PK used the following chart to make his point. He uses it as proof that
US citizens pay a low tax rate. Krugman wants us to believe that
because we rank so low on this list we should be more than willing to
accept higher taxes to support that big government "we" all want.
It’s hard to argue with this list and the conclusions that PK draws from it. Let me try. This is the raw data that the chart Krugman used was based on:
First let me point out that the 2009 data for the USA (30.1%) was the
lowest in the 13 years of information presented. This is because the US
was in a recession in 08 and that always means lower tax
receipts. To make a statement, Krugman uses the most opportune data to
support his position. When you look at the past and projected numbers
you see that the US average of ~34% is right in line with Japan, Korea,
Australia and Switzerland.
For me, the most significant error by Mr. Krugman and his chart is that
he deliberately chooses to exclude exactly how high those tax rates are
in the countries he holds up as shining examples. Yes it is true, Norway
Sweden, Denmark, Finland, and France have higher taxes than does
America. But look what they are paying to get to the top of the list.
Respectively 56%, 56%, 54%, 53% and 49% of GDP. Who wants to be on the top of that list? I doubt the folks in Sweden or Denmark are so proud to have made it to the top.
What Mr. Krugman shows up as an example of “what we should do” is
actually a disaster. Mr. Krugman should get his head out of, well,
academia and start talking to Americans of all stripes. Liberals,
conservatives and all the folks in between. He won’t find one that will
stand up and support 50+% taxes on GDP. What may be acceptable in Sweden
is simply not going to sell in America.
If he bothered to ask a few economists what they thought 50%/GDP taxes would do for America he would also get an earful. That is just stupid bad policy.
It shouldn’t surprise us a bit when politicians like Ryan and Obama talk
about numbers and budgets and spin every chart to suit their agenda. It
quite another matter when Nobel economists do it.
Picking any year will get the same result And look at Australia. A big dip down and a big increase. Anyway, the US govt spends the same % on healthcare as most other nations, yet the total health care spending is +7% any other nation. When wll Americans begin to wonder if they are getting vallue for their health care spending, let alone how they can get it?
candles
So if the US were allowed (*cough*) to have similar (200-300%) external debt to GDP ratio to those Nordic beauties, that would free up several trillions of dollars worth of money for 'government job creation' (principal lead earthen excavation and refill engineer, inquire within), right?
But what do they know?...with their fully-funded pension schemes, 3% unemployment, and non-facade economic recoveries in swing.
Right on snowball. Government can be a lesser evil or a great evil, like ours. unfortunately. And when I say Government I am not talking about the technicians like Obama, Greenspan, bush, Paulson,bernanke, etc...I am referring to the pseudo ideological apparatus that keeps it going and rationalizes it.
Maybe it is not governing and being governed that is the problem, but rather how governing and being governed are done.
moneymut ..we are not a homogeneous, tiny ,in population and geography country. these micro countries have less land than ONE of our states.
comparing norway or sweden to USA is wrong!.
try comparing us to the Old USSR to get the scale closer in type of diverse populations and size..then your little "see how great" the socialist states are! is very hollow and idiotic..
have you been to germany or france, these are not tiny countries, they are big and diverse...
IMO the biggest problem with the US is the misallocation of resources. Just as a company that spends 100% of its available cash on gold plated offices and bonuses for executives will not be able to compete with a company that invests the bulk of its free cash in R&D and capex; the US and associated serf (state and local)governments spend the vast majority of their money on totally unproductive B/S.
You are correct. How scarce capital is allocated today is the best predictor of future prosperity.
The "tax more/tax less" argument is actually two separate arguments.
First, it is an argument about how to best control the sovereign's deficit. The cost of carrying a deficit reduces the ability of government, and society, to allocate capital properly.
Second, it is an argument about which entities are best trusted to allocate scarce capital.
The "no government/small government" crowd assumes that government spending is always the absolute worst method of allocating scarce capital. That position is disingenous, at best, and has the additional problem of turning its advocates into unwitting shills and dups for the super rich. Perhaps most illustrative of the basic, stupid "wrongness" of this position is the role the fractional private banking system played in the real estate bubble. We let private banks allocate our nation's wealth to the constuction of millions of unnecessary homes, which the banks now eventually foreclose upon and then let rot unsold. I suppose it is also well-illustrated by the tech bubble, where bank and brokerage-created margin greatly contributed to another mind-boggling mis-allocation of capital.
