Coyote Blog

So many lies and half truths, so little time to debunk them!

First of all, it's true that the rich are paying more than the poor in income taxes despite all the tax relief they've had recently (not just income taxes, but lowered capital gains taxes). But that's why it's called "progressive" taxation.

And of course it's not fair! Welcome to planet Earth. If you want fair, you have to go to Jupiter. Only five-year-olds expect fairness, and even they don't always get it

But the rich are suffering *so* much! We must help them with more corporate welfare! Note: the U.S. has paid more for the non-working "Star Wars" weapons system last year than it paid in food stamps and other welfare. If minimum wage rose as fast as CEO compensation for the last decade it would be $25 an hour (source: NY Times).

For the record, median real wages have been stagnant for nearly 30 years. Lower wage earners have actually seen a decline in purchasing power. Meanwhile the top 0.01% of income earners have seen a 457% increase in real income (no joke). But still, it's so sad that the wealthy have to pay disproportionate taxes! I weep!

And of course Social Security is welfare. Only in America is the word "welfare" a pejorative. Social Security prevents what we had before it -- widespread poverty among the elderly, widows and orphans. But the rich with their 457% higher income aren't being fairly treated! (I weep even more!)

But is progressive taxation bad for the economy, for the public or for the common weal? The upper brackets in our income tax have *never* been lower, nor have corporate taxes. So economic performance is the best it's ever been, right?

Sorry, it's actually pretty crappy compared to the really high-tax-bracket eras in the 1950s and 1960s (91% and 70% top brackets, respectively). Remember those days when you could keep Mom at home to raise the kids, or even go to college by working part-time at the pizza place?

Even the modest tax increase put through by the Clinton administration produced superb growth and employment, especially compared with the current administration. This result, BTW, is why "supply-side" economics that was the Reagan excuse for lowering top income tax brackets was just baloney. It predicted the exact opposite of the Clinton era successes.

But lower taxes have provided more economic stimulus, and higher tax revenues, right?... Just like Grover Norquist says.

Again, this is a complete lie. You have to ignore not only the comparative economic results but the Reagan deficits to believe this. Reagan's deficits exceeded all previous administrations' combined. Until the current administration, it used to be the record, too. It's just not possible to have this result if tax collections were more.

Here's a look at why expecting good economic results from lowering those top brackets is pure, undiluted baloney, promoted by the "conservatives," the intellectually inadequate, and very wealthy people. This is from Ravi Batra's book "Greenspan's Fraud"

p.170 "...I staged a mock drama in my class to explain why cutting the tax burden of the wealthy is always bad for the U.S. economy. It was a rather difficult task, because Texas [Batra teaches at SMU in Dallas] is Bush country and my students were fond of their president, who has repeatedly lowered the top-bracket tax rates. ...

"[Playing the role of government,] I ... took a ten-dollar bill from my pocket, and handed it to the [mock] CEO as his tax cut, and extracted a promise from him to use the tax relief for investment expansion and to provide jobs to new graduates...."

"'But now [government] revenue has fallen by $10; so what should ...the government do to pay my bills?' I asked my class. Someone answered: 'You borrow money or raise other taxes.' 'Very good,' I replied. Then I asked the ... [ten] participants [playing the role of workers plus the 'CEO'] to pay me one dollar each as their new Social Security tax in exchange for future benefits payable upon retirement. I told them this was essentially what Reagan and Congress, following Greenspan's advice, had done from 1981 to 1983. This way I collected ten dollars, just enough to meet the government's deficit. The student CEO now had only $9 left as his tax relief.

"'Are you now ready to increase your investment by the amount of your tax cut?' I asked the CEO. 'Yes, sir,'came back a confident reply. 'Wait a minute,'I said, 'your sales have now fallen by $9, because your employees, who buy your goods, are that much short of money, while the government has no additional revenue to spend. your shelves are piling up with unsold goods. Would you, in your right mind, expand your business in these circumstances?' The student CEO paused, pondered the question a bit, and then said no.

"'In fact, you will fire some employees because of declining sales,'I added. The student agreed reluctantly.

"That year there were more than 100 students in my class. I said to them: 'Assume that you all own your own company; now tell me if you would expand your business and risk more funds in investment in the face of dwindling sales, even if the government substantially cuts your taxes.' Not a single hand went up.

... [p.172]

"'Let's now discuss the other option...Suppose we don't raise other taxes at all; then how does the government pay its bills? Obviously by borrowing money." After a slight pause, I said to my students, 'Remember ... [government] has already handed $10 to the CEO as the tax cut. Now, who has the money to lend...?

"'Would you expand your business now?' I asked him again. 'No, I just gave the tax relief back to you.' 'Case closed,' I said. 'The CEOs demand tax relief so they would have more money for investment, but if the government borrows it all back from them to pay its bills, then they are back to where they were before the tax cut. So how can investment rise...?

...So in any case, the CEO benefits at the expense of ...all."

The bit about the government borrowing reducing business capital investment is exactly what happened during Reagan's trillion-dollar deficits. Reagan's "Morning in America" was an average business cycle recovery that was unusual in this one way: capital investment -- the engine of future productivity growth -- was flat because the deficits sucked all the oxygen out of the capital markets. See Paul Krugman's "Peddling Prosperity" for the details.

From the original post in this thread: "I guess my question is, what's enough? Already, half the country only pays less than 3% of the income taxes. Do we really want a country where 50.1% of the people vote to live off the other 49.9%?"

Answer: If wealthy people profit from the roads, courts, regulations, and other public benefits, why are they carping if it also pays the freight for widows and orphans too? Is a 457% increase in real spending power just not enough? And is 457% really fair? (Painting all recipients of government spending as welfare queens is the subtext here, but that point of view is only viable if you pull the coin from your pocket and say "My Precious!" too.)

From the original post: "Postscript: Yes, I know payroll taxes work differently and hit lower income folks pretty hard. But then again, the Social Security program is supposed to be an insurance and retirement plan, not a transfer program. The left goes bananas when you suggest Social Security is welfare and not an honorable paid participation program. So, like any other insurance, the premiums are flat rather than progressive. You can't have it both way."

