Originally Posted By SuperDry <a href="http://www.cnn.com/2007/POLITICS/02/02/bush.budget.ap/index.html" target="_blank">http://www.cnn.com/2007/POLITI CS/02/02/bush.budget.ap/index.html</a> This is on top of the money already spent, and doesn't include money beyond Sept 2008. Considering that the war is likely to go well past that point, the cost is just staggering. And all of it paid for with borrowed money.
Originally Posted By mrichmondj I expect my tax rate will be roughly 75% before long to pay for these bills plus the cost of Social Security. So much for the American dream.
Originally Posted By Shooba Does anyone know what the NET effect of Bush's tax cuts are, if you consider the debt per person he has amassed?
Originally Posted By DouglasDubh <Does anyone know what the NET effect of Bush's tax cuts are, if you consider the debt per person he has amassed?> Tax cuts have resulted in an increase in revenue to the federal treasury.
Originally Posted By SuperDry <<< Tax cuts have resulted in an increase in revenue to the federal treasury. >>> I don't doubt that this is the case strictly speaking, but the issue is a bit more complicated than that. First of all, subtract inflation from any treasury revenue growth to get a real growth figure. The cut in the capital gains rate is seen by many to encourage capital investment, which tends to encourage economic growth and be good for the country as a whole. When a cut in this rate is enacted, it's quite natural for there to be a big boost in revenue collection at least initially, as many people with unrealized gains decide that it's now worth taking them and pay the tax at the new, lower rate. I don't know enough about the statistics to know what the long-term effects of having a reduced capital gains rate is on tax revenue, but it's certainly less than it is in the first year or two after reduction. It's still quite possible that a lower rate is good overall in the long term. Also, a reduction in taxes for lower-income people tends to expand the economy, as for those people living paycheck-to-paycheck, each extra dollar that they don't pay in taxes will tend to get spent on something rather than saved. Presumably, their quality of life increases as does the economy. But the reduction in the marginal brackets for ordinary income for the top brackets is another thing. There's little evidence to support that lowering the top bracket from 39.6% to 35% does anything other than lower the taxes paid by high-income earners and that it has little to do with expanding the economy or benefitting society as a whole. Most people that are in the top bracket are not going to change their spending habits based on their tax rate being 35% or 39.6%. But these three issues are very cleverly put into the same pot by those that want the marginal rate on ordinary income to be lowered.
Originally Posted By DouglasDubh <There's little evidence to support that lowering the top bracket from 39.6% to 35% does anything other than lower the taxes paid by high-income earners and that it has little to do with expanding the economy or benefitting society as a whole.> Untrue. The evidence is that when the top marginal rates are cut, revenues increase much faster than they were prior to the tax cuts. That's what happened in the 60's under Kennedy, in the 80's under Reagan, and in the 00's under Bush.
Originally Posted By mrichmondj ^^ You conveniently omit the example where marginal rates were increased during Clinton's first term in office and tax revenues accelerated and the annual budget deficit disappeared.
Originally Posted By DouglasDubh I don't conveniently omit that - it didn't happen like that. During Clinton's first term, marginal rates were increased, and the economy slowed its growth. It wasn't until a Republican Congress convinced President Clinton to cut capital gains rates that tax revenues accelerated and the annual budget deficit disappeared.
Originally Posted By mrichmondj << I don't conveniently omit that - it didn't happen like that. During Clinton's first term, marginal rates were increased, and the economy slowed its growth. It wasn't until a Republican Congress convinced President Clinton to cut capital gains rates that tax revenues accelerated and the annual budget deficit disappeared. >> That's an interesting comment considering that your previous comment suggested that marginal rates were the driving factor behind tax revenue. Now, you've changed your philosophy to suggest capital gains rates make the difference? You also neglect to comment that in 1997, the government posted its first budget surplus in years. Perhaps Clinton was more comfortable passing a tax cut knowing that the budget was balanced and the country could afford some tax relief. That's very much unlike the current administration, which continues to spend our country into financial oblivion while cutting taxes for the wealthy simultaneously.
Originally Posted By DouglasDubh <Now, you've changed your philosophy to suggest capital gains rates make the difference?> Low taxes in general make the difference. Almost everytime a tax cut is enacted, it "costs" less than predicted. Almost everytime a tax increase is enacted, it fails to raise as much as predicted. <You also neglect to comment that in 1997, the government posted its first budget surplus in years.> In 1997, there was a deficit, although it was smaller than in previous years, thanks to GOP lead slowing of spending increases. <Perhaps Clinton was more comfortable passing a tax cut knowing that the budget was balanced and the country could afford some tax relief.> Perhaps, but that doesn't negate the fact that the economy really took off in 1998, after the capital gains cuts were enacted.
