It was good timing that the CBO Published Its Latest Outlook today since Jerry and I were discussing if one could pay all of our future bills by just raising taxes on all of us. Personally I believe it will take GDP growth, wise tax increases and wise spending cuts to get us out of this with the least pain.
However Jerry insists that just taxing more CAN NOT resolve the issue, which of course I think is silly. It seems to me that if we all increase our tax load by about 25%, we can bring the Revenues line up to the Outlays line. It would probably mean going back to the rates of 1998, when we last had a surplus. Of course it would have been much easier if the silly GOP folks hadn't just given us all a tax cut... And all the politicians had not just increased our Federal spending.
The following table comes from Forbes: It is Spending Problem, I have always liked that article. Of course the question is how do we get the current voters to stop being selfish. As Hiram notes, our children do not have a lobbyist and they don't vote... Which of course seems to be a problem for them since we are apparently selfish... We keep insisting on low taxes and high benefits, even if it means putting it on the credit card of future generations. How did we get so selfish and uncaring?
However Jerry insists that just taxing more CAN NOT resolve the issue, which of course I think is silly. It seems to me that if we all increase our tax load by about 25%, we can bring the Revenues line up to the Outlays line. It would probably mean going back to the rates of 1998, when we last had a surplus. Of course it would have been much easier if the silly GOP folks hadn't just given us all a tax cut... And all the politicians had not just increased our Federal spending.
From the new CBO Report linked above
The following table comes from Forbes: It is Spending Problem, I have always liked that article. Of course the question is how do we get the current voters to stop being selfish. As Hiram notes, our children do not have a lobbyist and they don't vote... Which of course seems to be a problem for them since we are apparently selfish... We keep insisting on low taxes and high benefits, even if it means putting it on the credit card of future generations. How did we get so selfish and uncaring?
35 comments:
Just a note, we are still discussing related issues at Minnpost Balanced Budget Amendment
If the GOP really loves to cut spending why don't they take a vote in support of that?They voted more than 50 times to end Obamacare. I think the reason they don't take that vote is they know the public doesn't support major spending cuts.
So what major spending cuts would you make?
I think I would just freeze the total and tell the politicians / bureaucrats to start optimizing and reducing redundancies.... Most organizations can take a 10% cut with little pain.
Do you ever wonder why we are paying for SO MANY spy agencies? I sure do.
Also, I would get the FEDs out of the medicare and welfare business. There is no reason the States can not take care of their citizens more effectively than needing a Federal Bureaucracy doing that..
Of course I would also get rid of all the union driven wastes...
You are correct that "the public doesn't support major spending cuts".
As I said above "We keep insisting on low taxes and high benefits, even if it means putting it on the credit card of future generations."
It reminds me of what I replied back to RB over on MP.
"I agree whole heartedly that entitlement is a BIG PROBLEM.
In this case entitlement to me means... "I paid taxes, therefore I deserve something back." It seems to be a human condition that one feels owed something back whether they pay $100 or $10,000,000 per year in taxes.
Then again why would a person pay extra taxes, say no to approved benefits, etc in our system?
That is the core of the "stealing from our kids" problem... They have no lobbyists working for them... And most voters think they pay too much and/or get too little... So they demand angrily that someone else should pay more taxes and they should get more benefits. :-("
"I think I would just freeze the total and tell the politicians / bureaucrats to start optimizing and reducing redundancies.... "
That's not how it works, though. The Republican Congress has actually voted for the Ryan framework which theoretically calls for spending cuts. They have also failed to produce the specific appropriation bills required to support it. The Executive Branch has little authority to redirect dollars under current law -- Congress has the power of the purse, and they decide where the money gets spent.
The federal governments spends money on three things, health care, social security, and the military. If we want cuts that are meaningful, those are the things we have to cut, or at least where we have to find ways to reduce spending.
Which area do you want to cut?
--Hiram
Sean,
Congress does not freeze/cut spending because many of us "current voters" don't want them to. Just think of all the new spending ideas Hillary and Bernie proposed last year, and how popular they were.
Hiram,
I am happy cutting all 3 if it means that we "current voters" live within our means and stop borrowing from future generations.
