Fiscal irresponsibility - McCain & Obama tax policies
 

http://www.taxpolicycenter.org/publi....cfm?ID=411693

We're now paying the price for extended budget deficits, fueled by persistent (and arguably) irresponsible tax cuts without regard to their long term economic effects.

The preliminary analysis of McCain's & Obama's tax policies suggests with Obama tax revenues (ability to close the deficit, reduce the debt) would be increased by $700B, while McCain's proposal would increase our deficit / debt economic baggage by $600B.

The micro-focused conservative emphasis on the benefits of tax cuts is running up against the now apparent economic price to be paid by all for irresponsible fiscal policy.

As with McCain's proposal to exploit domestic oil reserves, there is no commensurate requirement for (needed) sacrifice by individuals, the underlying problems to be manifested & paid for in the long run are ignored.

This is simply a continuation of Bush's fundamental irresponsibility. We have to face reality. This isn't it. This is transparent political pandering, exploiting individualism for short term political gain.

No sacrifice to be paid, folks. Put the tab on the credit card.

Like Bob Dole before him, McCain has sacrificed his deficit hawkishness on the altar of supply side voodoo, AGAINST THE COUNSEL OF HIS ADVISERS. You've got a serious mess when someone who admittedly doesn't know much about economics ignores his economic advisers. All this government borrowing will blow interest rates through the roof and arrest investors.

Obama, on the other hand, will raise revenue from the richest 1.5%. It's the first law of public economics that if you're gonna tax, go after the people most unresponsive to taxation. In our time of huge deficits, this is sensible economics.

He's also lifting the cap off the ultra-regressive payroll tax, simplifying tax forms for middle class taxpayers, and encourage the middle class to take advantage of 401Ks they currently aren't.

This tactic always makes cry.

Liberals encourage a liberal like Bush to spend like a drunken sailor, but the sole conservative aspect of him refuses to raise taxes.

So after he's accrued a debt spending for the libs on a prescription drug plan we don't need and can't afford, the liberal element steps in and states, "we really need to raise taxes."

Sorry don't buy it. Start cutting programs and eliminating staff. Until that's done seriously, NOBODY should seriously consider raising taxes.

Start by means testing Medicare, limiting benefits, and eliminating the Prescription Drug plan.

Start by not rehiring retirees from the federal government bureaucracies. Encourage early retirement.

NOTE: I'm fully aware, nobody will implement these sensible suggestions, and Obama will probably f.. us up with your suggestions, but F... us for electing the asshole.

Struggling economy, so let's restrict capital, regulate banking more, dry up spending through higher taxes, change the capital gains tax

Why couldn't I think of dumber ideas than that.

I don't have time to give you an economics lesson right now, but google "asymmetric information," for more on why banking needs to be regulated, take a class on quantitative methods at your local JC and then review the empirical literature on the elasticity of the labor supply on the top income bracket, and then we'll have an intelligent discussion.

I know what the f..ing bastards teach in those classes, but I disagree with their methods and assumptions.

You're just referring to Keynsian bullshit, and you know it. Just because one can throw terms around doesn't mean you know about a damn thing about running a business, making a small sub industry function or how to stimulate real growth.

Yes, one can read the "leading" economic publications to arrive any conclusion or to justify any position one desires. That doesn't mean in reality it works. It's rhetoric. In short, it's a political decision to justify what you want to do, wealth redistribution in order to grab power. You can do your regression analyses, paint your fancy graphs, but none of you really wish to benefit anybody other than yourselves. That's the bottom line. Economic wars are fought with words now, not ships and guns.

Macro-economics is bullshit. You don't control or account for enough variables to ever get it right. In order to make it work right, you'd need to be a quasi-benevolent dictator a la those in Singapore, treating the populace as work units of production.

But you have failed to address the consequences of a high level of government employment in non-productive job sectors, the high concentration of the GNP on non-discretionary spending, and whether having a trade deficit is good or bad.

