Congress can be just plain taxing

As long as we're all clear: the key to a balanced budget is... drumroll please, making the budget busting tax cuts permanent!

You see, it goes like this. First the country was heading into a recession when Mr. Bush took office, so to stimulate the economy, we needed tax cuts.

Then there was 9/11, so of course we needed more tax cuts.

Then we started the Iraq War, so naturally, taxes would have to be cut so those at the top would feel no burden whatsoever while the nation was at war.

Then the economy started humming, so naturally what we needed was... more tax cuts.

Now the economy is faltering (because of massive structural trade and budget deficits and higher interest rates as a result??), so what better way to give it a boost than to enact more supply-side tax cuts.

And of course now (well, always since Bush took office) that the budget is running a huge deficit, what better way to fix that than by taking even more revenue from the treasury by making the regressive tax cuts "permanent."

You see, people, the logic is utterly bullet-proof. Long live our Debtor in Chief.

Figures that Bill "Tax the hell out of ALL Americans" Niekirk believes budgets can only be balanced by raising taxes. Tell that to New Mexico, where Democrat Bill Richardson LOWERED state taxes, or to Colorado, where Republican Gov. Bill Owenws LOWERED taxes several years ago, and in which those states have been doing quite well and having budget SURPLUSES!

But thanks, Bill, for continuing to show that you and the rest of the LIBune Washington Bureau is so incapable of being objective and are so far to the left that is beyong sickening.

Congressional Black Caucus gives Jefferson standing ovation
WASHINGTON (CNN) -- On the same day that the 110th Democratic-led Congress convenes with a plan to immediately pass lobbyist and ethics reforms, the Congressional Black Caucus Thursday gave a standing ovation to Rep. William Jefferson, the Louisiana Democrat who faces an FBI probe into bribery allegations.

"The haters... and negative nabobs...the people who spoke against him couldn't prevail against the people who spoke for him," Dr. Michael Eric Dyson, master of ceremonies for the CBC's celebratory event, said Thursday morning.

Incoming House Speaker Nancy Pelosi, D-California, led the charge to remove Jefferson from the House Ways and Means Committee last spring and has said she will not consider reinstating him to the powerful post until he is cleared of all allegations.

The FBI is currently conducting an investigation that alleges Jefferson accepted $100,000 from a telecommunications businessman -- $90,000 of which was later recovered in the congressman's freezer.

Wonder if there's going to be an ovation for John "Abscam" Murtha?

"But leave it to Leon Panetta, Clinton's former budget director and chief of staff to dismiss the move. "This is just happy talk," he said."

As GWB speaks you can actually see the calculations taking place. I think he, and all his 'people' have concluded that the situation is so bad for Repubs, that '08 is a lost cause, and Jeb ain't runnin', so why not plant some poison pills for the new Dem. president to swallow?

The whole idea could actually be to starve revenues even more. What if President Obama takes over just as the worst financial crisis since the Great Depression hits?

Services aren't free. It takes money to have support an army, keep food inspected and safe, have clean drinking water, have safe roads on which to travel, not to mention an educated population. In short, taxes support our country. To cut taxes is to cut funding for our country, which is an unpatriotic act. Let's get back to the peace and prosperity of the 90's when President Clinton raised taxes on the rich (who then made a fortune in the stock market) and made everyone better off. That's what a society is all about.

Sounds like Bush is planning for his post-presidential career - comedian. Too bad it's too sad to be remotely funny.

What a flipping joke.
W. "decides" that he wants a balanced budget AFTER he and the lockstep Republican led Congress have just finished with 6 years of spending us into oblivion.

W. wants the Dems to raise taxes so they can get the GOP hacks back into Congress next election cycle.

Wow, John D is on the warpath.

Your argument is flawed by the simple fact that New Mexico or Colorado isn't wasting billions of dollars in a costly and unneccesary war in Iraq. There are other reasons as well, but a bit much to go into here.

It IS kind of fun to watch John D go all red-faced and see the veins in his head pop out! I bet if we rile the little tyke up even more, we could get him to froth at the mouth!! I sure am glad he's not one of us "loony lefties" or he'd REALLY go hysterical!

