Politics Obama - Actually doing a good job?

The Ryan budget cuts approx. $1.2 trillion in non-defense discretionary spending - welfare, food stamps, school lunch programs, childrens health program, Pell grants....that hit working class families and those on the margin the hardest.

It cuts other discretionary spending that help drive the economy - transporation/infrastructure funding, R&D...

It cuts entitlements like Medicaid by $800 billion and turns it over to the states, many of which are already facing budget deficits and effectively privatizes Medicare for those currently under 55 yrs old that will likely cost them $thousands/yr when they reach retirement (who will offer affordable health insurance to the group with the highest risks?) and are on a fixed income.

It raises defense spending.

It proposes no new revenue.

It makes the Bush tax cuts permanent at a projected cost of $5 trillion over ten years and then goes even further by squeezing the current five brackets down to two, with the top rate of 25%, a rate last seen during the Hoover administration in the 1920, and at a cost of an additional estimated $4+ trillion over ten years.

It is Reaganomics on steroids.

 

I am not sure how it is possible to inflict real pain on the wealthy short of confiscation of their wealth. In the context of tax policy - rich people manage their tax burden. I think that until people on the liberal side of this question see that, we will never make progress.

Here is a set-up question:
Are rich people less rational than you?

Here is the question that makes my point:
How much would you spend to save $1 in taxes?

Here is clarification of the point in the form of an answer to the last question:
In some cases you may not spend anything in an attempt to save a $1 in taxes. You may not be aware of the possibilities. You may not care to go through the effort . So of course some fit into these categories. Others do not, in fact some may even spend more than $1 to save $1 in taxes. At some point you could calculate some sort of blended average - perhaps people on average will spend $.50 to save $1 in taxes. So, just looking at this we would know if the government raises or lowers taxes the net impact +/- would be 50% in this example.

Here is a real world example to illustrate the point:
The reason HR Block offers a free tax review, is because they know many people can legitimately save money on taxes but don't because they are not aware or have not been willing to put in the effort. So they say, if we can save you tax dollars, pay us to prepare your taxes. So, many people take advantage of that and spend a few hundred dollars at HR Block to save money on taxes. Now imagine a rich person who employs tax accountants/lawyers/financial planners and spends $$$$ on these services - of course the goal is for these professionals to do their job just like HR Block does its job.

Now I go off into extreme land to illustrate the point:
Take a guy like Romney, who can take 6 years of his life to run for President. Or, a person like Oprah Winfrey who decides she wants to start a new cable network for fun. They sit on more money and wealth than the average person can even dream of - they have their wealth in a diverse basket of investments managed by professionals. They may give these professional a goal, perhaps something as simple as - I want a 7% after-tax return on this basket or that basket of wealth. The government can raise or lower taxes all day long - but you can bet Romney or Oprah are going to get their X% after tax return. I am not saying they don't pay taxes, they do. But if the super-rich wants an X% return they are going to get it, even if that means for example their actions cause interest rates to go up in the economy - hurting those who borrow money, including the government.

I kinda like the Oprah example, now I go off on another tangent because now I am having fun with this:
Oprah decides she is going to start a new network. The new network is failing and is losing a ton of money. But, Oprah is super-rich and there is no reason to feel bad for her, because all of a sudden she has some losses that she can off-set against other profitable investments. So, her little hobby, I mean business, may result in her not paying any taxes on other income. It is nice to be Oprah. But it gets better, and here is the difference between the super-rich and almost everyone else. The super-rich can do what Oprah is doing over and over and over. Fast forward, 5 or 10 years and Oprah's network is making a ton of money, Oprah can start a new hobby, I mean business, that is going to lose money - off-setting the money she is making from her network - allowing her to pay less or nothing in taxes.

Now the concluding question and statement going back to your point:
So, how are you going to inflict pain on the wealthy? You can not.
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A dollar taken from productive use through taxation and used in a non-productive manner.

If taxes are an undue burden on the tax payer. I could give an example, if one is needed.
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As opposed to what? Obama's budget that did not get a single vote in Congress, even from his own party.

