Debate Over Raising the Debt Ceiling
http://thedianerehmshow.org/shows/2011-04-20/debate-over-raising-debt-ceiling
The nation’s next big budget battle is shaping up over the debt ceiling. Earlier this week, the ratings agency Standard & Poor’s changed its outlook for U.S. government debt from stable to negative. And when it did, it added new urgency to the debate. The U.S. has a current debt limit of $14.3 trillion. Economists predict that number will be reached in mid-May. The White House wants Congress to increase the limit immediately. But that support may come with a high price tag. House Majority Leader Eric Cantor says Republicans want to see serious reforms. We look at the political debate over raising the debt ceiling and its economic repercussions.
Guests
David Smick
global macroeconomic advisor, founder and editor of The International Economy magazine and author of The World Is Curved: Hidden Dangers to the Global Economy
John Harwood
chief Washington correspondent for CNBC; reporter, "The New York Times;" coauthor with Jerry Seib of "Pennsylvania Avenue, Profiles in Backroom Power"
Dean Baker
co-director of the Center for Economic and Policy Research and author of "False Profits: Recovering from the Bubble Economy"
John Feehery
president of of Communications and Director of Government Affairs for Quinn Gillespie Communications, and a former congressional staffer for Bob Michel, Tom DeLay, and Denny Hastert
Mary Miller
assistant Treasury Secretary for Financial Markets
Comments
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hainc on April 20, 2011 @ 10:39 am wrote: "The top 10% of wage earners pay 70% of the government's income tax receipts. Don't let your envy drive tax policy."
Leaving aside the critical questions of 1) how accurate is that statistic (and what's your source), and 2) what percent of the GDP (or the nation's assets if you prefer) does that top 10% possess, there's several other points you may be ignoring.
The income tax is not the only tax we pay. Not all income is earned income. Therefore, that 10% may not consist of wage earners paying income taxes.
Don't let your ignorance drive your politics.
hainc on April 20, 2011 @ 10:52 am wrote: "First of all, the two wars were not off-budget and hardly a secret to Congress."
Funny, as I recall the Afghanistan and Iraq wars were paid for by special appropriations, and not as part of the official budget. Sounds like they were kept "off-budget" to me, which is exactly what that expression refers to.
Borrowing started long before 2006, why don't you talk about all the borrowing Republi-Cons did from 2001 - 2008 (Reagan), and during Bush the First and Second? I see you can "cherry-pick" with the best of them.
"Obama and the Dems signed off on not increasing the tax rates last year before the Repubs took control of the House."
- Nice try ignoring the fact that the Republi-Cons extorted that concession by filibustering all budget proposals until they got their way (holding the unemployed hostage to their concern for the "poor, starving" wealthiest among us.)
"Spending cuts would be the place to start, just like every American family has had to. Everyone will be hurt."
- Really? I'm sure Bill Gates and Warren Buffet will really miss those social programs that are cut. (But then, they actually oppose Republi-Con ideology. Maybe they know something you don't?) I would have no problem with Ryan's plans if it were truly a case that "Everyone will be hurt" - but it's not! While he cuts programs that help the less well off, he cuts taxes for the wealthiest - boy can I feel their pain!
Shared sacrifice is a concept I can accept. Clearly it's one you and other Republi-Cons reject.
Don't let your ignorance, partisanship, and ideology dictate your politics.
monte on April 20, 2011 @ 10:53 am wrote: "I hear the cries that this is the wrong time to make cuts in government spending and it seems it is always the wrong time."
I think you've got that confused with the cry of Republi-Cons, who claim it's always the wrong time to raise taxes, but never the wrong time to cut them. You know what happened the last time we followed that kind of philosophy? The Great Depression!
Just a quick question about raising the debt, how much federal tax dollars would be saved if the entire legislature house and senate in DC reverted back to being operated and paid by the individual states each represents? To date, no one I have asked has bothered to respond, must be a touchy question. Thanks , HRE
The data is available on the IRS website and is referenced on numerous other websites.
