In the defense of the prog tax system ....continued.... I find it interesting when conservatives call for bringing back the draft, especially when their also for flat taxes... The key word in the Selective Service draft is 'Selective,' it does not apply equally to everyone... there are standards in place for enlistment, voluntary or otherwise. The young and healthy are disproportionately responsible for the defense of the nation.
And how fair is that? I know a few old soldiers down at the VFW who would love to die on the battlefield. Why don't we call them up, instead of sending my buddies to the sandbox? Who cares if they're in wheel chairs? We can suicide bomb the enemy with our elderly! Come on! Let's Roll! It'll add a whole new dimension to the term mission CREAP!
What? Uh...No. That was Raoul Duke talking. I don't know what's going on. Damn ghost in the machine. Weird paranormal sh$t, here. You'll have to excuse me.
Obviously...a physically fit fighting force makes for a strong national defense. The military discriminates against those who are not up to their standards, and for more than just reasons that pertain to health and fitness. Despite what that demented, libertine sports writer might think, sending the elderly into combat is not a good idea, but we see his point. If the burden of military service is unequal, if it falls squarely on the healthy and the young, then how can a tax system not fall unevenly, according to means?
Sure, military service is voluntary..currently, but the military does not accept all those who 'volunteer,' and to even say that we have a 'volunteer' military is simply not true. After all, it's not like the folks in uniform get shot at for free....take away the military's pay and see how fast they turn their guns on the government. Military service, however patriotic the motivations of the enlisted, is still an extreme form of wage-slavery. After all, it's not like members of the military maintain the ability to negotiate their pay, besides mutiny. It's take it or leave it, and they are wholly under-compensated for the risks that they take on. And obviously, coercion and seduction is used in filling out the ranks of a 'volunteer' fighting force. Often, the deciding factor in the decision to sign up is not Patriotism. Many are seeking an opportunity, a way out of a desperate situation. And in holding the keys to a better life for many individuals, the military uses its leverage to get the most out of them.
“Be All You Can Be” translates to 'Do what we tell you to do for as little as we can get away with paying you to do it.' Geez...I sound like Alvin Greene, or is it Joseph Stack? I don't know, but according to the Good Doctor, “When the going gets weird, the weird turn pro,” and our national psycho-politics seems to illustrate his point, more and more every day now. We are all headed to the Edge. Socrates warned it would come to this. Democracies are always driven to madness.
Right now there's a song on the Red, White, and Blue airwaves....by Billy Currington..the lyrics go, “God is Good, Beer is Great, and People are Crazy.” It is truly an anthem for our time, mood-music to calm the common impulse shared amongst the reckless and the dejected to form the Big Bad Gonzo Mob. But my, my..I have led us astray on quite the detour here. This defense of the prog. tax system has taken strange turns, indeed, and I apologize for the turbulence.....but remember, you are never lost inside the Whirlwind, not when you're in the hands of El Prezidente Kaboom.
I can assure you, this is no bogus report. The facts are all assembled. I found them in the Encyclopedia of ole Common Sense...
Flat taxes do not satisfy all the complaints regarding taxes. Progressive or flat, such taxes still have to be collected, involuntarily.
We do not require equal military service commitments from all Americans, regardless of their difficulties in meeting such obligations. And we don't require an equal percentage of taxes paid by all Americans, regardless of the hardships that face. And both for good reason. For the former, it would make for a weaker, sluggish national defense, while the latter would bankrupt the Treasury, and do more harm to liberty than good.
The real problem with our tax system is that it's not progressive enough....
Those making a quarter-million are taxed the same as those making $25 million. We should devote additional high marginal tax brackets to deficit reduction, now. Reducing government debt will force banks to focus on the real economy. When big profits are already secure in servicing government debt, why would they risk them? Lending to even credit worthy borrowers requires more work on the banks part.....fundamentally speaking, lending to the public is riskier than lending to the government. Reducing government debt will help facilitate real economic expansion...but the only way to do so, is to RAISE TAXES ON THE RICH!