Yes, "hit lower income folks pretty hard" is an accurate description of quadrupling the FICA burden to pay for those CEO's lower tax brackets. But the peasants are consoled because they believe it's only fair! (And they can watch Paris Hilton blow her 457% increase in income on cable!)

Incidentally, no "conservative" is willing to risk getting specific about government spending reductions that are significant. Never. (And by "significant" I mean big enough to be more than 5% of the budget. All earmarks put together are less than 2%.)

Social security is a regressive, regressive tax. You don't pay on income in excess of $90K. If this ceiling were lifted, it would just be regressive, and all the supposed problems it has would disappear too.

And sorry, you *can* have it both way [sic]. Whether it's supposed to be insurance or transfer, who cares? The current generation pays the retired generation's benefits. It's a transfer. Social Security also pays some widows and orphans' benefits. It's insurance.

Here's a little passage about what's really going on with this constant carping about "fairness" for the poor pitiful rich people earning millions:

"What are the implications of private control of public resources, such as education, in this instance, or health care, telecommunications, Social Security, etc.?

"NC: Well, there are actually two components to that, both of them leading themes of the Bush administration's domestic policies, and of reactionary policies generally. One of them is, to put it simply, to put as many dollars as you can in the pockets of your rich friends: that is, to increase profits for the wealthy -- to increase the wealth and power of concentrated, private capital. That's one driving force in the administration's policy. The other is to break down the social bonds that lead to people having sympathy and supportive feelings about one another. That contributes to transferring profit and decision making into the hands of concentrated private power. A component of that is to undermine the normal relations -- sympathy and solidarity -- that people have.

"Take Social Security. Social Security is based on a bond among people. If you earn a salary today -- somebody your age -- [young people of twenty or so] you're paying for the welfare and survival of your parents' generation. Well, okay, that's a natural feeling. If you want to increase the control of concentrated private power you have to
drive that out of people's heads. You have to create the kind of people that Ayn Rand is talking about, where you're after your own welfare and you don't care what happens to anyone else. You have to think, "Why do I have to care about that disabled woman across town who doesn't have enough food to eat? I didn't do it to her. That's her problem. She and her husband didn't invest properly; she didn't work hard enough, so what do I care if she starves to death?" Well, you have to turn people into pathological monsters who think that way, if you want to ensure that unaccountable, concentrated, private power will dominate the world and enrich itself. So, these things go together....There's a
pathological brand of what's called libertarianism which wants to eliminate that and turn you into a monster who cares only about yourself. And that's one aspect of undermining democracy, and undermining the attitudes that underlie democracy, namely, that there should be a concern for others and a communal way of reacting to community concerns." From http://www.chomsky.info/interviews/20080519.htm

Of course there will no convincing the addicts. "It's only fair that I get more money, and 457% isn't nearly enough (My precious!)"... But junkie logic is junkie logic.

And I can't promise sobriety would provide the kind of cocoon of comfort junkies experience regularly. When you leave the junkie world, the world gets unpredictable. But sobriety has its moments. You know, the blessings of experiencing life in abundance rather than the zombie-like existence every junkie calls living. Check it out, but don't expect comfort.

"Life is trouble, only death is not!" -- Zorba the Greek.

“For the record, median real wages have been stagnant for nearly 30 years.”

Is this statistic concerning wage earners, people who are eligible to work, or all people? You can never tell when someone is using statistics to make a political point and they don’t spell it out.

Either way it's an impressive statistic. Especially given the large influx of legal and illegal immigrants who are or were earning below the median wage after entering into this country.

One simple question Yoshidad. Where did all of the Star Wars money go? All of the money spent on Star Wars equals about what the US spends on pizza every year.

correction "wall values" ought to read "wall street values"

Yoshidad,

Your quoting Chomsky about Social Security being a "bond among people" is absolutely pathetic. What bond do I have with the retiree I saw tooling down the road in a $500,000 RV the other day? And what bond do I have with the woman who fled New Orleans after Katrina and now refused to look for a job because she was so comfortable in the hotel that FEMA (read me) was paying for for her.

The only bond with I have with these people is that every April 15th I am given a choice by my government. Continue to allow us to make decisions about where your money will go (to people such as I have described above) or go to jail. This is not a bond it is legalized theft. And in our "democracy" there is nothing that prevents the woman who lives in a hotel at my expense from voting to up my taxes for her benefit.

To describe this state of affairs as a "social bond" is ridiculous. I have significant bonds with my extended family and friends. You can bet that if these people got in trouble I would be there with whatever help I could provide. This was the state of affairs before government took over with its own form of "social bond". Extended families looked after one another as did friends,communities and religious organizations.

And before you go off on your usual mindless rant about us heartless libertarians, remember that the U.S. we have the highest level of private giving of any country. When Chomsky decribes a "monster" who only cares for himself, he is sure as heck not describing me and the evidence would show he is not describing most Americans. Maybe he is describing himself? By substituting government action for the charitable actions of private individuals, Chomsky provides a form of guilt absolution for those who choose to be the heartless monster he describes. Why worry about the aged or victims of natural disaster when the goverment is taking care of the problem. Chomsky's quote looks suspiciously like projection to me.

Anyone who calls government coercion a "social bond" is someone who wants to substitute the judgement of the state for the things that private individuals have derived true meaning from over the years, such as family and religion.
Remember the "Politics of Meaning"?, it is a perfect example of this sort of pablum.

clouse wants a more details for the quoted median wage info. Try this one: http://www.nytimes.com/2006/08/28/business/28wages.html (you have to click on the chart to see the years on the X axis)

Meanwhile, poster Doug is apparently bitter about government meddling, and wants only strictly constitutional public policy. He is also not impressed when I deny that "fairness" is an appropriate measure of benefits in responding to the initial post about taxation, which basically says progressive taxation isn't fair.

FYI, Doug, the terms of debate about such taxation do not include the constitution. Tax rates are outside the scope of that document. Economics too...not anticipated there. So let's keep our eye on the ball, shall we?

Notice, BTW, Doug that you -- and people like you -- do not respond to the argument actually made. All you've got is just distraction ("look it up in the Constitution!") and *name* calling. ("Dang Socialists! They're a-gittin' as uppity as the negros!") See how it works? I won't deny that reasonable people can disagree, and even do so agreeably, but what you're doing defines illegitimate argument.