GDP is a measure of consumption, business investment, government spending and net exports; so I'm not sure what you're talking about.
AGI is what is taxed and I'm only referring to personal income tax collections.
Try arguing the facts next time.
hainc on April 20, 2011 @ 11:47 am wrote: “Tax cuts don't direct anything; they allow people to keep more of what they earn.”
That depends on how the taxes are cut. For example, many tax cuts (also known as deductions, exemptions, loopholes, etc.) are designed to encourage certain types of economic activity. Capital gains and qualified dividends are taxed at “preferred rates” (less than some earned income) in order to encourage investment. But ordinary interest income (such as from savings accounts) are not. How about letting the next tax cut consist of a $5,000 exemption for such interest? Funny, I don’t hear Republi-Cons arguing for that!
(By the way, that $5,000 figure was chosen at random for the purpose of illustration. Focus on the concept, not the amount.)
“that may mean foregoing the big screen TV, cable, high speed internet, new cars every two years, resort vacations, Starbucks, meals out”
- Yeah, and with the tax cuts they’re promised on the Ryan plan, I’m sure the wealthiest will be making lots of sacrifice - NOT!
hainc on April 20, 2011 @ 11:47 am wrote: “... Our government should be on the same diet.”
- Yeah, so let’s start by starving all those government contractors who got sweetheart contracts, especially military contracts!
Republi-Cons like to use the false analogy of comparing the government’s budget with a household budget. But let’s employ it. Gas prices are going through the roof, everything else may soon cost more. Employees would normally ask their employer for more money to cover the increase. What happens if that employer (on a budget cutting kick) refuses, and even demands a cut in salary? Well, if the employees have nowhere else to go they have to cut back on “luxuries” like food, shelter, medicine, etc. Keep it up long enough and their only choice is to starve!
Same deal with the government. There’s plenty that can be cut, but that’s no reason to insist the government must be run on “starvation wages”. There are those who can afford to pay more taxes, and should - especially if you’re asking others to do with less government programs that help them, and which they need to survive.
Shared sacrifice - without it nothing will get done!
As of Iraq and Afghanistan see http://cbo.gov/ftpdocs/117xx/doc11705/08-18-Update.pdf Box 1-3 for estimate and treatment of costs.
When did budget deficits begin and when did the national debt start? You are the con.
So when Democruds are in control, they're not really in control? Pathetic excuses, but I'm impressed with your ability to twist the facts to your delusion.
As the tax stats note, almost all are sharing; except the 50% of earners who pay nothing in income taxes.
Envy is strong in you, but not much else.
Name one sweetheart deal.
American families and businesses are cutting, but the government never feels any pain. Just more and more paper pushers and "slugs" as Obama likes to call them.
Shared sacrifice to you means everyone but you.
hainc on April 20, 2011 @ 2:20 pm wrote: "AGI is what is taxed and I'm only referring to personal income tax collections. Try arguing the facts next time."
I did, but I notice you pulled your usual trick of ignoring what I wrote (or only focusing on part of it, and the least relevant part at that).
To repeat: you spoke of "wage earners". The income tax is paid on both earned and unearned income. Not all persons paying income tax are "wage earners".
Plus, the term "income tax" usually omits the payroll taxes, which are only paid by wage earners, with an income cap so the wealthiest wage earners actually pay a lesser percentage than the lower earners. If we're talking about tax burdens that should be included, as should all other taxes - which is the main point I was making.
As for GDP, that wasn’t the only term I used. I also spoke of the nation's assets. What I was trying to reference was those statistics which show how the wealthiest among us have gained a larger percentage of the wealth even as they've paid a lower percent tax on that wealth. Sorry, if I used the wrong term, but it was discussed during the program, so I assumed you'd know what I meant. My bad!
