It's about the looting
Posted by aogFriday, 22 July 2011 at 09:04
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House Minority Whip Steny Hoyer (D.-Md.) said on the House floor last night that if the balanced budget amendment Republicans are supporting is ratified and included in the Constitution it would make it “virtually impossible” to raise taxes.
The panic is really getting to them — now we have the admission that raising taxes is the priority. Loot first, govern second is their real motto apparently.
Friday, 05 August 2011 at 07:02|
Steny Hoyer is an idiot.
As of 1999,
All the states except Vermont have a legal requirement of a balanced budget. Some are constitutional, some are statutory, and some have been derived by judicial decision from constitutional provisions about state indebtedness that do not, on their face, call for a balanced budget.
But that didn’t stop any states from raising taxes over the decades. Right now, off the top of my head, I can think of a half-dozen work-arounds, should Congress decide to raise revenues in the presence of a balanced budget amendment.
More importantly, raising taxes IS the priority. Cutting spending is good and necessary, but given current conditions, spending likely can’t be cut enough to balance the budget. Increased taxes would be necessary.
For instance, consider just the Social Security and Medicare programs. Currently, they consume $1.2T of the $2.2T in total Federal revenues, out of a $3.8T budget. So, if we were to balance the 2012 budget with spending cuts alone, we’d need to cut 60% of non-retiree spending. Is that politically possible? Even to ask the question is delusional.
And, given that the deluge of retirees is just beginning, a mere decade from now in 2021 it’s projected that SS & Medicare spending will be $2.1T - effectively 100% of ALL current Federal revenues.
So, any rational attempt to balance the Federal budget through cuts alone means not just eviscerating every non-retirement program, it also means deep cuts to retirement programs. What are the odds that the Boomers, who compose a large plurality of the electorate, will allow that to happen?
My estimate is that there is a zero percent chance of that occurring.
Therefore, tax increases are 100% likely.
Friday, 05 August 2011 at 14:54|
The proportion of GDP taken in taxes has had a ceiling at around 20% for decades. Currently spending by the federal government is around 25%.
In 2010 the current-dollar GDP was $14.5T, and total Federal revenues were $2.2T, or about 15%. If 20%’s the max., we can raise Federal taxes in various ways by about 33% before hitting that ceiling.
Problem is that even then we gotta cut Federal spending by about 30% across the board, or around $1T. If we could do that, and at this point it seems very clear that we won’t do that voluntarily, then revenues & spending would match up pretty well: $14.5T GDP - $1.3T (‘cause during the first year every dollar of spending cut by the gov’t comes straight out of GDP, + knock-on) = $13.2T GDP * 20% taxes = $2.6T in revenues vs $2.9T in spending (‘cause spending on food stamps & unemployment go up, making the spending cuts $0.7T net)…
But oil prices ought to come down quite a bit under such a reduced-demand scenario, and borrowing a mere $300B is penny ante, so it’s all good. For a year. But them Boomers keep a ‘coming…
And it’s all fantasy anyhow, en’t no way that Federal spending gets cut by 30%, we can’t even agree on how to cut 3%.
So yeah, I expect the nation to be fundamentally changed, at a level of intensity higher than the 60s and lower than the American Civil War.
Second, I think we’re on the downslope of the Laffer curve and long term increased taxes will decrease economic growth leading to less overall tax cash flow.
Maybe, maybe not. Here is an idiot writing about the Laffer Curve, and here is a smart feller writing about it: The Laffer Curve in real life.
Bottom line is that there is absolutely no objective evidence to suggest that we’re in the Laffer sweet spot, and some that supports a contention that the sweet spot actually lies in the direction of “higher taxes” from where we are now.