P.S. As for whether SDI works -- well of course it works if you tell it where the target is going to be, when it's going to fire and don't use any countermeasures (radar interference, decoys, etc.). And under those conditions is the *only* time it has worked in any test. Period.

If you are really interested in SDI, Wikipedia has extensive coverage (http://en.wikipedia.org/wiki/Strategic_Defense_Initiative, and for more current weapons: http://en.wikipedia.org/wiki/Ground-Based_Midcourse_Defense).

But let's not bullshit the bullshitter here, mon cher. SDI or GBMD is something that has never worked in anything resembling a combat situation. Worse still: As currently conceived, it is even an offensive weapon that breaks the Mutual Assured Destruction standoff.

In other words, as an added bonus to its non-working status, it provokes a whole new weapons race. If you want to really understand the military's R&D and acquisitions procedures, I recommend Senator William Proxmire's book "Report from Wasteland" to you. A real eye-opener.

Anyway, SDI is just more subsidy for the military-industrial complex, I say, for a non-working weapons system in the context of a defense budget that exceeds the rest of the world's military expenditures put together -- for a military that still can't keep us out of a fight.

Could we at least agree about that one?

Jim Collins asks where did all the Star Wars money go? Answer: To the military-industrial complex. Where else? Is this the most productive thing we could do with it? What about all those alternative energy sources we could perfect? Or a cure for AIDS? Or tastier pizza?...8^)

If your point is that some workers got a job because Star Wars money was spent making weapons, I say "sure." But is that the best use of their time?

oh, and regarding fairness yoshi, please define what you are talking about as you are not making and sense. what do you mean by fairness?

are we talking about a fair system? because then everyone ought to be treated the same way. this argues against progressive taxation.

are you talking about a fair outcome? because in that case, you need to define fair. does fair mean we all get the same? how is that fair to those who work harder or are more innovative? identical outcomes is horribly unfair. why should a squirrel who gathers no nuts get a share of those gathered by one who did? and if he does, isn't that a strong incentive to free ride? what happens when all the squirrels do it?

This is not for Yoshidad sake, because he has eyes and does not see, ears and does not hear, but for any reasonable person that thinks the 50's and 60's was great economic times.

I wish I knew where this good life of the 50's and 60's was that Yoshidad talks about. I missed out on that. As for me and my friends there was only one family car, nobody I knew could afford to fly, bus was it. When my Uncle died in 1960 I went to the bank with my Dad were he had to take out a loan to fly to California and then only he could go to his brother funeral. We didn't have a TV until 1957 and then that was a small black and white with only 2 channels (could not receive the NBC channel). No family vacations, the only time I stayed in a motel was 4 time in 1957 on a trip to California to visit family, and the next time was 1969 on the next time to CA.

Cars, manual transmission, a radio, a heater and nothing else. No automatic transmission, no power steering, brakes, windows, mirrors, not rear defroster, no cup holders, no air conditioners, no seat belts until mid 60ties, unless you could afford a Caddy. Nobody I knew could.

Houses was smaller, we had a four room house (not number of bedrooms) until my mother went to work (yes not all mothers stayed at home) and then my parents added two more rooms.

No ipod, mobile phones, internet, video games, no computers, no calculators, no voice mail or answering machines, no microwave oven, no dishwasher (unless rich), no vcr or dvd, no tivo, I could go on. I did get a record player for my birthday but it was not a stereo.

No malls or supercenters.

As for working your way through college with a job in a Pizza Shop, that didn't happen except in the movies.

My parents saved to send me and my sister to college, there was not the grant money and loans that is available today. I had an easier time putting my daughter through college than my parent had with me.

As for health care, cancer was a death sentence, when someone got cancer, you started preparing for the funeral, no chemo. When I was born there was no vaccine for polio, measles, chicken pox or mumps, everyone had to get a smallpox vaccination. I had to suffer through measles, mumps and chicken pox, it was not fun. No access for people in wheelchairs. No MRI or CT scans, no ibprofen, no oral medicine for type II diabetics (my grandfather had to use insulin), no CPR, no crash carts, no bypass surgery, no transplants, no Laparoscopic surgery and I could go on.

As for women opportunities, not much, the girls in my class was told that the opportunities for them in the workplace was nursing, teaching, secretaries, seamstress and all the "traditional" "woman" jobs.

What was the job choices, where I lived you could work in a steel mill doing hot dirty back breaking work, or you could work in the coal mines doing cold, dirty back breaking work and die of black lung like by grandfather or in a mine collapse like a friend did. I preferred my software development job, sitting at my desk in a nice air conditioned office.

If I had a choice, I rather grow up today than in the 50ties.

Hey, this is getting to be like one of those multiple chess games... Slow down!

morganovich says Ravi Batra's story is "just a fatuous story about an economy dominated by government spending and grants that is incapable of growing. what happened to that tax break for investment? didn't the investment yield jobs? if investors profited, what did they reinvest in? and if we add capacity, doesn't that reduce price making everyone better off as they buy what they want/need?"

Yoshidad answers: The short answer is "no." The evidence of the U.S. economy in the 1950's and 1960's is enough to refute any objection you have to Batra's story of why lowering taxes on the wealthy is a loser for the economy. That wasn't a story, that was history.

Maybe you don't remember the time when your wife didn't have to work, and you could send your kids to college without borrowing on your middle-class salary... That period -- which had very high marginal tax rates -- refutes what you say, in spades.

Meanwhile, the Reagan tax breaks for the wealthy yielded an average business cycle recovery with flat capital investment, and average job creation -- no miraculous growth. When Reagan came into office, the U.S. was the world's largest creditor. When he left, it was the world's largest debtor. When he came into office, it also had a trade surplus; when he left, a trade deficit. And there's certainly worse employment growth today with W's cut-the-tax policy. Nothing you're looking for appears when you examine what happened.

Conversely, after increasing marginal income taxes on the wealthy, the Clinton years produced higher investment returns, better employment creation, and better capital investment. This isn't controversial any more than the assertion that average people did better in the 50's and 60's than they're doing today.

There are reasons to discount Clinton's contribution to all this economic improvement, but there's no doubt whatsoever that when it was proposed, it was derided by the tax-cutting supply-siders as something that was going to send the economy to heck in a handcart.

