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Volcker: Raise Taxes to Curb the Deficit
Paul Volcker says that the U.S. will probably need to raise taxes to curb the deficit.
Specifically, at a speech to the New York Historical Society, Volcker said that America should consider imposing a "value added tax" - a type of national sales tax used in Europe - and also carbon or other energy-related taxes.
Of course, Herbert Hoover raised taxes in 1932, with disastrous results for the economy.
More importantly, instead of raising taxes or cutting services, why don't we just stop unnecessary wars, unnecessary bailouts and unnecessary interest costs - and claw back the ill-gotten gains from the too big to fails?
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Come on Chet, half the fucking income earners in this country pay zero federal income tax as it is which means they have zero stake it how much the federal government costs which means they vote for more of it hoping to get some swag thrown their way. That's where the last 30 years have landed us.
John Templeton, founder of the Templeton Funds, to Paul Kangas during a PBS interview in 2004: "All currencies, not only the American dollar, but all currencies, always go down, mainly because of democracy. The voters will vote for a person who is going to spend too much, and so you have to expect all currencies to go down."
Right. In other words, we need to raise federal income taxes.
Nope. Fair tax on consumption. Everyone pays, nobody hides. Eliminate the IRS. Eliminate Social Security tax. Go to http://www.fairtax.org for more details.
And...reduce government budget by 10% over each of the next 4 years.
broaden the tax base, actually - there's a difference. But it probably means raising taxes for the lowest earners, which is politically near-impossible (and almost certain suicide).
Unfortunately, "the rich" simply can't pay all the bills in this country. This is gonna get a lot uglier before it gets better.
I think they'll all have to go up in tandem. The reason so many don't pay anything is because the real priority was to lower taxes on the well-to-do, but politically, that can't be done without reducing the lower brackets as well, creating tax credits, etc.
In the same way, we can't raise taxes for middle Americans without raising the upper brackets even more. Can't be done politically.
I certainly don't want to pay more taxes, but I think it's foolish at this point to pretend it won't happen. Better to debate the right kinds of taxes that are the least harmful to the nation's private sector.
Like the health-care debate, there are plenty of changes coming down the pike that conservatives won't like. If you engage in the debate the bill might break 20% your way. If you stick your fingers in your ears and chant "no taxes, no taxes" you'll get 0% of your way.
Some of these unwanted changes are indeed coming because Demos are more amenable to government solutions, but some are simply foisted upon us now by 30-years of growing deficits, aging boomers etc. It wouldn't matter if the Prez was Obama, McCain, Ron Paul, or the resurrected corpse of Reagan himself.
(Reagan raised taxes to help close the deficit by the way. The "no taxes, no way, never" philosophy is more reminiscent of the bullet-headed Gingrich cohort.)
You can justify it any way you want but at some point people are going disengage from activities that trigger taxes and I shouldn't have to draw a picture to show how that won't mean a brighter tomorrow for the US of A.
You can't just look at the fed income tax rate anyway. If you are actually productive in this country but aren't falling-down rich your total tax burden has exploded in the last 30 years. State, local/property, licenses, fees and all manner of rent seeking bullshit has been expanding like crazy, it will never go away and it's only going to get worse.
Exactly which tax free activities are you referring to?
I'm really not trying to "justify" anything but just be a realist. We have an annual hole of $1 trillion+ to fill. I wish I could tell you that that will be accomplished with no extra pain to you or me, but it won't.
Volker is just stating the obvious. An adult acknowledges when the room is on fire and talks about how to put it out. Children and nutjobs pretend the room isn't on fire, or point fingers about whose job it is to put it out, or argue that we never should have bought those cheap flammable drapes in the first place. None of those things puts out a fire.
chet I think taxes are inevitable too but only because the tax spenders have more clout than the tax payers. If your expenses exceed your income you either find a way to boost income, cut expenses or both. My point, several posts ago was that cutting expenses hardly ever gets more than lip service...in fact the government seems to be increasing expenses as fast as it can. This is simply bullshit and although it won't do any good I'm calling Volker on it.
So yes there are some adult realists out there acknowledging that the room is on fire but a lot of them also happen to have flaming torches in their hands.
Son, no offense, but do a bit of reading, huh?
There would be trillions in tax recovery if the tax laws were ever upheld on that 70 percent plus of American-based corporations which refuse to pay federal taxes (as in offshore finance centers to shelter - hide - profits, as in "pass-through" tax evasion structures, offshore, 'natch, as in profit shifting, as in transfer pricing, and as in a host of endless tax dodges).
