Something you can’t even hear on cable: In this post, Digby make an important statement about the projected deficits being frisked in that super-committee. There is nothing new about her statement. In our head, we link it to Jonathan Chait.
There’s nothing new about this statement. But it’s almost never said:
DIGBY (10/27/11): Assuming you agree that it's important to cut the deficit right in the middle of an epic economic downturn, which I don't, keep in mind that simply letting the Bush tax cuts expire—in other words, going back to the tax rates in effect in 2001—will cut the deficit in half. Soooo, are these cuts to the safety net (which will impact people like this) really all that "reasonable?"For clarity’s sake, this means letting all the Bush tax cuts expire—not just those on the highest earners.
Let us add one point to that highlighted statement. Going back to the Clinton-era tax rates will cut projected deficits in half—and this will bring projected deficits into line with what budget experts think is a manageable level of debt. In other words, the whole debt crisis goes away the moment the Bush tax cuts expire.
How inept is the liberal world? To what extent has the liberal world failed to gain purchase in the discourse? Chait's efforts notwithstanding, very few voters have never heard what we just said. Most people have never heard that the debt crisis goes away the moment the Bush tax cuts expire—the moment we simply return to the Clinton-era tax rates.
(Update: Here's David Leonhardt stating this point, with a link to Chait.)
You never hear that said on cable. Most voters have never heard it at all. But that’s because our side is very weak—weak in the head; weak in the heart; addicted to silly name-calling and personality-driven cable clowning.
We liberals have been lazy, weak and ineffectual for a very long time. We aren’t very smart. And we aren’t extra-moral.
And here’s the part that’s really a puzzle: We can’t get over ourselves!
"Our side" is the liberals? The Democrats?ReplyDelete
Look, they're not weak in the head. They're rich! They really don't give a fig about "what budget experts think."
They're rich. Rich, I tells ya!
They don't want a return to Clinton-era rates. Why on earth would they spend their precious time fighting for what they don't want?
A "brilliant" orator such as our President could have made the case himself...
And I know it's not Bob's beat to really "pile on" Dem presidents, but one would be remiss in sidestepping our own "leadership" in how this has all played out.
To wit: Obama supporters (the loud kind) are convinced the debt deal was a masterstroke of political bargaining. "Pragmatic Progressives" they call themselves. Failure to see the issue the way they do makes one an "Emo Prog". The new term brewing in "Zero Sum". (A play on "purity politics", which of course obscures the truth, but whatever)
Sorry, Bob. Those figures are bogus. The deficits of 6.1% and 3.6% of GDP are projections for 2021. Those figures are virtually science fiction. Nobody know what the deficit will be a decade from now.ReplyDelete
Here are some realistic dollar figures for 2012. The total federal individual income tax collected in 2009 was $866 billion. For 2012, this figure will have grown some. Let's optimistically assume that the total federal individual income tax collected in 2012 will be $1 trillion. The Bush tax cuts were 10%. So, eliminating them would be worth around $100 billion in 2012. (This may be optimistic, because it ignores any depressive effect from raising the tax rates.)
The estimated deficit for 2012 is $1.1 trillion. So, if the Bush tax cuts were eliminated next year, that would cut the 2012 deficit by only 9%.
Incidentally, nobody really knows what a "managable level of deficit" is. Economists say that at some combination of debt and deficit, the foreign lenders will abruptly end their easy money approach. At that point, the sh*t will hit the fan.
Some say that a debt to GDP ratio of 120% is a key measure. With a GDP of %13 trillion and a debt now over $15 trillion, we're close to 120%. We'll hit the 120% ratio in a little over a year.
"The 2001 and 2003 tax cuts are quite expensive in terms of lost revenue. Extending the lower tax rates on income would cost about $1.6 trillion over 10 years. A host of other measures that were part of the legislation—a higher exemption for married couples, the extension of the estate tax cuts at the 2009 level, the lower rates on capital gains and dividends, and a higher Child Tax Credit—would result in a revenue loss of about $300 billion each over the next decade.ReplyDelete
Combined, extending the Bush tax cuts would cost about $3 trillion over 10 years; limiting the tax cuts to middle-income households would lower this cost by about $700 billion. Either way, that total would be added to the deficit."
Now we know that Bob's bete noir is the inability to get hard, reliable facts from anywhere (and the fact that nobody cares!). David in Cal suggests 100 billion annually, the above suggests 300 billion.
There's no inconsistency. I was talking only about the the lower tax rates on income, which Brookings estimates would cost about $1.6 trillion over 10 years. Since the economy is assumed to grow over time, $100 billion for the first year is consistent with $1.6 trillion over ten years. (BTW Anon, note that I didn't say "$100 billion annually" I said $100 billion for the first year the Bush tax cuts ended.)ReplyDelete
The 10-year projection for the Bush tax cuts I've been seeing is $3 trillion. Contrary to what Somerby posted, you can't take $1.5 trillion out of the economy without contracting said economy and adding more to the deficit.ReplyDelete
It would be a pretty world if we could just take whatever the amount of the deficit is away from people and then the deficit problem would be solved, but in the world we live there's a term for taking that much money out of an economy: disinvestment. Usually it's a strategy to attack a foreign government to bend them to our will, but in 2011 in the US, it's something liberals and conservatives long for because they don't think about it too hard.
To get that money from taxes on all Americans would mean that working class and professional class Americans would start spending a whole lot less than they currently do. Most likely, they'll start to take on private debt to pay for their rent, medical bills, food, etc. It's not like these people are living high on the hog right now - add to their taxes and they'll take on debt.
Taxing just the wealthiest Americans and corporations wouldn't have such a contractionary effect because it'll mostly just come from their savings since they aren't even investing much nowadays. This is why people are usually discussing taxing only the wealthy - taxing middle class people right now is really just moving public debt into the private sphere.
The trade deficit is offset by public and private debt combined. I thought liberals believed public debt was better than private debt since at least the government won't have it's house repossessed.
As James Galbriath pointed out in his last book, no country has ever cut spending to get rid of its debt because they always get logged in a cycle of contractionary fiscal policy.
Or: the national debt isn't a problem. It's a sign of deeper problems. Solve those problems and the debt gets solved.
Ak. My first graph should have an "even" before $1.5 trillion.ReplyDelete
Yeah I realize that Dave, apples and oranges. So when someone talks about ending the Bush tax cuts, is it just the income tax rates or the entire package. No one explains details (or no one pays attention to them) and the figures just fly by each other. Fact is, taxes as they were under Clinton would put a big dent in the deficit otherwise, we're just playing games. Is it good for the economy? I don't know.ReplyDelete
Alex, paying taxes to the government is not the same as you can't take $1.5 trillion out of the economy without contracting said economy and adding more to the deficit. Where do you think that cash goes? Into a black hole?ReplyDelete
In short, your beginning is just flat wrong which, by the way, renders the remainder of your comment, well, wrong. With or without the "even".
I'm not saying David IC is right, I don't believe his numbers, but yours are way out of line. I can't believe Leonhardt made that claim.
Letting the Bush tax cuts expire on the top $250,000 earners would fix Social Security permanently, if the money were used exclusively for that purpose.
But it wouldn't cure any other problems in the short term. If the economy roars back, (which it won't), and we cut back many discretionary programs and completely overhaul our health delivery system and our trade policies, we could be debt free in 10-15 years, and have a comfortable economy and safety net to boot.
Of course that means the Republicans must be kept out of power during that time, since both the neo-cons and the Tea Partiers will bring down the country as we know it.