To be continued.....
Mahalo,
Kaboom
The Defense of the Prog. Tax ...continued....
Well Aloha people....Kaboom, here, back again for another round...
...reporting from the Edge, as usually, and possibly a little too close this time. There seems to be some sort of electrical problem in the outdoor common hallway area of my apartment building, and I'm not so sure that I can tolerate that buzzing noise all night. I believe it has something to do with a light on the second floor that's on the fritz. Some sort of weird halogen bulb that looks like its cracked. It may be shattered to pieces by morning.
The prog. tax system is broken and Republican/conservative/capitalist-libertarians are going in for the kill. The Bush tax-cut expiration tax increase debate is high-stakes political warfare. After everything our Democratic Party has been through, since it took back the government in 2007, raising taxes may be our greatest challenge yet.
Now, Democrats seek to keep the cuts in place for those making less than $200K, or $250K for married couples. But by lowering the amount of income to which the highest marginal tax rate applies, we are going to tax some people even more than they were taxed under Clinton, without inflation even being considered. No matter what can be said about the wisdom of this proposal, detractors have to admit, this Party has balls. Let's hope we can take a good kicking to them, like Coach Buzzcut.
Pursuant to the avoidance of political mutilation at the polls, I have come up with several remedies.....job-creation tax credits....business re-investment tax credits.....high-wage employer tax credits......all to go along with the green-jobs initiatives already out there.....let's say...hey rich people....put more people to work and you can keep your Bush tax cuts!
I'm gonna leave it at that and go bash in that goddamn buzzing lightbulb.... While my main motivation is anger and iritation...I strangely feel that I will be doing something for the sake of economic stimulus...F%ck their malfunctioning property, I pay rent here!
More soon,
Mahalo
EL PREZIDENTE KABOOM Wrote: What do we know about the Kennedy Tax Cuts vs. the Bush Tax Cuts? Was Kennedy a supply sider? Was the tax rate in 1960 to the right of the Laffer Curve? If so, did the Roosevelt tax rates slow economic growth out of the Great Depression?
Lots of thought provoking questions here, Kaboom. There are of course other factors that influence the analysis, and some right wing websites will cite these instead of conceding any benefit of higher taxes on the economy and society. I mention the right wing Heritage Foundation as one of those think tanks that refuses to give Roosevelt any kudos for his New Deal programs that benefited society from higher taxes. Instead they point to the benefits of World War II on the economy and employment. However, the USA didn't really enter that war until the bombing of Pearl Harbor on December 7, 1941, almost 10 years after the first of several tax increases were imposed by Hoover and continued by Roosevelt. Roosevelt took office in March 1933, but the first tax increase was for the year 1932.
Charles McMillion in his February 9 , 2009 blog post, The "FDR Failed" Myth, debunks the popular conservative notion that it was World War II and not the New Deal policies of Roosevelt that brought the nation back to economic prosperity. As McMillion emphatically states: "This belief, though widely held, cannot stand up to even the most basic economic analysis. Yet the mainstream corporate media, which abound with anti-government ideology, seek to reinforce this myth."
McMillion has the academic credentials to make his case, and he does so in a professional manner. His article and graphs are well worth reading and studying. I'll extract a few points from his article.
The monthly data for industrial production show a near three-year collapse under President Hoover, ending when FDR came to office in March 1933. Production rocketed by 44 percent in the first three months of the New Deal and, by December 1936, had completely recovered to surpass its 1929 peak.
GDP... plunged 25.6 percent from 1929-1932, including by 13.0 percent in 1932. It stabilized in 1933, and then soared by 10.8 percent, 8.9 percent and 12.0 percent, respectively, in 1934, 1935 and 1936.
After-tax personal income, consumer spending, real private investment and jobs all reached or surpassed their 1929 peaks by late 1936.
Despite the new record peak in the number of jobs by late 1936, because of population growth and because more people were encouraged to seek jobs, the unemployment rate did remain very high until public spending programs truly exploded with the start of World War II. But even here, it was again vastly expanded government spending, this time to fight the war, that ended high unemployment.