Just imagine the stupidity and irresponsibility of the situation. We are at peace and our National Debt is on Track to exceed what it was after WWII.
If they were the greatest generations. We must be the most selfish generations.
Don't future generations depend on the stuff we paid for? Schools and world wars and that sort of thing? Do toddlers chip in on the house payment these days? Or are they mostly freeloaders?
--Hiram
I am fine leaving them with reasonable bonding bills.
But that is not what we are talking about here... We are talking about money that is used on short term benefits.
If we want to put a mortgage on big infrastructure projects, sounds fine.
I am kind of "leave it like you found it or better" type of guest.
"Congress does not freeze/cut spending because many of us "current voters" don't want them to. Just think of all the new spending ideas Hillary and Bernie proposed last year, and how popular they were."
And, guess what? Hillary and Bernie had ways to pay for those plans and they were *still* popular. The notion that the party that gave us Medicare Part D has any right to scold anybody else about wanton spending is absurd.
Of course many people liked Bernie and Hillary's plans.
They thought they would get an excellent value.
Big benefits for them personally and Low cost to them personally.
Kind of aligns with my "we are apparently selfish..." view.
"Kind of aligns with my "we are apparently selfish..." view."
Fortunately, we have things like, you know, data that tell us that doing things like making it easier to pay for college or building roads and bridges has more societal benefit than giving tax cuts to the rich.
Source please...
Here are a couple:
ASU: THE VALUE OF HIGHER EDUCATION:INDIVIDUAL AND SOCIETAL BENEFITS
Demos: BANG FOR THE BUCK: STIMULUS EFFECTS OF TAX CUTS VS. PUBLIC SPENDING (And before you bark about the source, please note that the economist Mark Zandi who produced the underlying data was a chief economic advisor to John McCain.)
This may take awhile... ~68 pages... Oh my...
Sean,
I can not tell a lie... Only skimmed the 68 pages of the ASU source, and focused mostly on the Exec Summary / Overview
And I really did not see that it proved that "making it easier to pay for college ... has more societal benefit than giving tax cuts to the rich."
It did state:
Societal Benefits
• Social benefits of a workforce with greater educational attainment and skills can be traced to the enhanced worker productivity associated with greater educational attainment. These productivity gains translate into higher output and incomes for the economy.
• Non-monetary societal benefits in regions with high proportions of college graduates include lower crime rates, greater and more informed civic participation, and improved performance across a host of socioeconomic measures.
• Intergenerational social benefits may be very large as degree attainment today translates into higher probabilities of degree attainment in future generations.
• Empirical work in econometrics suggests that after controlling for differences in amenities and individual wages, an increase in the share of college graduates in the labor force leads to significant increases in productivity and wages for all workers.
• A portion of this significant wage effect is attributable to spillovers that result from
productivity gains. Simulations for Arizona using conservative estimates of these spillovers suggest that combining spillovers and individual benefits realized from a four-year college degree, degreed workers account for gross lifetime earnings that total $1.6 to $1.9 million more than workers with only a high school diploma.
• Accounting for costs of education and the time value of money, discounted lifetime net
benefits from a university degree — including combined individual and societal benefits
exceed $600,000 per worker —a combined internal rate of return of about 16 percent.
• A statewide simulation designed to measure the impact of raising the share of college
graduates in the labor force by 0.2 percent (the median annual rate of increase observed in
the econometric studies) that used Arizona data on educational costs and wages reveals that
total costs match benefits after about 11 years. After accounting for the time value of money, the payback period is about 13 years and the net discounted benefits (benefits less costs) that accrue after 20 years are estimated at $364 million.
• Numerous estimates of the rate of return to investments in education prevail in the literature. Results suggest that significant portions of economic and job growth are attributable to human capital while discernible evidence of non-monetary benefits also is seen empirically.
None of the above statements surprise, but I get no sense of comparison to the benefit of lower taxes and capital investment. What am I missing?
As for the Demos piece, it really does not provide enough info for me to make sense of it.
Maybe I will need to look at it's source doc longer.