Consistency: Obama budget fails to get a single Democratic vote … again « Hot Air

I am gonna guess that this has something to do with some political thing, beyond my comprehension. Perhaps Obama will have more flexibility next year.

 

There is a difference. Government can tax $1 and spend $1. The government can tax $1 and spend $2. The government can tax $1 and not spend it. The $1 tax may be wasteful and/or excessive or it may not be wasteful and/or excessive. In either case government spending is a separate issue. I would argue wasteful taxation is when a tax is imposed that hinders the ability for other more effective taxation. Or a $1 taken through taxation from a productive use to a non-productive use. Excessive taxation, is what I would argue is an undue burden placed on the tax payer.

Again, you know I am a supply side guy - I think in some instances tax cuts can lead to greater economic activity that in turn leads to more tax dollars sent to government - not wasteful. I also see some circumstances where the opposite is true (tax increases leading to less economic activity and less taxes going to government) - wasteful.

I most likely listen to the same Obama speeches that you listen to - I do not believe Obama. If you believe him then you will think, based on a speech he gave yesterday, that the Ryan budget wages a war against weather prediction. It wages a war against clean water. I don't know what to tell you and others because we don't have an alternative on the table to discuss. The President, you or anyone can demagogue the Ryan budget all day long, but until there is an alternative to discuss what is the point?

 

Nonsense. One only need look at the effective tax rates to demonstrate that the notion that the rich will always find a way to avoid as much taxes as possible just doesnt fly in the face of the facts.

Yep. It was political grandstanding much like the Democrats did with Reagan and Bush budgets, that they (as the majority at the time in the House) used to force the Republicans to do the same, with just about the same outcome.
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The House Democratic Budget Proposal

 

The rich can avoid taxes and the rich can make up for tax increases.

The second part is important when assessing the impact of tax policy. On what basis is this nonsense? Does it simply go beyond what you want to discuss? Is it not important? What?
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I was not aware of this. When did anyone vote on it? Is it serious, meaning worth reading? Or, is it one of those political maneuvers that is beyond my comprehension?

 

Ace...you just need to look at marginal tax rates v effective tax rates and I think you will find that slightly higher marginal rates on the top bracket does not lead to significantly lower effective rates.

And to expand on the vote on Obama budget so that you can understand. The Republicans used a parliamentary procedure to force the Democrats to vote on Obama's budget with no amendments - no adding or taking away even a penny from any program.

In my 30 yrs in public policy, I dont recall any time where the majority party voted for their party's president's budget with no changes....completely ceding the budget process to the executive branch.

This is one of those non-issues overly exaggerated by talking heads with their viewing/listening/reading audience jumping on board w/o question.
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They cant vote on it in the House until the Speaker allows it to be put on the docket. Another political maneuver by the Republicans.

 

I don't know why this is confusing. Perhaps, it boils down to how rich people think compared to the rest of us. The marginal rates, effective rates or whatever rates are secondary to those who control large amounts of wealth because they tend to focus on growing or preserving their wealth while maintaining their life style. These rates, however, have a big impact on those trying to accumulate wealth. In the context of shared "pain" - it won't happen unless the government confiscates wealth - income tax policy will not do it. We can inflict "pain" on the college basketball player getting his first multi-million dollar contract. But, when a player retires with some wealth and a plan, i.e. Magic Johnson he goes into another league in regard to wealth. My argument is that your idea of fairness or shared "pain" is simply not going to happen. This line of thought held by Obama and many Democrats is getting in the way of doing what needs to be done. I believe Warren Buffet is really saying, go ahead, raise my taxes so we can move on...he doesn't care, he will continue to minimize his tax bill as best he can and just raise prices for ice-cream cones at Dairy Queen.

Wait, wait, wait, now I get it. You are waging a war against the children. You don't want poor kids to be able to eat ice-cream. You are a bad, bad, bad man.