You're not cynical at all at anything coming from your side. Try cynicism.

hahaaha! this is the best thing you've said the entire thread. you're almost right, cross-country regressions have their weaknesses. but asymmetric information is a micro issue, and macro is still 900% more valid than your theological, process philosophy, textual criticism garbage.

what does the virtue of trade deficits have to do with Obama again?

asymmetric information is a contract concept, where the usual example is that of the used car salesmen. We dumb lawyers discuss that and other concepts whether it's economically feasible to induce breach, so what's your point. Some guys I think name Stiglitz and Spencer or something developed some theories in this area.

this is a problem in banking when investment and commercial banks cook their books. hence the need for more regulation. hence the need for an Obama presidency.

Bullshit.

Not to jump into this bar fight, but there are certainly legitimate reasons for selective redistribution of wealth, it's not simply a means of buying votes through programs (I know that's the conservative fantasy, but if that were true, people on welfare would be making a lot more than they do, and Bill Clinton would have never agreed to welfare reform).

An extreme example of a situation where tax policy could effectively make the whole society (hence economy) improve: El Salvador, where 1% of the nation own 99% of the wealth. This really isn't good for anyone.

Slashing spending to match post tax-cut revenue would be politically untenable, and I'm sure conservatives wouldn't go for the commensurate cuts in weapons programs.

We got here on a sugar high, there's no place to go without some pain.

your mom's a lesbian

Hell, mon, the banks are already fairly well regulated - it's the other players (unregulated) in the financial markets that drove us halfway off the cliff from their SubPrime intoxication.

The banks agreed to regulation after the Great Depression. As part of the bailing from Bernanke, the other sectors in the financial markets have to be regulated. They've proven they can't self-regulate, and as a nation, we can't afford the destructive effects of unbridled greed, not in that market.

I was speaking more of the abolition of wall between investment banking and commercial banking making it easier for the commercial banking compartment to make a loan to its investment bank to push up its stock. Excessive deregulation by Bob Rubin and the Clinton administration created the bubble.

Here is economic growth under administrations of different parties, with a one-year lag.
http://rodrik.typepad.com/dani_rodri...02%5B21%5D.gif

Growth under dem administrations is both higher and more equitable.

And less Arch bring up the tech bubble again and make some looney connection to tax hikes, the figures attribute the bubble to Clinton.

Oh my, that is so much bull. Man I wish I had the time today to debunk this malarky.

Before I would devote time to debunk Chino's blatant dishonesty I deserve to be paid.

I can see Seattle disdain for Chino now.

Everything I've said is ground in economic theory and empirics. Your lawyering crap might get you by in the liberal arts, not here. Pulling terms from wikipedia to make it look like you know what you're talking about won't work either. And like appealing to SU would boost your credibility or something.

You believe that graph proves your point? If so, then I know you're dishonest.

I can go to the Heritage Foundation or one of the conservative economic thinktanks to countermand your bullshit.

Did you learn that shit in Paulsen's advanced philosophy class as well? Others learn stuff besides you.

You're mom's a lesbian.

This is an automatic response until you come up with something substantive.

The problem with Asymetric information is determining how much is asymetric.

How much more does the bank know than the average consumer?

thank you! what a refreshing response from the other side.

when investment banking is in bed with commercial banking, commercial banks can make bad loans to companies whose stocks the investment banks are trying to push and pad their balance sheet and 10-Qs.

It's hard to quantify how much they're deceiving their shareholders, but the bubble should be a clear indicator it's too much.

So you show you have no limits by insulting a person not associated here. And your response to MRD's response was pathetic. Demonstrate an iota of honesty and I'll respond in kind, but I find you to be the most dishonest person here.

You're mother's a lesbian.

I'm confused...
Are you calling him your mother?
Are you saying your mother is a lesbian?

Multi-verb sentences are so confusing...