From what I understand government spending is kind of funny because it counts into the GDP. So a country could apparently jack up their GDP by just taxing and spending faster. Of course that does not mean that the country will be creating real wealth. (ie inventions, production, education, mining, etc)
And I wonder how they deem food stamps to be a great financial investment. According to that we should allow many more millions of poor people into the country and spend trillions per year on food stamps??? That makes no sense.
And does it matter that they are studying recession recovery.
"In this paper, we use the Moody’s Analytics model of the U.S. economy—adjusted to accommodate some recent financial-market policies—to simulate the macroeconomic effects of the government’s total policy response. We find that its effects on real GDP, jobs, and inflation are huge, and probably averted what could have been called Great Depression 2.0. For example, we estimate that, without the government’s response, GDP in 2010 would be about 11.5% lower, payroll employment would be less by some 8½ million jobs, and the nation would now be experiencing deflation. "
Sean,
Now please remember what I think the solution is...
"Personally I believe it will take GDP growth, wise tax increases and wise spending cuts to get us out of this with the least pain."
With that in mind, I agree that infrastructure projects that improve America's global competitive capability are a good thing. That does not mean we just start spending on bike paths, light transit, etc. They need to make fiscal sense.
Also, I agree that spending and changing laws to ensure children are not left behind is critical. Our country can not afford to have a bunch of immature irresponsible dependent citizens if we want to continue to stay the dominant world power in this competitive world. Also, there is no excuse for leaving these kids trapped in poverty just to keep public employees, baby mamas and baby papas happy...
Please also note that I support "wise tax increases"... Not just "tax the rich" because.
"None of the above statements surprise, but I get no sense of comparison to the benefit of lower taxes and capital investment. What am I missing?"
Well, as has been discussed several times before, there is no correlation between low tax rates on the wealthy and high economic growth. In fact, many of the strongest periods of economic growth post-WW2 have come in what would be considered by conservatives to be periods of high taxes on the wealthy. Meanwhile, the study I linked (and there are many others that show similar results if you fire up the Google) show persistent widespread benefits to funding education.
"And I wonder how they deem food stamps to be a great financial investment. According to that we should allow many more millions of poor people into the country and spend trillions per year on food stamps??? That makes no sense."
They are a great investment because practically every single dime of them goes back into the economy, and because of the clustering of recipients, they can support real jobs in many poor urban and rural areas. (I used to work for a grocery company, and stores used to see a surge in sales on the refresh schedules for SNAP. Some stores were heavily reliant on that business.) What that means is not necessarily that we should expand the program and pay for food for millions more, but recognize that this is a worthwhile program on many levels for those who are authentically poor. It is not wasteful spending by any stretch of the imagination.
"low tax rates on the wealthy and high economic growth"
I think "low" is in the eye of the beholder. If one American citizen is paying hundreds of thousands of dollars in taxes each year just so 20 American citizens can get more benefits than they pay in taxes each year... I am not sure who is free loading? (ie not paying their fair share)
To me, if food stamps / welfare are effective spending or not is very complicated. You are correct that they boost the country's GDP. However if they suck people into dependency and single parent households... They are very very expensive benefits and threatening to our country's long term survival. That money needs to come with some very high expectations for the recipients, or it just breeds entitlement.
For the bazillionth time: Able-bodied SNAP recipients have work requirements and time limits.
For the bazillionth time: Having children in the house complicates that simple statement that "Able-bodied SNAP recipients have work requirements and time limits".
Facts about SNAP
WIC Info
If a Mom has 3 kids, do the kids receive funding whether she is eligible or not?
How does the program ensure the kids are getting fed well, and Mom is not using it for other purposes?
I found a page for Able Bodied Without Dependents, but not on for "with dependents".
Maybe I will look later
"If a Mom has 3 kids, do the kids receive funding whether she is eligible or not?"
Eligibility is based on household income and household size. Yes, it's true that the time limits don't apply if you have minor children in the house.
The benefit is calculated based on the Department of Agriculture's Thrifty Food Plan, which defines an adequate-nutrition, low-cost diet. Households receiving SNAP are still expected to spend 30% of their net income (gross income less deductions, which include a standard deduction and an earning deduction to cover taxes as well as child care, child support, and certain medical and housing expenses) on food, The benefit is then the difference between the Thrifty Food Plan amount for a household of a given side and 30% of the net income.