G-Bu is quite clever in this move. He gets to ruin us financially with his irresponsible, multi-billion-dollar, foreign-financed expenditures and then, when he decides it's time to balance the budget, he can point fingers at the Dems and note how they increase the taxes to do it (cue: "TOLD ya so -- TOLD ya so!" along with attendant dance). I tell you what -- he may be a drugged out alcoholic with all the intellectual curiosity of a banana, but he's one swift little cookie when it comes to switching the blame away from himself! (Sorry for the food analogies, but I started my diet on Tuesday.)

Oh, and a comment for Disgusted -- I'm with you on getting Jefferson in front of a court to decide if he's guilty and, if he is, to get him the heck out of public service until he's paid his due.

Oh, you folks don't bother me in the slightest. I actually have pity on y'all. All of you loony leftists have a complete inability to understand economics, history, fact. It's actually quite comical.

Even Alan Greenspan credited the Bush tax cuts with ending the recession he inherited and lessening its impact. Those tax cuts have led to 5 years of economic GROWTH, nearly 2 MILLION jobs created in 2006 alone, an unemployment rate at historic lows of 4.5 percent, personal income up a very healthy .5 percent in December of 2006.

Oh, and those tax cuts enabled those making under $20,000 to no longer pay a federal income tax. And the tax increases of Bill Clinton included taxing Social Security benefits on senior citizens. Real nice of you loony leftists.

Brian, I began to read your post and I was getting enraged until I finally picked up on the sarcasm.

I really wish more people (most notably those on the right) would use more common sense when it comes to issues like this. It's pretty basic, Rich people keep their money, poor people spend their money, so which side would benefit more from tax cuts? Which side would put that money back into the economy quicker and with more frequency?

You would think the great Depression would've answered all these questions. How did we as a country pull ourselves out of that? It certainly wasn't supply side economics that's for sure!!!!

Even Alan Greenspan credited the Bush tax cuts with ending the recession he inherited and lessening its impact.
Posted by: John D | Jan 5, 2007 1:10:01 PM

Your grasp of economics is more advanced than I gave you credit for. Did you get a degree from sears with that? The recession he inherited? Could you get out that old abacus and tell me how
anything Bush could have done that would have affected the economy that quick?

"Even Alan Greenspan..."

Hahahahaha. You're a real comedian, John D.

John D,

"Even Alan Greenspan credited the Bush tax cuts with ending the recession he inherited and lessening its impact."

First off, "even" Alan Greenspan? He's one of your guys. That's like saying "even" Martin Luther King believes in civil rights for all. Furthermore, Mr. Greenspan wanted and expected spending cuts to go along with the tax cuts. He has consistently said that one without the other is not sustainable.

"Those tax cuts have led to 5 years of economic GROWTH, nearly 2 MILLION jobs created in 2006 alone'

With $2-3 trillion in borrowed stimulus pumped into the economy since Bush took over, you'd hope we would get something out of it.

"an unemployment rate at historic lows of 4.5 percent, personal income up a very healthy .5 percent in December of 2006."

When exactly DOES history start for you? Sometime in 2002? Mr. Bush took over with 4% unemployment, so I'm having a really hard time figuring out how his 4.5% unemployment could be considered "historic(ally) low."

You regularly cherry-pick statistics from isolated timeframes to make your point, so I would like to see some examination of the entire Bush presidency and where median income, growth, poverty, etc. is today versus when he took office. If you want, we can just use the post-recession period if that makes it easier for you. I'm not arguing that growth in any quarter is not good news, just that the bigger picture, especially in light of all of the deficit spending, is in order.

It must be nice living in John D's world. It's a place where massive debts pushed off on our children is actually a good thing, and where a war based on lies taking the lives of hundreds of thousands is morally beautiful.

Too bad the rest of us live in the real world.

Which side [rich people or poor people] would put that money back into the economy quicker and with more frequency?

