Two things to observe:
- Between the passage of the 16th Amendment, which ushered in the modern Federal income tax, in 1913, and the end of WW I, the US somehow managed to exist with only 2% of Federal tax revenue as a % of GDP. Then the war ended, and it was all downhill from there, with Federal tax as a % of GDP first flatlining around 5-6% of GDP, and then after WW II, it found a new home just shy of 20%. One wonders what the new benchmark support for US Federal tax will be after the next global war.
- Spending, unlike taxes, have been far more erratic, and far larger on average, than Tax revenues. In fact, in the 82 years after 1930, there have been only 14 budget surpluses. Of note: the four years of Clinton budget surpluses between 1998 and 2001 were the first time Federal tax revenues surpassed spending since 1969. Judging by the recent explosion in government spending, which we doubt will ever be reduced to historical trendline again, the US can kiss the concept of budget surplus goodbye for ever.
Federal tax and spending as % of GDP - 1900-2011:
"Of note: the four years of Clinton budget surpluses between 1998 and 2001 were the first time Federal tax revenues surpassed spending since 1969"
ReplyDeleteSurprisingly, zero hedge posts something that even dittoheads and tea baggers should be able to understand, namely that if you do not take in more then you spend, you create a deficit. The presidency of Ronald Reagan, IMO, marked a true and sharp turning point in taxing and spending policy. That sharp change was that it became accepted that ideology trumped every other concern. Reagan wanted his trickle down economics, he wanted tax increases on workers and he wanted a war on those IN poverty. He got what he wanted but put us on a path of parabolic spending increases.
George Bush Sr.'s presidency also marked a turning point. When he made his infamous read my lips pledge and then raised taxes and then lost the election (in no small party because of a third party candidate) the Republicans from that point forward adopted a 9/11 like "Never Again" sense of outrage and determination to forever fight ANY tax increase. Simultaneously, they beat the drums even louder that all solutions lay in cutting all spending they are philosophically opposed to.
The Clinton years, IMO, are not what they appear on the surface. Coming into office, he was not inheriting a full blown recession and we were just about to embark on the dot com bubble. He raised taxes and because other conditions were right, the economy thrived. He also, however, gave stealth tax cuts to those making less money. People in most every category did well and because of Newt, Clinton was forced to accept welfare reform, but at least it came at a time when the economy was much better.
Today, we are in a situation where every smoke and mirror trick in the book has been used, taxes are at their lowest points in decades, the gap in wealth between the very few and very large is enormous, all manufacturing has been given away, the entire legislative process has been sold to the highest bidder and we are being told that the absolute best solution is to make poor people pay more taxes while we cut spending and benefits to everyone under 55.
The retort to this of course, is to attack me as somehow being in favor of massive government spending, coddling of the lazy, and soaking of the rich. I am not. If we magically erased all debt overnight, cut spending by 60% and lowered taxes, we would still be stuck with an economy and distribution system of profits that simply does not work.
"The retort to this of course, is to attack me as somehow being in favor of massive government spending, coddling of the lazy, and soaking of the rich. I am not. If we magically erased all debt overnight, cut spending by 60% and lowered taxes, we would still be stuck with an economy and distribution system of profits that simply does not work."
DeleteAre you reffering to Obama, or is this a direct quote from him?
Because the rest of your comments are spot on
No, these are all my words and I was making a defensive swipe against a potential counter argument that did not address the substance of what I was saying. I've never heard Obama or any other Democrat with national exposure say what I'm saying here. I get frustrated in debates in the debt and spending. Partly because I'm tired of hearing the endless bullshit about how fiscal Republicans are. Nothing in the last 30 years remotely supports that. But, I also feel that last para is at the core. We have gone from a period where workers shared in the economy to a point where they are reviled as blood sucking leaches.