By now the tea partiers here are pounding their fists on the table and shouting that "it was the government that caused those bubbles". Not without the eager help of the banks. If anything, that argument makes my next point.
Large government has become a very effective weapon to crush your political opponents and to shovel obscene amounts of wealth to your political supporters. When used for that purpose, the government cannot be seen as a device that has any chance of properly allocating scarce capital. Government starts with a slanted playing field, anyways, since it feels some responsibility for taking care of the useless eaters, which is a noble, albeit very uneconomical, allocation of capital.
So, what is a concerned citizen to do? Well, given the obvious fact that our private fractional lending banks right now are clearly no better at allocating scarce capital than the federal government (I think a good argument can be made that the only allocation of capital being seriously considered by the Fed and the TBTF banks is to allocate all available capital to their own balance sheets), there is no reason to entrust them with any significant part of the job. So, increase taxes on the wealthy, and cut spending, but not so much as to kill off the useless eaters.
I realize that the banksters now control both political parties, and that money rules politics. Those contributors want a some ROI, just like Charles Keating, bless his crooked heart, had the poor judgment to publicly admit.
I just like to get up in the morning and think that there is some hope that it is not too late for some populist political change. At least the tea parties have it half-right.
agreed, defense, bank bailouts, GSE that privatize profits, socialize losses etc, health care that cost double per GDP what other countries spend but does not yield better results etc..
yeah, look at healthcare: overblown demand and overblown supply,misallocation of resources. A simple shift of consciousness would change this diseased sceneraio. Unfortunately, the opposite is happening: we will export to the rest of the world our sick conception of medical care along with our own sick conception of existing in the world.
Taxation in Europe is higher mostly because of VAT, not becasue of (significantly) higher icome taxes and those who think US can avoid VAT should only look at deficits, debts and unfunded liabilities. It´s not if, but when. There´s no way to plug a hole of 1.5trillion(deficit), 14trillion(debts) or 100+ trillion(unfunded liabilities) purely on budget cuts. It´s a mathematical impossibility. You live in a magic world, if you believe in that. So it´s either this or US society(!) disintegrates(when the next depression strikes). Literally. Now, take your pick.
Sweden will have a budget SURPLUS of 0.3% of GDP this year, in 2012 it will be 1.8% and in 2013 2.8%. And Sweden´s GDP will rise this year by 4.6%, in 2012 it will be 3.8% and in 2013 3.6%.
yeah, but according to Bruce, if we had Sweden's tax rate we would kill our economy, I mean really, look how they are dying over there
Me thinks this excludes state taxes, county taxes, city taxes and various other special taxes and fees that only exist in the USSA. Add those in, and the USSA is probably near the top of the list.
Appropriate federal tax rate: 0%.
VAT taxes, like a sales tax, is one of the biggest taxes Europeans pay, it is counted towards discussion of European taxes
check again,
the source cited included state/local taxes and revenue.
Thanks for all the comments. Both those that liked and those that hated it.
Taxes on wealth people are going up. Those that think this should happen will have their way. Not to worry.
I am not sure that those who are talking about those rich people and their taxes really understand what they are talking about.
What is coming? Much higher taxes on incomes greater than $250,000. What is also coming is an indexation of the dreaded AMT tax. In two years if you have a family income of $80k you will get hit by the AMT.
This is very much a middle class tax increase. Tens of millions of people who are not subject to this will be. And they will hate it.
Tax increase will hit every family to one extent or the other. Yes it will be progressive and wealth will be penalized. But this is going to hit the vast majority of people in the country.
We may be able to come close to balancing a bloated budget on paper. But in reality the increased taxes will just reduce growth. We will not be better off for raising taxes. We will just have a bigger government.
That's what Krugman wants. You so sure you want that too?
Bruce, have enjoyed your previous articles, but this time you need to examine some basics:
#1. big bankers are getting money from the Fed for _near 0%_ interest rates. They would be failed & bunkrupt but for US govt "bailouts" - so, ultimately, the USgvt is a BETTER risk than they are.
SO - WHY does the "US govt DEBT" KEEP GOING UP? ans- because the bankers are charging us, our govt, MORE INTEREST, than THEY have to pay! This is absurd, a TRANSFER OF WEALTH from workers to (otherwise) failed, bankrupt speculators.