Posted by: g | Jan 5, 2007 1:24:43 PM

g., isn't the answer really, "both?" Poor people spend their money, creating demand for goods and services, which creates jobs for them and for other people. Rich people spend money too, actually more of it, which is how they get those big houses, expensive cars, and yachts. This creates demand for goods and services too, which creates more jobs. (Remember the posting a couple of days ago about the luxury tax on yachts, which caused the collapse of the yacht-building industry, which threw the middle-class people employed there out of work.) The money that rich people don't spend, they save, but not in a money vault like Jack Benny or Scrooge McDuck. It goes in the bank, or is invested. Both of those contribute to capital formation, which is the piling up of large sums of money for use by companies that provide those goods and services.

Let's not succumb to the politics of envy here. Both wealthy people and those less wealthy have their places in an industrialized society. It's all interdependent, and the money goes round and round.

Dave,

Excellent post and a wise economic synopsis. Please don't jump to the conclusion, though, that what primarily inspires this political conversation is envy.

As I see it, the issue of tax cuts and the resulting income distribution boils down to two goals: Bang-for-the-buck and fairness.

I am on the record on this thread concerning fairness.

As for bang for the buck, I look at it this way: Say 5% of a taxpayer's income is returned. An individual making $1,000,000 would receive $50,000. A taxpayer earning the median of $45,000 would receive $2250.

I argue that the marginal effect on the decision making process would be decidedly greater for the median earner, as they would have more incentive to spend it versus save it. If the point of the redistribution is to stimulate economic growth, the dollar spent at the store by the hypothetical median earner will create more growth as it trickles UP towards the owners of capitol than it would if it were invested and trickles down.

That is the reason I believe the tax scale should be as progressive as possible without stifling economic growth. Conversely, it is why I believe that tax cuts for the very wealthy are not an efficient stimulus for economic growth.

Billy,

Are you saying that our hero, Senator Obama, was a co-sponsor of a bill that is a "passing fad".

It looks like the first tax reform the dems are passing are to help the rich as opposed to the middle class. Not just reform the AMT, they want to repeal the tax. That would mean Bill gates wouldn't have to pay the AMT. Ohh the humanity!!!! The AMT hit fewer people than a raise of the SS Tax cap that they will be proposing soon. I forgot, the AMT tends to hit people in high tax states, that is blue states. Also, how are the dems going "to pay" for this tax decrease. One TRILLION strong. I wonder how the libs are going to take to this. So much for the fiscally conservative democrats.

I'm all for it. This makes the estate tax look like chump change.

Bryan,

This is proposed by your new Senate Finance Chairman - not even in office 48 hours. How is today's economy faltering?

C. Morris, who is the new Finance Chairman of the Senate?

Bill R.

The economy achieved negative economic growth in the 3rd quarter of 2000, the end of the Clinton Administration. In March, 2001 the recession started and lasted for 8 months. Did he inherit a recession, not quite. But he did inherit an economy on the brink of one. Remember during 2000, the NASDAQ bubble burst and lost 50% of its value and the DOW lost over 10% that year. Since you have a good grasp of economics, you will know that the stock market is a leading economic indicator.

Bryan,

Your unemploement figue=res are correct. As far as the economic success of President Bush as compared to President Clinton, President Bush inherirted an economy that was on the downturn of the economic cycle as opposed to President Clinton who inherited an economy on the upturn (18 months out of a recession).

Tony,

The deficit as a percentage of GDP is the same now as it was in 1980, 2.7% - not large at all.

Dave Brann,

Welcome aboard.

Stan, how does the deficit as a percentage of GDP compare now to 2001 when Bush took office?

Interesting that you chose 1980 as a comparison, after a Democrat was President. Then Reagan & Bush ran it way up, till Clinton brought it down. Who's the party of big spenders again?

Deficit as percentage of GDP was 0.1% on average during the Clinton admininstration, 4.3% during Reagan/BushI, and has averaged 1.2% from the Washington administration to the present day, including all wars and the great depression. So, by what standard is 2.7% low?

Oh, and before you say it, the wars in Iraq and Afghanistan have cost only 0.8% of GDP, so that doesn't make up even a third of the difference from the Clinton years.

Hi Terry,

GOP + PIG + LIPSTICK = George Jr.s "Good" Economy

Terry,

Do you have any data to support Clinton inheriting an economy that was on an upturn? I seem to remember the period from 1990-1992 being the worst recessionary period since the Great Depression.

I also remember Newt and the gang claiming that if Clinton increased taxes during a recession, we were guaranteed another Great Depression.