 

I don't think the point is to "inflict pain". The point is to tax fairly, which means that the richer one is, the more tax one pays.

If I understand your argument correctly, it seems to be that there is little point in trying to tax the very rich because they are too smart and will use loopholes to avoid paying. Of course, there is the possibility of closing loopholes. Even putting that aside, I don't agree with your argument. Take it further and it would seem to lead to the idea that we should place the heaviest tax burden on the poor and the least well educated .. oh .. wait..

 

The effective tax rates for individuals at the top are at or near historical lows. The effective corporate tax rates are at historical lows.

How much lower should we go, Ace, while cutting programs that benefit the working class and poor?

 

A person with a good corporate job making a decent salary, has a nominal tax rate and an effective tax rate. Depending on circumstance and discipline that person may be able to maximize 401(K) deductions (pre-tax lowering effective rate), maximize cafe plan deductions (medical, daycare, etc), early on in this person's career the effective and nominal rates on income has a big impact on the person - government can "inflict pain" through income tax policy - raising rates, changing deductions impacting both effective and nominal rates.

But...

Fast forward a decade or so, after this person has been maximizing pre-tax deductions, most notably the 401(k). At some point this person will be accumulating more wealth in his 401(k), tax sheltered than he earns in income. At this point the government can do whatever they want with effective and nominal rates - this guy has reached what Bob Brinker (An excellent financial talk radio show host) calls critical mass. The only way to make him feel pain is to confiscate the wealth he has accumulated in his 401(K).

Our system taxes income. We do not tax wealth. We do not tax consumption. Average people have a fixation on income, rich people do not - they focus on wealth and their life-style. Warren Buffet owns a jet rental company - he can fly anywhere he wants at no net cost, in fact his company makes money. He owns Dairy-Queen, he eats all the ice-cream he wants, at no cost, in fact his company makes money. Short of taking his wealth, how are you going to make him pay his "fair" share?

Our focus needs to be on finding the tax rate that maximizes tax dollars collected while doing the least amount of damage to the economy. Let the market be the judge of fairness. And it is my view that we tax consumption, not income, not wealth - with a tax policy that reflects real social costs.
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Our tax code is a mess. It is impossible to say what an efficient top rate should be. Short of doing what I suggest, taxing consumption, I would have a very simple system, possibly one rate on all income above a certain amount - with no special interest deductions.

 

But guys! Paul Ryan is a serious man with serious solutions to the serious problem of poor people not being treated like the worthless parasites that they are! OF COURSE we give rich people tax breaks! They're the ones who give their money to hedge fund managers who then make a ton of money moving that money around thereby stimulating the bank accounts of hedge fund employees, thereby stimulating the economy! Exclamation!

 

Are we really talking about individual 401K's here? Is that where you see the greatest growth in wealth?

Pain = increasing the capital gains tax - what you probably consider wealth confiscation.

If higher or lower taxes on income are irrelevant to the wealthy, why are Republicans fighting so desperately to lower them for the wealthiest Americans?

Please explain to me, in all seriousness because I don't know, how taxing consumption over income or wealth is more reflective of social costs. And what, in your determination, are "social costs?"

Except, as has been pointed out to you numerous times, the wealthy consume less than the poor and middle class. A tax on consumption is still putting the tax burden heavily on the shoulders of the poor and middle class. And I believe that Ryan's bill combines the top five tax brackets into one (maybe two) - in essence, lowering the rate for those in the highest tax brackets to something like 25%. Granted, his bill does do away with certain loopholes but knowing Ryan, his plan will not tip the boat his wealthy friends are sailing in.

 

You have to understand that many conservatives dont look at program like welfare, food stamps, school lunch programs, even unemployment insurance, as temporary "safety nets" but as programs creating dependency, laziness and complacency. They honestly believe they will empower people by signficantly reducing funding for these programs.

Santorum: "I don't want to make black people's lives better by giving them somebody else's money; I want to give them the opportunity to go out and earn the money." (putting aside the stereotype of social safety net recipients, he claimed he said "blah" not "black")