Hey Big Spender.....
 

For the fifth time in the last seven years, Congress has had to raise the debt ceiling in order to keep up with the Bush administration (and the Republican Congress) uncontrollable runaway spending.

The total US debt is now over $9,000,000,000,000 (thats 9 TRILLION) and when Bush leaves office in Jan 2009 likely to be nearly DOUBLE the $5.7 trillion when he took office in Jan 2001.

If thats not bad enough, the percentage of this massive and growing debt held by foreign governments and investors has risen from under 16% in 2001 to a projected 25% (nearly one out of every four dollars of US debt will be held by China, OPEC and other friends) when Bush leaves office.

Just one more pile of shit left on the oval office floor by Bush for the next president to clean up.

threadjack-like aside:

i am greatly cheered to see you again host.
you should come out to play.

end aside and returning to regularly scheduled programming....

Very, VERY good to have you back.

So again we find ourselves asking: What can be done? I'll probably be paying for this well into my 80s, and my children, children's children, and possibly even more generations will be dealing with our mess, be it governmentally financial, societal, or economic (leaving things like global climate change and DU munitions alone). I'm reminded of George H. W Bush's famous 'New World Order' speech:
We have a Democratic Congress. We have the House. We have a president, and head of the GOP, who's approval is quickly approaching the teens. This is a time where it should be easy to sway the more centrist GOP reps to begin repairing the massive damage done by the now out-of-favor neo-cons. We can use the election to sway the idiots (cept Ron Paul) running on the GOP ticket to pull the rug out from under Bush so that we can get bipartisan legislation moving. If the party turns on Bush, we can undo war funding and wiretapping (as long as the Dems don't turn on us again).

The most obvious question: Given Bush has no discipline when it comes to spending why hasn't Congress done something to bring this obscene level of fiscal irresponsibility under control?

And the follow-up: Why is one branch of our Federal government given the responsibility for the mess when it seems like at least two branches are at fault?

The Senate is at fault, but they were mislead into the war, which is costing us the most, so it's a bit harder to blame them. They do share the blame, though.

Absolutely, both the White House and Congress are to blame for the $4+ TRILLION rise in the debt in the last six years...during which time, the Congress was under Republican control and Bush never vetoed one spending bill.

Clinton and a Republican Congress demonstrated how it can be done....balancing the budget in his last two years in office and paying down the debt through a "pay as you go" approach.

Bush would also need to recognize that tax cuts to the top 2% and trickle down economics is in fact, voodoo economics (as George HW Bush rightly noted).

I do want to start another lengthy exchange on this issue, but I need to understand one thing from you and others who share the above view. We all know that the affect of federal government fiscal policy can not be measured with precision or predicted with precision because of so many uncontrollable variables (we may never really know the true precise net affect of certain types of tax cuts or increases on the economy, we can only speculate) - that as a given, here is my question regarding a fundamental principle of supply side economics. If a group of people has more disposable income that they re-invested and spend in the economy, is that a good or bad "thing" for the economy?

is that where all those exorbitant CEO salaries and stock dividends are going? back into the economy? from where i'm sitting they appear to be going, by and large, into offshore accounts, hinky speculative investments and big-ticket luxury items. not sure who that's supposed to trickle down to, exactly.

i assume that every time i buy a product at wal*mart, some chinese entrepreneur benefits from the skill of some overpaid american CEO at outsourcing the manufacture of products and services to human-rights-violating subcontractors overseas, but that's good for the economy of chinese entrepreneurs, sweatshop owners and american megarich chairmen of the board. doesn't help me a whit to have my tax dollars subsidizing capital and industrial flight from the US. which, make no mistake, is what all this bush big spending is all about.

The fallacies of supply side economics have been debated here before and I dont see a reason to rehash the same arguments and evidence.

I subscribe to the Mr. T. school of economic thought.

i pity the foo' who advocates extreme laissez-faire anarchic capitalism over a sensible, mixed national infrastructure founded on genuine, public-private sector partnerships characterized by competent, vigorous oversight and accountability!

i dunno, doesn't quite fit on a bumper sticker, does it?

little-known fact: the iraq reconstruction is a total showcase of supply-side economic reform at work. and i think we can all learn from the success the friedmanites have met with there. we can argue the economic abstractions but the bottom line (sorry! :P ) is, the supply side thing has been tried over and over. doesn't work except for a tiny minority (for whom it works exquisitely well). the record is clear on this.

i'm reading "shock doctrine" by naomi klein right now. it's making me fighting mad. great book.