By the way, I'm not sure GDP includes all the things you referenced. According to Wikipedia (a source I don’t pretend is always correct, in fact take this with a grain of salt) Gross domestic product (GDP) refers to the market value of all final goods and services produced within a country in a given period. There are apparently three different ways of calculating it, only one approach (the expenditure approach) includes government spending.
Confusing, ain’t it?
P.S. - and just what does “hainc” stand for anyway?
If I were talking, I would slow down for you benefit. For the purposes of the originally quoted statistic all references are to individuals, not corporations or trusts or other entities required to file income taxes. AGI includes active and passive earnings of persons, personal income tax collections refers to persons; so the statistic concerns individuals only.
The debate is about income taxes; not withholding taxes, payroll taxes, social security or medicare taxes, unemployment taxes, sales taxes, property taxes, excise taxes, import duties or user fees.
GDP is flow, wealth is a point in time. Good and services produced are consumed by consumers, businesses, and government or exported.
Please cite stats on wealth. What is wealth?
hainc on April 20, 2011 @ 2:37 pm wrote: As of Iraq and Afghanistan see . . . “
Thanks for the reference, but it actually supports the point I was making. Look at page 10 of the report, where it cites the “Supplemental Appropriations Act”. Get it? supplemental appropriation is how expenditures are kept out of the officially passed budget document (of course, after the fact those appropriations are included when it’s time to figure out the real budget).
In other words, here’s how the game is played: pass the budget without these expenditures, thereby casting an official vote for a lower budget (and a lower deficit), then pass the supplemental appropriation so you can avoid revealing that the budget you voted for was a work of fiction (“nudge, nudge, wink, wink, know what I mean?”).
Incidentally, this is a game played by both parties. I’m not claiming the Democrats are filled with virtue, as you apparently believe the Republi-Cons are.
hainc on April 20, 2011 @ 2:37 pm wrote: “When did budget deficits begin and when did the national debt start? You are the con.”
- See what I mean? I merely pointed out that you only discussed deficits starting in 2006, I never claimed the Democrats didn’t share a portion of the blame. Well, guess what? The last year we didn’t have a deficit was 2001, under a budget passed during the Clinton Administration. From that point on, it’s been deficits “as far as the eye can see”. So, to be mindlessly partisan (like you), the answer to your question appears to be “the deficits began when the Republi-Cons controlled both the White House and Congress”!
(And as I’ve pointed out before, “Republi-Con” is simply short for Republican-Conservative. If you chose to give it a different meaning that’s your problem, not mine!)
Of course, to be historically accurate, the first deficit under the Constitution was in the first decade (1789 - 1800). And I’m pretty sure that even under the Articles of Confederation (predecessor to the Constitution) we ran a deficit. I guess red ink is truly “the American Way”!
;-)
“Envy is strong in you, but not much else.”
- Really? It so happens that the majority of my income is from investments, not earned income. So, since I’m calling for an increased tax burden on such income does that make me envious of myself?
Mindless ideology is strong in you, but nothing else!
hainc on April 20, 2011 @ 2:40 pm wrote: “Name one sweetheart deal.”
How about all those no-bid contracts that just happened to go to Dick Cheney’s former company (which just happened to also be a big supporter of the Bush Administration)?
“Shared sacrifice to you means everyone but you.”
- And how do you deduce that? I’m not the one pushing for larger tax cuts that will only benefit me, while cutting programs I don’t need (Ryan’s plan). In fact, if I were completely selfish about things, I’d have supported the proposal made a few years ago to completely exempt dividends. I didn’t.
Once again, reality doesn't match your ideology.
Etaoin Shrdlu
I think most people would be OK with some tax increases if they saw some serious across the board permanent spending cuts and the elimination of some of the many redundant government agencies.
What is with the constant use of your republi-con insult. It just shows your bias and quite frankly it's hard to take you serious. I am a Libertarian as far as I see it both parties are lacking. Childish name calling will not advance anything.
hainc on April 20, 2011 @ 3:01 pm wrote: “For the purposes of the originally quoted statistic all references are to individuals, not corporations or trusts or other entities required to file income taxes.”
