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Austerity

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We currently spend $2.3 trillion annually on our federal government. We take in $1.5 trillion in applicable taxes. In the next several years we must add in above this baseline about $500 to $800 billion annually for SS, Medicare, Medicaid and Obama care. We might be able to reduce Defense by about $200 Billion annually with the phase out of the current wars. If the government seeks to fund more jobs these numbers will rise

If you add that up it essentially says we must double the federal income tax take to stop increasing the deficit. My numbers do not address the existing $14 trillion debt. The $70 billion annually we would make from “taxing the rich” under current proposals is lost in these numbers.

So let us give everybody what ever they want (no demand) and collapse the incomes of the workers making more than the median (those who pay income taxes) to essentially that of those making less than the median. Equality of outcome – Mr. Marx would be proud. Not going to happen!!!

Yes we should tax the rich – more than Mr. Obama proposes. We may need to increase taxes on everybody by 5% or so. (Remember the tax increase will be on top of cuts in services and higher fees). We may also have to tax the current substantial numbers of people who are not poor but who do not contribute to the operation of the government. We may even need to address inefficiencies and duplication in our $800 Billion a year social safety net starting by consolidating the programs under one set of Congressional Committees.

We are facing a period of austerity. If we act soon it will hurt but be manageable. If we do not act there is real austerity (think Greece) in our future. Equity demands the pain be shared.

The current demands that meaningless cuts (think Medicare) be augmented with very modest tax increases on the wealthy will not cut it. The notion of disestablishing the social safety net while protecting the very rich is also a non starter. IMHO the 2012 prize will go to the party that figures out how to best balance the pain across the population (or marginalize those selected to take the brunt).

Comments

Eybea Opiner 3 years, 5 months ago

The wealth of the Forbes 400 totals about $1.3 trillion. There are about 3.1 millionaires in the U.S. Their wealth (assets that can be invested) totals about $11.6 trillion.

If we expropriated all of the wealth of the Forbes 400, we would just about cover this year's deficit spending. If we took all the remaining wealth of the millionaires, we would pay about 70% of our national debt.

The question is, do we have too little taxation, or too much spending?

beatrice 3 years, 5 months ago

The answer is: Yes on both accounts, at least until we pay off the debt.

kansanjayhawk 3 years, 5 months ago

In our modern "world economy" I am afraid that trying to tax the rich will result in the rich simply moving their money to overseas havens where they can shield it from additional taxation. The result of those decisions would be less investment and capital being expended in this country. Wouldn't it be better to find ways to attract those with wealth to this country and encourage them to invest in business and economic enterprises that would create economic expansion and as a side benefit create jobs?

devobrun 3 years, 5 months ago

They aren't hiring because that would mean expanding their business. In this economy, expansion is not a smart move. So they keep their money on the sideline. How to break the downward cycle of no jobs because of no growth and no growth because of no jobs? Start finding jobs that produce new, effective benefits to the public. New product that really works will be bought. If the new thing is honestly fruitful, the world is a better place and people buy the product. The manufacturer hires more people......and the economy grows.

Even government economists know this and that is why "green" has been touted for so long. It has been hoped that every product will be redesigned "green". The economy will grow by taking every product and changing it to be "green". It isn't working. "Green" is a completely false benefit and people aren't buying.

The new jobs in America come from natural gas exploration. It is the only growth industry right now. If you are an able-bodied worker and you need a job.......there are thousands of openings in Texas, Louisiana, Pennsylvania and the Dakotas. Thousands of jobs.

Gas production will reduce energy costs. Taxes from gas production will fill the coffers of each state. If the increased tax revenue is met with austerity in government spending.......we can reduce our debt. If not, then we will default like Greece.

George Lippencott 3 years, 5 months ago

vertigo (Jesse Crittenden) opines… Nonfinancial companies are sitting on $1.8 trillion in cash, roughly one-quarter more than at the beginning of the recession. “ Moderate Responds: That is not their money. Most are publicly held and that cash belongs to the shareholders. Are you arguing that we mandate the use of Shareholder equity to create jobs essentially using shareholder money as funding for another social service? Consumption drives our economy. We are not consuming – we are paying down debt. For those of us who pay taxes we are not buying because we fear a major tax increase that will consume all our disposable income. For those of us paying for public services to include utilities we are awaiting the latest “green “ edit that will soak up any remaining disposable income as rate increases. For those of us who lost sizable savings in the late great financial disaster we are trying to rebuild our savings so we might some day be able to retire,
From the businesses standpoint (particularly small business where about half our jobs are), why would you hire in the face of the same uncertainties? You cannot even make a reasonable projection of the cost of hiring another body since the regulations associated with Obama Care, the new consumer protection entity, financial regulatory reform and many more (80,000 pages of regulation in the last two years) are not written so the costs are unknown! If we would just do whatever we are going to do with taxes and regulation and get on with it, consumers and businesses could again make rational decisions.
In my current view of the world, government is the problem and not the solution.

