A revealing thing has happened on the way to the fiscal cliff: A bloc of GOP House members rejected their own leader’s proposal to extend the Bush tax cuts for all but millionaires. Speaker John Boehner expected opposition from Democrats. Instead, he was thwarted by the intransigence of his own members, whose aversion to taxes trumps all other concerns.
Of course, Republicans purport to care about more than low taxes. They say they want smaller government and lower deficits. And yet, they have repeatedly refused to consider trading even small tax increases for much larger spending cuts.
Comments
The author said tax cuts don't pay for themselves...Richmond, where are you?
Herein lies a basic problem, "About one-half of Americans say that their taxes are too high" ask them which taxes and they'll say "taxes". If you delve into it with them they will tell you all about state taxes, real estate, sales, fees, the list goes on and on. But say taxes and everyone thinks "federal taxes". Pols promote the delusion in order to gain votes and then use it to promote a particular ideology. We don't see any pols get up and say well if we are to lower taxes, SS, Medicare, Defense the big boys in the budget have to take a heavy hit. Why? They'll lose.
Pols no longer run to govern, they run to run. The public itself doesn't punish or reward pols for actual work done, but merely for mouthing ideas. The TP mouthed nonsense, won an off year election and can't and won't govern. the Repubs basically no longer exist and the Dems have no one to govern with. Both sides no the solutions, but both sides recognize they are politically painful and rather than lead the public, they lie to the public. Rather than press for the truth the public prefers the lie.
Frankly, folks love to blame the pols, me I consistently blame the folks.
"...Frankly, folks love to blame..."
What a simple observation, and I would certainly agree.
The phrase "tax cuts don't pay for themselves" is a favorite refrain from the left. But in truth, those of us who have a deeper understanding of the relationship between marginal tax rates, and tax revenues never use that phrase. The phrase is is silly on its head because it implies a concrete, measurable, "cost" to lowering tax rates. There is no such thing. NEW PARAGRAPH: The economy is dynamic. This means that that there are thousands of variables coming together to deliver the end result of tax revenue. The phrase above ignores this dynamism; and implies a fixed, static result based on nothing more than the change in tax rates. Ergo, a 10 percent reduction in tax rates leads to a ten percent drop in tax revenues. This is simply not true. The key, is to find the optimal tax rate schedule which maximizes tax revenues. History suggests that lower rates are good for the economy and can lead to greater revenue. This was the case in the 1980s and again in the 2000s. Our all time greatest collection,of tax revenue was in 2007, 4 years after the tax cuts of 2001-2003. The revenues grew in each year, as the economic growth led to grater tax collections. The code became more progressive, and the wealthy now pay a greater share of the tax burden, and nearly half of all Americans pay no income tax. Clearly, the idea of raising tax rates on the wealthy is political argument. The current rate schedule DID succeed in raising more from the rich. But I do not call that "tax cuts paying for themselves." The phrase is silly.
I always considered the Laffer curve aptly named, Laffer. It does not work, but is it really the point. One cannot find solutions to problems if one is locked into one particular idea. Oddly the public for all of its faults reconizes what you fail to recognize or admit. The solution is an increase in selective tax rates and a reduction in spending and will in the long run require defense and entitlement reform.
You are right economies are dynamic, but simply because people don't agree with you does not imply they don't have a deep understanding of the relationships between taxes and the economy. Pulling out years while interesting is rather pointless. If you were "absolutely" right then the Clinton years should have been a train wreck. The 1950's a horror show. But you'll argue that economy was good because of the prior Pres. or a War recovery which in fact ignores the fact that economies are indeed dynamic. Taxes while effective on the margins really don't dominate economies other factors are more important and the major one we lack right now is "surety" of conditions.
Stockman, Reagan's financial advisor in the 80's and the original proponent of trickle down, has said now that it does not work.
"And yet, the [Republicans] have repeatedly refused to consider trading even small tax increases for much larger spending cuts."
This may have happened in some hypotheticals. But neither President Obama nor Harry Reid has offered spending cuts larger than, or indeed anywhere near, the size of the tax increases which are currently in question.
And John Boehner, Mitch McConnell, and Eric Cantor have not acknowledged the cuts already made since the original budget/tax issue came up during 2011's debt ceiling flail.
The tea party is composed of right wing wackos. They have about as much common sense as a gnat. The real problem here was the jerry mandering of districts to exclude urban areas in many districts. This effectively rendered the one million additional vote democratic advantage over republicans in congress to a sizeable loss and republican control of congress. We need to correct this problem of the loser winning. Until that happens our government is broken
The democratic party is abunch of left wing wackos, controlled by the east coast and California. How's Cali working out?