#2. all financial transactions are TWO-SIDED. No one points out that "one person's DEBT, is another person's INCOME" - (interest received). But if the lender never really put up any "money" - if the lenders got "BAILOUTS" - then they are effectively GETTING MONEY FOR FREE, TWICE ("bailouts" and now INTEREST on "the money" they "loaned" to govt. - which the govt. first gave to them as "bailouts." = pure insanity!)
#3. Why does JPM have to take 50% off the top of every FOOD STAMP payment?
#4. No matter how the rubinite (summers, emanuel, gensler, orszag, lew, bernstein, schapiro, bernank, geithner, etc.) GS, JPM Neo-Cons (who currently dominate the late "Democratic" Party) http://www.huffingtonpost.com/2009/12/03/matt-taibbi-obamas-big-se_n_378705.html try to SABOTAGE New Deal & Great Society economics (the great American social safety net that took 100% years of blood, sweat, toil, tears, sacrifice, two world wars, a great depression, and dozens of lesser 'panics' and recessions to bring about) - you can not prove Keynsian economics wrong, because there was this little event called "WWII" that took an American economy in deep recession with low industrial productivity, lots of unused capacity, idle resources (including manpower & financial potential, etc.) and - IN FOUR YEAR FLAT - turned into the great wartime industrial production giant, "the arsenal of democracy." There was NOTHING in the way of material, resources, or latent manpower in this picture in 1942 or 1943 or 1944 that wasn't there in 1939... only the political will and national urgency to DO SOMETHING. (Indeed, what is most amazing about WWII is that much of that production was essentially DUMPED on the bottom of the ocean, whether literally, freighters or war ships sunk by torpedoes, or in terms of bombs and bullets expended for zero residual value); and millions of men were drafted out of the domestic industrial workforce!)
#5. WHAT THE HELL are Americans GETTING FOR ALL THAT DEBT we are paying? I see ECONOMIC CONTRACTION, and SLASHING the social safety net, and MORE COSTLY basic goods & services! this is a BAIT & SWITCH FRAUD!
IT's looking like the FIRE sector (minus real-esate) has become a Frankenstein monster - or is that a bloated vampire squid?
great points, thanks
exactly right,
Krasting & others make unhelpful generalizations about "raising taxes", without discussing the hows and purposes as I earlier commented.
I would like to hear them defend how raising taxes on the FIRE sector would supposedly NOT benefit the overall economy.
better yet, just get rid of the parasites, at least when a govt taxes you, you get some value, like roads, food stamps, countries invaded etc...but when FIRE sector skims money for nothing, we get no value
yep, if this is true, we will be back to tax rates like they were in the 90s, and lower than they were in 50s, 60s, 70s...yep some taxes are going up...and yep, its not the end of the world.
If we are serious about deficits we must cut govt spendingor increase taxes or both. Making a deficit, and even more, a debt go away requires some sort of sacrfice. W spent on wars and Medicare part D and decrease tax rates, that was not sustainable even before great recession..
so if don't increase taxes, we cut govt spending and that will cut jobs and reduce disposal income people get via Soc Sec, UI, food stamps...this is anti-stimulus. If we cut govt spending and gave it back in tax cuts, then the spending would just change from government to private spending, but deficits would continue. Alternatively, if we increase taxes and use that to pay deficits, then that is also anti-stimulative, not better or worse than cut govt spending...either way money is taken out of economy to pay reduce amount of debt incurred. In fact, many economists would say a tax increase to rich is less harmful to economy that govt spending cut, but for now we can just think they are equal and just acknowledge, closing deficits slow down economy, and require sacrifice.
So given all the deficits run up by both Repubs and Dems by both overspending and by cutting taxes when not cutting govt spending, we must now fight to close deficits.
Closing deficit spending will hurt economy, plain and simple. Increasing taxes and or cutting govt spending and using extra money to reduce debt spending will remove that moeney from economy. End of story.
So the choices are only cut spending, only increase taxes or do both...but short of Dean Bakers solution that we default, we must decrease money in economy. I don't buy increaseing taxes is a definitively worse way to remove money from economy than decreasing Soc Sec benes, decreasing Defense spending...it all hurts...
Basically being in debt hurts, paying down debt hurts....and it will hurt economy....if you want to decrease deficit it will be a jobs killer no matter how you do it, ask any country under an IMF austerity program.
Here is some tax information that is impossible to cherry-pick, its compiled by the The Tax Foundation.