ExxonMobil paid ZERO in fed taxes (they are the second biggest oil corp in existence, after Robert Hormats' fav crowd, PetroChina).
Five percent of the fed taxes are paid by American corps (that's five cents out of every dollar in federal taxes).
Please, learn a bit of arithmetic.
With the changes in tax policy under the Reagan Administration, the basic interpretation at the time and for most observers since, was that it was a roll back in taxes for the heavy part of the taypayer spectrum.
Wikipedia: The Economic Recovery Tax Act of 1981 (also known as the ERTA or "Kemp-Roth tax cut") was a federal law enacted in the United States in 1981. It was an Act "to amend the Internal Revenue Code of 1954 to encourage economic growth through reductions in individual income tax rates, the expensing of depreciable property, incentives for small businesses, and incentives for savings, and for other purposes"[1].
The Act also reduced the marginal income tax rates in the U.S. by 25% over three years (the top rate falling from 70% to 50% while the bottom rate dropped from 14% to 11%) and indexed the rates for inflation, though the indexing was delayed until 1985.
This, of course, was responsible for the surge in prosperity during the 1980s. All revisionist history aside, Reagan’s first term was a tax cutting term. The result was an avalanche of investment and increase in business activity.
Wikipedia: The U.S. Congress passed the Tax Reform Act of 1986 (TRA) (Pub.L. 99-514, 100 Stat. 2085, enacted October 22, 1986) to simplify the income tax code, broaden the tax base and eliminate many tax shelters and other preferences. Referred to as the second of the two "Reagan tax cuts" (the Kemp-Roth Tax Cut of 1981 being the first), the bill was also officially sponsored by Democrats, Richard Gephardt of Missouri in the House of Representatives and Bill Bradley of New Jersey in the Senate.
The tax reform was designed to be revenue neutral, but because individual taxes were decreased while corporate taxes were increased, Congressional Budget Office estimates (which ignore corporate taxes) suggested every tax payer saw a decrease in their tax bill. As of 2009, the Tax Reform Act of 1986 was the most recent major simplification of the tax code, drastically reducing the number of deductions and the number of tax brackets.
Income tax ratesThe top tax rate was lowered from 50% to 28% while the bottom rate was raised from 11% to 15% since many lower level tax brackets were consolidated, and the upper income level of the bottom rate was increased from $5,720/year to $29,750/year. This package ultimately consolidated tax brackets from fifteen levels of income to four levels of income… In addition, capital gains faced the same tax rate as ordinary income. Moreover, interest on consumer loans such as credit card debt were no longer deductible. An existing provision in the tax code, called Income Averaging, which reduced taxes for those only recently making a much higher salary than before, was eliminated (although later partially reinstated, for farmers in 1997 and for fishermen in 2004). The Act, however, increased the personal exemption and standard deduction.
This is not necessarily a Democrat/Republican issue, but if the revisionists want to call Reagan a tax raiser, then someone should answer with the obvious axiom that the Democrats are the taxers.
http://en.wikipedia.org/wiki/Tax_Reform_Act_of_1986
Oh hey! a VAT. Why didn't I think of that?
Now that's thinking outside the box old man!
Maybe we could have all the prosperity of England (and the lines at the doctor's office) too some day!
Oh wait, let's make a game of this...how about...
Price caps on gasoline and ration cards!
Yeeeesssss!!
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I love how cutting government spending in any measurable quantities never even gets close to the table. If Greece is any guide the government will ruin the country before it lays off one diversity counselor.
Welcome Barak Hoover indeed.
The speed of all jumping on the VAT bandwagon indicates this was long in planning. I am not saying the crisis was engineered. But using Rahm Emannuel's edict to never waste a crisis, the Dems have pulled out the VAT plan.
It's necessary to fund the deficit. Of course, the deficit exploded because of Dems vast increase in spending, necessitating the VAT. Why else increase spending for such dubious projects? (Sorry I'm not saying this well, but I think the increase was primarily to make a VAT crucial in the eyes of the public).
I've a much better idea:
1) Cut government employees (that includes ALL the 535 in Congress and their staffs) paychecks across the board by about 33% 2) cut their benefits which should be no more beneficial than a non-union company pays its employees. All pay increases in the future will be based on meritorious service which in government work is an oxymoron 3) downsize government immediately by 1/3.
Cut your own check by 33% and set the example.
Yes, lets make more welfare queens, thats solution.
How funny that idiot's first tought about problems is to reduce someone elses wages instead bringing wages of those that barely survive on it to decent levels.
