What is "fairness?"

[lawrocket 3]

That's the thing. Some may consider these statistics to be reflective of "fair."

There is disagreement because fairness is a subjective idea. There are people who believe that it is not "fair" that others have such assets and earnings as those who pay the vast majority of taxes. Meanwhile, there are those who do not believe that it is "fair" that a vast minority of the population pays the majority of the individual taxes.

Neither is right. Neither is wrong.

My wife is hotter than your wife.

[lawrocket 3]

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$100 dollars to a poor person might mean the difference between living in a house or living in a cardboard box next month. The same can not be said about the rich.

And $100 per month to a company may mean the difference between breaking even and a loss. Which, of course, may mean the difference between a person staying employed and being laid off.

Which makes a big difference to that person. Fair or not, it's life.

My wife is hotter than your wife.

[mnealtx 0]

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>To boot, Obama and people like him think they can cover the hole being produced by
>his policies simply by taking even more.

And republicans think that they can cover the hole caused by their policies by taking in less money.

Both are, of course, going about this the wrong way. You need to spend less AND take in more to cover the hole.

Lower tax rates do not always equal less money. Lower tax rates tend to stimulate the economy and tend to result in an increase in revenue rather than a reduction.

Mike
I love you, Shannon and Jim.
POPS 9708 , SCR 14706

[billvon 3,107]

>Lower tax rates do not always equal less money.

Nor does government spending always equal more debt. Government spending means more jobs, and during downturns in the economy that can be part of what prevents those downturns from being worse. And as the economy recovers, revenues increase.

Of course, continuing to lower tax rates AND continuing to spend more does not work at all in the long run - which is how we got here.

[ShcShc11 0]

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So is THAT 'Fair'?

No, it's not fair. To boot, Obama and people like him think they can cover the hole being produced by his policies simply by taking even more. They clearly haven't done the math.

Debt isin't the same as your household / company debt.

Remember: Even the smallest country will sell 70% of what they produce to themselves. The USA, despite "Made in China" products, sells approximatley 85-90% of their work to themselves.

Not even the biggest companies sell as much to themselves... not even close!


...
Deliberately cutting the deficit is not the best way for a government to balance its books. Deficit reduction in a depressed economy is the road not to recovery, but to contraction, because it means cutting the national income on which the government’s revenues depend. This will make it harder, not easier, for it to cut the deficit.

Let's look at what's happening with our good friends in Britain who advocated: "SLASH NOW! DEBT IMMINENT!"

"The British government already must borrow £112 billion ($172 billion) more than it had planned when it announced its deficit-reduction plan in June 2010."


http://static.bdo.uk.com/assets/documents/2010/12/BDO_business_trends_-_December_2010.pdf

https://lh5.googleusercontent.com/_VgJQTp0Bsf0/TW_RZtr7uxI/AAAAAAAAAR8/Lk8tqJcxdGM/bdo.jpg

Emphasis on the chart. Business confidence at an all-time low due to austerity measures (aka slash now!) plans.

[mnealtx 0]

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>Lower tax rates do not always equal less money.

Nor does government spending always equal more debt.

I never claimed it did - why do you always have to use strawman arguments, bill?

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Government spending means more jobs, and during downturns in the economy that can be part of what prevents those downturns from being worse.

Yeah? How's that been working out, the last 3 years?

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Of course, continuing to lower tax rates AND continuing to spend more does not work at all in the long run - which is how we got here.

And there you go again...

Mike
I love you, Shannon and Jim.
POPS 9708 , SCR 14706

[ShcShc11 0]

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Yeah? How's that been working out, the last 3 years?

The stimulus enacted by Obama in 2009 were inadequate to plug a U.S output gap of 3 trillion+ $.

A 700B$ stimulus that consists a major part of ineffective tax-cuts is hardly anything considering at how big the financial crisis was in 2008. Oh and don't forget most States slashed their budgets?

[mnealtx 0]

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Yeah? How's that been working out, the last 3 years?

The stimulus enacted by Obama in 2009 were inadequate to plug a U.S output gap of 3 trillion+ $.

The comment was in response to government spending creating jobs - care to respond in light of that?

Mike
I love you, Shannon and Jim.
POPS 9708 , SCR 14706

[billvon 3,107]

>I never claimed it did

Uh, right. And I didn't say you claimed it. This is a discussion board; not everything posted is about your posts.

>Yeah? How's that been working out, the last 3 years?

About as well as the tax cuts did.

[lawrocket 3]

What are the biggest problems as far as the deficit goes? Yep – Entitlement Spending. Medicare, Social Security are our top dog problems. These are supposed to be financed through payroll taxes – not income taxes. But, because they are so underfunded, general taxes pay for them.