If the US was really progressive, the top 1% would pay on average more than 38%, and NOT 23.7%.
But this hardly tells the whole picture as the tax is computed ONLY on AGI(Adjusted Gross Income). So in fact, the top 1% subjects a part of their income to tax.
a much more accurate accounting for total tax burden people pay, which accounts for various taxes including FICA, and accounts for tax deductions etc. is presented here...more could be said because the FICA contribution your employer pays is right off your earnings but is not including, and state and local taxes not included but at least a teeny more sophisticated than your numbers above
http://economix.blogs.nytimes.com/2009/04/08/how-much-americans-actually-pay-in-taxes/
Is FICA a tax...your numbers above completely ignore the biggest tax wager earners pay.
I don't know about you, but if govt takes the money out of my paycheck, I call it a tax.
Your numbers above are cherry picked because they ignore FICA tax and only look at income tax. FICA is cap at incomes over 100k, to FICA is regressive and rest of income tax is progressive.
But there is further hole in your cherry picked of nubmers on Income Tax. If you earn money via wages, it is taxed with FICA (only up to 100k) and taxed by income tax, but if earn money via capital gains and dividends, it is taxed at lower level, 15 percent. Wages below 100k are taxed at a much higher rate than any other type of earnings.
It is not as simple as you numbers above present. Always, always, when they want to make it look like the rich are paying way less in taxes than regular middle class wages earners they ignore FICA tax and they ignore fact wages get taxed more heavily than dividends/capital gains. Hedge fund guys earn dividends, pay 15 percent on this while a middle class person may be paying at double that rate. This is why Buffet says his secretary pays higher rate of taxes than he does, and Buffet does not even try to evade taxes like many rich do.
It would be disturbing if the Lloyd Blankfeins and Jamie Dimons of the land had to pay a 50% tax rate on their compensation of stock options and salary
their heads might explode....it might even be better if we had just let their employers go bankrupt in 2008, then they would have no income to tax but we would have to bank bailouts to pay for, fair enough
Using GDP to measure the relative impact of high tax rates is grossly misleading since government spending counts as a net positive to GDP. So while it's theoretically possible for a government to efficiently spend every tax dollar it gets, I have a feeling they are much more likely to be paying people to dig holes and then fill them back in and calling it 'production'.
That's what gets me about all the big government advocates out there. Sure we can have the government spending like crazy and show nice GDP numbers, but all GDP is not created equal. There is a difference in the outcome between dollars allocated by a reasonably efficient market (not all the time, but more often than not) and dollars allocated by a government bureaucrat (which are far more likely to go to his pet projects).
Krugman's stupidity only surpassed by Obama's.
Less government ... as in less waste of resources. If I knew that my tax dollars were going to pay down national debt and not to subsidize Transnational corporations offshoring more and more jobs to the point of destroying civil society in this country, I would gladly pay more taxes. As it is, the momentum is with the Transnationals. As such, lead remains a good sidepocket investment for sooner or later, this pot is going to boil.
Is government in place to serve the people or is government now the employer of last resort for a labor force that has been sidestepped by the Transnationals? If so, the FED is the perfect transfer vehicle. The middle class have been sucked dry by Transnational corporations and their employment of cheap offshore labor, offshore tax evasion and marketing prowess having created a nation of addicts to consumption while the government then proceeds to monetize its own debt, increase food stamp programs, hire more of the populace, and now transfer wealth back from Surplus countries by debasing the USD. China's reserves? Kiss them goodbye Chairman Mao, since you are in for a penny you're in for a pound. I don't think Hu and the boys are under any illusion that those dollars are really "their" dollars. Not when they are still growing at close to 10% and US unemployment is still really close to 20%. Monopoly money or virtual credits, The FED is now taking its pound of flesh.
The source of funding can no longer come from the middle class who are all tapped out. Nor can it come from offshore bond investors. It will definitely not come from Transnational corporations since they have apparently seized hold of the body politic. Therefore offshore sovereign USD surplusses are being tithed directly.
If the US Government was indeed a function of service to the people, simply rationalizing agency functions would go a long way to reducing expenses. If the US Government is indeed now the employer of last resort (even foodstamps are a form of employment / compensation), then the waste and duplication in government is actually part of the process of rebalancing global imbalances ... but I would have to add that the process seems to be getting out of hand. Imbalances to cure imbalances?
http://online.wsj.com/article/SB10001424052748703749504576172942399165436.html
Wall Street Journal MARCH 1, 2011
Billions in Bloat Uncovered in BeltwayThe U.S. government has 15 different agencies overseeing food-safety laws, more than 20 separate programs to help the homeless and 80 programs for economic development.