So, sorry, I'm not buying your arguments. Neither are any reputable economists.

Xmas writes that the rich will take lots of time and attention to lower their taxes if you raise their rates. This doesn't seem controversial, but my guess is that the implication here is that raising rates is a waste of time because the rich will just get some fancy tax shelters.

That would be true, Xmas, except the ultimate tax shelter is lower rates, and the rich have been lobbying successfully for that for years. Who do you think pays Grover Norquist to go around saying that lower taxes mean the government gets more revenue? (And if you believe that, I'll give you some lead bricks to make your balloon go higher.)

JimK writes: "Your quoting Chomsky about Social Security being a "bond among people" is absolutely pathetic. ... And what bond do I have with the woman who fled New Orleans after Katrina and now refused to look for a job because she was so comfortable in the hotel that FEMA (read me) was paying for for her. The only bond with I have with these people is that every April 15th I [can pay my taxes] or go to jail. This is not a bond it is legalized theft. And in our "democracy" there is nothing that prevents the woman who lives in a hotel at my expense from voting to up my taxes for her benefit."

Dear JimK: Yours is exactly the argument made by the American Confederacy. The only answer to you is that, without what you call "theft," the modern nation state is not possible, and democracy as we know it is doomed. The consent of a majority of the governed says "pay income taxes" so unless you want to secede, I suggest you pay.

And I'm not questioning whether it's possible to legitimately disagree about the desirability of nation states, but where there's national sympathy, then there's something other than compulsion to urge people towards national defense. Compulsion is what Saddam had -- remember how effective that was in motivating his troops?

National sympathy also is a sentiment that keeps people from trying to pass off tainted food as healthy (thanks for the dog food, China!), and we'd all better hope that such a sentiment is at least possible, or we're in a world of hurt, because most of us don't grow our own food, or build our own homes, or make our own medication, etc., etc. Better hope those folks doing for you are honest -- either that, or move back to the cave.

Anyway, we fought a civil war about this very kind of issue (similar in kind, if not identical). The agreement that prevailed was that a majority of people gets to decide, and you have to go along or go to jail. You can call it theft or patriotism. I suggest the latter for your own benefit, but it's your decision, either way.

That's not to say I'm that thrilled about all the things the government is doing, either, BTW. But bringing up welfare queens, and ignoring the corporate welfare is really egregious -- and far beyond pathetic -- IMHO. It's straining at a gnat, swallowing a camel.

Non-working Star Wars got more than all the crooked welfare queens, and legitimate welfare recipients put together. And that was just one of many weapons systems. B-2 bomber, anyone?

Oh yes, and the multi-trillion-dollar war on terror? Some studies say terror is up 700%(ouch!)... Effective, no?

As for social cohesion, let's also remember that precious few of us are more than a mugging or a bad disease away from sleeping in a refrigerator box, too. Are you sure you want to roll those dice without a safety net, or with one that's just your family? That's worked so well in Mexico, don't you think?

Personally, I think what you call welfare is just a cheap way to buy social peace. It's very cheap compared to the military, and it handles a lot of the dysfunction natural to any human society.

What do you think we should do with all the schizophrenics and drug addicts, anyway? Send 'em to the ovens? OK, Mr. Hitler, but let's consider the possibility that there's at least an alternative that might include morality.

And drug arrests since the 1980's are up in the U.S. 1100%, so we're doing the concentration-camp thing now. Drug use is down 50% (not 1100%). Canada hasn't increased its incarceration rates like the U.S. and has experienced a similar drop in crime. But what the heck, even though it isn't working, let's continue to imprison people. What do you say? Maybe we could torture them too...?

NASCAR Wife writes: "What should the Government do to cover its bills when revenue falls?” CUT-CUT-CUT. Cut till it bleeds! Cut till it really, really hurts."

NASCAR wife makes what might be legitimate about specific programs. What about all those earmarks, for example? A toilet paper museum in Albany? Some other idiotic thing...

You can always find an example of stupid government. It's like shooting fish in a barrel. All their meetings and documents have to be public. (Question: Were there any stupid decisions at Enron, or Adelphia, or Global Crossing, or Worldcom, etc., etc. etc.?)

But the trouble with this argument is that it is fundamentally dishonest. There are no budget items that it's politically possible to cut that are also large enough. All the earmarks put together are less than 2% of the budget.

So I'll believe any of you courageous budget cutters if you can tell me something that would even make a 10% difference. You can't. Period. Not even the "courageous" Republicans currently holding up the California budget have such a thing. (They want to cut something, but they won't say what. And they're going to stamp their tiny feet and hold their breath until you guess what it is. Nyah!)

BTW, lower revenue sharing from the feds is showing up all over the place in higher local and state taxes. Even the tax cuts are baloney.

Oh yes, and let's not forget that confining the discussion exclusively to taxes and spending is misdirection popular among the "conservatives." What about eliminating the depletion allowance -- a special write-off for oil companies? Silence. And when W buys a money-losing baseball team, cons the Arlington Texas voting public into gifting them a stadium, then sells the team for millions more than he paid... Is that a taxable event? Or is it spending? (Answer: neither, but it's 75% of W's net worth). See David Cay Johnston's "Free Lunch" for enough examples of this to make you grind your teeth.

Anyway, if you exclude Social Security, Medicare, interest on the national debt, and the military, then you only have 15% of the Federal budget to cut. Where shall we begin? The FBI, or the Federal Courts? How about the CDC? Is that crickets I hear?

Look, I'm not denying there's waste. It's a *human* activity. How could there not be waste? There is no difference just because it's government.

But the thinking of (sigh) people like NASCAR wife is that there's something significant to cut that could get the consent of a majority of the governed. Remember that little civil war thingy? It said majority rules.

No such thing exists. Social Security and Medicare...you gonna cut those? Pulleese! Bush shut up about it when his privatization plan was exposed as baloney. No majorities are available for any of these things.

The military is really the only legitimate cut-able thing, and Bush and the neocons have made it orders of magnitude more expensive. So where's the spending-cutting beef here? Three trillion dollars for Iraq and still counting... Again, a fundamentally misguided argument, used by the people spending more on the only really cut-able thing.