And what does that have to do with the price of eggs in China? I pointed out that the income tax includes more than just earned income. Do you think corporations (etc.) are the only things with unearned income? Nope, plenty of “real persons” have unearned income - yours truly included.
And why shouldn’t we consider corporations (etc.)? They get the benefit of being in this country. They are protected by the military and the police, they benefit from our interstate highway system, as well as other government programs. Shouldn’t their tax returns be counted? (Especially when it turns out they pay no income tax?)
“AGI includes active and passive earnings of persons, personal income tax collections refers to persons; so the statistic concerns individuals only.”
- But you originally referred to “wage earners”, which does not include “passive earnings”. Do you have a problem understanding English? It appears so, which raises the issue of how can any of us trust your assertions of what those statistics actually say? We should all be very skeptical.
(But then, I hope people are skeptical about what I say. Fact check everyone!)
hainc on April 20, 2011 @ 3:01 pm wrote: “The debate is about income taxes; not withholding taxes, payroll taxes, social security or medicare taxes, unemployment taxes, sales taxes, property taxes, excise taxes, import duties or user fees.”
- Oh really? Those other taxes aren’t part of the budget? We can just ignore them? Gee, do you have any idea how big the deficit would explode if we tried that! Just because ignoring those taxes serves your partisan and ideological purposes, that doesn’t justify such dishonesty.
“What is wealth?”
- What is truth? I already said I was referencing (badly as I admitted) what had been discussed in the show. So, go ask the “experts”. Meanwhile I’ll just say this: I see nothing wrong with those who’ve gained the most by living in this country paying more for the privilege of living here. That’s why a graduated income tax is actually the fairest tax, and that’s why demanding sacrifice from those who need government programs to survive, while cutting taxes on those who don’t, isn’t fair, isn’t “shared sacrifice”, and will never pass!
(At least not without the Republi-Cons engaging in their usual tactics of extortion, this time threatening a default if they don’t get their way.)
"Wealth envy" would generally be mischaracterizing what is better known in civil societies as a sense of fairness and proportion (in several respects). It can be argued that low-wage earners (in the U.S., at least) are taxed - by virtue of being poor and having their labor and government subjugated, often despite doing some of the hardest work. Some states seem to be doing much better with job creation and incentives to curb abuse. To whatever extent closing tax loopholes is even possible, the economic model still undermines.
But it's generally a better term than "class envy" - which could (considering the decline of civil responsibility) imply trading grounded human values and moral fighting shape for a membership at the country club elite and more of everything than you need.
@Mike Sergeant. Don't mean to sound overly prickly, but please read my post again; we agree. I would refute the misleading, frequently stated statistic from the right that the 70% of taxes paid by the top 10% is too much. As a proportion of their share of the nation's wealth (71% in 2001, and no doubt considerably more in the intervening ten years, owing to the Bush tax cuts), that 70%, if anything, is too little. The wealthiest citizens pay *less* than their fair share of taxes, taking into consideration the obscenely lopsided distribution of wealth in the U.S. Once more, to invert the comment from another poster, obeisance (reflexive deference) to the wealthy should not drive tax policy.
monte on April 20, 2011 @ 3:40 pm wrote: “I think most people would be OK with some tax increases if they saw some serious across the board permanent spending cuts and the elimination of some of the many redundant government agencies.”
Which is exactly what I’m calling for, so we are in complete agreement. I just don’t see that in Ryan’s plan (or in anything hainc appears to support).
Let me add that I would also favor raising the age for Social Security and Medicare eligibility, thus putting an additional burden on myself (I’m 58). That’s another sacrifice I’m willing to make.
The concept to focus on is “shared sacrifice”. Bluntly put, for each dollar in social programs cut, I want to see a dollar increase in taxes - especially on people who don’t really need those programs, or who benefit the least from them. (After all, for such people cutting or delaying those programs isn’t much of a sacrifice.)
monte on April 20, 2011 @ 3:40 pm wrote: “What is with the constant use of your republi-con insult.”