These are a few of the findings in a massive study of overlapping and duplicative programs that cost taxpayers billions of dollars each year, according to the Government Accountability Office.
A report from the nonpartisan GAO, to be released Tuesday, compiles a list of redundant and potentially ineffective federal programs, and it could serve as a template for lawmakers in both parties as they move to cut federal spending and consolidate programs to reduce the deficit. Sen. Tom Coburn (R., Okla.), who pushed for the report, estimated it identifies between $100 billion and $200 billion in duplicative spending. The GAO didn't put a specific figure on the spending overlap ....
Income tax is a badge of slavery. We should be ashamed to put up with it.
The point that taxes in the US are relatively less than in many other nations stands as factually correct.
Objections to raising (the same kind of ) taxes in the US (to continue more of the same militarism, bankster largesse, and other frauds) is also legitimate.
What is missing in the usual debate about government and taxation:
1) How are the taxes being raised? Who is paying the taxes? Are the taxes regressive? Are the taxes being spent for the purpose levied (e.g. Social Security)?
2) What is being provided for the taxes? If nations with a higher tax rate are providing free education through university, public health care (at half the GDP cost in the US), and free public utilities, then that should be contrasted with funding excess militarism and financial largesse.
Citizens paying quasi-private organizations (government sanctioned corporations) to provide health care, public utilities, and education are not strictly speaking, being taxed by government, but are in effect being "taxed" nonetheless.
very good points, thanks
Thanks CDSKILLER.....Bruce offers nothing....He knows he's pandering to his audience who will lap up his drivel then ask for seconds.....Maybe Bruce isn't smart enough to develop and offer a plan of his own.
My Plan is to round up the communists and sell them to the aging but blood thirsty Contras.
Throw around phrases like "social safety net" here and be prepared for the bitch slap.
CDSKILLER'S idea: "I would also cut the military by 50%, phased in over 10 years, close more than half the bases, look to cut it even more long-term, cut the nuclear arsenal dramatically..."
I say this is very shortsighted thinking, CD, no offense meant, because your idea has lots of merit, but here is a better plan: cut USA military spending to zip, zero, nada....TODAY...sell America's military inventory to the highest bidder, use the $$$ to pay off the deficit and/or debt, then we will all rely on the Supreme Leader in Iran do undertake the role of the world's policeman. See how your logic would workout for us? Iran should be the world's policeman and then EVERYTHING would be OK.
Bruce, when all you do is attack it's not very impressive. I have my issues with Krugman, like everybody, but you're wrong to say that he wouldn't find anyone who would stand up and support a 50% tax. I would. So would tons of people I know. 50% is nothing. I would support a progressive tax rate that would rise from 50% on income over $1 million to 90% on income over $5 million. I would also cut the military by 50%, phased in over 10 years, close more than half the bases, look to cut it even more long-term, cut the nuclear arsenal dramatically, tax all financial transactions, make credit default swaps unprofitable insurance products, require lenders to hold on to 25% of the mortgages they create, re-impose Glass-Steagall and a host of other measures, and end subsidies to oil companies. What do you suggest to avert the disaster coming our way?
90% taxes? One makes $5mm and keeps only $500k? What kind of system is that?
It may come to that given the level of projected spending. But when you cross 50% (forget your 90%) we, as a society and economy, will nosedive for a very long time.
How old are you? Want to take 25 years out of your life paying taxes? Do you have no aspiration to be successful and make money?
Trust me, your plan would destroy the country. We are a people who strive for individual freedoms. Your plan just takes it all away. It won't work.
I do hope someday you make a million a year. When you do, and keep only $100k, you will see the other side of this idiocy.
If I thought you had any measurable net worth, I'd send you my wire account for your 50%.
The financial disaster cannot be averted, mon frere. What you don't know is that Krugman et al probably know this, their interest is in maximizing the outcome for themselves. Right now, that is veiled as mass preservationist speak.
Tell me why the "news" is wasting its ink on future possibilities (Ryan plan, Obama plan, etc.) while not reporting actual events - like the 175% rise in Silver since 12/09?
If your stuck on averting the disaster, I suggest you hang out here and read on with a discerning eye...