So if NASCAR wife says "I say if the program has not been around for 25+ years, cut it." she's excluding interest from the national debt, Social Security, Medicare, but maybe not the military. What do you say NW? Will you go for a 15% cut in the military like Kucinich proposed? My bet is that she doesn't go for it. Any takers?

Meanwhile, the point about "nobody's investing in Europe" is refuted by a) the more expensive euro, in dollar terms, and b) things like European stock index funds (see the trend in http://quicktake.morningstar.com/FundNet/Snapshot.aspx?Country=USA&Symbol=VEURX), for one example.

In other words, you're making things up, not making a legitimate argument.

NASCAR Wife *loves* the rich, too: "the 50.1% vote to PAY themselves with overbudensome taxes on the other 49.9%. This stagnates the economy by essentially taxing the most productive and entrepreneurial."

Again, even the supposed majority of crooked welfare Negroes are not paying themselves more than a single weapons system. The $372 billion in tax breaks Bush proposed went mostly to the wealthy. The upshot of recent decades of tax cutting is that the biggest gainers are quite obviously the very, very rich (457% for the top 0.01% while median real wages stagnate!), so you're straining at a gnat, swallowing a camel.

BTW, if the "entrepreneurial" were so valuable, then CEO compensation would be related to performance. Sorry, not even *that* bit of urban legend is true. (See http://www.commondreams.org/headlines05/0412-10.htm, for just one of many, many examples).

So let's review, shall we: No matter what reality is, y'all can deny it. That's your prerogative.

But it's really not controversial to say that average folks did best in the 1950s and 1960s when marginal taxes on the wealthy were highest. It's also not controversial to say that the results of George W. Bush's tax-cutting was less than stellar in producing results in the real economy (OK, we're doing swell now with stagnant real wages and the sub-prime meltdown...Yup!).

Bush's results were at least less-than-Clinton, and at worst a huge bit of welfare for the wealthiest among us.

And it's not at all controversial to say that W's $372 billion tax cut was orders of magnitude bigger than anything paid in welfare, and certainly orders of magnitude squared bigger than what was paid in illegitimate welfare claims (estimated to be no more than 15% of welfare, at the high end).

So my conservative brothers and sisters, once again, you have conflated a mass of urban legend and marketing with reality. This resembles nothing so much as the dog's breakfast but should not be mistaken for being in touch with reality outside the Matrix.

But this is the kind of thinking that got us to this point: As a consequence, we're "borrowing money from China to buy oil from the Persian Gulf to burn it in ways that destroy the planet. Every bit of that's got to change." - Al Gore (because you need to hear from him)

Thanks for playing.

actually yoshi, you are just flat out wrong.

the example you cite from batra is so fundamentally incomplete that of course it provides the wrong answer. it fails to account for growth. bigger pie = everyone does better.

the period you describe in the 50's and 60's was not nearly so rosy as you describe and benefited from a one time massive tail wind of the US getting to sell the rest of the world all the things it needed to recover from a world war. this allowed for poor policies to survive because the underlying situation was so good.

then we got the 70's. remember the seventies? no growth. massive inflation. horrid taxes?

the 80's were a massive accomplishment coming out of that disaster. i grant you that too much was spent by the government, but the solution to that is cut spending, not raise taxes. congress's refusal to push through any of reagan's cuts was largely to blame there. and where did all the innovation come from that allowed clinton to preside over a boom?

the 80's. loads of primary research into optics was done with government funding. the entire telcom/internet boom was made possible by the invention of the erbium doped fiber amplifier. this made wave division multiplexing possible. THAT caused a massive surge in telcom capacity and drop in price which made all the wild efficiency gains of the post internet era possible.

tax cuts don;t drive immediate revenue growth. obviously, there is a short term decline. but it winds up ahead in the intermediate and long term as it drives more growth so ultimately, more taxes get paid. an incremental 1% to growth rate over 20 years at a given tax rate DWARFS the gains from raising the tax rate 5 percentage points on the rich. if you don;t think tax cuts can cause such growth, you have no idea what ened the 70's.

and i have no idea where you get your information on "reputable economists" but speaking as a 25 year wall st veteran with loads of friends among top world economists (and an advanced econ degree of my own) i'm here to tell you you need to check your facts. you are utterly misinformed. are there some academic economists that agree with you, certainty, but i think that if you examine their success in actually predicting the future and the responses of the economy to policy changes, you will realize that their opinions do little to successfully forecast reality.

oh, and regarding your questions of what to cut, it's not fair to joust against straw men and assign opinions to others that they have never espoused. i don;t see the "conservative" programs/issues you attack championed here. readers of this site are not generally conservative. they are libertarian. but for cutting the deficit itself:

that's easy. freeze the budget immediately in all categories. raise it only by specific vote for specific projects. that will turn our deficit into a surplus in a few years.

all earmarks - gone.

all government subsidies for all businesses, agriculture, research etc - gone.

SS - private accounts, no longer an unfunded liability. break up the current fund into accounts for those who have paid in to date.

medicare - comprehensive measurement and reorganization around cost benefit. most medical expense comes in the last 9 months of life, and by most i mean 75%+. cut all of the horribly expensive procedures that have very low marginal benefit and we can afford all the healthcare everyone else needs.

welfare etc - limit duration, require work

legalize drugs. tax them.

lower taxes. invite in business and innovation from abroad.

want to see a great example of how well this works, take a look at what ireland has done in the last decade. THAT is what cutting taxes and attracting business can accomplish. in a decade they have gone from one of the highest tax nations in europe to the lowest. and their growth has leapt from the bottom of the chart to the top. to top it all off, transfers as a % of GDP have dropped through the period while median income has risen. everyone is better off.

government is a terrible provider of goods and services and a massive distorter of economies and disrupter of growth. the less they meddle, the better off everyone is in the long run.

Please do not feed the YoshiTroll. It only makes his posts longer and more frequent. Thank you.

morganovich: What kind of health care system do they have in Ireland?

http://en.wikipedia.org/wiki/Health_care_in_Ireland

Alleged libertarian Bob Barr supports Goracle's economic crippling

The real question is why should we be surprised that lowering marginal tax rates actually increases economic activity and tax revenues? Despite all of the liberals claim, the truth is that the Laffer Curve is a mathematical fact. Just apply Rolle's Theorem and you are done. That the empirical evidence completely supports the claims is very good evidence to the shape of the curve.

