The GOP eats itself on fiscal mattersFollow

Yeah, there's been a deal hammered out between the Congressional leaders and White House. Probably the least enthused is Pelosi who said she'd vote for it but also made clear she wasn't putting any effort into whipping votes for it.

Edit: Apparently it passed the House

It's expected easy passage in the Senate.

Edited, Aug 1st 2011 6:29pm by Jophiel

Can you logically clarify something for me? If you want lower taxes, but a stronger national defense, how do you propose it will be paid for? Is it strictly a matter of all incoming money going towards military, and any kind of social services are **** out of luck?

And if people are so gung-ho on having a smaller government, why do they want regulations on peoples sex lives? Isn't that beyond what a government should be focusing on? I know these questions have been asked many times by many people, but I have yet to see an answer.

It's a lot more significant than just saying that we'll raise the debt ceiling by 2.5T today, with a Trillion in cuts agreed upon today and another 1.5T in unspecified cuts to be determined later... maybe. That option always leaves open the possibility that they don't agree on cuts later, but the debt ceiling increase stays anyway. With the bill as written the second stage of debt ceiling increase requires specific actions. Even the automatic fall back mandates cuts. There's no "if we don't do anything, the ceiling is still raised" option in there.




Yup. Pretty much the way it had to go down though. It's not like they could possibly agree on so much in so little time. It's the same basic problem as the one I outlined for the whole balanced budget amendment bit. There's just no way to get that done in the time required, so it's not a realistic option.



We'll see. Lots of Republicans are still standing firm on their "no tax increases" position, and I suspect it'll be even harder to put taxes on the table right in the midst of election season next year. And if it were really just oil subsidies, you'd have a point. But you and I both know that there's no way in hell that they get revenue numbers even in the same order of magnitude required by just eliminating stuff like that. The counter argument will be do we punish homeowners by eliminating their mortgage deduction, or cut off junkies receiving medicaid? Just as much a talking point, but it'll resonate pretty strongly.




That's hardly the extent of non-defense cuts that will be on the table though. If the only things at stake really were just subsidies for oil companies and high salaries for doctors, we wouldn't have much of a debate. It's all the other stuff that costs us a whole hell of a lot more money each year that fuels the debate.




For everyone? The corner the Dems have painted themselves into on this is that they know it's political suicide to raise taxes on everyone across the board. They love having the talking point about "Bush tax cuts for the rich", but the reality is that those tax cuts benefited everyone. Eliminating them hurts everyone. They can't actually eliminate those tax cuts. What they have to do is write new legislation which creates different tax rates, keeping the same rates for everyone except "the rich". But they don't have the numbers to do that. So the whole issue is pretty much DOA for them.

You're not actually pining your hopes on that, are you? ;)

Oh hey look, it's open lobbying season again!

This bill makes that much clear, at least.

Well, it has to be somewhere in the range, or it wont be sufficient to prevent the automatic cuts that kick in, right?



Or a $500B domestic spending cut, right? It's not just the GOP making this choice, or facing a negative if the committee plan isn't approved. It's just as legitimate to ask if the Democrats are so sold on the requirement of eliminating those subsidies and tax breaks that they're willing to fail to reach a deal over them and thus mandate an automatic half trillion dollar of cuts in domestic spending (my understanding is that the automatic cuts are evenly split between defense and non-defense spending).

You're also still missing the magnitude issue. That's $500B over 10 years (it would actually be $600B, or half of 1.2T, but who's counting?). So call it $60B/year. Even the most "liberal" measures of the oil subsidies put them at about $4B/year. That's a whole order of magnitude too small an amount. Aircraft tax deductions are likely in the hundreds of millions range, which puts them yet another order of magnitude off the mark.

You're certainly not going to get anywhere near the 1.5T mark needed ($150B/year assuming a 10 year time frame), with just those, or even several times more of those things. There will have to be cuts in other areas. And if you want to do this with revenue increases, you'd need to do more than just go after the "low hanging fruit". You would have to raise taxes on average working Americans. And that's not going to be terribly popular.



Sure. If we can find the necessary cuts in other stuff that no one cares about, then great! Um... But if that were the case, then why are we having to fight over this in the first place? You and I both watched as the fiasco of this years discretionary budget was debated Joph. Can you honestly say that the same group which couldn't agree on even 100B, then 90B, then 60B of cuts can come up with $1.5T? Not without lots of fighting. And I suspect that some sacred cows will be on the chopping block as well.

We'll see of course, but sometimes the very fact that something is a sacred cow makes it a target. And I can assure you that the GOP would *gladly* give up oil subsidies and plane deductions in return for defunding NPR and PBS. And it's exactly that willingness which gives them the positional advantage here.