There is no hope in turning some of these statists...they are singing from the same hymnal.
What they cannot see is, that the numbers are just too large...the government could confiscate all income earned from those making above 100k (about 1.4 trillion) and it would not even cover this years deficit.
I did not say tax all income over 100k at 50%...or even 90%...I said take it all...earn a 101K and have it taken away completely...all this really doesn't matter now.
ummm...there is plenty of hope, at end of Clinton admin, with a Repub congress, we had a surplus and we paying down debt. We would have to cut spending and raise taxes, yes, taxes alone would not do it. But we could cut spending in a way that is not horribly hard to take. The above commenter mentioned cutting defense in half, that would be even lower than 90s defense spending and still leave us with better military than anybody else in the world. The tax rates in late 90s were higher than now, but not end of world, the late 90s tax rates were lower than 50s, 60s.
Most countries like Canada, UK, Germany, France, Japan can provide pretty damn decent universal health care coverage for the entire population with all public (UK) or some public some private insurance/providers (Canada, France, Germany, Japan) for about 8 percent of GDP, while we spend privately and publicly 16 percent of GDP and still don't cover 50 million working age, non-poor people. If we just spent per capita what Germany spends on health care, much of our deficit would be wiped out.
We were doing okay in 90s, we had social services and a good defense, we had good infrasturcture and our taxes were not horribly onerous, going back to that spending/tax regime might hurt a bit, but to say it is end of world, we could never balance budget is ridiculous, we did it 11 years ago, we could do it again and it would not be the end of our lives as we know it, just would be like 90s.
"ummm...there is plenty of hope, at end of Clinton admin, with a Repub congress, we had a surplus and we paying down debt."
I believe you're confusing deficit with debt...this is the debt table from 93-2001;
FY1993...$4.411488 trillion
FY1994...$4.692749 trillion
FY1995...$4.973982 trillion
FY1996...$5.224810 trillion
FY1997...$5.413146 trillion
FY1998...$5.526193 trillion
FY1999...$5.656270 trillion
FY2000...$5.674178 trillion
FY2001...$5.807463 trillion
They borrowed from Social Security taxes to make it appear the deficit was going down...but what they were actually doing was adding the liability of borrowing from SS to the national debt through inter-governmental borrowing operations...you have to remember that snake Bob Rubin was a part of this operation, among others.
At no point did government debt ever go down in those years.
+1
I admire folks with a 6-decimal-place vocabulary.
You're missing the larger picture, fiat-mutt.
Since we decoupled from physically-backed currency ('71 = final nail in that coffin), we have been running an illusion of real wealth creation and, in turn, spending what the fiat status falsely tells us is our true value.
There have been ebbs and flows in this, but it has directionally gone one way - more and more debt. Take your utopian 90s. I could argue about the reality of the "balanced budget" you claim, but I won't. What was the outcome of that period: an enormous, enormous creation of bubbles and the attendant debt that had not real backing.
The 90s came to roost in 2000-01, and that pain was then deferred and augmented by the loose money policies in the 2000s. The '08 crash didn't get us all the way back to reality, either.
The rest of your banter is ideological, and frankly just noise. We can argue about what we might not spend money on, but we need to calibrate that discussion on the real wealth foundation, not the false floor that the fiat system suggests.
Don't let PK BS y'all. His simpleton sleight of hand ignores one of the most basic principles of economics: behaviors can only be affected at the margin.
The average tax receipts/GDP in his likely-biased chart are completely irrelevant. The U.S. economy is conditioned around a certain set of tax/confiscation rates - what matters is how the U.S. economy would respond to a change in tax rates. That response is unique and different from every other country for a host of reasons that aren't worth taking up more space here to delineate.
Point is, he's full of crap. Taxes are going up, and the results are bad. Deficit rises = increased fed borrowing = devaluation of fiat = gasoline, food, etc. rising in price. Inflation is the indirect tax of the government spending. And the returns of those increased taxes? Look at the continual revisions in GDP estimates, the constant spin of the worsening BLS initial jobless claims, etc., etc., etc.
So PK is being paid off to put a stake out there for direct taxation. Just ground cover for the B Hussein O and the band of statists.
I think this is a very poor article.
Any idiot that thinks America's Debt is trivial and manageable is thinking like a Republican or Democrat. Politicians are not economists.
So lets checkout just the Fiscal Debt -- which currently stands at $75 trillion. And let's say the interest on that debt is a nice and fair 5% per year.
