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Thread: Tax Cuts and Deficits

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    tWebber carpedm9587's Avatar
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    Tax Cuts and Deficits

    So this came across my news feed this morning. When the tax cut was passed, the promise was "so much growth that federal receipts would actually climb and the cut would pay for itself." (I'm paraphrasing, of course) Instead what we have is a soaring deficit - at a time of comparative fiscal health - and it is due to a combination of reduced receipts and increased spending. I was particularly interested in the table just below the "Tax Cuts and Spending" table. The picture is not a good one.

    We hear so much about "taxing the rich is just stealing," but we apparently have no problem with stealing from our children and grandchildren. After all - that is what the national debt represents: money we have taken from the future to pay the costs of the present. When we do that and keep the debt to what we can pay in our lifetimes - no problem. When we continue to spend to a degree that the debt will have to be paid by the next two or three generations - we are stealing from those future generations. There is simply no other way to see it.

    We need a balanced budget law or amendment - and we need it badly. Political leadership needs to be forced to live within its means - across the board.
    The ultimate weakness of violence is that it is a descending spiral begetting the very thing it seeks to destroy...returning violence for violence multiplies violence, adding deeper darkness to a night already devoid of stars. Darkness cannot drive out darkness; only light can do that. Hate cannot drive out hate; only love can do that. Martin Luther King

    I would unite with anybody to do right and with nobody to do wrong. Frederick Douglas

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    tWebber Mountain Man's Avatar
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    It's funny how you claim to be unbiased, yet the only stories that "come across my newsfeed" that you think are worth discussing come from liberal sources. So either your "newsfeed" is liberally biased, or you are.

    Also, your source does not use official numbers but a Congressional Budget Office "estimate", so the entire story is based on a guess by one of the most notoriously unreliable agencies in Washington.
    Some may call me foolish, and some may call me odd
    But I'd rather be a fool in the eyes of man
    Than a fool in the eyes of God


    From "Fools Gold" by Petra

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    tWebber carpedm9587's Avatar
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    Quote Originally Posted by Mountain Man View Post
    It's funny how you claim to be unbiased, yet the only stories that "come across my newsfeed" that you think are worth discussing come from liberal sources. So either your "newsfeed" is liberally biased, or you are.
    Bloomberg is fairly widely rated as having a left-center bias, which aligns with my own experience of reading them. They number among the set of publications I most turn to for that reason, because they are probably as close to nonpartisan as modern media outlets are likely to get. They are essentially the left-leaning equivalent of the WSJ, which I also read.

    Quote Originally Posted by Mountain Man View Post
    Also, your source does not use official numbers but a Congressional Budget Office "estimate", so the entire story is based on a guess by one of the most notoriously unreliable agencies in Washington.
    The article analysis aligns with several others I have encountered over the last few months. It simply was the more thorough of them and best written (IMO), hence my selection of it for my post.
    The ultimate weakness of violence is that it is a descending spiral begetting the very thing it seeks to destroy...returning violence for violence multiplies violence, adding deeper darkness to a night already devoid of stars. Darkness cannot drive out darkness; only light can do that. Hate cannot drive out hate; only love can do that. Martin Luther King

    I would unite with anybody to do right and with nobody to do wrong. Frederick Douglas

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    tWebber Starlight's Avatar
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    Quote Originally Posted by carpedm9587 View Post
    the promise was "so much growth that federal receipts would actually climb and the cut would pay for itself." (I'm paraphrasing, of course)
    As Paul Krugman has been pointing out, this promise was always ludicrous and based on zero actual economic research. That such claims are widely believed by many people speaks to a deficient media environment, and propaganda influencing the gullible.

    Instead what we have is a soaring deficit - at a time of comparative fiscal health - and it is due to a combination of reduced receipts and increased spending.
    Indeed, if the economy is doing well, now is exactly the time to be running a surplus and reducing debt. Because, if and when another recession occurs the government needs to be able to address the issue and if the government is as bankrupt as the rest of the economy when it happens, that's a terrible situation.

    but we apparently have no problem with stealing from our children and grandchildren. After all - that is what the national debt represents
    Well some of us do have a problem with what the Republicans are doing.

    We need a balanced budget law or amendment
    That's not the right solution, it's like cutting off your nose to stop your nose from ever bleeding. Governments need the freedom to control the economy by helping out in recessions by running deficits, and conversely in good periods trying to stop bubbles forming by running surpluses. This has been a core tool in governments' economic toolboxes for decades and taking it away is a terrible idea.

    Market economies have a tendency to self-reinforce, so if there's a bubble developing they massively inflate the bubble, and then when a crash happens they massively increase the size of the crash. The government, whose spending constitutes ~20-50% of the entire economy depending on country, is thus in a really good position to put brakes on in both directions by controlling its expenditure. Leaving things entirely to market forces alone would be... unpleasant at best.

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    tWebber carpedm9587's Avatar
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    Quote Originally Posted by Starlight View Post
    As Paul Krugman has been pointing out, this promise was always ludicrous and based on zero actual economic research. That such claims are widely believed by many people speaks to a deficient media environment, and propaganda influencing the gullible.