Incresing meager wages removes them from welfare class into consumer class. That does a double whammy of reducing deficit and helping economy at the same time.
Only ones to pay for this is are those outrageous menagement salaries and bonuses, that do not deserve it anyway.
Increase minimum wage to $15/hr, minimum, and it will reduce outlays for tax credits and create more consumers. It will save federal and state budgets, SS and medicare, improve living conditions for millions and create new customers for corporations.
Per IRS statistics over 50% of americans live on less then $32,000 a year. Thats not counting those that do not file taxes due to no income.
You are mixing private and public. Muddy thinking of a socialist — government, fix it !
The congress is taxpayer funded.
The low paid clerk to which you are referring is private — let the private sector find the wage for that low paying job, and if you don't like a low paid job and want a profession, work three jobs like I did to fund your way through 7 years of college and better yourself. Work yourself up and out of that low paying job too much work for you?
And those 50% of Americans you're talking about are not all Americans, they are illegal aliens and legal residents, many of whom are on the public doles for housing section 8, food stamps and "free" medical.
"The congress is taxpayer funded."
Try a little less muddy thinking, dood!
The congress is corporate-funded:
http://www.wallstreetwatch.org/reports/sold_out.pdf
The taxman cometh: VOLCKER.
When our rulers needed a Middle East war they co-opted a sometimes-dovish statesman and general to present questionable evidence of non-existent Iraqi WMDs (gotta find somebody else though for Iran; Colin Powell’s credibility jar is empty). And now that investment banks have an ATM card for the U.S. treasury, and the value of taxpayer accounts there are depleted, the rulers need another tax. Maybe aging Paul Volcker can be pulled out from the past to lend his name to European Socialism, otherwise known as the Value Added Tax (VAT). Perhaps, reason the rulers, the younger generation will only remember Volcker’s Reagan Era inflation work. Trouble is, there’s more to the man than just this latest role as banker shill.
What is never said regarding Volcker as Fed chair is that when he raised the interest rates above 20% in the early 1980s after the Carter era, he broke the law of usury in America. Since then, America and the world has reaped the usury whirlwind. Said journalist Naomi Klein in her book The Shock Doctrine, “In developing countries carrying heavy debt loads, the Volcker Shock was like a giant Taser gun fired from Washington, sending the developing world into convulsions. Soaring interest rates meant higher interest payments on foreign debts, and often the higher payments could only be met by taking on more loans …”
In 1984, while defending his fleecing of the American taxpayer for his whopper bailout of Continental Illinois, Volcker told the Senate Banking Committee: “The (bailout) operation is the most basic function of the Federal Reserve. It was why it was founded.”
And while Volcker was giving the nation’s insolvent seventh largest bank a free ride, he allowed the folding of tiny Bledsoe County Bank of Pikeville, Tennessee, and of Planters Trust and Savings Bank of Opelousas, Louisiana. During the first half of that year, 43 smaller banks failed without an FDIC bailout.
When First Pennsylvania Bank required bailout in 1980, Fed Chair Volcker said he planned to continue funding indefinitely until we…work out a merger or a bailout… [Irvine H. Sprague, “Bailout: An Insider’s Account of Bank Failures and Rescues” 1986]
The usual suspect big bankers went to Washington then as now, to work out advantageous bailouts for Continental and for First Penn, arguing along with Volcker that the TBTFs were “critical to preservation of world economic stability.”
Bailout Man has been part of the banker protection team, the BPT, during several administrations.
The New York Times, on the appointment of Volcker as Carter’s chairman of the Federal Reserve Board, wrote on July 26, 1979, that Volcker learned “the business” from Robert Roosa, a partner in Brown Brothers Harriman, and that Volcker has been part of the Roosa Brain Trust at the Federal Reserve Bank of New York, and, later, at the treasury in the Kennedy administration. “David Rockefeller, the chairman of Chase (now JPMorgan Chase), and Mr. Roosa were strong influences in the Mr. Carter decision to name Mr. Volcker for the Reserve Board chairmanship.” Robert Roosa was Carter’s secretary of the Treasury, and represented not only Brown Brothers Harriman of the London Connection, but the Trilateral Commission, the Council on Foreign Relations, the Bilderbergers, and the Royal Economic Institute. He also was a trustee of the Rockefeller Foundation and a director of Texaco and American Express companies.
On December 2, 1981, the Times mentioned that when Open Market Committee meetings are held, Solomon, as NY Fed president, and Volcker, as chairman of the Board of Governors, sit together at the head of the table and relay instructions which they have received from abroad.