Were the next 7 years the greatest economic expansion in the history of the country or am I just drinking the Kool Aid?

I wish we had another well-read smarty from the right to credit a republican congress for that. wink cm

You can thank Reagan's tax cuts for the prosperity of the Clinton years.

Bush's tax cuts have been hamstrung just the way previous tax cuts have been - - by too much government spending. The so-called Republican congress spent like drunken Democrats. If we could cap spending and cut taxes at the same time we'd really get somewhere.

"Tax the rich!!!!" is the same old class-warfare rhetoric the left feeds upon. Why should prosperity be penalized? I know many people who started with nothing, worked very hard, and have done very well to earn everything they have. Why should they be taxed more than the rest of us? I wish the Democratic party had more to stand on then getting even with the evil "rich" and scaring people with the thought that the evil Republicans will take away their government hand-outs and force them to take some finanical responsibility for themseleves.

"Why should they be taxed more than the rest of us?"

Why? They have the money and are harmed least by it being taken from them.

Take $20 from a poor person and you take food off their table.

Take $20 from a middle class person and your taking it from their kids college education.

Take $20 from the rich and you've taken a small portion of some luxury from them.

It's a simple choice.

Republicans will take away their government hand-outs and force them to take some finanical responsibility for themseleves.

Posted by: no name | Jan 6, 2007 9:43:07 AM

No name asks...Are there no prisons? and the
union workshops? are they still in operation?
If they would rather die...they had better do so
and decrease the surplus population.

no name,

Did you thank Jimmy Carter for the economic prosperity during the Reagan years?

Ironic, isn't it, that the Republican party is full of "social darwinists" but has trouble accepting Darwin's theory of evolution?

no name,

"wish the Democratic party had more to stand on then getting even with the evil "rich" and scaring people with the thought that the evil Republicans will take away their government hand-outs and force them to take some finanical responsibility for themseleves."

Glad you are hear to contribute such drivel to the conversation. You ignored all substance from previous posts and simply spouted right-wing "class warfare" talking points. I realize it is hard to argue with people who know what they are talking about, but most of the "thinking" wingers here at least give it a shot.

Thank you, Dave Brann and Bryan, for a reasoned analysis.

Tony,

I went back to 1980 to basically show where deficits were before supply-side economics made this a prosperous country and contrasted them to where they are now.

To put a little more history behind this, in 1943 in midst of WW2, the country's deficit was at 30.3% of GDP. Five years later, we grew out of it. Granted that was before the Great Society.

Since 1980, the highest deficit as % of GDP was in 1983 was at 6% when the country was coming out of a very deep recession in 1981-82. By the time President Reagan left office, that was down to 3.1%. It rose again to 4.7% as the country came out of the 1990-91 recession. After the economic run of President Bush/Clinton ended in 2000, the surplus was at 2.4% of GDP.

The highest under the current President is a deficit of 3.6% of GDP in 2004.

It is the spending that has increased $900 billion in the past five years, the deficit is not a taxation problem, IT IS A SPENDING PROBLEM.

Bubba,

If you go onto gov't websites, and compare GDP in constant dollars, you will see neagtive amounts in the latter part of 1990 and aneding in mid-1991. Simple Google Search.

As far as the great economic growth that went on from 1991-2000, there were many factors that assisted it and higher taxation was not one of them. The fact that President Clinton was in office during the 2nd greatest consumer invention of the 20th century, the personal conmputer/internet, assisted the growth that the economy (therefore tax revenues). Was the spending held down - yes. The reduction of military and intellgence spending helped reduced the deficit. Also, the GOP Congress under Newt accelerated the balanced budget.

If you remember in the Spring of 1995, Newt was saying that the budget would be balanced in five years. President Clinton was saying, no there are $200 billion deficits for as far as the eyes can see

"C. Morris, who is the new Finance Chairman of the Senate?"

Terry,

You talkin' to me?

Yes name -

Nice reference to "talking points"...you've become exactly like the rest of the lefties here. If it's a conservative opinion it must be talking points.

Here's more for you to digest.

http://www.opinionjournal.com/weekend/hottopic/?id=110009489

"the deficit is not a taxation problem, IT IS A SPENDING PROBLEM."

