Reflecting on your article, can you further explain exactly why it is a 'bad time' to impose tax hikes, specifically upon multimillionaires and billionaires? Especially in light of the fact that our disparity in wealth accumulation has reached banana republic levels?
Tax rates for the wealthy are too low and surely should be raised to Clinton-era levels. But it makes sense to raise the rates when the economy is doing better. I'm fully aware that raising taxes on the rich has a much smaller negative impact on the economy than raising taxes on the middle-class. But unless that impact is zero, why do it now? Of course, we shouldn't cut spending right now either.
No, enough. We've been kicking the can down the road for 2 decades, and in case you didn't notice, markets are starting the bail on lending to the U.S. NOW (PIMCO, China). By training I'm an economist, and that also means knowing some basic game theory. Your game plan, only modestly disguised, is for fiscal hawks to give Obama something real, now (authority to spend more, more, more) in return for vaporous promises of good behavior in the future, spending cuts we know no Democrat is serious about because no Democrat has even offered a plan. No. The only way to get spending cuts is to get them FIRST; enhanced revenue through tax reform can come second. It's the only way.
As an economist, you're surely aware of the state of the economy. You know that business isn't spending -- in fact, is sitting on piles of cash -- and that consumers aren't spending, either. You know that government spending is an important contributor to economic activity. And you want to cut that spending now, with the economy wheezing and gasping? Bad idea.
Why not reduce foreign aid or at least modify the method by which aid is given? This is especially true when giving contrary nations money.i.e Pakistan, Venezuela and ,by the way the United Nations.
You could cut foreign aid to zero and have negligible impact on the national debt (unless you consider spending three-quarters of a trillion dollars on defense each year a form of foreign aid). Oh, and the money we give Venezuela is in payment for that nation's oil. If we want to stop sending huge amounts of money to problematic countries like Venezuela and Saudi Arabia, we need an energy policy that reduces our dependence on fossil fuels.
First, do no harm is a fine approach. However, not increasing the tax rates on the very wealthy will only end up with cuts to programs that the poor and what little is left of the middle class need. It won't end up with out being able to engage in the kind of public works programs that will put people back to work. I understand that you think that tax rates are not where they should be. That said, how do you justify not increasing revenues when this will do enormous harm to the vast majority of us?
I said there should be neither budget cuts nor tax increases until the economy improves. Longer-term, there will be both. My preference would be for the cuts, when they come, to begin with the defense budget before we even look at social programs that have already been pared to the bone. Ultimately, we're going to have to take another whack at health care (which other developed nations do more effectively, at half the cost).
So much of taxpayer's money is protecting oil interests, whether through subsidies or military involvement. Why isn't this the perfect time to subsidize domestic production of 'green' energy, and rehabilitate our infrastructure? Both will produce jobs for Americans - and get our economy going. Why are these seemingly not even under discussion?
There's a lot of discussion about jump-starting the "green" industry. But it is assumed that House Republicans will never approve this kind of investment. It would be in their constituents' interest to instruct them otherwise.
Presidest Kennedy said "Ask not what your country can do for you but what you can do for your country." Why can't our leaders convince us that sacrifice is needed and we as a people need to take a higher moral ground?
The middle class is already sacrificing. Perhaps someday Americans will realize that.
Hi Gene, Great column and a whiff of common sense. But don't you think that the fundamental goal of the GOP is to make it seem that the President is just hapless. To block any type of solution to a problem as a run up to the next Presidential election To the GOP It doesn't matter that the greater good of the country is put in jeopardy as long as they get the political gain? Thanks again for the column. Norwalk, CT
Mitch McConnell, you will recall, acknowledged that his number-one goal is to make Obama a one-term president. There's danger, though, in playing brinksmanship for political gain. People might notice.
It appears that the Tea Party is really becoming more than a one-election phenomena and is starting to attrack a large number of independents and Democrats in addition to conservatives. The Tea Party's main goal is to defund most of the federal government. Mainly they're interested in funding defense and not much else. If they take over the White House and end up with strong majorities in the Senate and House, they will almost certainly adopt the Ryan plan, effectively ending Medicaire as we know it. That will be just the beginning of their mission. Do you think the rise of the Tea Party spells doom for government at all levels and the Democrats?
No, because the Tea Party is far less than a majority. The movement's rise is a sign of a several trends -- including how frustrated some people are with the major parties -- but I don't see it as a threat to take over the government. Well, not beyond the extent that it's taken over already, given that the Tea Party caucus in the House seems to think it's running the whole world.
