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My Challenge To Liberals
If you’ve been paying attention to politics lately, you’d know that the great debate in our country right now is over how to solve our looming (and entirely predictable) debt crisis. On one side of the debate, conservatives are saying that we need to cut government spending and grow the economy to reduce the deficit. On the other side, liberals are saying that we need to raise taxes on ‘the rich.’
Here are the facts: the largest amount of revenue the federal government has ever brought in during one fiscal year was $2.7 trillion in FY 2008 – under the dreaded George W. Bush and his ‘tax cuts for the rich.’ Even if the government were to raise this much revenue in FY 2011, we would still be over $1 trillion short of what Obama wants to spend this year.
My challenge to liberals is simple: Can you please explain to me how raising taxes on ‘the rich’ is going to close this gap? The government is only going to collect $2.2 trillion dollars in FY 2011, and the CBO’s best estimates show that even if the Bush tax rates had expired at the end of last year, the government would have brought in an additional $60 billion per year. That leaves us at $2.26 trillion for FY 2011 – still over $1.5 trillion less than what we’re scheduled to spend.
The answer is that there’s no feasible way to tax our way out of this mess – we need to cut lots of spending, and as fast as possible.
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16 Comments
The fact that your ignoring is even if you cut spending to revenues you have a $14.3 trillion debt to pay off. Yes by cutting spending you stop adding to that debt but you MUST collect more revenue than you spend. So either you cut Govt’s budget to $2 trillion a year and use the remaining to pay off debt or you increase revenues above the Federal Budget costs. Our highest revenues were in the $2.5 trillion area not $2.7 trillion for one http://www.fms.treas.gov/mts/mts0909.txt and at that number your talking 2005 I think, when we last ran Govt for that cost. In 2008 we still had almost $500 billion deficit since Govt actually spent $2.9 trillion. No matter how you look at it, we need a combination of DEEP CUTS and a modest tax revenue increase if we ever hope to get out of this.
@thegreatbobo
The fact is that a low tax rate environment is best to grow GDP, and growing the economy is the quickest solution to the debt problem. Our economy is $14.6 Trillion; growing that by 4% means that we added $584 Billion to our total output, plus at 4% we would be adding jobs. Do you realize how much of that would end up in the Treasury? What if we grew 6%? Not to mention growing the size of the economy also shrinks the size of the debt as a percentage of the economy.
The people are taxed enough already. The graph in this post shows how rediculous this whole debate is on spending. We QUADRUPLED the largest deficit in previous history and there have been no attempts to stop the bleeding with the exception of the latest budget agreement for FY 2010.
When Reagan brought the top marginal rates down from the Carter-era 70th percentile to 28%, tax revenue remained steady at 18%. There have been several adjustments since them, from Clinton’s 39% to Bush’s 35%, and so on. And the revenue stream was the same as it was since Reagan – hovers around 18%. The government, no matter what they set the tax rates at (income or otherwise) never really collects more than 20%. Therefore, raising taxes won’t produce anywhere near enough revenue to close the gap. Luckily, the Obama Administration has brought this problem on itself and has set spending levels to astronomically high that anything he does in terms of raising taxes won’t fix the problem, so it’s pointless to hurt the economy more. He’s taken raising taxes off the table as a means of solving the problems he’s exacerbated. Ryan’s plan (an actual plan, as opposed to Obama’s demagoging, economic illiteracy and speechifying that he’s trying to pass off as a plan) calls for lowering rates on everyone while eliminating a host of deductions. You know, like Obama’s own deficit panel recommended and what Obama ignored yesterday.
We don’t have a revenue problem and never did. We have a spending problem.
The only way to increase revenue is to grow the economy and thus increase revenues from a larger economic base. Attempting to increase tax revenue will be just that – an attempt. Stripping income strips job creation and shrinks the economy. Think of it this way; take all the money from the rich, satisfy all your class envy, and the result will be one year of progressive class war bliss. Then what? No one left to tax. No reward for enterprise. No job creation. Economy implodes. Still, sticking to “the man” is all they can think of.