I’ve already explained what that term means. If you chose to view it as an insult, there’s nothing I can do about it. Though I admit I coined it in reaction to such lovely expressions conservatives loved to use as “DemocRat”, and the Republicans’ insistence on saying “Democrat Party” instead of the proper term “Democratic Party”. The reaction I’m getting from Republican-Conservatives only demonstrates “they can dish it out, but they can’t take it!”
“I am a Libertarian as far as I see it both parties are lacking.”
- While I agree that both parties share blame (something I don't recall hainc saying), I’m afraid I have little love for Libertarianism either (in the economic sphere). The notion that we are all “rugged individualists”, and can live in the modern world without government social programs, economic regulation, or without caring for each other, is a fantasy. If you want to read a description of the “ideal” libertarian world, read Thomas Hobbes’ Leviathan. It’s called the “state of nature”, where life is nasty, brutish, and short!
Please note: the alternative to Libertarianism isn’t Communism (as some people seem to believe). I favor Capitalism, just not the laissez-faire version.
“Childish name calling will not advance anything.”
- Yup, and as I’ve told hainc (and others like him), I’ll stop using the term Republi-Con once they agree to stop accusing people with different views of being “envious”, stop calling union members “thugs”, “parasites”, and all the other charming epithets they employ.
Well, since I'm sure everyone is as sick of my comments, as I'm sick of writing them, this is goodbye (for now at least).
But one other observation: hainc still hasn't answered the one question I've repeated many times: what's the origin of his name?
It's not a trick question, sir. I'm not going to make fun of you. I'm just curious. After all, you know where I got my name from, why the secrecy about yours?
Military/Defense comprises around 59% of the budget, at $1.03-1.45 TRILLION. Several billion could be trimmed from that without hampering their capabilities.
Talk about entitlement spending! Let's start cutting there.
If this program were ten years ago the discussion would be of surpluses indefinitely. (http://thedianerehmshow.org/shows/2001-03-07/bush-budget) The crowing about the putative Clinton surpluses was one of the greatest disservices ever done to America by politicians and pundits. I say “putative” because the debt continued to grow monotonically even as Clinton and others were crowing, “Surplus!” (Actually one of the callers to that show did recognize that the Clinton “surpluses” were bogus.)
Question: Does anyone know what accounting legerdemain was used to claim a surplus even as the debt increased/
Question: Does anyone know whether the funds sent to the banks under TARP were manufactured money or borrowed money (probably from the same banks) and thus added o the debt? Are they or were they subject to the debt limit?
One of the guests wasted no time before blaming today’s deficit and debt on “entitlements—Social Security and Medicare”. Social Security and Medicare are not part of today’s problem; both programs are and have been running operational surpluses, i.e. the FICA and Medicare taxes received exceed the benefits paid, the excess being “loaned” to the general fund and replacing borrowing that would otherwise be done on the open market. Sometime in the future they will become problematic as the “loans” will require repayment either from general taxes or by replacement borrowing.
The future of the debt: The total debt as of March 31 is $14 trillion, 270 billion and the projected FY2011 deficit is $1.5 trillion. If the deficit remained the same $1.5 trillion a year for 12 years the debt would expand to $32 trillion. Pres. Obama has offered a “plan” to “reduce” the deficit by $4 trillion over those 12 years. That would leave a debt 12 years hence of $28 trillion. Rep. Ryan has offered a “plan” to “reduce” the deficit by $6 trillion over 10 years; call it $7 trillion over those 12 years, leaving the debt at $25 trillion. Ryan’s plan projects a rate of increase of 4.78%/year; Obama’s plan 6%/year. If continued at 4.78% the $25 trillion would grow to $831 trillion by 2100, at 6% Obama’s $28 trillion would grow to $2.213 quadrillion. Can anyone say Weimar Republic? How about Zimbabwe?
What we need is a way to bring the deficit to zero over the next few years.
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