I consider myself an average/ordinary middle class, middle of the roader who tries to stay somewhat informed. I don't read or care very much about process stories or claim to understand the nuances or politics of inside the Beltway infighting. I live in the middle of the country and am over 50 female. Now that I have given you my demographic-- my question. Why are the politicans not focusing on jobs and growing the economy and instead playing Charlie Brown football with the US credit rating? And if all these GOP candidates have a way to bring jobs to the US and "fix" the economy-- why don't they share with the rest of the class? I think the Dems aren't doing a very good job either. where is thier focus on jobs?
I've written several columns asking those very questions, and I guess it's about time to write another. I'm waiting for someone, anyone, to come up with a compelling message about jobs -- a message that connects with people. Haven't heard it yet.
A good reason to raise taxes on the wealthy is to help fund the social service programs people need to survive. The wealthy keep a lot of their money tied up - they don't spend it on goods (the production of which might employ people), and there are only so many services they can buy. They have more money than they know what to do with. And while we're at it, perhaps corporations should actually pay corporate taxes.
You're right on all counts. It's just that I would prefer to do what obviously needs to be done -- raise taxes on the rich to reasonable rates -- when the economy isn't sputtering so badly. I'm confident that raising taxes for the wealthy right now wouldn't kill the recovery, but I don't think it would particularly help, either.
As a Republican, I'm pleased with the strategy House Republicans are employing. They've essentially told Obama that unless your party passes our plan, we'll default on our debt, send the world into a deep recession or depression and throw millions of Americans out of work. And by the way, we'll lay all of the blame on you and your party, guaranteeing a Republican sweep of the White House, Senate, and House in 2012. Then the real work of dismantling the government will begin. Will the Democrats agree that they have zero influence on the debt ceiling bill and capitulate, like they have on almost everything else since the 2010 elecitons? Will they refuse to budge and watch the economy implode or is there another possibility?
Republicans have already succeeded in having the battle on friendly territory: The question seems to be how deeply to cut government spending, not whether making such cuts now is a terrible idea. So I think the GOP is positioned to get the better of the bargain. But if Republicans actually cause a default, or even threaten so convincingly that the markets react, I don't believe they skate free without being blamed. They're playing a dangerous game with the economy, and they're playing a dangerous game with their own political standing.
Eugene, it's not quite true that the economists have blown this. There have been a small number of vocal stalwarts (Roubini (sp?), Krugman and others) who anticipated the crash, called for a much larger stimulus, and have told us that we're not out of the woods yet. These economists have recognized that a financial crisis is its own breed, that it takes a long time to deleverage and the government needs to step in aggressively with spending to fill the void. They've been unrelenting and generally ignored on the front pages and national conversation -- other than by wonks. The upshot is that the general public is largely unaware of these views and uninformed about this particular perspective.
I don't think you can argue that Paul Krugman is being ignored. The op-ed page of the New York Times offers a pretty big megaphone. He was right, I believe, about the stimulus being too small. He's well-read at the White House and in the Capitol, so I don't think this view of the crisis -- and what to do about it -- is unknown to policymakers. It's just being ignored.
If we have to spend debt-financed dollars to avoid another recession, at least let us be smart about it. The same dollars spent hiring workers to rebuild crumbling infrastructure are better spent than allowing Grandma to live in a single family home in Arizona or Florida she can't afford. I know no one wants to live with their elderly Mom anymore, and Mom doesn't want to be "dependent", but we can't afford to pay her enough to live alone. SS checks have to be cut. The only questions are when, how much, and where will Grandma live afterward.
I hear Grandmas booing and hissing throughout the land. Social Security would become a problem years from now, unless some modifications are eventually made, but is not a problem now. The problem isn't where Grandma lives. The question is how to pay for medical care for an aging population. I believe the United States wants to ensure that senior citizens are properly cared for. Which means, if I'm right, that we'll have to find a way to keep costs as low as we can -- and pay for them.
If I reduce my income, my debt would tend to rise. Republicans don't seem to believe this, saying that cutting taxes would increase business and thus increase tax revenue. But after the Bush tax cuts, can they still say the theory has been proven correct? I still see few people saying what THEY would sacrifice to have tax cutgs and a balanced budget at the same time.
Right. Let's hear it, folks. Ready to turn in those Medicare cards?
That's all for today, alas. My time is up. See you again next Tuesday!