In response to the first comment, this is a big misunderstanding that even conservatives have. We do not need to pay of all of our debt right now, we need to stop growing it. We have almost always had some level of debt and that is not a bad thing, every country has debt. We need to make sure that level stays at or below 18% of GDP so that it does not lead to inflation. Decreasing taxes grows the economy and leads to more revenue, enough to get us a balanced budget or near there for awhile. The reason we need entitlement reform isn’t because of the costs this year, but because they are rising at a crazy rate.
“Can you please explain to me how raising taxes on ‘the rich’ is going to close this gap?”
It probably won’t. But can you and other conservatives explain how “The answer” is to “cut lots of spending, and as fast as possible,” given that (1) the federal govt (thru Treasury and Federal Reserve) does what gold mines once did (tries to run deficits of money that are sufficient to satisfy the demand for it) and (2) there’s absolutely no threat of significantly higher interest rates, inflation, incomes, capacity utilization, etc???
Idiots abound, left and right. The deficit and national debt are red herrings. Policymakers should be focused on real growth and standards of living, both present and future. Optimal deficits and debt will follow.
[...] Kevin Eder has a challenge for liberals: Here are the facts: the largest amount of revenue the federal government has ever brought in during one fiscal year was $2.7 trillion in FY 2008 – under the dreaded George W. Bush and his ‘tax cuts for the rich.’ Even if the government were to raise this much revenue in FY 2011, we would still be over $1 trillion short of what Obama wants to spend this year. [...]
Reagan cut taxes and in his years from 1981 to 1989 total tax revenue went from $599 Billion to $991 billion (tax policy center). So it is not impossible to cut the deficit by cutting
spending and also cutting taxes. But, at this time the economy is
still correcting and until it hits equilibrium we will not see a
great lowering of our deficit. One thing is certain. We must cut spending. The president is a fool.
Reagan cut taxes and in his years from 1981 to 1989 total tax revenue went from $599 billion to $991 billion (tax policy center). So it is not impossible to cut the deficit by cutting spending and also cutting taxes. But, at this time the economy is still correcting and until it hits equilibrium we will not see a large decrease in our deficit. We must cut spending and the president is foolish to pander to his base with his sophomoric
campaign rhetoric instead of leadership.
The liberals could care less about filling gaps. All they care about is total redistribution of wealth. Once we understand that liberals do not think like conservatives, we will stop playing this game with them.
[...] “conservative conceit.” As Kevin Eder showed here, there’s no way to increase taxes (presumably on the rich since Klein doesn’t believe [...]
Example: California…Increased taxes over several years, companies leave, people leave, revenue for the state declines, state pays more for social programs, state can’t print money, state goes broke. Ring a bell?
In 2006 Nancy Pelosi took over, I made several comments that the nation would follow California’s lead over the next several years… Wish I’d have put some money on it.
Does anyone really think that if we give more tax dollars to Congress they’ll actually use it to reduce the deficit? They’ll blow it on things which get them re-elected, just as they’ve always done. Just as they raided Social Security, for example. Not a dime in new taxes. Cut spending.
[...] has been explained here and here and here, there’s a problem with revenue projections (i.e. tax revenues to the [...]
Here’s the answer no one wants to hear: since we can not, as a practical matter cut 40% of government spending to cause the government to live within it’s means (expenditures equal revenues), we just need to cut a bit of spending 10%, about $500BN/yr, and then DOUBLE every taxpayer’s bill. That would add another $1.6TN to the tax revenues, and coupled with the cuts I mentioned earlier get us close to deficit neutral.
To double every taxpayer’s bill means you take the ‘total taxes owed’ line on your 1040 form, the number right before where you subtract payments already made, and multiply it by 2. This would solve Warren Buffet’s complaint that he could afford higher taxes and allows those who pay no taxes to still pay o taxes…
[...] if the Bush tax cuts were completely repealed, it would raise revenue by only about $60 billion. The federal deficit for 2011 alone is expected to hit $1.5 trillion. Which means that the deficit [...]