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Originally Posted by smooth
Primarily, two things are going on currrently: increased revenue and reduction in the deficit. But these two things are not necessarily connected, although they appear to be on the face of it.
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Two things determine deficit, equilibrium, or surplus spending: Income and expenses. The two are directly related. Looking at the current data, spending is up, income is up more, therefore deficit spending is lower. I don't understand how you can say the above.
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Aside from the issue of how far back governmental action stimulates tax revenue (whether recent supply side policies did it, whether Clinton's policies did it, whether Bush former's policies did it, or if we should go all the way back to Reagan OR notwithstanding that the president has very little to do with the larger economic picture, in general, all of which have been claimed by one side of the aisle or another), this does not indicate whether such action is the cause of increased revenue or whether increasing collection tactics resulted in them.
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I agree. I think Presidents get too much credit and too much blame. I primarily directed my question to people who strongly believed that Bush's economic policies are on the wrong track. I remember people blaming Bush for the short recession after his election. I would like them to re-visit their doom and gloom predictions.
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That is, are tax revenues up because more money is flowing or because the IRS is doing a better job of netting it in. We don't know from the factoids presented in your piece.
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I look at the data and I look at real world behaviors to draw my conclusions. To me it is obvious - if you lower tax rates, tax avoidance becomes less attractive. If my marginal tax rate is 110%, I do everything to avoid earning an additional taxable dollar. If my marginal tax rate is 50%, I do less to avoid earning that additional taxable dollar. If my marginal tax rate is 10%, I do almost nothing to avoid making that additional taxable dollar (annd I might work harder to make more taxable dollars since I get a 90% benefit).
The IRS is not doing a better job, at lower tax rates people hide less income, work harder to make more income, invest more and spend more - classic supply side economics. Clearly there is a point of diminishing returns from lowering tax rates, but we are not there yet.
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Allowing that more money flowing is the cause, or significant factor, that says less about how the deficit is declining without producing hardships for middle/lower classes without looking at a broader picture...
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We are not playing a zero sum game, where there has to be a winner and a loser. Historically our strong economy has been a benefit to everyone. But, we can look at your specific examples below.
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For example, tuitions are sky high and increasing rapidly. Currently, the legislative bodies are marinading over a bill that would lock students into paying a relatively high loan rate. Whereas I locked much of my loans into an historically low rate of 3.5% through a consolidation process, this new bill would lock my current graduate student loans into a %8+ rate. That's not significant, it's massive. One could argue that it's crippling, especially when we consider who takes loans out for school--disproportionately the impoverished classes.
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Government secured loans are not the only source of financing higher education. For example- I worked and went to a low tuition state school - I did not finance any of my education. Some can use home equity loans from thier parent's homes, savings, etc.
Also, more "impoverished" people have an opportunity for higher education than ever in our history. All motivated individuals have access to higher education, however, not everyone will get a "free" education. What is wrong with people paying the real cost of their education. The primary benefactor of higher education is the individual not society - in my opinion the individual should pay.
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When the feds strip or reduce funding for schools, those with the least amount of money are hit the hardest, regardless of their desire to do right by themselves and become educated and give back to the societies they live within.
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What is the percent of school funding comes from federal government? Could the school be run more effeciently? Why has there not been any productivity gains in higher education? Why are the costs going up faster than inflation? Some schools have billions in endowments and still get federal funds, why?
There are many complex issues with higher education. I think the level of federal funding is insignificant in regard to access.
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Next, we move on to services rendered. When the feds tighten their purse strings, the states and localities must a) pick up the slack by taxing their people more and/or b) reducing services. When we look at a place like California, that has a wide variety of social services funded via taxation, the immediate effect was to raise local and state taxes. The long-term effect has been to systematically strip/reduce funding from "non-essential" agencies and services as well as figure out ways to reduce funding even to the essential ones.
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I think it is more effecient for local services to be paid for from local funds. Also, local officials can be held more accountable than the big Washington bureacracy.
When you look at California ( my state), we have billions of more tax dollars going to Washington, than come back in the form of services.
I also think the Federal government has gotten involved in more areas than it should be in, like education.
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In the case of a place like Oregon, that doesn't have a variety of tax structures, particular things like property tax and for-use fees are raised. Things that some people don't care about, like camp site fees or hunting licenses, are raised along with more visible services--like firefighting, police, and DMV fees. These kinds of changes disproportionately affect classes of people who have relatively low levels of power, such as, elderly home owners, destitute "campers", and low-income people who rely on the police the most (who feel both the economic crunch of demand for more dollars and the policy implications of less patrols in the very areas that need them the most). And since schools depend on federal dollars and local funds, when the federal dollars go away a more wealthy community can afford to pick up that slack in a way that an impoverished community cannot.
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If we you your logic going to the extreme, why not have a single central government controling all activity, like a communist state.
I don't think people who don't camp should subsidize those who do. When someone goes camping they should pay for the services they recieve (park rangers, camp sites, rescue services, maint, etc.) to the degree that society benefits from green space I would agree that we should incur some kind of tax for that, but otherwise there should be no subsidy.
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One response has been that a number of services I've listed are not fundamental rights, nor obligations for a society to provide for its citizens. Whether one thinks another person has an ethical/moral/legal right to affordable housing or effective policiing is a subjective argument, not objective. It's based on ideological responses, much as my argument laid about above that such services may in fact be "essential" to one group and not another is ideological.
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I agree. As a society we have an obligation to care for the old, chidren and those mentally il.
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Cumulatively, however, these things present a serious problem for our society. While appearing to "save" money, reams of scientific evidence (empirical research, hard cold facts) indicate that the money we save on the front-end is pennies on the dollar to the money we spend at the back-end in the form of incarceration and crime within impoverished communities perpetrated by those who attended shoddy schools and are presented with bleak prospects in their futures.
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I think we have to look at history. Many of the things the federal government has assumed responsibility for, were handled in the past without government involvment. In my view government involvment does not always mean improvement.
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The money we save now will have to paid in one form or another.
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Not true. Let's say we simplify the tax code and eliminated the IRS and the need to spend billions on CPA's, tax software, H&R Block, and lost productivity filling out tax forms. That savings could be put to procuctive use or increase leisure. That's nothing but money saved.