DeleteI have come to believe that the closer we get to unregulated capitalism, the more wealth becomes a zero sum game. Which is to say that the owners of capital will use their heavily weighted voice to ensure that a greater and greater slice of profit is given to them. The flaw, that I believed Greenspan finally saw is that human nature is to seek comfort and reduce risk no matter what station you are at in life. Fundamentally, I see no moral difference between between a lazy slacker who a claims benefits for a disability he doesn't have and a wealthy snot who decides he would rather use his money to keep competition away rather then reinvest and take risk to keep improving his company. Some insecure Type A people will live their entire lives looking for someone or something to beat so they can feel good about themselves. The rest of the world will seek comfort. If you are poor and do it, you are a leech. If you are rich and do it, you are worshiped and pitied for being a victim.
At a polar opposite, you can, of course, stifle all creativty and desire to work. We are no where near that extreme, certainly not when you compare where taxes and regulations where at the end of Carter's presidency. But again, much of what we so vehemently argue over is fantasy. We've never been socialist, and we've never been purely capitalist. At best, I believe we have had times where we decently managed inequality and a majority of people did well. That is what I would like to see be a primary goal of any candidate running.
I believe our biggest problem is lopsided redistribution of wealth upward. For as long as that persists, everything else is truly freaking meaningless. Cut all you want. Kick people off food stamps. Repeal Obama care. Kill the EPA, kill the department of education. Do whatever you freaking want. It will not create a continuous recycling of capital that is crucial to national growth of wealth.
Your right, taxes are at their lowest point in a very long time.
DeleteFederal taxes on middle-income Americans are near historic lows, according to the latest available data. That’s true both for federal income taxes and total federal taxes.
Income taxes: A family of four in the exact middle of the income spectrum will pay only 5.6 percent of its 2011 income in federal income taxes, according to a new analysis by the Urban Institute-Brookings Institution Tax Policy Center. Average income tax rates for these typical families have been lower during the Bush and Obama Administrations than at any time since the 1950s. 2009 and 2010 were particularly low because of the temporary Making Work Pay Tax Credit.
Overall federal taxes: Overall federal taxes — which include income as well as payroll and excise taxes — on middle-income households are near their lowest levels in decades, according to the latest data from the Congressional Budget Office (CBO).
The 5.6 percent rate is the effective tax rate, or the percentage of its income that a family pays in taxes. It is well below the 15 percent marginal tax rate — the rate paid on a filer’s next dollar of income — that a family of four in the exact middle of the income spectrum faces.
It will not create a continuous recycling of capital that is crucial to national growth of wealth.
DeleteThat ended with the import of cheap junk from around the world and is unlikely to ever return.
Two significant factors to consider. The decision to go off the gold standard, and the general fund being a slush fund for all government revenue.
ReplyDeleteTwo genie's out of the bottle.
Alright dollar, you raise some reasonable points. Respectfully, bringing up the gold standard is a cop out and here is why.
DeleteHere's what Alan Greenspan had to say in 1966 in his essay "Gold and Economic Freedom"
"But the welfare statists were quick to recognize that if they wished to retain political power, the amount of taxation had to be limited and they had to resort to programs of massive deficit spending, i.e., they had to borrow money, by issuing government bonds, to finance welfare expenditures on a large scale."
It is completely impossible for me to look at that paragraph and not think of Ronald Reagan. Of course, you will spit hairballs upon reading that. But go back to those charts again. Despite the fact that FDR basically started taking us off the gold standard, it was Nixon, a Republican, who finally shut it down for good. Spending started to go up, but it wasn't until Reagan that it went parabolic.
I don't endless scream about Reagan because I am some fucking liberal. I scream about it because we continue, to this day, to listen to people who worship him and his tactics which were nothing more than transfers of wealth upward. Here again, the two faced Greenspan nails it very well in the same article, "Deficit spending is simply a scheme for the confiscation of wealth."
To blame lack of a gold standard for our problems today is exactly the same as an addict blaming the producer or seller of the object of his addiction for his problems. To this day, I can still agree with much of Francisco's speech to Reardon on money from Atlas. Though needlessly long, it perfectly describes the REAL cause of inflation, which is debasement of value. When Howard Dean said he had the support the congressional black caucus, Al Sharpton replied that you only need a co signer when your credit is bad. This sums up the gold standard.
