As I mentioned in a comment to my previous post, often I would like to spend more to help people that are seriously striving to improve themselves or provide for their families. And Lord knows I think that Social Security should stay solvent so that our older citizens continue to get the checks that they have earned during their working years. At these times I become rather empathetic to the plight of these fellow humans.
Yet at times the side of me that believes in fairness and personal responsibility rebels at these concepts. I look at the Debt history charts and just shake my head. Starting in about 1980 we apparently lost our way, our wants began to significantly outpace our revenues. These baby boomers took more than they contributed. And yet the Conservatives still complain that taxes are too high, and the Liberals still complain the spending is too low.
I am not sure where this is headed, yet I am certain that this is not the situation that I want to pass on to my children. At least there was a good reason for the ~1940 Debt peak and it was somewhat unavoidable, yet I can not think of any good reason for the current state other than a lot of people are being selfish. People who are striving to avoid paying for this excellent society that enables them to prosper, and people that are striving to free load on the efforts of others.
I hope we figure this out sooner or later... Thoughts or feelings?
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20 comments:
The population is aging. And my own view on the debt is that if we really thought it was a problem we wouldn't be cutting taxes.
--Hiram
Any reasonable reading of the spending chart should recognize that our current trajectory is unsustainable and it doesn't matter HOW high you raise taxes. At some point you must start spending less than you take in or debt will overtake you.
I will say it again: add together all of the real debt the federal government has accumulated PLUS all of the "unfunded liabilities" (aka impossible promises) of Social Security, Medicare and Medicaid and a baby born today owes $350,000, in today's money. Now where is a kid that age going to earn that kind of money?
OK, I've previously proposed that there is one way we can settle these obligations by raising taxes. All we need is a federal tax rate of 100% on everybody, no exceptions, exclusions or deductions of any kind, for the next 8 years. Some claim that's not practical.
J. Ewing
I am a proponent of increasing tax revenue and cutting expenses. The challenge is how do we accomplish this?
I am pretty sure our temporary lower payroll taxes is not a good idea. And I agree that lowering other taxes makes no sense to me, unless they are truly constraining GDP growth. And I think the Buffet rule make sense so that all those write offs are not abused. Though I thought that is why we have the alt min tax.
As for cutting spending, the best way to do this is spend more effectively. Unfortunately that means automation and change, which will be resisted by the people in the system... And feared by many...
The reality though is that something needs to change.
Taxes have been lowered in the Obama administration to stimulate spending. I tend to be skeptical of this policy also, because with the debt overhang, what people tend to do with the additional money in their pocket is pay down their credit card debt, something that isn't all that stimulative. The problem is that the message that tax cuts are good for the economy have been parroted for so long and so effectively, even Democrats have come to believe it. And of course there are other reasons why we cut tax cuts during a recession which aren't based on economic considerations, mainly that people need the money.
Government spends money pretty effectively, certainly in comparison to the private sector, where various compensation packages are a huge drag on productivity generally.
--Hiram
"Government spends money pretty effectively, certainly in comparison to the private sector, where various compensation packages are a huge drag on productivity generally."
I hope you are kidding....
However I know that you are not, and that you actually truly believe this... It is hard for me to understand...
I just look at the extraordinarily high CEO salaries. Mitt Romney gets paid 14 million dollars a year for literally doing nothing. You don't find anything comparable to that in the public sector.
Some areas of the government aren't efficient. But they are often areas where we don't want the government to be efficient.
--Hiram
There is nothing worth less than doing efficiently that which should not be done at all. Most of what government does today should not be done by government at all. Most CEOs work some incredible hours under tremendous stress. I would want no part of it, and the few that do have to be rewarded by the free market or nobody would do it. Politicians, on the other hand, are willing to spend millions of dollars of somebody else's money to get a job that pays them (nominally) 150 grand a year but lets them spend Billions of dollars of other people's money. Which is less efficient, somebody that makes his company a billion and takes a million dollar salary, or takes 1/10 of a million and spends a 100 billion of his "company's" money? Do the math, and you will find that the true "value" of the federal government is about 20% of what it actually costs.
J. Ewing
Government is often efficient because efficiency isn't a driving priority in the way we make decisions. Take the current stadium debate. Obviously the efficient answer would be for the Vikings to play in the Gopher Stadium. And for the Saints, instead of building them a new stadium, to have them play in the Twins Stadium. We don't need two sports arenas. Why not tear down the Wolves arean, have them play in St. Paul, and sell that property for condos, and use the money to pay down the debt for the Twins Stadium and help to pay for the Vikings Stadium. These are all efficient options yet none of them seem to even be on the table.
--Hiram
Hiram,
Who is paying Romney $14 million per yr? Or is that what his investments have earned recently?
Romney lives of investment income from what I understand. He isn't forthcoming on these matters.
--hiram
Since no one is paying him, he really does not need to do anymore than he chooses.
I won't argue with you that some CEO's are grossly over compensated. On the other hand I think the majority earn every dollar. Being a CEO is a life I would never choose.
Some interesting links:
Census Gov't Jobs
Natl Review Govt Jobs
Seeking Alpha Gov't
Here is an example of how corporations play off jurisdictions against each other to get tax benefits.
--Hiram
Sorry, the link didn't come through:
http://www.nytimes.com/2012/04/29/business/apples-tax-strategy-aims-at-low-tax-states-and-nations.html?_r=1&hp
This is a pretty typical story. Corporations do use their ability to operate easily in multiple jurisdictions to play them off against each other. And this is largely why I share Republican skepticism about corporate income taxes. And why corporations don't much care about America's high tax rates. It's a basic rule of tax preparation that you don't have to be concerned about tax rates you don't have to pay.
--Hiram
For convenience.
NYT Apple Tax Strategy
A very interesting link. It is definitely a global and competitive world. A good reason to try and improve the effectiveness and efficiency of government.
And probably focusing the taxes at the individual citizen level.
The inefficiency is structural. We have states and countries that allow themselves to be played off against each other to the disadvantage of all. That happens with trivial issues like the Vikings stadium but with important issues as well. We can focus on economic realities but that creates problems too.
--Hiram
I think that "playing off" is called negotiation. It is typically how folks work to get the best value for the least cost.
What do you mean by the inefficiency is structural?
I think that "playing off" is called negotiation.
There are other words for it too, threats, hostage taking. And the reality here is that there is little or no reason to negotiate anything as these decisions are made.
The issue is structural because it's on political boundaries, that are arbitrary, unchangeable and economically irrelevant. The result is a set of fictions that don't correspond to sound policy requirements. Let's say Apple does business in the United States. It partakes of the benefits of working here, a stable business environment, educated workers and customers, protection from the military. All of these things are essential to Apple's business and all of them cost money. But instead Apple's income is arbitrarily assigned to a low or non tax jurisdiction, not for any economic reason but purely to avoid the taxes that pay for the benefits it receives. And over and over again, and that's inefficient.
--Hiram
Something I don't value much that other people do is competition. Too often competition is little more than cannibalization, and that's a lot of happens when states allegedly compete for business by changing the way they tax. We are having that kind of discussion with respect to the Vikings stadium, where we are asked, at least in some sort of theoretical way, to compete with someone else. That argument doesn't move me. We should decide how much the Vikings are worth to us, decide if that's a price we want to pay, and if it isn't we should just say good luck and farewell to them, and get on with our lives.
--Hiram
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