Getting Closer to the Brink!

[turar]

On taxes:

 

It's interesting that top tax rate is pretty low currently as compared to other periods in the last century, when the US was prospering and growing: http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=213

 

 

On spending:

 

Seems like military spending is #2 after SS/Medicare currently. Seems like significant cuts there would go a long way in resolving the spending issue. Are tea partiers OK with those spending cuts?

[jeffmori7]

As a Canadian from Quebec, I just have a simple question as I don't understand what is really happenning. Here, richest people are used to pay more than 50% of their revenue in taxes and it's not that bad!

 

What is it with you Americans? Why is it so terrible to raise taxes to eliminate a deficit, espicially when these tax raises will concern only the richest 2% of you (more than 250k $ /year)?!?

 

Those rich people can afford paying a bit more and it will be so much better for the economy than any tax cuts that hapens during the Bush era.

 

For me, this chart speaks for itself :

 

http://www.offthechartsblog.org/what%E2%80%99s-driving-projected-debt/

[JSArbitrage]

As a Canadian from Quebec, I just have a simple question as I don't understand what is really happenning. Here, richest people are used to pay more than 50% of their revenue in taxes and it's not that bad!

 

What is it with you Americans? Why is it so terrible to raise taxes to eliminate a deficit, espicially when these tax raises will concern only the richest 2% of you (more than 250k $ /year)?!?

 

Those rich people can afford paying a bit more and it will be so much better for the economy than any tax cuts that hapens during the Bush era.

 

For me, this chart speaks for itself :

 

http://www.offthechartsblog.org/what%E2%80%99s-driving-projected-debt/

 

Americans generally have an inherent distrust of government; it goes back to our founding.  Americans generally don't like the idea that we have to pay 40-50% taxes when you add up federal, state, local, real estate, sales, etc.  It goes against the American DNA.

 

I am generalizing of course.  But much of the problem we are having comes from the fact that Americans are becoming divided on the issue above.  It used to be that most of America was against a larger, more active federal government.  But many people have been watching Canada and much of Europe and have decided that it's not a bad system. 

 

So you have a clash.  About half of the America still has the rugged individualism and about half see America as much more of a collective.  So through the years, the rugged individuals have compromised to gain lower taxes and the collectives have compromised to gain more social programs. 

 

Now we run into a situation where those old compromises just don't work.  We're out of runway.  So now...which ones wins? Do the rugged inviduals cave and accept higher taxes or do the collectives cave and accept less social programs.  Or a little bit of A and B?

 

 

 

[ubuy2wron]

Tim if you repeat a falsehood a thousand times it does not make it any closer to being the truth. The tea partiers are focussed on one issue only NO TAXES lets kill the beast kill the beast is their chant the rest of the adults including the much maligned MR Obama are suggesting a combination of expenditure cuts and "revenue enhancements" are required. The economy can not tell the difference between a expenditure cut and a tax increase on the margin but voters can and this farce is all about votes and nothing about the economy.

 

The Tea Party absolutely does not want additional taxes.  In that you are correct.  Do they see the federal government as  a beast that is growing in size?  YES.  Do they want to reverse that trend? YES   Do they want no federal government? NO.  But if you don't think they are serious about balancing the budget then I would say you are wrong.  Most have no problem with reducing the size of government back to 19 to 20%.  Many would go even lower.  Try talking to them.

 

How much of the problem is due to tax rates being to low?  Not much if at all.  If you disagree please tell me which ones (corporate, payroll, or income) and how much you would raise them and how much of the deficit it would solve.  So if it is not a revenue shortfall problem, why should they support "revenue enhancements."  The reality is that significant cuts in spending are needed or else we are just kicking the can down the road.

 

This is where I disagree with Howard Marks.  He thinks compromise is part of the solution.  I see past compromise as part of the problem, and compromise as refusing to seriously deal with the issue.     

 

Why is refusing to raise taxes a sign of intransigence when demanding that taxes be raised is not?   

   

Tim um lets me see Obama and the adults on both sides are open to dramatic cuts in all budgets on the expenditures side but no house Republican will approve any proposal that includes ANY tax increases... you can not be serious.

[JSArbitrage]

That's what it may take.  If they don't come to some sort of agreement tonight and get it into the house tomorrow, I think Wall Street's interpretation of this just being political gamesmenship will quickly dissipate.  Can't believe that such pig-headed behavior is being put ahead of the welfare of the country!  Cheers!  

 

I don't think you quite appreciate the viewpoint of the Tea Party.  They don't think the Federal Government is too big; they think it's evil.  So, to them, it's like saying we should continue operating the Death Star because, after all, the Death Star employs and supports most of the Empire! Doesn't matter to them.  They're Luke Skywalker and they are going to blow up the Death Star, even if your random foot solider that works on it is just working 9-5 to put food on his family's table.