Terry, who's been in charge of both the spending and taxation for the last six years?

This is the third story in a row I have read on this website where the headline doesn't match the article content.

This post is titled "Congress can be just plain taxing", yet the content is about Congress repealing a tax and eliminating pork.

Interestingly, there are a few potshots at Obama thrown in, which seem to have nothing to do with the topic. Strange how a post about Congress cutting spending turns into 'Obama and Taxes'.

MattD,

The media tend to attack whoever is in power, I think. The Repubs are out now, so let's jump the Dems!

Obama, who I like, has enjoyed a lot of generally positive coverage. Now that he has been built up, it's time to tear him down.

C Morris, if you can answer the question?

Tony D., as I have said before, I am not thrilled with past performance of the GOP Congress and President Bush over the past six years when it comes to gov't spending. The senior perscription plan will be another boondoggle that hamstrings future generations to come.

No name, excellent article. It's a shame the article didn't come with pictures so more people on this blog could understand.

Terry-

Sounds like you're willing to spend vast amounts to blow people up, and nothing to help people get by.

Only if those people are our enemies, both foreign and domestic. Helping people get by can be done thru volunteer works.

Terry-

Who are the domestic enemies you'd like to blow up? Us evil Lefties?

While volunteerism is great and noble, it can't get the whole job done, witness Katrina.

Terry,

I stand corrected. March 1991 was the end of the recession according to most reputable sources. I would hesitate to champion Clinton as inhereting an economy on an upturn since, thankfully, that was the only direction it could go. Unless you agreed with Gingrich and Dole, both who said we would tail spin into another depression if Clinton took office and raised taxes. Much of this understood as political posturing at election time which seems to force a degree of economic uncertainty around every election cycle. Tax hikes didn't necessarily stimulate the economy directly but they did help take us from record deficits to record surpluses. Not too sure about who deserves the most credit for that.

Tony,

The phrase "enemies, both foreign and domestic" comes from the oath that a new solider takes upon induction into the military.

Katrina is an extraordinary situation. It was exasperated by mismanagement at the local level on all the money that was sent to Louisiana/New Orleans over about 30 years to fix the levee system but was spent on govt largess.

Bubba,

What took us from defictis (not record deficits in term of GDP - the only way to truly measure them)to surpluses had more to do with an economy that started to boom from the personal computer/internet and secondly from the gridlock in DC that slowed govt spending.

Terry-

Katrina wasn't that extraordinary. It was a major disaster, yes, but tomorrow it could be an earthquake in California, or a tsunami on the coast. But you can't claim that such a disaster can be handled by charity alone.

The great depression couldn't be handled by charity alone. A major pandemic can't be handled by charity alone. The homeless can't be handled by charity alone, though good people sure are trying.

Your vision of the Federal government only as a source of armed might, against enemies foriegn and domestic, is a perversion of everything America should be.

Tony,

Your version of America as a giant handout where the productive are taxed and the non-productive reap is well - Cuba.

Since you brought-up Katrina. Great front page story in today's WSJ. Talks about a shrimp boat that has been in someone's front yard since the storm. A contractor had VOLUNTEERED to removed the boat until he found out there was diesel fuel in the boat. He back down. The reason - he didn't want to be held liable by the states environmental laws.

Yeah, that's it Terry, fall back on some red-baiting whenever someone supports basic social services. Republicans, so predictable.

Yep, great Katrina example. Excellent example of why we need the government to step in sometimes. Spilling diesel fuel all over the place is hardly going to improve the situation now, is it?

Tony,

The reason the gov't would step in is that they couldn't be sued unlike a private contractor, even though the private contractor might do the better job, he faces the possibility of the lawsuit.

"even though the private contractor might do the better job, he faces the possibility of the lawsuit"

He might do a better job, or he might do a worse job.

If he's negligent, and contaminates my neighborhood with diesel fuel, shouldn't I be allowed to seek compensation for the damage done?

Tony,

My point exactly. If a private contractor would to mess-up they would face a lawsuit. If the gov't was to do the job, they could not be sued. In other words, if the gov't comes in and contaminates my neighborhood with diesel fuel could you sue them?