El Castor wrote:
( previous postsnipped-follow thread )
Post by El CastorPost by Alan LichtensteinPost by El CastorI would take that one step further. Increasing taxes will not only
cause widespread "suffering", but it will adversely impact economic
growth, reducing total tax revenues and very likely more than offset
additional revenues generated by a higher rate of taxation. If a
country could tax itself to prosperity, France, with taxes nearly
double that of the United States, would be the richest country in the
world. Instead it has a moribund economy and pension problems worse
than the United States.
There is a 'right' figure to which taxes can be raised which would not
have the debilitating effects on the economy. In a perverse way, the
ill-advised Bush tax cuts did have such an effect on the economy, since
the current economic 'boom' is a result only of the increased Government
deficit. That, IMHO, cancels out the economic prosperity, as the
deficit will have to be addressed at some point. Raising taxes to the
degree that they were prior to Bush may be that right figure, assuming
that spending can be brought back to that amount. Of course, the
increase in spending due to the unnecessary war would be a prime
candidate for elimination.
Raising taxes slightly for the long term may very well solve all our
problems with a minimum of pain for all involved.
I disagree. The problem is too enormous. A slight increase in taxes
would be like throwing gasoline on a fire and would only fuel
congress' inclination to always spend incrementally more than we take
in. Even if that were not the case, it still would be insufficient. We
have to deal with the outgo side by such things as increasing the
retirement age, lengthening the period between partial and full
benefits, tweaking the COLA, etc.
The fact that the problem is enormous only means a more severe
solution. It does not justify ignoring the problem, which is apparently
what you propose doing. Ignoring the problem will ultimately
necessitate a devaluation in order to pay back the debt with worthless
money, with all that entails. I think that solution, which will be the
only one left if we don't do something soon, will have the most
deleterious effects. We can take steps to at least return to the
surpluses of the Clinton years by rescinding the ill-advised Bush tax
cuts and ending the war expenditures. Taken over the next 40 years, we
can at least significantly reduce the debt to the point where another
small tax increase could wipe it out.
I reject your pessimistic view of Congress. It ran surpluses under
Clinton and didn't spend the money and there's no reason to believe a
disciplined Congress of the future would do any differently. The one
thing we cannot abide by is the Republican policy of borrow and spend.
Post by El CastorPost by Alan LichtensteinThe mantra of severe
economic difficulty which accompany ANY tax cut
I believe you meant to say "tax increase".
I did.
If not, I really don't know
Post by El Castorwhat you are trying to say. Assuming that's what you meant, then I
have to say that the Left always wants just a little more. The need
for "a little more" is insatiable. I could go along with the "little
more" approach if I believed that would be the end of it, but I do
not. It would be only the beginning. We need to spend less on Iraq, on
bridges to nowhere, and on out of control entitlements, however my
faith that we will do that is exceeded only by your faith in the
effectiveness of a border fence. (-8
There you go again, Jeff, rambling on using a dislike of the liberal
faction as if that somehow makes good economic sense for your side. It
doesn't. Fact remains that the gap in income between the wealthy and
the poor is widening, but the income gap between the middle class and
the poor is closing. If you don't see that the destruction of the
middle class is rapidly occurring, and if you don't understand that what
makes this country the economic power it once was is a strong middle
class, than you've got blinders on. Fact remains, we don't produce
anything here anymore, so what is there to invest a tax cut in? A
textile plant in China? An auto plant in Korea? A steel plant in
Japan? Jeff, wake up and smell the coffee. Tax cuts don't produce
anything, because there's nothing here to produce. They only serve to
provide income for the rich. But that's for another discussion. We're
talking about taxes and Social Security. So I apologize for my digression.
Post by El CastorThe following statement regarding the necessity of massive tax
increases which would be needed to redeem the entire trust fund, is
true. And, by the way, the problem would not be solved when the trust
fund was redeemed -- it would continue at an accelerating pace, as
would the need for more and more money.
Of course, if you mean the deficit due to demographics regarding Social
Security, you are indeed, right. But we also need a different way to
fund the program so that future deficits are precluded. Again, a topic
for another discussion.