The problem is that you either extend the cuts for everyone, or you let them expire for everyone. Just like last year, the Dems will be put in the position of arguing to raise the average persons tax burden across the board. The only way to keep taxes the same on everyone except the top 2% (or whatever figure they want to use), is to pass a new piece of legislation setting new rates for each of those brackets designed to kick in when the Bush tax cuts expire. Then they could honestly claim that they're fighting just to raise taxes on the rich.

But there's no way in hell such a piece of legislation will even be written, much less passed between now and then. Thus, they either extend the whole thing, or argue to raise Joe average American's taxes.

According to your charts Gbaji, revenues are at historically low levels. Why are you so insistent that there is no need whatsoever for any tax increases, and that it shouldn't be in any way on the table? It completely makes sense to want to cut spending, but it seems highly delusional to say that there is no place for any tax increases at all.

I can't speak for gbaji, but in my mind the reason that no revenue increases should be on the table is the recent explosion in federal spending. The President's proposed budget for 2012 is somewhere near 3.8 trillion dollars. That's a 40% increase in spending over 4 years. That's spending that is unsustainable and should be rolled back.

That's true. For one thing, it's lacking $1.25 trillion in Jophiel Economic Development Funds. Obviously, my congresscritter is slack.

Revenue returning to normal levels will happen on its own. There's ebb and flow to the revenue cycle, just like the business cycle. Adjusting tax rates, etc., in a reactionary fashion every year does little more than confuse the marketplace, creating an environment of uncertainty and caution. Maintaining the status quo and borrowing to fill the shortfall, while paying down that borrowing in flush years, works in most cases. The problem is that we've borrowed not to cover shortfalls in the revenue cycle, but to fund pet projects and giveaways, grossly overspending the ability to pay for our borrowing without inflating the currency.

I believe that we need wholesale reform on the tax code. Gut it today and establish a moderately progressive rate structure that caps out @ 20% for personal income & 15% for corporate income, exempting NO ONE from a bill. No one could then reasonably be crying about Exxon not paying their share, or GE not paying their share. No one would be able to complain about nearly half of the American people not kicking in.

Give people and industry a sense of security in their obligations and you will see economic growth. With economic growth will come revenue growth.

This, pretty much exactly.

If revenues were down because we passed legislation which decreased tax rates, there would be a valid point to say that we should adjust tax rates back up to regain our lost revenue. But that's not what happened. Revenues are down because businesses are not engaging in the sorts of activities which generate tax revenue. That same lack creates higher unemployment, which results in even less revenue. Looking at the 2010 revenue by source table and comparing to 2007, we see that corporate tax revenue decreased by about 180B and income taxes decreased by 265B. Shuffle in some losses and gains in other smaller areas (oddly enough "miscellaneous receipts" doubled from 47B to 95B over the same time period, go figure!), and we account for the ~400B decrease in revenue over that time period.

It's not because tax rates changed, so the solution isn't to increase tax rates.

On the other side, we absolutely did pass legislation which resulted in massive spending increases. It's therefore quite reasonable to say that it was those spending increases which should be reversed. It's downright bizarre to argue that we should keep spending where it is and increase taxes instead. It's strange even to argue that we should somehow "share the sacrifice" and affect both sides evenly. We didn't change them evenly in the process of creating this debt, did we? So why do people think that it's "fair" to evenly change them now that we're in so much debt?


Before even looking at the tax side of things, the first thing we should be doing is reducing spending by an amount equivalent to what we increased it by. That's "fair". Then, after we've done that, we can assess the effect and look at the economy as a whole and discuss other actions. I just think that raising taxes, when lowering them wasn't the cause of the problem, not only isn't a fair solution, but also likely wont solve anything anyway. We're still spending too much money. Raising taxes to pay for it treats the symptom of debt, but doesn't do anything about the general economic negatives of having too much money flowing through the government in the first place.


Obviously, that last bit is my own economic ideology speaking, but can anyone honestly say that the spending we've done has actually helped us recover economically? The problem quite obviously is a lack of private employers hiring people. I just don't see how taxing those people more works as an incentive to get them to put more money into things which result in employment. I do see how it might just cause the exact opposite effect though.

And I said that if all we were talking about in terms of revenue increases was eliminating oil subsidies and tax deductions for corporate jets, there wouldn't be much issue with including "some revenue increases" in the deal.

But you and I both know that when the Dems talk about increasing revenue, they aren't just talking about those things, right? That was my earlier statement Joph. It's a deception put on by your side to push for things like eliminating mortgage interest deductions, but then whenever someone opposes this, they are accused of risking a default (or the trigger cuts in this case) over oil subsidies and deductions for corporate jets. The hope is that by equating any opposition against tax increases to protecting oil subsidies and corporate jet deductions that you can demonize the whole "anti-tax" position and therefore get taxes passed which aren't oil subsidies or elimination of deductions for corporate jets.


Right? I mean, you know that's the game being played. Why be coy about it?

Which explains all the screaming done when the topic came up. Right.

Before you try to lecture about people being truthful, speck/eye, kettle/black, etc.