Mandatory spending for FY 2012 is $2.1 trillion dollars. That’s
• Social Security - $761 billion
• Medicare - $468 billion
• Medicaid - $269 billion
• TARP - $13 billion
• All other mandatory programs (Food Stamps, Unemployment Compensation, Child Nutrition and Tax Credits, Supplemental Security for the Disabled and Student Loans) - $598 billion

The problem is that the number of workers under retirement age is stagnating but the number of beneficiaries is increasing. The SS and Medicare trust funds are evaporating, meaning more general fund dollars are necessary to pay for programs that can no longer pay for themselves.

The argument to increase income taxes is to support programs that were SUPPOSED to pay for themselves. Back in the days of the “balanced budget” the Medicare and Social Security funds had enough money to raid them and “balance” the budget. Hence, national debt increased with those balanced budgets. Look it up!

Soon, Medicare will be top dog. The borrowing that the US is doing is to support these programs. Cuts are being made all over the place except for these programs. Before 2020, these programs and debt servicing will eat up every cent of federal revenue. No defense, roads, parks, etc. No NASA, no research funding, no NIH.

Income taxes are proposed to be increased on the wealthy to bridge this gap as a matter of “fairness.” But, in all fairness, income taxes weren’t supposed to be used on Medicare or Social Security in the first place! They were supposed to be self sustaining but, like all Ponzi schemes, were dependent on new investors to keep working. Once the supply of new investors dwindled while the number of payees increased it was bound to collapse.

So what is fair? Increasing taxes even though the cannot do anything but postpone the inevitable for a year or two?

The spending is SO out of control that national debt is now in excess of yearly GDP and spending is about a third of yearly GDP.

My wife is hotter than your wife.

[mnealtx 0]

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>I never claimed it did

Uh, right. And I didn't say you claimed it. This is a discussion board; not everything posted is about your posts.

Which, of course, is why you made the comment in a response to my post.

>Yeah? How's that been working out, the last 3 years?

About as well as the tax cuts did.

[billvon 3,107]

>So what is fair? Increasing taxes even though the cannot do anything but postpone
>the inevitable for a year or two?

Dramatically increasing taxes AND dramatically reducing spending.

We're like a guy with an insane balance on his credit card who is paying $500 in interest a month. What does he do? He can't afford to pay those bills and keep his car! And why pay anything above the minimum if the balance is just going to go up and up?

The answer, of course, is:

1) stop spending money on the card even if you don't want to
2) pay off the card even if it means selling your car.

Just saying "well, I won't spend any more; then the problem will go away" won't work. Neither will "keep spending on the card and pay it off." Gotta do both.

[billvon 3,107]

>Revenues up, jobs down. Your logic seems to be a bit off center.

Ah. Well, the tax cuts worked well then. We're in great shape. No problems with the debt.

And to think you were worried.

[ShcShc11 0]

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Yeah? How's that been working out, the last 3 years?

The stimulus enacted by Obama in 2009 were inadequate to plug a U.S output gap of 3 trillion+ $.

The comment was in response to government spending creating jobs - care to respond in light of that?

The stimulus stopped the hemorrhagic economy from freefalling, but too small to bring anything near to full-employment.

[mnealtx 0]

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>Revenues up, jobs down. Your logic seems to be a bit off center.

Ah. Well, the tax cuts worked well then. We're in great shape. No problems with the debt.

And to think you were worried.

Way to play the ball and not the player, Mr. "Moderator".

Mike
I love you, Shannon and Jim.
POPS 9708 , SCR 14706

[Coreece 190]

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>Lower tax rates do not always equal less money.

Nor does government spending always equal more debt.

I never claimed it did - why do you always have to use strawman arguments, bill?

Those aren't strawmen, they are billvonian analogies. (out of left field comparisons that leave you with a hairy eyeball.)

He uses them fairly often. I actually coined the term back in 2009:
http://www.dropzone.com/cgi-bin/forum/gforum.cgi?post=3545442;search_string=billvonian%20analogies;#3545442

Your secrets are the true reflection of who you really are...

[ShcShc11 0]

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>Revenues up, jobs down. Your logic seems to be a bit off center.

Ah. Well, the tax cuts worked well then. We're in great shape. No problems with the debt.

And to think you were worried.

Way to play the ball and not the player, Mr. "Moderator".

I'm just curious. What are your thought processes behind this? Do you not know that the stimulus 2009 consisted in large-part of tax cuts?

Are you willing to bring any numbers?


Cheers!
Shc

[mnealtx 0]

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The stimulus stopped the hemorrhagic economy from freefalling, but too small to bring anything near to full-employment.

Then why the huge difference from other recessions?