Back to the military-industrial complex, eh? My, the cupboard has gotten bare, what with the disappearance of the "more welfare is the key" arguments, and the "sure, but join a state militia first" trope, and the "it'll be more fair if we put this poor, disadvantaged youth with the third-grade equivalency and the non-white's natural inabilty to succeed and strong need for benevolent guidance . . . uh, no, wait . . . I mean, his unfair burdens . . . into direct competition with all of the top-of-their-classes valedictorians who make up the bulk of this school" parody of rational thought.

Oh, yeah, and the "Bush lied!" mantra. Almost forgot. Thanks, Chairman Rockefeller.

But, back to the demonic Military Industrial Complex! Who is that man behind the Curtain of Death, manipulating the politicians to send so much of my money to them so that they can continue to rain a ripping steel death down onto the innocent and pure young patriots as they attempt to place a bomb in yet another death-deserving day-care center while wondering secretly if their little sister will be one of their 72? Enquiring minds . . . and, well . . . Yoshidude . . . want to know . . .

Follow the money. It's mostly a huge churning cauldron of trained and educated middle-class workers, gathered together in one massive Boeing-sized room (how convenient!) to be exhorted to vote as an unthinking, uncritical group for the politicians who promise them the absolute most of all the goodies available. They take home a goodly-sized chunk of that blood money, presumably dripping all the way.

Next, if you look around, it's . . . (gasp!) . . . unions and their national leaderships and stakeholders, looking to that MIC as one of their last strongholds, the final big bastions of the faux class warfare that buttered Hoffa's bread for so long and allowed him to do so much that was good for humanity. People so loved that selfless guy, I understand that they still search for his burial place to this day, for homage reason, I'm guessing.

Finally, it's the evil shareholders of the companies crafting those Horrific Hackers of Humanity who wring out the remaining gore-begotten bucks of the MIC - yes, those same evil old hags and elderly pedophiles who hold the bulk of the country's 401k, IRA, and pension accounts, all of which strongly tend towards investment under the sheltering swords of the strong, secure, stable makers-of-boomy-things.

So, go smite them all, dude. Strike a blow for. . . oh . . . I don't know . . . the supremecy of apathy and illiteracy, I suppose.

"To Mr. Al Gore ( "past" Vice president of us(United States of American)

I have 1 (one) question?

Will YOU DEBATE SOMEONE WHO KNOWS ANYTHING ABOUT THE WEATHER (Hurriances, ect. ET al, ? ) Hope he can predict the current storm (dolly or whatever her or his name is) as well as he did as KATRIAN OR (NEW ORLEANS) bad deal for those living below sea level !

Moral of ? BE WISE WHERE YOU PUT A HOUSE!
TEXAS , NEW ORLEANS , NYC, NORTH , ICE COUNTRY
(WE CALL THEM WINTER TEXAS) = THE WINTER TEXANS COME DOWN TO SOUTH TEXAS EVERY YEAR BECAUSE OF THE cold weather (climate change?) every year since?
Have a nice warm winter folks!

Hi guys:

I am not sure if I am for or against these rebates check. Personally,I would rather see some logic to cutting down taxes, and this looks more like a gimmick than an actual plan.The one thing that bugs me though is,that the right wingers always seem to be more inclined to send those 150 billion to the top 1% rather than to the bottom 50%.As if only the top %1 knows how to invest.As if the top 1% never ships jobs overseas.
===============================================
Albertson

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Thanks Yoshi,

The one thing I hadn't considered is that high taxes lead to more influence in the government for rich individuals and corporations. So basically, you're saying that high taxes lead to more corruption of the government by the "rich". I think you're right on there.

Going back to my example, a person paying $400,000 a year in taxes can spend $100,000 to pay a lobbyist to get a specialized tax break so he only pays $200,000 in taxes, too. I mean, I'd pay Grover Norquist a few thousand to lower my tax burden.

[Yoshidad]:

So many lies and half truths, so little time to debunk them!

[concatenation of off topic talking points follows]

Sorry to have to point this out but you typed out your plan into the post. In the future keep it to an interior monologue.

Hey, Will H., thanks for posting that. Always good to have some clarity from someone that was there. Someone once pointed out that "The Honeymooners" was a show about a middle class family. They had NOTHING in their apartment - a fridge and a table. I'm only sad I can't live in the future, when cancer will only be a memory and healthcare will hopefully be 25% of GDP because there are so many new cures to spend money on.

Nice rant Doug! Right on the money. When are people going to realize that this isn't about the economy or the environment, it is about pushing the US in the direction of Socialism. Plain and simple. It's a shame that the Soviets gave up about 25 years too early. Had they seen the direction that the US and the UK are heading they might have decided to stick it out. Don't automatically write me off as a "conspiracy theory" kook. Starting in the 1950's the Soviets set out on a plan to destabilize the US. If you dig far enough back you will find that most of the radical organizations in the 1960's including the environmentalist movement recieved aid and funding from the USSR. The intent was to divide the US up into different factions that could be played against one another, to provoke instability.

Sorry, Mr. Morganovich, despite its limitations, Batra's story explains quite clearly how tax cuts for the rich reduce overall demand. You fault Batra's explanation as omitting growth - a "higher pie" for everyone. This is the same superstition to which Ronnie Reagan subscribed. You may remember that the Savings & Loans were going to grow their way out of trouble after they were deregulated. The largest scandal in U.S. history -- the S&L bailout -- ensued.

Perhaps Batra's story is incomplete because it omits the "higher pie" of growth, but consumer demand is 70% of the U.S. economy, and since that demand is now subsiding we'll see just whether the tax cuts for the rich produce growth or recessions, if they continue to be a hallmark of U.S. public policy.

I'm hoping you "conservatives" are right, believe it or not, because if you're not, and we continue to believe the elaborate superstition of Supply-Side economics, keeping taxes on the wealthy low because they're going to grow the pie, then the coming recession will be a lulu.