"taxpayers favor big new programs like the Medicare prescription drug benefit even more if it seems that they don’t have to pay anything extra for them." Taxpayers favor these benefits? More likely politicians favor these kinds of benefits because they attract more votes. According to these authors all spending cuts must be decided and argued solely by Republicans. Democrats have no such responsibility. Well isn't that an excellent negotiating position! As economists they should know that it isn't the beneficiaries of programs who should decide the cost/benefit of a program. Rather, any program should be analyzed independently for its costs versus benefits. We all benefit by many defense efforts but certainly not by all of them and virtually no taxpayers have a clue which military efforts exceed or fail on a cost/benefit basis. On the other hand, a beneficiary who pays no additional tax for the continuation of even the most idiotic "program" will be happy to see it continue. This is a transparent attempt to lend some "academic" support to the current posturing of Obama; to do exactly what he's always done about restraining spending in any regard; nothing. This article isn't an "economic" argument but another, purely political, one sided, attempt to put all the onus on Republicans to "solve" the crisis.
Your first statement is written as though you're contradicting the line from the piece, but you're not saying anything at all that's different. If politicians like them because people vote for them, that's essentially equivalent to taxpayers/voters like them, no?
And as for programs being independently analyzed, that sounds like a fine plan, right up until you see the GOP insisting we need to maintain or increase defense spending when the DOD keeps insisting it's not needed or wanted. Many politicians don't really give a damn about what makes practical sense for the country, they care about ensuring their local/state region isn't going to be adversely affected when they start cutting spending. So that means any military work going on in my state is critical, regardless of its value to our defense. The GOP refuses to accept that defense cuts could make sense, so how can they ever accept a reasonable cost/benefits analysis?
Anyway I'll stop with responding to some of your basic comments and ignore the more clearly partisan bits.
Did anyone notice the liberal spin of these two liberal economists? Read the WSJ is you want opinion pieces by both liberal and conservative economists.
You mean the WSJ that's controlled by Rupert Murdock's New Corp. (the people who run Fox News, inventors of 'fair and balanced' news reporting!), and who's readership earns an average of around $200K/year while the median American HOUSEHOLD's annual income is less than $50K? Yeah, I'm sure that the Journal will accurately reflect the nation's best interests, and present the most unbiased view of our tax structure available.
BTW - using the same adjective twice in one sentence, and three times in two sentences, is generally seen as redundantly redundant, hardly a conservative approach to writing.
Geo, your comment is full of holes. The WSJ has maintained its high journalistic standards despite Murdoch's ownership. It's not the same as Fox News. Alan Blinder, the liberal economist from Princeton, appears regularly on the op Ed pages of the WSJ. Can you name one conservative economist who appears regularly in the Globe. No you can't which is why you ignored my point.
The reason they revolted was because the cuts were not big enough. We cant afford the liberal dream.
Are you ready to put the whack to defense because the public won't support the cuts to SS and Medicare. Now you may want to cut them but the reality is the public doesn't agree.
the math does not work. Just see the CBO report. If getting costs in line mean other cuts, fine.
Why doesn't anyone of the Globe staff ever tackle the huge waste of money in the Black Budget qnd Black OPS.
This is where trillions are going down the unaccountalble hopper of the CIA (with its own air force) and the 800 military bases the US has all over the world. The money is there to take care of all societal needs but the other, hidden government that really runs this country has no regard for the common man, only power and empire.
If conservatives were truly "in sync" with the rest of the country, they would vote to pass the tax cut extension for the 98% of the country that needs it and negotiate the raise on the remaining, wealthiest 2%, plus other cuts and taxes. That's what President Obama ran on, spoke of and wrote and that's why the American people voted to re-elect him with not only the popular vote, but a landslide Electoral College vote, only the fifth president to accomplish that feat. One of the reasons Scott Brown lost is that he waffled on this issue. People are not stupid. You can't hold the country hostage while you quibble about the wealthiest 2% of the population and at the same time, declare that your are "Everyman."
And higher taxes on the wealthiest 2% would do what?
just read this: "Welcome back to Washington, the country’s biggest day-care center.
The capital’s politicians seem wedded to acting in their own self-interest, rather than the national interest, even as we barrel toward a fiscal train wreck"
Yes, people say they want lower taxes and smaller government, but they love big government programs. The value of a broad based national sales tax to properly fund and sustain programs that all of us will rely on, such as Medicare, when we reach 65 is clearly needed. A broad national sales tax of 5% on the Goods and Services created in a $16 Trillion Economy would produce approximately $800 Billion in new revenue. It's a simplisitc analysis, but it's the only way we ever really get where we need to be and it would take a huge chunk out of the current unsustainable Annual Budget Deficits. We should all understand this and our leaders and the media should help everyone to understand this. If the capture orbit continues to grow around the growing fiscal black hole we are creating, we will eventually all get sucked into it, it's that simple, then we all loose. We are either all in this together or we are not. The other parts of the individual and corporate tax code need some tweaking, to bring about more efficiency and fairness. We'll be fine, if we just apply some commonsense and collectively marginalize the extremist from both sides of the aisles.