Four Misconceptions About Taxes and the Deficit

[Chris_]

Four Misconceptions About Taxes and the Deficit

The Bush cuts in tax rates caused the deficit. Some economists argue that Bush Administration policies taken as a whole, including costly wars in Iraq and Afghanistan, caused much of the borrowing beyond what the U.S. economy can sustain. More often, though, the blame is focused specifically on the cuts in tax rates. Those rate reductions, however, account for only about a fifth of last year’s $1.1 trillion deficit.

...

U.S. income taxes aren’t very progressive. In fact, U.S. income taxes are among the most progressive in the industrialized world. Indeed, 46% of households pay no income tax at all.

Raising tax rates will fix America’s budget problems. Raising tax rates on households with incomes above $250,000 would produce revenues equal to only 4% of the 2012 deficit. Higher taxes on capital gains and dividends, plus higher estate taxes would produce an additional 4%. A few other current provisions that favor the wealthy are equivalent to 2% of the deficit. So all together, higher tax rates for the rich would reduce the deficit by no more than 10%.

The vast bulk of the money that would by raised by the full fiscal cliff tax hikes, however, would come from the middle class.

Time

Alright, who let the joker near the printing press?

I'm surprised Time actually posted this, but then nobody is running for election right now either.

[Eupher]

Time

Alright, who let the joker near the printing press?

I'm surprised Time actually posted this, but then nobody is running for election right now either.

Since Slime Magazine is on life support, they're going to the nth degree to try and make a silk purse out of a sow's ear.

[Big Dog]

The Bush cuts in tax rates caused the deficit. Some economists argue that Bush Administration policies taken as a whole, including costly wars in Iraq and Afghanistan, caused much of the borrowing beyond what the U.S. economy can sustain. More often, though, the blame is focused specifically on the cuts in tax rates. Those rate reductions, however, account for only about a fifth of last year’s $1.1 trillion deficit.

Major misconception #1: The nature of "the deficit". TIME readers are apparently too stupid to understand that the deficit is the difference between expenditures and revenues in each fiscal year. Effective 1 Oct 2009, George W. Bush had nothing to do with the Federal deficit.

Major misconception #2: "Reducing the deficit" = a surplus. The Federal government will still spend more money than it takes in, expanding the Federal debt.

Major misconception #3: The "fiscal cliff" is something our economy will fall off, like Wile E. Coyote. The so-called "cliff" is a reduction in the rate of spending beyond revenues. It's more like running upstairs two at a time, as opposed to three at a time.

Two words to the Feds: spend less.

[Ausonius]

Major misconception #1: The nature of "the deficit". TIME readers are apparently too stupid to understand that the deficit is the difference between expenditures and revenues in each fiscal year. Effective 1 Oct 2009, George W. Bush had nothing to do with the Federal deficit.

Major misconception #2: "Reducing the deficit" = a surplus. The Federal government will still spend more money than it takes in, expanding the Federal debt.

Major misconception #3: The "fiscal cliff" is something our economy will fall off, like Wile E. Coyote. The so-called "cliff" is a reduction in the rate of spending beyond revenues. It's more like running upstairs two at a time, as opposed to three at a time.

Two words to the Feds: spend less.

The FedGov can not understand the meaning of those two words.      Excellent summary of why uninformed and disinformed  (i.e. informed via lies) voters returned BIG BRObama to our White House!

I would add another factor: thousands of unnecessary local, state, and federal regulations and frivolous lawsuits of all kinds causing our economy to lose trillions more in productivity, and therefore less able to provide taxes to the FedGov.  People just do not see that connection at all.

In the end, however, yes, two words: spend less.

[thundley4]

http://directorblue.blogspot.com/2012/12/10-diabolical-fiscal-facts-what-talking.html

10. The President's desired tax hikes -- raising taxes on "the rich", those with an income over $200,000 ($250,000 for married couples) -- would pay for just 8 days of the federal government's operation.

9. The President's one-time, emergency Stimulus package of around $900 billion, passed in 2009, became part of the baseline federal budget and has been spent every year since.

8 more at the link.

[formerlurker]

http://directorblue.blogspot.com/2012/12/10-diabolical-fiscal-facts-what-talking.html


9. The President's one-time, emergency Stimulus package of around $900 billion, passed in 2009, became part of the baseline federal budget and has been spent every year since.

What the f#%^€ is he spending it on??!!!!!!

Education sure as hell isn't getting that money(which was part of stimulus).  The WSJ article it links to is premium only.

[Eupher]

What the f#%^€ is he spending it on??!!!!!!

Education sure as hell isn't getting that money(which was part of stimulus).  The WSJ article it links to is premium only.

Here ya go:

President Obama sold the $862 billion in stimulus spending as "targeted, timely and temporary." Critics said that was highly unlikely, and now the 2011 Obama budget has proven them right.

To wit, the White House is proposing to convert spending sold as a one-time economic boost into a permanent feature of future government growth. As both the Tax Policy Center and the Committee for a Responsible Federal Budget have pointed out, supposedly temporary parts of the stimulus—expansions of the earned income tax credit, the child tax credit and Pell Grants for college students—have now found their way into the budget baseline.

True to the way Mr. Obama has honored his campaign pledge of transparency, this news was buried in a footnote on page 170 of the budget's Analytical Perspectives.

The baseline normally reflects "current law," but the White House argues that this is unrealistic because Congress is never going to allow, say, the Alternative Minimum Tax to hit the middle class. Fair enough. But it also chose to smuggle these stimulus items into its definition of the "current policy" baseline and hoped that no one would notice.

The Responsible Federal Budget folks estimate that this fiscal sleight-of-hand would cost about $266 billion over 10 years, which by itself almost cancels out the White House's spending freeze.

The President's budget also asks for $25.5 billion to extend by six months the stimulus Medicaid bailout. The 4.9% federal spending increase was pitched as short-term relief for the states, but the White House seems to be trying to convert it, too, into a permanent part of the fisc. Keep in mind that this is separate from ObamaCare and arrives as the government's share of U.S. health spending crosses the 50% threshold.

Mr. Obama likes to pretend that he is the victim of a budget hit-and-run, as if the projected $1.3 trillion deficit in 2011 is all the fault of his predecessor. But President Bush didn't force the White House to request 1.8% of GDP more in new spending in 2011 than it did in 2010. Nor did Mr. Bush force the White House to assume that the stimulus transfer payments it created will be paid out into perpetuity.

What these budget details really show is that the stimulus was always more about promoting liberal policies than spurring economic recovery—which is why so many Americans are so angry.

Mods, if this is problematic, just delete.

http://professional.wsj.com/article/SB10001424052748704820904575055413176800990.html?lpe=WSJ_PRO&mg=com-wsj

[formerlurker]

Thanks Euph.

[sybilll]

http://directorblue.blogspot.com/2012/12/10-diabolical-fiscal-facts-what-talking.html

8 more at the link.

Great link Thundley.  Makes my teeth itch when liberals claim to be making "cuts" when the $900B is now included in baseline budgeting. Baseline budgeting being a practice that will never be explained to the fraction of Americans who can even understand the damned process. 

[SSG Snuggle Bunny]

This should be added to the Political Ammunition forum.