Post by El CastorPost by Alan Lichtensteinis stretching the rubber
way too far and does not take into account any less stretching, and
cannot be equated with the difficulties that would result from massive
tax increases, which would be needed to redeem ALL the 'dusty old IOU's'
as Rumple suggested.
The following is a red herring.
Post by Alan LichtensteinObviously a country cannot tax itself into prosperity, but neither can a
country create prosperity when it doesn't produce anything. And we
don't. All our production in industries which mean anything, has been
outsourced to China via Mexico, courtesy of the conservative 'free
market economy,' which severely understates long range problems in favor
of short term profits.
Statements of fact refuting assertions can hardly be described as red
herrings. They go straight to the fallacious theory of the positive
effects tax cuts have on the economy.
Post by El CastorAlan Greenspan, whose opinion I respect, made the following comments
in testimony before congress in March of 2005. He does not seem to
preclude minor adjustments to tax rates, but certainly does not see
increased taxation as the solution. Alan, I realize you sincerely
believe that we can tax our way out of this. I disagree.
Over time, and with proper adjustment of the funding mechanism,
absolutely. You have no solution other than more of the same. And
neither did Greenspan. His only concern was for the impact Social
Security would have on the deficit. He couldn't give a rat's ass about
whether the fund was solvent or not. His only concern was that since it
was established by Law, he had to deal with it. He just didn't want it
messing up his precious Treasury.
Post by El CastorThe problem is really not one of over-promising to retirees, nor is it
one of under taxation. Simply put, we are on a pay-as-you-go system,
and as the population ages, fewer and fewer workers are supporting
more and more retirees. Japan is in the worst fix in this regard, and
is looking at a future in which there will be one worker for every
retiree. We are headed down the same road. That is an untenable
situation.
That is obvious. And what should be obvious is that the pay-as-you-go
funding mechanism is ineffective and needs to be changed. Republicans
don't want to do it, because they want individuals to take the risk so
that they can keep taxes low for the wealthy who don't need Social
Security, and the Democrats are afraid to change it because they would
have to take a page from the Republican play book and deal with the
stock market. And the people are too afraid because most of them have
no clue as to how the whole system of retirement funding works. So you
have every possible constituency afraid to change the system, for
different reasons, but the effect is still the same.
Post by El Castor"Failure to address the imbalances between our promises to future
retirees and our ability to meet those promises would have severe
consequences for the economy. The most recent projections by the
Office of Management and Budget show that spending on Social Security,
Medicare, and Medicaid will rise from about 8 percent of GDP today to
about 13 percent by 2030.3 Under existing tax rates and reasonable
assumptions about other spending, these projections make clear that
the federal budget is on an unsustainable path, in which large
deficits result in rising interest rates and ever-growing interest
payments that augment deficits in future years. But most important,
deficits as a percentage of GDP in these simulations rise without
limit. Unless the trend is reversed, at some point these deficits
would cause the economy to stagnate or worse. Closing the gap solely
with rising tax rates would be problematic; higher tax rates rarely
achieve a comparable rise in tax receipts, and the level of required
taxation could in itself severely inhibit economic growth.
In light of these sobering projections, I believe that a thorough
review of our commitments--and at least some adjustment in those
commitments--is urgently needed. The necessary adjustments will become
ever more difficult and larger the longer we delay. No changes will be
easy. All programs in our budget exist because a majority of the
Congress and the President considered them of value to our society.
Adjustments will thus involve making tradeoffs among valued
alternatives. The Congress must choose which alternatives are the most
valued in the context of limited resources. In doing so, you will need
to consider not only the distributional effects of policy changes but
also the broader economic effects on labor supply, retirement
behavior, and national saving. The benefits to taking sound, timely
action could extend many decades into the future."
http://www.federalreserve.gov/BoardDocs/Testimony/2005/20050315/default.htm
So? All you have posted from Greenspan is that he's saying that if we
don't do something, the shit is going to hit the fan. A lot of people
have said that.