    Indeed, if the economy is doing well, now is exactly the time to be running a surplus and reducing debt. Because, if and when another recession occurs the government needs to be able to address the issue and if the government is as bankrupt as the rest of the economy when it happens, that's a terrible situation.

    Well some of us do have a problem with what the Republicans are doing.

    That's not the right solution, it's like cutting off your nose to stop your nose from ever bleeding. Governments need the freedom to control the economy by helping out in recessions by running deficits, and conversely in good periods trying to stop bubbles forming by running surpluses. This has been a core tool in governments' economic toolboxes for decades and taking it away is a terrible idea.

    Market economies have a tendency to self-reinforce, so if there's a bubble developing they massively inflate the bubble, and then when a crash happens they massively increase the size of the crash. The government, whose spending constitutes ~20-50% of the entire economy depending on country, is thus in a really good position to put brakes on in both directions by controlling its expenditure. Leaving things entirely to market forces alone would be... unpleasant at best.
    You observation about a balanced budget law or amendment makes sense. I do think we do need to have some form of law or amendment to force this issue since law makers are unwilling to do so themselves. It has to have safeguards, however, that allow a government to dip into deficit spending when needed, and it needs to be structured so that an unscrupulous leader cannot use it to achieve their own ends (as with the current discussion around "declaring a national crisis"). Unfortunately, the very leaders who cannot manage our finances responsibly would have to create such a law or vote for such an amendment - so the solution to the problem is the very problem that requires a solution.

    Sadly...
    Last edited by carpedm9587; 01-13-2019 at 07:36 AM.
    The ultimate weakness of violence is that it is a descending spiral begetting the very thing it seeks to destroy...returning violence for violence multiplies violence, adding deeper darkness to a night already devoid of stars. Darkness cannot drive out darkness; only light can do that. Hate cannot drive out hate; only love can do that. Martin Luther King

    I would unite with anybody to do right and with nobody to do wrong. Frederick Douglas

  6. Amen Cow Poke amen'd this post.
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    See, the Thing is... Cow Poke's Avatar
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    Quote Originally Posted by carpedm9587 View Post
    We need a balanced budget law or amendment - and we need it badly. Political leadership needs to be forced to live within its means - across the board.
    When your outgo exceeds your income
    your upkeep becomes your downfall

    The trick is to keep your expenditures below your income. Our government seems incapable of grasping that concept.
    --- this space intentionally left blank ---

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    See, the Thing is... Cow Poke's Avatar
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    Quote Originally Posted by carpedm9587 View Post
    You observation about a balanced budget law or amendment makes sense. I do think we do need to have some form of law or amendment to force this issue since law makers are unwilling to do so themselves. It has to have safeguards, however, that allow a government to dip into deficit spending when needed, and it needs to be structured so that an unscrupulous leader cannot use it to achieve their own ends (as with the current discussion around "declaring a national crisis." Unfortunately, the very leaders who cannot manage our finances responsibly would have to create such a law or vote for such an amendment - so the solution to the problem is the very problem that requires a solution.

    Sadly...
    Let it be known that I amen'd this post on purpose - it was not an attempt to report.
    --- this space intentionally left blank ---

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    tWebber Mountain Man's Avatar
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    Quote Originally Posted by Cow Poke View Post
    When your outgo exceeds your income
    your upkeep becomes your downfall

    The trick is to keep your expenditures below your income. Our government seems incapable of grasping that concept.
    Because it's "free money" to politicians. They just have to take more of our money to cover any budget gaps. I don't think I've seen a government body yet at the local, state, or national level that I would consider fiscally responsible.
    Some may call me foolish, and some may call me odd
    But I'd rather be a fool in the eyes of man
    Than a fool in the eyes of God


    From "Fools Gold" by Petra

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    See, the Thing is... Cow Poke's Avatar
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    Quote Originally Posted by Mountain Man View Post
    Because it's "free money" to politicians. They just have to take more of our money to cover any budget gaps. I don't think I've seen a government body yet at the local, state, or national level that I would consider fiscally responsible.
    I work with our city and county officials quite a bit, and I think they try to be much more responsible than our federal leaders --- I think the more 'local' the control is, the better the results can be.
    --- this space intentionally left blank ---

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    tWebber carpedm9587's Avatar
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    Quote Originally Posted by Cow Poke View Post
    When your outgo exceeds your income
    your upkeep becomes your downfall

    The trick is to keep your expenditures below your income. Our government seems incapable of grasping that concept.
    Yes it does. When Democrats are in power - expenditures tend to climb, and taxes with them. When Republicans are in power, taxes tend to drop, but expenditures tend to continue to climb. It appears that the only party that actually cares about the deficit is whichever party is not currently in power.
    The ultimate weakness of violence is that it is a descending spiral begetting the very thing it seeks to destroy...returning violence for violence multiplies violence, adding deeper darkness to a night already devoid of stars. Darkness cannot drive out darkness; only light can do that. Hate cannot drive out hate; only love can do that. Martin Luther King

    I would unite with anybody to do right and with nobody to do wrong. Frederick Douglas

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