Rockefeller and Roosa also were highly influential in Carter’s nomination as the presidential candidate of the Democrat Party.
Déjà vu?
Thanks, JR, for an awesome history lesson that few Americans are aware of.
Rockefeller family disciples: Carter, Henry Kissinger, Zbigniew Brzezinski, Peter G. Peterson, and list goes on and on.
And to those who have forgotten, Davy Rockfeller made out like the bandit he is (still at the Peterson Institute and with the Bretton Woods Committee) when Carter froze the Iranian assets on deposit in America (at Chase) which meant they couldn't make their interest payments, which meant that David Rockefeller, at his Chase, confiscated their billions on deposit!
Ain't greed and corruption grand???? (If you're a Rockefeller they are!)
You rock, JR!!!!
The mandated VAT is ruining the EU, and will ruin the US too.
Hey, I've got a new idea for the federal government....STOP SPENDING OUR MONEY! The gravy train has been running for 40+ years now. We cannot do this in our households; you cannot do it either.
Republicans and Democrats, you have a choice, either start listening to our reason, or stop working in government service.
We are really pissed off. We're not going to shoot you, but we are going to fire you.
Did he really say this?
The only way towards fiscal responsibility is to tax more?
Can this man show any more contempt towards the American tax payer? We need viable economic policies that spur growth and cut waste, and his solution is to tax more. Something is terribly wrong. Not perhaps with Paul but the system.
Perhaps more importantly, is that Paul has clearly given up on effect legislation and government fiscal responsibility from the current administration.
Both Ben and Paul feel that the politicians will not be able to advert crisis. They are irresponsible and it will be left up to the FED to pilot the Titanic without a rudder. This is yet another version of a FED warning.
The so called unsustainable path, is really the end of the road.
Just ask Paul.
Mark Beck
Yup! And he's been mentioning it for quite awhile now.
Remember, please, that just the previous week or so, when President Obama was sure that the health insurance legislation would pass (a k a private insurance subsidy program), he appointed neocon Alan Simpson, along with Erskine Bowles, to begin the mantra for privatizing Social Security and Medicare.
When Bush #1 had trouble with NAFTA, they brought in Brand Clinton to get it done.
When Bush #2 had trouble privatizing Soc Sec, they bring in Brand Obama to get it done.
Been there...seen it.
Agent P and Mark:
In my estimation, this is Volcker (someone who has credibility on both sides of the aisle and is widely regarded as a successful Fed Chair) going to bat for the Obama administration. The Obama team will probably respond with, "that's not administration policy", or "all options are on the table", but the notion of a VAT keeps coming up, and it's just no coincidence. That's been the plan all along, and it's where we're headed.
Obama also put together his little bipartisan panel to discuss how to balance the budget - conveniently with 10 Democrats and only 8 Republicans - to give the appearance of a united "effort" to raise taxes in the name of fiscal sanity. Volcker's comments are an extension of that.
Volcker knows better, but my guess is he wants to be heard within the administration on other issues pertaining to financial reform. So in exchange for "the Volcker rule", he goes to bat for tax increases.
Politics, baby.
Isn't our AG Eric Holder's brother some expert on the way the vat tax works in Europe? I would bet he wouldn't be on that commission if they didn't want it.
What genius in the administration gave Volcker the green light to bring this up before November? We all knew it was coming, but I personally thought no one on the left would dare mention it until the day after the mid-terms.
I can't wait to see the backpedaling on this one..."That is not the administration's policy. Besides, you can't trust what Paul says, he's getting old and doesn't know what he's talking about."
Poor bastard, they'll probably put him out to pasture to cover their butts...damn shame!
Raising taxes would throw tens of millions of families into bankruptcy and foreclosure. People will be able to pay their bank debts, or increased taxes, but not both.
Tax increases would allow the banks to seize the assets (houses, businesses, farms, etc) of a ruined population before the Fed ignites hyperinflation.
You are finally beginning to see the plan, dude.
Good for you! And I mean that seriously, as that's half the battle.
Next, begin to read primarily Glenn Greenwald, Chris Hedges and Glen Ford.
Follow the money, always, follow the money.
Thank you and moo...moo...moo.
WOOHOO, property seizures just for the unpaid tax bill! The ULTIMATE mark to market!
Go for it!
Coming soon to an auction near you... buy some 30 year treasuries, get a free house!
ooh ooh! can i get an iPad with mine!! prettty please?!