If tying the dollar to gold is the only way this country can show the world we are not irresponsible fucking children, that speaks volumes to our character. I stand by what I said. No group of welfare statists has more clearly and succinctly put into practice the adage "Deficit spending is simply a scheme for the confiscation of wealth." then Republicans. When Republicans could not outright unwind the new deal, THIS is the path they took to begin taking away the protection of a middle class that FDR started. This is what Reagan is really worshiped for.
Greenspan makes the point that gold is not the only thing that has ever been used as a store of value to back up currency. But Francisco make the point better. Regardless, we debate philosophy as if we have actual examples in the real world to back up our discussions. We don't. Reagan said one thing, but in practice did the exact opposite...and so did every POTUS after him. Since we can't stop this endless worship of Reagan and Clinton that neither deserves, how bout we at least stop talking about the world as we wish it to be and address the world as it really is.
Max,
DeleteNice piece although not entirely correct. The congress is responsible for spending. The President makes the request, Congress when it works as designed makes a decision on what they will fund and how it will be spent. Once funded by Congress signed by the President it's difficult at best not to spend the money as that's the law.
The anomaly is the last 4 years, the CR process which has a 7.5% escalator built into the budget. That is how the Obama administration is able to spend 800 billion more this year than when he took office.
When the politicians take their own self interests out of the budget process is when we will see true budget reform. That will only happen with a super majority to force spending cuts through the system. I often wonder if it wouldn't be better to refuse to pass a budget or CR as that would force cuts. Ever notice that government never gets smaller, even during a recession, government thrives.
So now we move the goalpost and say it's all about congress. For Republicans, and I'm not aiming this at you Lou, they conveniently blame Bush while THEY HELD THE CONGRESS FOR SIX FREAKING YEARS and then come back and go apeshit on Obama and the Democrats for not fixing everything in two years of control. THIS, is my point, we have got to stop the bullshit of freaking the fuck out ONLY when a Democrat is in office. Republicans are NOTORIOUS for finding fiscal Jesus every time they are out of power. It's getting old.
DeleteAs for the super majority, we already have this system and it sucks. That we need a super majority is an unmistakeable admission that we are idiots. That we are so immature that the only thing we can say is "NO, I will get my way or crash the plane and kill everyone." Currently, the Democrats hold two houses and the Republicans one. Yet, the Republicans and many right of center are okay with the entire process being shut the fuck down because they reject the outcome of recent elections. McCain said elections have consequences. I don't really see Republicans suffering those consequences these days. For six years, we had a Republican super majority. This is an honest question, why should I have even a slight belief they will somehow do it differently this time?
Self interest is one thing. Rigidly clinging to ideology is another. Again, I stick to what I said above. Ever since Bush Sr., Republicans have become a party that refuses to raise taxes or pay the debt that STILL remains largely rung up by their presidents. Blind allegiance does not fix anything. I'm getting very close to deciding to not even vote for Obama after I saw an interview with the green candidate last night.
Max, the main reason for the formation of the Tea Party is to restore fiscal sanity. Wouldn't it be nice for instance if we actually had an annual budget passed by congress and signed by the president? Both sides are at fault of course and your tirades against Reagan are off point to a point.
DeleteTheir is a substantial amount of blowback going on now down in DC and in Statehouses across the country. I have stated many times that this isn't about this one election or any one election down the road. This movement will take this cause to the grave. If gridlock is the only method to prevent our grandchildren from becoming economic slaves to the State, then gridlock it will have to be.
It matters little who wins next month. There is a big pile of debt that has to go through the gooseneck. Many of the golden geese have already been summarily slaughtered or put in such onerous regulatory chains as to be neutered.
It will be a long, long time before this pile of political horse shit is mucked out of DC and our major cities.
But mucked out it will be.
1773-2009 Hand me the pitchfork.
William, the majority of America is NOT where the Tea Party is, which is to say they are not where the Kochs are. You are correct that it matters little who wins next month. But, I see nothing from the Tea Party either that suggests to me they are serious about fixing our problems.
DeleteThere is one inescapable fact, once you are in debt, you cannot get out until you first take in more then you spend, and then take that surplus and apply it to the debt you owe. I'm sorry to say William, there is not a single stinkin politician right of center who is willing to do this. If they cut spending of programs they hate, they will simply put in another tax cut. The path we were started on under Clinton and Newt, with a system of paygo, was working fine. Now, we can't even go back to that arrangement.