Batra's story also explains how the decades of the '50s and '60s could have stellar economic performance despite very high marginal tax rates, and how the Clinton presidency's economic policies didn't spoil the Reagan/Bush economy, they improved on it. Again, both of these explanations are simply not available from Supply-Side (AKA "voodoo") economics.

Batra would have to have a more elaborate story to include the magical effects of growth, I'll give you that. But the growth of the 50s and 60s compares favorably to subsequent decades too -- again, despite the supposed bad effect of higher taxes. Could voodoo economics just not fit the facts?

Morganovich then brings up the '70's:"then we got the 70's. remember the seventies? no growth. massive inflation. horrid taxes? ...the 80's were a massive accomplishment coming out of that disaster. i grant you that too much was spent by the government, but the solution to that is cut spending, not raise taxes. congress's refusal to push through any of reagan's cuts was largely to blame there. and where did all the innovation come from that allowed clinton to preside over a boom?" --You see Clinton gets zero credit, it was the innovations of Reagan's presidency that were responsible for the boom!

In truth, the problems in the U.S. economy in the 1970s had little to do with changes in taxes or spending -- the 1973 recession and its aftermath occurred because U.S. oil production peaked in 1971, then the Arabs denied us oil in 1973. It was the first time in modern history that the U.S. couldn't pump enough oil to produce itself out of a shortfall in world supply. The ensuing recession was the worst since the Great Depression, and occurred because oil prices basically quadrupled overnight. Think of it as a massive, regressive tax increase paid to the Arabs and oil companies, sort of like what we're paying Exxon, the Arabs and other exporters now.

The price of oil in 1971 was $1.75/bbl, incidentally, and only 30% of domestic consumption was imports. Until recently, the peak of oil prices was in 1982 ($42 in 1982 dollars) when Paul Volcker began implementing his Fed policies that drove interest rates up to wring the inflation out of the economy. Currently, the U.S. imports roughly 70% of consumption at $140+/bbl.

This 1971 peak in U.S. domestic oil production is irreversable, says the petroleum lobby (the American Petroleum Institute) and folks like Daniel Yergin, whose think tank (Cambridge Energy Research Associates or CERA) is an industry-friendly one -- no tree huggers there. Heck, Yergin is a fan of Reagan. Read his book "The Commanding Heights" that praises Reagan and Thatcher to the heavens.

The enviros simply want conservation (real conservatism) or to have something other than oil as a fuel, but there's no real controversy about whether U.S. domestic production has entered an inexorable decline since the '70s -- even if we produce ANWR. CERA is a little more optimistic than the peakers about the world's supply. On the other hand, here's CERA's scorecard v. the reality of peak oil, BTW: http://www.aspo-usa.com/index.php?option=com_content&task=view&id=313&Itemid=146

In recovering from the stagflation '70s, the resourceful U.S. economy eventually roughly halved its energy consumption per dollar of GDP. Between the lower energy demand because of conservation, and lingering stagflation, and because of an increased supply because Alaska's North Slope came online as Ronnie Reagan stepped into office, energy prices subsided during Reagan's presidency, providing an added boost to the economy unavailable in the '70s.

Incidentally, we can dispute which inventions coalesced to increase productivity in the '90's (was it semi-conductors, fiber-optics, software, or network equipment, or...?), but I must admit it's refreshing to hear that Morganovich acknowledges the government's research had positive role in producing these things. However that role has been ongoing, not just in the 1980s to benefit the '90s, though, so let's give credit to previous administrations too...and enlightened government spending, generally. Yes, it is *possible* -- even if it's not always actual.

Meanwhile, crediting Ronald Reagan and his supply-siders with the "Morning in America" recovery of the 1980s is where we part company. The source of my information about this is Paul Krugman's excellent book "Peddling Prosperity." Krugman is a Clark-medal-winning economist who currently teaches at Princeton, and writes editorials in the NY Times, so his credentials are substantial, in contrast to many "supply-side" supporters (e.g. Jude Wanniski was a journalist who never submitted a thing to peer-reviewed economics journals, but was well-funded by wealthy people who profited from his theories). Supply side economics has fallen into such disfavor, BTW, that "conservatives" are taking some pains to deny it is at the root of current policy (see http://www.brendan-nyhan.com/blog/2007/09/mcardle-bush-no.html, for one example)

Krugman's description of Reagan's "Morning in America" economic recovery, elaborated in that book is this: It was an average business cycle recovery accompanies by flat capital investment and a big federal budget deficit. The statistics and footnotes are in the book. Read it, then get back to me. I've lent it to my "conservative" friends, and despite some initial reservations, they've been convinced Krugman is right too.... But don't take my word for it.

So did lowering taxes on the wealthy produce some miraculous growth spurt, and a miraculously "higher pie"? No. It was an average business cycle recovery with flat capital investment, and a record federal budget deficit. An no, tax collections didn't increase -- the record-breaking deficit proved that, as do the multiple tax increases that followed the lowering of top brackets. These barely kept the government deficit in control -- and it was record-breakingly large (more than all previous presidencies' combined).

As Jason Epstein says: It was a "crackpot theory that led Ronald Reagan to believe that huge tax cuts in federal taxes would lead to federal surpluses, when the actual outcome proved to be a cumulative deficit of $3.5 trillion." He continues: "The Laffer Curve was a hoax because its allure and effect were not increased productivity but a tax cut for the rich. Thus the Laffer Curve illustrates another phenomenon as old as civilization—or even older: the tendency for wolves to dress like sheep."

I've mentioned it before, but it's worth restating: David Stockman, Reagan's budget director stated, on the record, that Supply Side economics was not a real theory, it was just a pretext for lowering those top brackets. From Wikipedia, where Stockman says: "'I mean, Kemp-Roth [Reagan's 1981 tax cut] was always a Trojan horse to bring down the top rate.... It's kind of hard to sell 'trickle down.' So the supply-side formula was the only way to get a tax policy that was really 'trickle down.' Supply-side is 'trickle-down' theory." Of the budget process in his first year on the job, Mr. Stockman is quoted as saying: "None of us really understands what's going on with all these numbers," which was used as the subtitle of the [source Atlantic Magazine] article." (See http://en.wikipedia.org/wiki/David_Stockman#Office_of_Management_and_Budget)

You may have seen Stockman in the news recently. He was being led away in handcuffs, indicted for securities fraud. This is so... Reagan! (Fact of interest: With the exception of the Nixon administration, the Reagan administration holds the record for the most indictments for malfeasance in office -- 29. How many such indictments does the crooked, slick-willie Clinton administration have? Zero, none, bupkiss. I couldn't make it up. See here:http://www.rollingstone.com/news/profile/story/9961300/the_worst_president_in_history)

The truth is that while taxes on the rich were lowered, revenues fell dramatically -- so dramatically that Reagan signed eight such tax increases to deal with revenue shortfalls (what else?) and pay for his military buildup. These taxes included increases in FICA and the gas tax. All told, Reagan / Bush 41 quadrupled the doubly regressive social security taxes.