 

They are a huge X Factor here.  If we don't raise the ceiling and it's because the Tea Partier's reject a plan to do so, they will go down in history as perhaps the most powerful non-mainstream political force in the last 30 years.  More powerful than Perot's Reform Party or Nader's Green Party.

[Ballinvarosig Investors]

I think some of you guys are missing the woods for the trees. The issue here really isn't the debt per se, it's the deficit. Last year, the United States spent $1.5 trillion above what it took in from taxes. $1.5 trillion is 10% of American GDP. You take that kind of money out of the economy, and you're looking at another severe recession, or possibly even a depression. The deficit spending certainly isn't sustainable, however I think that the Tea Party movement is ignoring the impact that it has made in preventing our recent great recession from becoming a great depression. My big fear at the moment is that what if this global Keynesian splurge is the only thing that is keeping the global economy ticking along.

[ragnarisapirate]

That's what it may take.  If they don't come to some sort of agreement tonight and get it into the house tomorrow, I think Wall Street's interpretation of this just being political gamesmenship will quickly dissipate.  Can't believe that such pig-headed behavior is being put ahead of the welfare of the country!  Cheers!  

 

I don't think you quite appreciate the viewpoint of the Tea Party.  They don't think the Federal Government is too big; they think it's evil.  So, to them, it's like saying we should continue operating the Death Star because, after all, the Death Star employs and supports most of the Empire! Doesn't matter to them.  They're Luke Skywalker and they are going to blow up the Death Star, even if your random foot solider that works on it is just working 9-5 to put food on his family's table.

 

They are a huge X Factor here.  If we don't raise the ceiling and it's because the Tea Partier's reject a plan to do so, they will go down in history as perhaps the most powerful non-mainstream political force in the last 30 years.  More powerful than Perot's Reform Party or Nader's Green Party.

 

I almost laughed out loud at this. But, yes, I think that is a pretty fair explanation. Though, I will add that a lot of TEA Party members don't seem to mind a big government when it comes to stopping social issues that they abhor... Say, Darth Vader running around keeping gay people from marrying and such.

[Kraven]

These kinds of conversations, while fun sometimes, never go anywhere.  People used to be able to come together and figure out a solution that was best for the country.  Now every minute that goes by people are more divided.  Liberals believe that if Jesus ever decides to hang it up and retire, Obama is ready to step in and take his job.  Conservatives believe (to borrow the analogy from above) that only they stand in the way of the evil empire taking over.  It's strange because I always learned that a good deal was one which was good for everyone.  A good deal was not one in which you got everything you wanted, but one in which you get a lot of what you want and the other side gets something too.  If you always strive for that last penny or the "best" deal, you will not be in business for long as no one will play with you anymore.  Of course, government is obviously different.  They just need to do it.  That's it.  Figure it out.  It's really as simple as that.

[Tim Eriksen]

Tim if you repeat a falsehood a thousand times it does not make it any closer to being the truth. The tea partiers are focussed on one issue only NO TAXES lets kill the beast kill the beast is their chant the rest of the adults including the much maligned MR Obama are suggesting a combination of expenditure cuts and "revenue enhancements" are required. The economy can not tell the difference between a expenditure cut and a tax increase on the margin but voters can and this farce is all about votes and nothing about the economy.

 

The Tea Party absolutely does not want additional taxes.  In that you are correct.  Do they see the federal government as  a beast that is growing in size?  YES.  Do they want to reverse that trend? YES   Do they want no federal government? NO.  But if you don't think they are serious about balancing the budget then I would say you are wrong.  Most have no problem with reducing the size of government back to 19 to 20%.  Many would go even lower.  Try talking to them.

 

How much of the problem is due to tax rates being to low?  Not much if at all.  If you disagree please tell me which ones (corporate, payroll, or income) and how much you would raise them and how much of the deficit it would solve.  So if it is not a revenue shortfall problem, why should they support "revenue enhancements."  The reality is that significant cuts in spending are needed or else we are just kicking the can down the road.

 

This is where I disagree with Howard Marks.  He thinks compromise is part of the solution.  I see past compromise as part of the problem, and compromise as refusing to seriously deal with the issue.     

 

Why is refusing to raise taxes a sign of intransigence when demanding that taxes be raised is not?   

   

Tim um lets me see Obama and the adults on both sides are open to dramatic cuts in all budgets on the expenditures side but no house Republican will approve any proposal that includes ANY tax increases... you can not be serious.