I understand the bitterness of paying taxes for social programs you are convinced you will never use. I felt the same way.......at age 24. Gridlock is NOT the only to protect our children from being saddled with debt. However, gridlock IS the only solution for those who reject the world as it is because it isn't the world they believe (falsely) existed 200 odd years ago. Gridlock IS the solution when what a minority wants is in opposition to what the ELECTED majority wants. Essentially, the Tea Party path is to keep saying "No" until we have rolled back every law short of reinstating slavery.
What got the Tea Party going was palpable. What they have become is just another mouth piece of special interest rich people who want the world deregulated for their benefit. If only I'd seen some example that the market genuinely kept people honest, I might feel different. You, William, may be the embodiment of Howard Roarke or a founding father, but the titans of business are not and they have proven time and again they will choose to shit on us rather then absorb cost to not do so. It's a false choice to say that we can have regulation or we can have prosperity. But that's the main choice we are being given by people who support the tea party.
Max,
DeleteTo be accurate, 3 years, the other 3 were split R/D.
The question you have to ask yourself, is it the same America today that it was 12 years ago? 4 years ago? I think not. 4 more years of the same is certainly not the way to go. Not once has Obama made a statement that he will get the budget under control or reduce the debt. The Pubs. at least make a little noise in that direction.
Is the debt affecting our economy? Think the zip interest rates are there just because the economy isn't the greatest? I contend they are at zip because we cannot afford higher rates even though they should have been raised some time ago.
So the choice that it comes down to, want to roll the dice and hope O changes?
As a side note, both parties have been spouting that small business is the answer. What a joke as small business, start up's pays peanuts and it is a scam by both parties. But it is a answer to jobs although a piss poor answer. Outside of a specialized small business when have you seen a mom and pop pay 60K a year?
Max, just a data point for you. Our Tea Party continues to celebrated substantial increases in attendance which will result in increases in membership.
DeletePrediction, If I might? If Romney-Ryan does happen to lose the republican party is toast. The democrats in power will also not have a dance partner for another four years. One way or the other unsustainable government spending will turn back towards sanity.
You just cannot get out of your trench Max and see the paradigm that is occurring. You're flying your bi-plane blind at the center of a hurricane and you keep reporting to base how calm things remain.
1773-2009 FOUR MORE WEEKS!
Lou, I guess we need to be a little more precise. Here is a good link http://uspolitics.about.com/od/usgovernment/l/bl_party_division_2.htm regarding which party held which house. If we are talking about congress to mean the senate, there was a split. That said, Republicans controlled the house of congress until they got thumped in 2006. Which was my point. I believe a lot more of the budget work gets done in the house then in the senate, but certainly both do budget work.
DeleteA point that I continue to raise that you basically either reject or refuse to talk about it is that there has been a de facto change in the way the senate works. Simply have a majority is no longer a majority because with the filibuster rules, the minority party can block whatever the want. As an added bonus, they no longer even have to go stand up there like Mr. Smith. They simply say we will filibuster that and if the Democrats can't wrangle 60 votes to end the filibuster, they can't have a vote on simple majority lines. Democrats, of course, have done this to the Republicans, but in McConnell's tenure, the number of Republican filibusters has been off the charts. You can bring up in retort that Reid blocks house bills and this is true. However, it's a separate issue of obstruction. Bush, when his party controlled two houses, did not face the same level of opposition.
William, I agree on your prediction of the Republican party, as did Andrew Sulivan. The Democrats have no dance partner as it is. This will not be a change. Regarding the celebrations the Tea Party is having, I say good luck. You, looking outside of the Democratic party, believe you have it nailed on every aspect of how they think and what they want to accomplish. Of course, being in the inside of the Tea Party movement, you are convinced that what YOU believe is what everyone in that party believes. Looking at your party from the outside, I see much different things then you do. You are no less reporting all is well to base camp then I am. But, we'll wait and see how well your party does this season. Objectively, I think you have a much better chance on picking up seats in mid terms then now.