Morganovich returns to suggest some specific cuts. These are almost all inadequate or baloney. A few examples:

- "all earmarks - gone." Sorry, Mr. Morganovich, I don't know what you're thinking. Earmarks are less than 2% of the federal budget. I said show me something *significant*, not something trivial.

Another example: "SS - private accounts" -- Not only is this irrelevant to the deficit (the unfunded SS liability is not part of the budget calculation), it is not politically possible. On the "plus" side: it is intellectually dishonest. When Morganovic says "break up the current fund into accounts for those who have paid in to date." -- who is left to pay for current beneficiaries? Current SS taxes pay for the current beneficiaries' benefits. If you're going to privatize, where does the money come from for those private accounts and current beneficiaries too? Answer: Additional taxes collected by the government, then managed by Wall Street. That would be laughable if it weren't the real proposal from privatizers.

From such intellectual dishonesty, there is no specific answer about where the private account money comes from, even from Bush when he proposed this, because it was such a political third rail. See this for the entire story with footnotes: http://www.nytimes.com/2005/02/01/opinion/01krugman.html

Another example: "lower taxes" -- and this will lower spending... how?

Anyway, Morganovich's proposals don't do what he says pure and simple. He provides no significant about what to cut other than "freezing" the budget -- unless inflation is 10% not even that would cut 10% from real spending unless the entire budget gets a cost-of-living increase.

Morganovich concludes with "government is a terrible provider of goods and services and a massive distorter of economies and disrupter of growth. the less they meddle, the better off everyone is in the long run." -- except for managing sophisticated research into fiber optics, apparently.

So, I'll admit that sometimes what you say about government incompetence is true, Mr. Morganovich, but sometimes not. I would say that if you're suggesting abandoning or defunding (Cut cut cut!) publicly-funded infrastructure the ultimate result is that you would be living in a cave, or someplace like Haiti or Madagascar. You may want that, but I'm guessing it's not a politically viable position. Some of our posters want a Lexus, but ignore how useless it would be without a road to drive it on -- I do not make this mistake.

Josh weighs in to ask "Yoshi are you saying minimum wage should be indexed to reflect the rate of CEO pay?"

Yoshidad answers: No Josh, I'm simply pointing out that real wages have been stagnant despite measurable productivity increases. The vast preponderance of the payoff for those real productivity increases has gone to the very tippy-top of the income pyramid (70% of the payoff went to the top 1% of earners, if memory serves). You can try reducing my arguments to absurdity, but the observation about increasing income inequality is really not controversial.

Ravi Batra adds that when wages don't increase as much as productivity does, then overall demand suffers, unless you can induce people to borrow. When they run out of credit, then demand collapses -- and this is one of the really scary aspects of the current sub-prime mortgage crisis (some banks are reported to have as many as 33% of their loans in default -- *that* is scary! -- and strangely reminiscent of the S&L bailout). This observation about aggregate demand is true, even if corporate profits may increase (they typically do), says Batra. (more later)

RE: yoshdad , 7-24-2008

If you will do one thing for me , I would appriciate it.
You are (from your written comments) college education.

One thing that My dad (My Hero!) taught me at a very young age was three things in life.

1) Be Honest! with people even if the truth HURTS! THEM! (Fad in the 1980 called TUFF LOVE!)
2) Don't Lie - Honesty (can't spell) is the best policy!
3) If you have the ability to WORK! there are no execues not to be able to SURVICE WHAT LIFE THROWS AT YOU!

These three principle are the only ones that I have operated under in my short career of life! (53 yrs old)

As I have MATURED over my business careers (accountant, hired bankruptcy expert, oil&gas landman, oil & gas investments, Farmer ( not by choice for six years) but for the FAMILY!, let me tell you one thing!

You or anyone else in the UNITED STATES OF AMERICA
(MAYBE RUSSIA, KOREA, ECT. ECT. ) CAN'T or WILL NOT TELL ME WHAT I SHOULD DO TO BE HAPPY, OR HOW TO TAKE CARE OF MY FAMILY! PERIOD!

IF YOU DECIDE (OR SOMEONE ELSE! MAYBE OBMANA)DECIDE TO "FORCE" THOSE ISSUES ON ME, COME ON DOWN AND TRY ON MY PRIVATE PROPERTY DOWN HERE IN SOUTH TEXAS, BECAUSE THE 1ST FAMILY DOWN HERE IN 1913 FORWARD PUT UP WITH DROUGHT, HURRICANCES, FARM DISASTER, RANCHING DISASTER, MEXICAN BANIDOSI (PANCHO ) ECT. ECT. ECT. , BUT DO YOU KNOW? WE ARE STILL HERE!

AS FOR THE EVIL OIL & GAS BUSINESS THAT YOU COMMENTED ON ! YOU ARE THE TYPICIAL TRUST FUND BABY WHO HAS NEVER HAD WORK!!!!!!!!!!!! one day in their day in the whole life. Your grandfather , father did the hard work , you are sucking on the tits. good day.

AND YOU BETTER LISTEN REAL GOOD!

YOU BETTER HAVE A GODDAMM GOOD ARMY BEHIND YOU OR , NO, I GURANNTEED IT! YOU WILL BE BUZZARD BAIT!

Have Nice Day!

Peace & Love!

Life is to short for this crap!

Why do we talk about FICA rates without talking about benefit formulas? It's misleading, perhaps even an outright lie. While the tax is regressive, the benefits formula is extremely progressive. So much so that, in my opinion, the net effect is to make the FICA tax a progressive one.