So 5% interest per year on $75 trillion is $6.67 trillion -- which is just about equal to half the US GDP of $14 trillion. Therefore any successful payback must surely also entail a per year payback by the US Government of at least $6.67 trillion a year plus to make any dent whatsover on the Fiscal Debt. So every year, America will have to pay half her GDP towards Fiscal Debt payback -- just to pay the interest. Anyone like to argue ?
Now how's Ryan's plan and Obama's economic joke looking ?
Ryan's proposed $61 billion payback a year represents a percentage yearly payback of 0.0813% which wouldn't even tickle the interest due(5%) and Obama's current spend policies are laughable because his tragic economic policies simply assumes that America will be able to pay back the debt easily in the future. This is also very poor economic thinking.
Here's why. Between 1952 and 1972 the US GDP averaged 3.7% and between 1972 and now it has averaged an incresae of just 3%. That's a 23% drop in average yearly GDP increase. In the next 20 years it will drop further because American business is so uncompetitive now.
So the only way you can realistically hope to pay back this huge debt is to heavily tax both the citizen's -- all citizens -- as well as business. Any other thinking is pie in the sky, this stale bluff cannot last forever because the world is watching America very carefully now. So it will be painful.
In 2006 the Fed bought just 10% of all US Treasuries. Currently the Fed is buying about 70% of all US Treasuries sold. And if the Fed stops buying Treasuries, interest rates will rise and the US will default on its debts. That's why there will be no stopping the Fed purchasing US Treasuries -- the timeline here is forever.
So, if you want it easy with useless low levels of taxation then all I can say is good luck to your kids, their grandchildren and their grandchildren's grandchildren. They will also be forced into paying their share of the debt.
Lucky us.
+1
Spot on, compadre. The math doesn't even work on the GAAP-skirting $14.3T of "recognized" debt. Wait...$14.4T....um...$14.5T. Tick, tick, tick...
The dam has failed, and the banksters have a few rolls of Bounty.
"Currently the Fed is buying about 70% of all US Treasuries sold."
I have been sniffing my coffee, pondering on this. One colusion i came up with is. Could the FED board of governers, simply increase their buddies credit rating, to allow cronnies to purchase more of these, aka printing money by way of fractional reserve? by simply saying ya, timmy over there is buyin, lets give him a new JPM visa black card, and a BAC visa gold, and maybe hmmm a 2milion condo here in NYC on a 1% a.r.m.(so he stay's in line), and lets see, how about a 200mil credit line at wachovia....maybe we can build his confidence so much, he'll refund, and reopen Country-wide for us...just by issueing him a better credit rating, and the FED printing press is techniclly "not printing"
OMG...
is this what Timmy DID???? increased the TBTF's credit lines? so the fed and treasury dont print, but simply, and loosly EXPLOIT, credit ratings? hmmmm
wtf's in this coffee
sugar....check
potentially radioactive milk.....check
potentially radioactive water....check
imported over-priced,over-taxed, might just be labeled "coffee" but is really some industrial compound made to replicate "real coffee", brown looking shit that now costs more than 8 bucks a pound...check
hmmm ..something has changed in this list recently...but i can't put my finger on it.
Without going into details, I work closely with a company affiliated with Paul Krugman, and I'm in finance, we perhaps even pay the man for his work in literature. (not Op-eds, think economics books). Let's just say the guy has a lot of tax shelters and would NOT be a good example of somebody "sharing their fair share". Unlike Karl Marx who died a pauper in true communist style, Paul Krugman will be in the top 1-5%, paying less taxes as % of income than 95% of everyone. Hardly a practicing preacher.
Krugman = Dumbass! Enough said!
Krugman is on the right path. He is showing us the way to everlasting salvation. But, instead of paying just a pittance of our labors, at the rate of a measly 50% or 56%, what is REALLY needed is to make the tax rate 100% and stop being so pissed-off about a silly notion of being independant.
People, we would receive not just FREE health care, but we could get FREE food, FREE housing, FREE transportation and most important, FREE peace and security in our lifetime. Yes, FREE EVERYTHING and/or anything we can conceive in our minds (hells bells, you could get FREE SEX). That will fix ALL the problems faced by humanity. Think of the Utopian World that would follow once we understand that giving ALL our productive energy to a One World Government would cure ALL problems. Now, that is logical thinking.