Why worry about wars. The Twelfth Iman is soon to solve those problems. Will switch hitters wear veils? Learn to speak to the Mahdi.
http://www.michaeltotten.com/2010/04/our-man-inside-irans-revolutionary-guards.php
The idea that this government is a dictatorship that wants to sustain power and therefore won't do anything like use a nuclear bomb is incorrect, I think. They have shown through their behavior over the past three decades that they have one goal, and that's to confront the West.
If you look more deeply into the thought processes of the people controlling the government, these are people who strongly believe Islam will conquer the world. Every act they commit is in that direction. They don't just want a nuclear bomb to make them untouchable. They think it will be the trigger for Islam conquering the world.
Uh...Pakistan already has the Bomb. They are muslim.
PRK has it as well...haven't used one. Iran will be no different.
Iran doesn't have a billion Indians (600 million hindu?) on the other side of the border with nukes of their own and bad blood from way back. Iran's nuclear neighbors (former Soviet Union, Pakistan) have a much better relationship, though not perfect.
I'm a Dinner Jacket is not in charge of Pak. What is your point? You have not listened to what the Iranians have told you and every one else who would listen. Read the interview and you might be able to recall some of the past statements from the Supreme Leaders of Iran.
Which Middle Eastern leader was proud of repeating "We Love Death?" But why worry. Obama will have tea with them and solve any problems. He understands them as he was raised as a Muslim.
Oh wow! Joe Lieberman is posting as Augustus!
Seriously, Joey, it was a hoot when the other day you called Iran an "expansionist nation."
Holy cow, Joey Lieberswine, I mean, I live right on the Canadian border and I've yet to see any Iranian troops there. I looked over at the Pacific the other day, and couldn't find nary an Iranian aircraft carrier.
I called a bud who lives on the Atlantic coast, and he told me, even using his binocs, he couldn't find any Iranian naval vessels on patrol.
I talked to an undocumented worker, Pedro, and he staunchly claims that there are no Iranian troops hiding on the Mexican border.
Yet, in every single country bordering Iran (Iraq, Afghanistan, Pakistan, Turkey, Turkimenistan, there are US military troops.
And right off their coast, in the Arabian Sea, there stands a bunch of US Navy aircraft carriers bigger than Moses.
Sorry, Joey, you and yours ain't fooling anybody.
Now go back and do what you partially did back in the '90s: defund the GAO and the SEC (who needs any regulatory, huh, Joey Lieberswine?).
it must be comforting to know you picked the right religion
The terrorist groups they finance will.
Bring-on the barter economy.
who runs bartertown?
The Food Stampers.
ya mon
"stop unnecessary wars, unnecessary bailouts and unnecessary interest costs"
Will that really be enough? That may give us a brief respite from budget problems, but the problem of our over bloated 'services' and entitlements will have to be tackled some time.
"...but the problem of our over bloated 'services' and entitlements will have to be tackled some time..."
Geez, spaced-out dood, you are soooo right. Where did you happen to matriculate, BTW? Harvard, Yale or Princeton? Perhaps Dartmouth, as all those outfits seem to employ the same exact roboto clowns (who always seem to belong to the same organizations: Bretton Woods Committee - brettonwoods.org, Peterson Institute - iie.com, Group of Thirty, group30.org).
I mean, all those insignificant wars, death profiteering and war profiteering hardly count, right?
I mean, all these debt-financed billionaires, responsible for the exploding national debt, and deficit spending (it's called socializing the debt, i.e., moron, peddling debt for their billions, then shifting that debt onto the backs of the public).
Seriously, spaced-out dood, where did you get your eddication?
Yes please do, this will expedite a revolt of the people. If you want to avoid this get rid of all the waste in the government. Balance the budget. This would be pain I could endure. Some accountability in the government would be nice since we are paying your salaries.
Well, how do people think the interest on the government debt will be paid? Someone has to pay for that, and it will be the taxpayer. Someone needs to ensure that bank managers are getting their bonuses paid, because their institutions are so profitable.
They will do what all banana republics do and inflate it away...
"cutting services" ????
Do we really think that even half of the money the US Government spends resutls in any benefit to its citizens??
The oil cartel knows well that they can continue their wars as long as there is no draft. Too bad for the folks in the National Guards and Reserves that thought they were going to ride tanks and shoot guns in the US countryside on weekends..............
Obama won't raise taxes on anyone making under $250,000 a year or he will be subject to immediate ridicule and will be summarily drummed out of office along with his economic advisers...
OT: Where is the "end sarcasm" button on my comment menu bar?
Hussien is already a lame duck. People are stupid and have short memories, but not that short. Wait until they apply VAT to MD 20/20 and NASCAR tix.