 

If you think Obama  and the adults on both sides are open to dramatic cuts then you are drinking the kool-aid.  If they were open to dramatic cuts they would have welcomed the Ryan and Coburn plans and said they just need to be tweeked to have some additional taxes. That is not true at all.  Obama will not publicly specify cuts.  Reid is floating paper cuts.  When anyone you think of as an adult does talk cuts, they are in the future, and they sure as hell are not dramatic.  Obama is reported to have proposed less than $2 billion in cuts for 2012.  Yes a measly $2 billion out of a $1.4 trillion deficit. That is not an adult that is someone living in a false reality. 

 

 

 

 

 

 

[ubuy2wron]

I think some of you guys are missing the woods for the trees. The issue here really isn't the debt per se, it's the deficit. Last year, the United States spent $1.5 trillion above what it took in from taxes. $1.5 trillion is 10% of American GDP. You take that kind of money out of the economy, and you're looking at another severe recession, or possibly even a depression. The deficit spending certainly isn't sustainable, however I think that the Tea Party movement is ignoring the impact that it has made in preventing our recent great recession from becoming a great depression. My big fear at the moment is that what if this global Keynesian splurge is the only thing that is keeping the global economy ticking along.

I listened to MS Bachman who is currently running ads in Iowa to try to cement a lead in the polls> I will not approve of ANY increase in the debt ceiling, I also listend to here comments on CNBC and I quote as closely as possible "any govt expenditure is bad for the economy and any tax is bad for the economy." This is not economics this is faith it is religion it is as silly a viewpoint as all business is evil .

[Liberty]

Politics is the mindkiller.

[Tim Eriksen]

As a Canadian from Quebec, I just have a simple question as I don't understand what is really happenning. Here, richest people are used to pay more than 50% of their revenue in taxes and it's not that bad!

 

What is it with you Americans? Why is it so terrible to raise taxes to eliminate a deficit, espicially when these tax raises will concern only the richest 2% of you (more than 250k $ /year)?!?

 

Those rich people can afford paying a bit more and it will be so much better for the economy than any tax cuts that hapens during the Bush era.

 

For me, this chart speaks for itself :

 

http://www.offthechartsblog.org/what%E2%80%99s-driving-projected-debt/

 

You are confusing tax rate with effective tax rates.  Tax rates are much lower today but there are a lot less ways around it too.  If you think the deficit can be eliminated by taxing the highest two percent you are not informed of the details.  The extension of the tax cut for the top 2% was estimated to hurt projected revenue by around 800 billion over ten years.  The extension of middle class tax cuts was three or four times larger.  $800 billion out of a projected ten year deficit of 9 trillion is not going to do it.

 

 

[jeffmori7]

I understand that raising taxes for the richest won't do it alone. But it is part of the equation. Reduce military expenses, make some cuts in your spending and you will be all right. Compromise is always a better solution and Republicans aren't doing any compromise. During Bush era, you didn't had that much issues with the debt ceiling, so what is the problem of the Tea Party?

 

Another problem of America and the fact that a lot of AMericans consider government as evil is your bad management of healthcare system. If I remember correctly, USA spend more in percentage than a lot of developped country like Canada where we have at least universal healthcare coverage for the ever growing budget we dedicate to it. You on the other side, must take private insurance even if you're governement is spending more than us on healthcare..that is part of the problem I think.

[ubuy2wron]

Obama is reported to have proposed less than $2 billion in cuts for 2012. Tim who did the reporting FOX News or the tooth fairy everyone knows the propsals that will survive a presidential veto will include expenditure cuts a heck of a lot more drastic than that amount. Budgets are the responsiblity of the house by the constitution, nothing that is written by the whitehouse is going to pass the house if it has any tax increases nothing is going to pass the whitehouse that only has expenditure cuts. Ms Bachman may have a titanium spine but she has rocks in her head. Anyway enuff on this I ain't getting sucked in any farther on this debate. America is looking sillier by the minute.

[Guest Hester]

 If you think the deficit can be eliminated by taxing the highest two percent you are not informed of the details.

 

I completely agree. I only support an individual tax raise or spending cut if it can eliminate the entire deficit by itself. If it can't, then it should be ignored. Granted, that's going to make budget deals difficult, but I try not to think about it.

 

But trimming 10% of the deficit alone by taking the marginal tax rate on the top 2% of earners to 80% of what it was during Reagan, blessings and peace be upon him, clearly shouldn't be done because it doesn't eliminate the whole deficit, and end human suffering on earth, and stop global warming (which I don't believe in).

 

Now I've got to get back to my Glenn Beck rally.

[Tim Eriksen]

Obama is reported to have proposed less than $2 billion in cuts for 2012. Tim who did the reporting FOX News or the tooth fairy everyone knows the propsals that will survive a presidential veto will include expenditure cuts a heck of a lot more drastic than that amount. Budgets are the responsiblity of the house by the constitution, nothing that is written by the whitehouse is going to pass the house if it has any tax increases nothing is going to pass the whitehouse that only has expenditure cuts. Ms Bachman may have a titanium spine but she has rocks in her head. Anyway enuff on this I ain't getting sucked in any farther on this debate. America is looking sillier by the minute.

