Wednesday, July 27, 2011

Two More Debt Ceiling Facepalms

1.  If one didn't know any better, one might conclude that our elected officials don't care whatsoever about the American people.  I know it may sound shocking, but I have this sneaking suspicion.  As evidence, I give you this Washington Post-ABC poll which asked people, among other things, if they would oppose or support certain items in an effort to reduce the national debt.  Here's a summary:

Cut spending on Medicaid:  26% support, 72% oppose

Cut military spending:  43% support, 56% oppose

Raising taxes on Americans earning over $250,000 a year:  72% support, 27% oppose

Gradually raising Medicare age from 65 to 67:  46% support, 54% oppose

Changing the way SS benefits are calculated so they increase slower:  42% support, 53% oppose

Raising taxes on oil and gas companies:  59% support, 39% oppose

Means testing Medicare:  61% support, 36% oppose

Removing SS tax income cap currently at $107,000:  66% support, 33% oppose

Raising taxes on hedge fund managers (essentially changing capital gains taxes to income taxes):  64% support, 25% oppose

In sum, Americans support raising taxes on the wealthy and corporations to match recent historical levels and only making very small changes to Medicare, Medicaid, and Social Security (such as means-testing, which I'm okay with) to help fix the national debt problem.  The only quibble I personally have with the majority of Americans is that I think military spending needs to be cut dramatically.

Yet, in the debt ceiling negotiations in Washington the exact opposite is being considered.  Tax increases for the wealthy and corporations are off the table and big changes to Medicare, Medicaid, and Social Security are a near certainty.  Up is down, left is right, sane is insanity, and what the American people want is irrelevant.

2.  The House recently passed their pie-in-the-sky Cut, Cap, and Balance bill.  The bill was so draconian that it had no chance, absolutely zero chance, of passing the Senate or not being vetoed by the President.  It was a waste of time and Harry Reid, bless his soul, called it "some of the worst legislation in the history of this country." the worst piece of legislation every passed by the House.

It worked by first making massive cuts to government spending starting next year and going into the future.  Second, it capped government spending at around 18% of GDP per year and required 2/3 vote in Congress to ever raise taxes.  Third, it required the passage of a balanced budget amendment to the Constitution before the debt ceiling was raised.

All three of those ideas are bad.  The first because the cuts come at the expense of the poor and elderly almost exclusively.  The second because it gives no flexibility to respond to crises like the one from which we are still recovering.  The third because it gives even less flexibility than the second and degrades the beauty of our Constitution.  It would ruin our economy, I have no doubts about that.

It was, then, seen as a way for the please-don't-compare-yourselves-to-the-real-Tea-Party Congresspersons to show their ultra-conservative chops.  It was a political stunt, nothing more and nothing less.  They knew it didn't have a chance for passage because it was so conservative, they knew it was just to satisfy their base.

But the Republicans control the House and it is their right to pass whatever they want.  I think it is a dangerous bill and a waste of time when we are so close to an economic meltdown, but they've earned the right to be irresponsible I guess by winning elections and anyway everyone knew it never had any chance to become law.  So it is not the mere passage of the bill that I consider a facepalm.

What really bothers me is that Utah Democrat Jim Matheson voted for it.  JIM MATHESON VOTED FOR CUT, CAP, AND BALANCE!  Are your *&%#^@ kidding me?  Even all of his Blue Dog Conservative Democrat associates called it a horrible bill just meant to give ultra-conservatives a message vote.  I would rather, much much rather, have a Republican in that seat than Matheson.  He's an embarrassment.  He is the worst Congressperson in the country.  I hope the state legislature redistricts him right out of office, I really do.


Architect said...

Remember that the elected officials have one goal that stands supreme - reelection.

Here is a quick history lesson about taxing the rich. The rich get hit with big taxes. They hire lawyers to use the loopholes. They pay less taxes. What, no loopholes? The rich leave town with their money. (Even John Kerry keeps his boat out of state to avoid taxes on the rich). The rich can't find loopholes and can't leave town? The rich give up their money and become poor. There are no more rich to fund the government.

The bottom line is that all spending cuts have vehement opposition.

President Obama wants to conduct comparative effectiveness studies for medical procedures, perhaps he could evaluate effectiveness of government departments. Is the Dept of Education giving a net benefit? How about the Dept of Energy? IRS? Minerals? Indian Affairs? Coast Guard? BATF? HUD?

Our borrowing options are running out. We can cut spending (yes we can) - pay gov't workers less, give away less $$$ to other countries & corporate/other welfare or we could start selling stuff. The federal government has nearly 33% of all land in the USA - it should be worth something. We could start granting permission to drill and to get royalties & excise taxes.

Here in my city the council plans to lay off 200 city employees. Plenty of residents want zero layoffs. One way to stop the layoffs is to bring in more revenue. Visit Costa Mesa. Stay in our hotels - we have the lowest hotel taxes, we're close to Disneyland and the Beach. Buy stuff at South Coast Plaza. BTW - the 1% extra sales tax expired last month.

Jacob S. said...

An alternative narrative is that the when taxes are higher the rich are more likely to plow profits back into business to avoid the taxation, as opposed to what is happening now with them sitting on literally trillions of dollars and not putting that money back into the economy. Imagine how many jobs could be created if that money was reinvested in business, as was done for decades when the marginal tax rates were much, much higher than they are now with strong economic growth.

The very best way we have of reducing the deficit problem is to grow the economy, which I think requires raising those taxes on the wealthy and the government investing in the nation. Growing the economy not only adds tax revenue but reduces the debt as a percentage of GDP. Then we can have serious conversations about cutting some spending which, again, I am in favor of.

I don't spend a lot of time in SoCal, but I'll make sure to spend some money in Costa Mesa next time I'm around. And I'll tell 'em Architect sent me. :)

Architect said...

"The very best way we have of reducing the deficit problem is to grow the economy"
You get economic growth when people are confident about the future. If people suspect that taxes will go higher, they will set aside money to pay them. Clinton pulled a fast one when he made new taxes on Social Security retroactive to the beginning of the year. My neighbor saw his SS benefits taxed at 90% when he was expecting a more modest tax rate. The net affect was he stopped working as much to get a more normal tax rate. The more than on trillion dollars sitting in corporate bank accounts are waiting for the new taxes imposed by Obamacare.

What if Congress started repealing the telecom taxes? Airport Security Fees? Import quotas?
I think that if you lower taxes, more people can pay them.

What if governments started streamlining the environmental impact process? Made permitting quicker? Reduced licensing fees or stop licensing some professions? What if we had loser pays on lawsuits?
I think that if you make it easier, faster, or less risky to do business that you will get more business.
Government corruption in India means that you need to pay huge licensing fees or bribes to start a business. The equivalent here is partnerships between existing businesses and governments to reduce competition or grant monopolies.

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