I really hope you're not claiming that these isolated instances (if they occurred at all) are the cause of our lending crisis now.

think about it this way. If you're both an investment bank and a commercial bank, and the companies whose stocks you're pushing aren't doing so well, wouldn't you be tempted to have your commercial bank lend money to the company to make them look like they're doing better? That's why there needs to be a wall between investment and commercial banking.

and no, that's not the cause of the current crisis. Ma'ake can give you more details on that.

How does lending money to a company make them look better?

Forgive my ignorance, but isn't that the role of an investment bank--to finance investment opportunities? Or are you talking about institutions like e-trade? Are you suggesting there is a conflict of interest in offering both traditional loans and investment vehicles? I don't see it.

It improves their capital position?

more cash on hand makes your balance sheet look better.

investment banks help companies raise money by selling securities. so it's in their interest to make those companies' stocks look good.

Have you ever heard of sarbannes-oxley? We have enough regulation

The definition of economics is the

"the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses."

what this means is that economics is a about incentives. What are the incentives for a party to act in the way they do.

What incentives happen when higher taxes on richest are enforced? What they do is create a backward bending curve just like the one you posted here. rich people decide only to make enough money that their time isnt worth paying most of it to the government.

Archae is right... we need a president who will cut back costs not try and raise revenue.

there's no question higher taxes for anybody reduces incentives to work. but we need to get on the ground and discover how much. the point I've been making is that the answer for the rich is, not much. in aggregate, the rich are not very responsive to changes in the tax code. if you look closely at the graph, in Dem adm years, when taxes are usually higher, the rich still did slightly better off than in GOP adm years.

there are many reasons why this is so. some rich work more to recover their taxed-away income. there are also other forces at work. when tax cuts drive up the deficit, heavy govt borrowing will kick up interest rates, and which ultimately is a tax

The exceptionally rich also have ways of hiding money away from taxes. You take those loopholes away, and they find others, or change their behavior such that they are no longer required to pay the tax in question. More importantly, the liberal definition of "rich" seems to have magical elasticity.

Soaking the rich has always been an amateur solution to economic troubles.

Can the rich afford? of course no one is questioning that. What we are questioning is the policy to get more revenue instead of cut costs. If we really wanted to cut our deficit we would cut subsidies, Means test Medicare etc.. Instead what we are hearing is "we'll tax the bastard rich people who have more money than us to pay for whatever we want" [my summation of his fiscal policies]

First, yes that's true to some extent, but I don't know of an instance where it's so pronounced that raising income tax rates did not raise tax revenue.

Second, no matter how many shenanigans they use, it hardly affects how much they work and produce.
http://www.hup.harvard.edu/catalog/SLEDOE.html

What exactly is the "labor supply" of the rich, and what does it mean that it was unchanged? That paragraph is very vague.

You're not going to convince me that raising taxes doesn't correspond to a change in behavior, no matter how many Harvard studies you cite. Tax receipts have also been shown to increase when taxes are cut and new growth is stimulated. So what's your point?

fair enough. I'm for reducing the deficit from both sides of the equation, but that's a philosophical debate we can't resolve today.

how much they work.

No. Just because increased receipts from growth came right after a tax cut doesn't mean the tax cuts increased tax receipts. Economies grow as they come out of a recession no matter what.

JFK's cuts recovered only 1/3 of the revenue. Reagan's man says Reagan's tax cuts only recovered 1/4 of the revenue.

How much of the revenue that wasn't recovered was the result of not cutting the wasteful social programs?

An honest question, as I have no idea.

Well, no surprise there. I don't expect the rich to just sit on the couch and relax when taxes go up. I simply dispute that they don't find new ways to prevent the feds from getting their money. Perhaps before a tax increase they had planned to sink money into R&D for product X ... but now that product X is being taxed, they elect for product Y. Or worse, they choose not to develop a new product at all.

One could just as easily say that increased tax receipts after a tax hike are unrelated to the tax hike. And tax cuts may assist in coming out of a recession, thus making them an indirect cause of increased receipts.