 

Ahh.  So sorry it wasn't Fox News.  I know that would have allowed you to immediately dismiss it as false.  I have read numerous articles from multiple papers that state it.  To be clear, I was only talking about 2012 cuts not overall.  Over ten years there will be a larger amount, but in typical Washington fashion the pain will be later, but the credit will be taken today. 

 

I will agree with you that the House will not pass anything with tax increases; however,  I think your political instincts are wrong on what the Whitehouse will accept.  I'll gladly wager that what is passed and accepted by the Whitehouse will not have "revenue enhancements." I'm sure the Whitehouse won't like it, but that is what they are going to have to accept. 

[SouthernYankee]

How is this for a grand bargain?

 

1) Go back to Clinton-era tax rates, Glass-Steagal becomes the law for financial industry, reduce spending to baseline of FY2000.

2) Repeal Obamacare, No Child Left Behind, & Dodd-Frank. All regulations revert to year 2000 as well.

3) Raise debt ceiling $2 trillion.

4) Get out of Afghanistan, and Germany, but make Iraq our new base (instead of Germany).

5) Make all budgets start at ZERO for the next fiscal year. Each program should have to acknowledge it was formed to SOLVE a problem. If the problem is not solved, the American people should know WHY NOT!!

 

How is that for a constructive lunch break?

 

Cheers, and since I haven't mentioned it yet, Congrats to the BRUINS!

 

[Parsad]

Cheers, and since I haven't mentioned it yet, Congrats to the BRUINS!

 

Damn you!  Just as I was starting to forget that we lost.  Thanks for ruining my day!

 

About a month ago, I was just hanging out with my brother and cousin at a restaurant, and in the middle of dinner, I just blurted out in an exhausted voice "I still can't believe we lost the f**king Cup!  How the hell do you lose a series when you are up 2-0 and you've gone through all of that to get there?  And what the hell went wrong with Luongo!"  They just looked at me like where did that come from.  I said, "I guess it's just hitting me now!"  ;D  Cheers!

 

[onyx1]

I will agree with you that the House will not pass anything with tax increases;

 

And the reality is that the Senate won't either.  Too many fearful democrats up for reelection in 2012.  There is only one person demanding tax increases at this point.  His attempts to 'go to the public' with frightening scenarios of a default won't work any better than his 72 public attempts to sell America on "deficit neutral" health care overhaul.  Several doomsday deadlines have already passed (one in May, and one last Sunday when Asian markets opened) and his "apocalypse credibility" is gone.  There is a zero chance of a US debt default.  He knows it, Geithner knows it, and now the banks know it:

 

http://www.foxbusiness.com/markets/2011/07/25/obama-to-banks-were-not-defaulting/

 

It is probably a shock to many in Washington that the GOP freshman would have the gall to stick to their campaign promises, but it looks like they are going to do just that.  With complete control of Congress and the WH, democrats could have delt with this issue mostly on their own terms, but chose not to do it (its been 800 days since the Senate passed a budget!).  It's time for Obama to accept that elections have consequences take what Congress gives him and move on.

 

[SouthernYankee]

Sorry about bringing up hockey, I just skated the other night (100 degrees at 8:00 P.M. will drive you indoors!) and I am getting the bug again! Can't wait to lace them up again come October!

[Liberty]

http://www.bloomberg.com/news/2011-07-26/republican-leaders-voted-for-drivers-of-u-s-debt-they-now-blame-on-obama.html

[mountboney]

Next few days will be interesting.

 

Though I don't think August 2nd is the "real" date.  It's looking more and more like the only thing that will bring the parties together is a real strong message from the markets.

 

A little Catch 22. The markets have been relatively calm because they are certain a deal will get done, but both sides have dug in because the markets are not showing any panic yet.

[Tim Eriksen]

Boehner's plan as scored by CBO comes out to only $1 billion in cuts for 2012, and $851 billion overall.  And some continue to say the problem in Washington is those intransigent new Republicans.  Huh.  Looks to me like it is the leadership and those who have been in Washington for a while.  Reid's proposal while larger includes artificial savings from ending operations in Iraq and Afghanistan that is already planned.  I don't know if they came to Washington like that or if the culture just does it to them, but it is near impossible to name a real statesman that puts principle over party and has not been corrupted by the system.    I fear we're screwed.

 

[Myth465]

Krugman and Brooks. Right as usual.

 

http://www.charlierose.com/view/interview/11804

 

They say things much better then I could.

[Liberty]

http://www.bloomberg.com/video/73202204/