Originally Posted By SuperDry <<< Untrue. The evidence is that when the top marginal rates are cut, revenues increase much faster than they were prior to the tax cuts. That's what happened in the 60's under Kennedy, in the 80's under Reagan, and in the 00's under Bush. >>> The Reagan cuts of the 80's were a drastic restructuring of the tax code, coming down from a top marginal rate of 90%. Of course lowering the top marginal rate from 90% to somewhere in the 30's is going to have a dramatic effect on people's behavior, but this is totally different than what would happen if you make adjustments within the 30's (say, between 35% and 39.6% as is being discussed). If they raised the top marginal rate back to 90%, of course that would stifle the work of the people in the top bracket. But I don't think that the same would be true for a possible raise back to 39.6%, and I also don't think that you've presented evidence to the contrary. When you cite the tax revenue increases in recent years from the Bush tax cuts, are you saying that the revenue on ordinary income increased, taking out the capital gains tax and inflation? If you could, please provide a reference (I'm not saying you're wrong - I really don't know for sure, other than that I've heard your claim be made frequently and have never seen it backed up by anyone). And let's look at it another way. Let's say the top marginal bracket were to be increased from 35% to 36%. It's almost certain that this would result in higher tax revenues, as hardly anyone is going to make a shift in their life because taxes went up 1%. The point I'm trying to make is that it's a fallacy to make a blanket statement "tax revenues increase when the rate decreases" and then cite an historic 90%-to-36% tax change as your evidence.
Originally Posted By SuperDry <<< In 1997, there was a deficit, although it was smaller than in previous years, thanks to GOP lead slowing of spending increases. >>> How would you characterize what's happened to federal spending, the deficit, and the national debt during the 4 years that the GOP had control of the White House and both houses of Congress?
Originally Posted By DouglasDubh <When you cite the tax revenue increases in recent years from the Bush tax cuts, are you saying that the revenue on ordinary income increased, taking out the capital gains tax and inflation?> I believe that's the case, although I'm not sure that I have seen it broken out like that. <The point I'm trying to make is that it's a fallacy to make a blanket statement "tax revenues increase when the rate decreases" and then cite an historic 90%-to-36% tax change as your evidence.> That would be a fallacy, and I certainly didn't mean to imply anything of the kind. I'm pretty sure I used some qualifiers, and also gave more than one example as my evidence. Of course, not every tax cut will result in increased revenue, but I do not believe the Bush tax cuts "cost" anything.
Originally Posted By DouglasDubh <How would you characterize what's happened to federal spending, the deficit, and the national debt during the 4 years that the GOP had control of the White House and both houses of Congress?> I'm not as concerned as some pretend to be. The deficit is pretty small, when looked at as a precentage of GDP, and getting smaller every year. That we increased spending on homeland security and defense after 9/11 is understandable, and I recognize that President Bush inherited a declining economy that was made worse by the 9/11 attack. Still, Congress could have done a better job of controlling domestic spending, and the President could have helped more. But I don't expect a Democrat controlled Congress will do any better.
Originally Posted By SuperDry <<< But I don't expect a Democrat controlled Congress will do any better. >>> I can't imagine that such a Congress could do much worse. Perhaps the biggest reason that I voted Republican in 2000 was to ensure that we as a nation would continue on the path we were on and not squander our good fiscal fortune. Boy was I wrong on that one. <<< The deficit is pretty small, when looked at as a precentage of GDP, and getting smaller every year. >>> You may be referring to the deficit in the formal budget, but I think if you look at actual spending, the story to be told is a bit different. Keep in mind the issue that was at the start of this thread: there's a request for a "supplemental" for $100 billion, just to cover the next 6 months of war, and this is not counted as part of the "deficit." It's quite easy to come up with a rosy picture if you separate spending from the deficit such that for anything you don't want to be counted against you, you simply exclude it from the budget, but then spend the money anyway. I think the best measure of the actual deficit is the growth (or reduction) in the total outstanding national debt. This covers all public expenditures with nowhere to hide. How do you think the last 4 years of complete GOP control measure up to this standard? And this doesn't even address unfunded future obligations such as prescription drug coverage.
Originally Posted By DouglasDubh <I can't imagine that such a Congress could do much worse.> They did in the 90's, under the first President Bush. <Keep in mind the issue that was at the start of this thread: there's a request for a "supplemental" for $100 billion, just to cover the next 6 months of war, and this is not counted as part of the "deficit."> Maybe not at first, but eventually it will. <It's quite easy to come up with a rosy picture if you separate spending from the deficit such that for anything you don't want to be counted against you, you simply exclude it from the budget, but then spend the money anyway.> Sure, but this again is something I don't expect the Democrats will improve on. <How do you think the last 4 years of complete GOP control measure up to this standard?> Probably better than complete Democrat control would have. <And this doesn't even address unfunded future obligations such as prescription drug coverage.> And the chief Democrat complaint against it was that we weren't spending enough.
Originally Posted By jonvn "Perhaps the biggest reason that I voted Republican in 2000 was to ensure that we as a nation would continue on the path we were on and not squander our good fiscal fortune" Kind of an odd choice, since it was a democrat in the administration at that time. "Hey, we have had good fiscal fortune under a democrat leader. So to continue that, I'm going to vote republican." Makes sense to me!
Originally Posted By SuperDry <<< Kind of an odd choice, since it was a democrat in the administration at that time. >>> I'm glad you pointed this out. One of the Republican talking points to explain away the prosperity of the 90's and what happened to the federal budget and deficit was that we had reached a sweet spot in productivity increases driven by automation and especially the Internet, and that it would have happened regardless of who was in charge. The thought among many Republicans at the time was that it was only a matter of time before Democrats squandered the fruits of the 90's and lead us as a nation to a precarious fiscal situation. I would never have guessed where the actual squander would have ended up coming from.