For instance, in 2018, the Thrifty Food Plan amount for a household of 3 is $504 per month. If that household has net income of of $600 per month, their monthly benefit would be $324 per month.
Let the kids starve. They're poor. They don't matter.
Moose
And I assume that food received via charities like PRISM, which I happily support, do not show up in the calculations. Correct?
So I know we have discussed what happens when irresponsible baby mama gets pregnant with #4, and you noted that "they get no more money". Is that correct or does the child get benefits that the mother controls?
Now I am not trying to say that irresponsible women are having babies "to make money"... I am curious what part of the system stops irresponsible baby mama from being irresponsible?
I mean these women have been raised with poor role models and babies are very loving. People are free to adopt a lot of pets... That does not mean we as a society should let them.
I am thinking a good pet fostering group has more requirements, than what irresponsible women face from our society.
And I am certain that adoption agencies do...
Moose,
I am happy to hear that you want to keep them fed.
Unfortunately it seems you have little concern about who is raising them and how effectively they are doing it...
"So I know we have discussed what happens when irresponsible baby mama gets pregnant with #4, and you noted that "they get no more money". "
Please do not make up quotes and attribute them to me.
Sean,
So now are you saying that mommas do get more money for having more kids?
I don't recall making that blanket statement. Source, please? And I searched this blog and never used the exact phrase you attributed to me in quotation marks.
The reality is that it depends on the program, and it also varies widely by state. Minnesota used to have a family cap on TANF, for instance, but removed it in 2015. Most states have realized that family caps cause more poverty than they prevent. There's no evidence that such caps decrease the birth rate, and birth rates for people on welfare tend to be the same or slightly lower than the population as a whole.
I looked all during lunch with little luck... I think my free software / service needs a better search engine... :-) Maybe I will try later.
From my memory, we were corresponding regarding "welfare queens" and the belief that they made more babies in order to get more benefits. You assured me that welfare reform had removed the incentive, because the welfare Mom's got no more additional funding for the additional baby.
I searched by welfare, TANF, SNAP, dependency, entitlement, work requirement, Angel Adams, queen, etc... And never found that comment string. So frustrating :-[
"Unfortunately it seems you have little concern about who is raising them and how effectively they are doing it..."
Yes. By all means, let's implement your program of breaking up poor families by taking away their children. That will fix it.
Moose
I must have missed the bullet about breaking up poor families... Which one is it again?
1.Weaken or eliminate the Public Employee Unions. Their primary purpose is to ensure the senior employees make the most money, receive the best positions and are secure in their employment. These goals are NOT aligned with cost effectively getting the most help to the people who need it. Pay for performance, not years and degrees.
2.Set hard knowledge attainment and/or poverty reduction targets that the bureaucracy managers must hit, and replace them if they don't. No more of these employment contracts where Superintendents get huge buy out clauses when they fail. Pay for performance, not degrees.
3.Make Long Acting Reversible Contraception and the Morning After Pill free and readily available for all. NO baby should be born unless the Baby Maker(s) are 100% wanting the child and feel prepared to care for it. (ie committed to being responsible capable Parents)
4.If a proven irresponsible Baby Maker who is on welfare (ie Angel Adams) gets pregnant. She should be forced to abort or give the Baby up for adoption. And if this happens more than once, her tubes should be tied.
5.The welfare payments and service should be set up to make recipients work, learn, mature and improve their self sufficiency.
6.The male Baby Makers must bear the consequences of their behavior. The female Baby Maker must name the Father so the State can ensure the required child support is paid. The cost may be higher than the money received, but the "free loading Baby Daddy" behavior must be dissuaded.
7.The State must ensure that Baby Makers and the Babies receive training, care, etc until they become a functional family. (ie Parents and Kids) This includes mandatory Parenting classes, Early Childhood Education, Inexpensive quality childcare, etc. Many of the Baby Makers are in this position because their role models were Baby Makers (ie not Parents). Someone has to train them what it means to be a Parent.
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