George Lippencott 3 years, 5 months ago

  1. Nope. If they bring it home they pay tax on it. If they give it to their shareholders thay do not have it to expand whan there is a reason to expand. No reason to pay higher dividends as the cost to borrow/finance is very low right now.
  2. There is no reason to expand as consumption is way down.. If we improve consumption we may see expansion. And I mean real consumption. Taxing people to allow the government to give money to other people is a net loss to the ecconomy.

devobrun 3 years, 5 months ago

Consumption would increase if there was anything really good and useful on which to spend the money. There aren't any new things that are really needed, necessary and downright cool.

Food, fuel, shelter, clothing, water, entertainment, communication, transportaion.......all are so good now that we live in a world of excess. Even poor people have big screen TVs and cell phones. Medical care is so sophisticated that it can't be afforded. We could do PET scans and MRIs all day long to evalutate every fiber of a human body if we had the time (and therefore the money)..

Nothing useful and new has come from fundamental research in decades. DNA research is that wild area that has promised cures for 30 years. A few applications have come of genomic research, but overall it has been pretty slim.
High energy physics? Oh wait, lemme get my lepton accumulator going here so that I can synthesize a new element......not. The communications and computer revolution is based upon fundamental research pre-1970. The technology improvements are mostly related to miniaturization and better process control (clean rooms).

Nothing new to be done....nothing new from science.....nothing new to be accomplished. Unless, unless.....maybe....psychology, sociology, behavior engineering......Nah, forget it. Nothing new has come along from those guys either and alcohol abuse is the same as it always was. And gangs and deadbeat dads.

Nothing new, George. We're screwed.

George Lippencott 3 years, 5 months ago

Afternoon

I am not quite as negative as you are. I do see difficult time ahead for those that continue to follow old and outdated norms. We are not going to see continued salary increases except for those with skills needed in the future. In fact I see job difficulties for quite some time as we finally adjust to shipping so many off shore (unless we do something to protect our workers). We are also going to have some rough times adjusting to less wealth. Most of the middle class is 20% poorer than when Mr. Obama took office (partially his fault). To pay our debts we will have to tax the middle more (we already are at the state and local levels). We will also cut benefits such as SS while making Medicare more expensive. All of that will inhibit consumption for years to come. (It never ceases to amaze me as those on here demand more taxes and cuts to the middle class services without any concern for consequences.) At some point we will see another Reagan who will cut social benefits that are IMHO excessive considering the impacts already experienced by the people paying for them. In time we may work our way passed this challenge if we keep our cool. The tendency to demonize anyone who points out that we can no longer afford the “gravy train” does not bode well for any attempt to begin to adjust to the new reality. Unfortunately there are too many “snake oil” salesman/woman in both parties that are only interested in keeping the lid on until they make their millions and leave office. Unfortunately there are too few of us that recognize “snake oil” when we see it.

devobrun 3 years, 5 months ago

But growth means that more goods and services are provided to the populace and that growth is provided by more workers. But America doesn't need any more stuff. We need "other". And the "other" isn't "green".

We need people behaving better, George. If every crook in prison was given the money that is spent on them to be in prison, they would live well. If every gang member was converted into a solid individual citizen and the programs, prisons, and police effort was reduced, those gang members could live well.

The new reality is that we can no longer afford Lindsey Lohan or her wannabes. We can no longer afford to care for all the crooks, deadbeats, liquored-up and drugged-up social misfits that drain the life from the culture. There is only one thing that our world needs, George......better people. People who don't lie, cheat, steal. People who show up and do the job. People who are responsible.

There is no thing that we need, George. Our economy doesn't need a new more powerful way to communicate with each other via twitter, facebook, or any other gadget. We must reduce government expenditures on bad people. If we can't fix our behavior problem.....we're screwed.

I see no new psychological advances. Indeed, psychology has given up on the criminals. Psychology is one of the last specialties on the list chosen by new doctors. It is a sad dead end. The programs, techniques and research of the 1960s, and 70s has wound down. Today we just give the emotionally challenged drugs......then they feel better......then they stop taking the drugs.....and murder their wife. Broken people aren't getting fixed, George. Our cost of dealing with them just keeps rising and their productivity just gets worse.

George Lippencott 3 years, 5 months ago

OK I see your point.

If we somehow did better with our crooked hoard or our unwilling to work bunch we might save money. But of course breaking that mold requires twice the money until we do – if we succeed. Many crooks want more than just enough and many people want to be kept.

We do need to be able to replace stuff as it wears out. We need to be able to incorporate new ideas in a timely but not disruptive manner. We unfortunately have to deal with ever increasing population. Think how much we could advance the climate change agenda if we limited births to replacement or less.

No we can not standstill without a lot of planning to move in that direction. And of course you have the 10% who want stuff just to have it (maybe 50%). If we do not change that desire we must continue the “ rat race”.

Love your idea but do not know how to get there given human frailty. We never did find the “new man”

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