I can't resist one more attempt, but I generally agree with you DC, this is pointless. The brilliance of the following explanation will be lost.

First, I will assume that DC and Mr. Tia agree that rich (and powerful) people have more options than poor people. Poor people are generally locked into our income tax code, as opposed to wealthy people who have the options available with the Corporate tax code, foreign investment tax code, capital gains tax code, estate/trust tax codes, etc, etc. So, lets look at a poor person as tax cuts may relate to "trickle down".

Let's say we have a single working mother with two minor children and she made $14,900 in 2006. In her case she would have a standard deduction of $7,500 as head of household, she would $9,900 in excemptions (3 people times $3300 each), she would then have a taxable income of $0. She would qualify for two child tax credits or $2,000 and she would qualify for the earned income tax credit, in her case, $4,522 dollars. She would get a tax refund based on those credits of $6,522. So her after tax income is $21,422.

Now let's say she got a better job and earned $39,000, everything else is the same. She would still have a standard deduction of $7,500, and $9,900 in exemptions. Now her (line 27 - 1040A) taxable income is $21,600. And her tax would be $2,706. She still gets the child tax credit of $2,000. However, her earned income tax credit is now $0. Now her after tax income is $38,294.

Her employment income went up by 162%, and her after tax income went up by 78%. Her tax impact was $7,228, on an additional earned working income of $24,100. That is equal to a marginal tax rate of 30%. As a working poor person she gets screwed by the tax code if she tries to improve her life. For every extra dollar she earns the federal government (not talking state, FICA, Medicare) the government takes $.30. What if she had that money for clothing, food, savings, college for her kids, an IRA, would that be good for the economy? Would that be good for her?

These are real numbers using IRS Publication 17 from 2006. Using tax credits or not these numbers have real impacts on real people. Anyone in a 30% marginal tax bracket is getting screwed by the government in my opinion, and to think that the government will do a better job spending the money is to be a fool. Spending in Washington is out of control, tax cuts are not the problem.

hmm, interesting, if a bit of a brow-furrowing read. i need to work on my way marginal tax-rule-parsing skills, for reasons that are currently deeply unfortunate to my finances. so struggling with that was helpful.

i'm questioning whether earned-income tax credits can actually take your tax liability into surplus status: you seem to be saying that in the first instance the woman's tax writeoffs actually get her a refund as though she'd made more money than she actually did? i have no evidence to disbelieve that, but i just find it astonishing the tax code would be put together that way.

but the upshot of what you're posting seems to be that someone whose income is in the lower-middle-class range -- 30s, 40s -- has a tax burden far outstripping someone whose tax burden is negligible due to poverty. the egghead in me wants to say that any sum seems significant when compared to zero, but i actually agree that the middle-class tax burden is oppressive. government at this moment is huge and is consuming lots of tax money, and despite reams of happy-talk about tax cuts, the middle class seems by and large to be paying for it. the question is, why? what is the government spending it on?

With the EIC and Child Tax Credits - yes. But that is not the point. the point is that lowering a net 30% marginal tax rate, gives a person more disposable income which is good. It is good for poor people, good for rich people and good for the economy.

Don't take my word for it, use Pub.17 and go through some examples, or ask your tax professional.

Progress. :thumbsup:

Now understand that the major benefactors of Bush's tax cuts are hourly/salaried working class people. Sure the rich benefited but, like i posted they have options, i.e. Bill Gates can have a $1 per year salary, run expenses through his corporations, charities, trusts, etc. to avoid taxes all day long if he were so inclined and if he thought the income tax rates to high. Our current tax system is too complicated and has too many holes in it for rich people to get screwed one way or the other. Why don't Democrats get that?

End taxing individual income and start a nation wide sales tax. Solves the "rich people get tax cuts" argument. Solves the "poor people get more money to have kids" argument. Saves the tax payers uncounted money when the IRS is eliminated.

Rich people buy more stuff. They spend more money. So, tax what they are buying and your nation profits.

I agree. We should not take away anyone's incentive to work, nor should we tax savings and investing.

thanks! i had to get really, really stoned before i could understand all that stuff. :P