Mike
I love you, Shannon and Jim.
POPS 9708 , SCR 14706

[ShcShc11 0]

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The stimulus stopped the hemorrhagic economy from freefalling, but too small to bring anything near to full-employment.

Then why the huge difference from other recessions?

Because by comparing the 2008-2009 crisis as being any similar to previous recession shows a lack of understanding what truly happened.

When 3 out of 4 major banks are in crisis mode and they hold [B] SEVENTY-PERCENT of American assets, then you are in crisis mode.


I'm sure that even you, mr. Mike, would have realized that.

[ShcShc11 0]

let's look at the inadequacy of the stimulus

I'l bring my charts.

The 2008 crisis had two distinct effects on spending.
1) It was obviously the housing bubble during the "Bush boom" where housing investment went down big time.

2) Consumers increased their savings ... dramatically thus reducing and slowing the economy (see the picture)


The difference was approximately six percent of USA's GDP. In terms of ACTUAL spending contained in the stimulus bill, it was approximately 1.3 to 1.5 percent of GDP.

Its like getting a squirt gun out to take out the fire.

[mnealtx 0]

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The stimulus stopped the hemorrhagic economy from freefalling, but too small to bring anything near to full-employment.

Then why the huge difference from other recessions?

Because by comparing the 2008-2009 crisis as being any similar to previous recession shows a lack of understanding what truly happened.

When 3 out of 4 major banks are in crisis mode and they hold [B] SEVENTY-PERCENT of American assets, then you are in crisis mode.


I'm sure that even you, mr. Mike, would have realized that.

And that crisis mode was mostly over by the end 1Q 2009, after TARP and the first bailouts.

Mike
I love you, Shannon and Jim.
POPS 9708 , SCR 14706

[ShcShc11 0]

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The stimulus stopped the hemorrhagic economy from freefalling, but too small to bring anything near to full-employment.

Then why the huge difference from other recessions?

Because by comparing the 2008-2009 crisis as being any similar to previous recession shows a lack of understanding what truly happened.

When 3 out of 4 major banks are in crisis mode and they hold [B] SEVENTY-PERCENT of American assets, then you are in crisis mode.


I'm sure that even you, mr. Mike, would have realized that.

And that crisis mode was mostly over by the end 1Q 2009, after TARP and the first bailouts.

Well no.
1) End Q1 2009, the banks were probably in their make-it or break-it stage. We have to remember citi hit 1$ (from 50$) April 2009 and is still doing it fairly pitifully

2) The American banks, even to this day in 2012, are still extremely vulnerable to any shocks (the most obvious and deadly one would be Europe's situation).


That said, you have to look at the 6% output gap that was caused by the housing bubble and by Lehman Brother's bankruptcy. You can't fill that 6% output gap by slashing spending.

[ShcShc11 0]

see graph below:

Let's take for example two bubbles under two different Presidents:


Here is the public + private debt in comparison to the GDP.

In the chart, you can visibly see the tech bubble during the Clinton era and the housing bubble during the Bush era.

In general, most people didn't buy dotcom with burrowed money where it contrasts to the housing bubble because the private sector did in fact burrow an outstanding amount of money. When the bubble burst due to the housing crisis, the private sector had to immediately reduce their debt and undergo deleveraging. The economy was put at a stop.

The 2008-2009 shock is just that much bigger than any of the other recessions the U.S has experienced previously (up until the 1930s).


...
Another thing that people should look up is the liquidity trap. The monetary policy is at near 0 bound, which means people can borrow at a very very very (historically low) cost. If the economy is lagging in spite of the 0 bound rate, then we have a liquidity trap.

The other time where there was truly a major liquidity trap was in the 1930s with the Great Depression.
Read:
http://www.voxeu.org/index.php?q=node/4227

Outside of the U.S, Japan 1990 lost decade provides a good example too. They too focused heavily by cutting spending and the 90s are now dubbed as the "lost decade" for Japan.


Cheers
Shc

[billvon 3,107]

>Way to play the ball and not the player, Mr. "Moderator".

An excellent dodge when you're out of logical answers!

But no worries. Conservatives who push "it's not taxes - IT'S ALL SPENDING!" neatly balance out the democrats who push "it's not spending - THE RICH DON'T PAY ENOUGH!" And as long as you ignore those two sets of extremists you're left with the center, who will be able to consider a solution that will actually work.

[popsjumper 2]

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What happened to Louis XVI, Czar Nicholas, Marie Antoinette etc. when people got pissed off about the lack of fairness in the system.

They ate cake?


Oh, wait....I'm heading in the wrong direction here.

My reality and yours are quite different.
I think we're all Bozos on this bus.
Falcon5232, SCS8170, SCSA353, POPS9398, DS239