Myth and ideology aside, the data show that from 1933 through 1936 the New Deal produced double-digit annual growth in GDP, production, after-tax income and private investment, with strong consumer spending and job growth exceeding their peaks in the 1929 bubble. The Great Depression ended by late 1936.
I'll add my own layman's thoughts to those of McMillion. Yes wars do help out the economy and employment but is this a real argument for war? An estimated 16 million people died in World War I and between 62 and 78 million in World War II. Those are huge numbers, but whether it is the millions or the thousands, when conservatives cite the benefits of war on the economy, one must ask: Is it worth it? Wars are a failure of diplomacy.
But getting back to Kaboom's questions on tax rates versus economic productivity. I couldn't find out how many millionaires existed in the depression, but in any case I would have to use inflation factors to convert their current dollars to constant dollars. Maybe someone has those numbers, but I don't.
I should also point out, however, that the corporate marginal tax rates were much lower than the individual marginal tax rates, not that it has much meaning because even then, there were many tax breaks, excess tax penalties, and loopholes that could be used to reduce or increase taxes. One really has to look at the bottom line tax burden paid including state, local, excess profits taxes and foreign taxes to get a handle on productivity versus taxes.
And yes, I would think that US corporations had a moral obligation to pay the high taxes in war time, even if some figured out how to minimize their burden. Contrast the period during and immediately after World War II with today's environment where any taxes are considered a form of socialism by the far right who have no problem engaging in wars but without a tax increase to pay for them...i.e. Iraq and Afghanistan. Times sure have changed.
That's a good observation Kaboom. In fact it's an excellent observation. But I admit to some skepticism until I did more internet research on what the expert economists say causes recession. And you know what? There is no consensus amongst the experts. All you have to do is Google "causes of recession" and you will find a lot of differing expert advice, little consensus and lots of finger pointing. So I'll freely build on Kaboom's observation in providing a rational for why tax cuts are one reason or maybe even the overwhelming reason for recessions.
While I chide the experts for lack of consensus, I do note that many do agree, however, that money needs to circulate to have a robust economy. Another word for circulating is spending. As long as consumers and government are spending money responsibly buying US manufactured goods and services the money circulates. Using wheat as an example, farmers will borrow money from the banks to plant their wheat crops every year. They use farm equipment manufactured by America workers who spend their money and pay taxes. They employ farm workers who spend their income to buy the basic necessities to provide for their families and pay taxes. When the wheat is harvested it is sold to granaries, which also employ people who spend their income on basic necessities and pay taxes. Bakeries employ people to make bread from the wheat who also spend their earnings and pay taxes. In every step of the chain, people spend the earned money and pay taxes, which the local, state and federal governments immediately also spend to provide public services...roads, schools, police, firemen, health and environmental services, welfare for the unfortunate, defense, etc. In other words, the tax money CIRCULATES back into the economy.
But what happens when you cut taxes. Governments no longer have enough money to cover all the things they used to do. Some people have to be removed from the chain. Maybe it's road maintenance workers...more potholes not repaired, or needed bridge maintenance postponed another year and many years until the bridge collapses. Or maybe a few teachers are let go, which results in more crowded classrooms and lower achievement standards. And "big government" projects like the Interstate Highway program of the 1950s and 1960s or Kennedy's man to the moon project that largely employ private contractors and lots of people who pay taxes are just not attempted because government doesn't have the money.
You might buy into the Reagan propaganda that most all taxes are bad and individuals and corporations know how to spend their money more wisely than government. Well, I'm sure some of them do, but many don't. When corporations divert their extra money to overseas investments, that money no longer circulates within the USA. When wealthy individuals spend their extra money on European vacations or just socking it away in a Cayman Islands bank account, it is taken out of circulation. When individuals invest in Wall Street financial instruments like derivatives, the money is largely taken out of circulation.
The bottom line is that when governments spend money it circulates within the economy. When taxes are cut, a big chunk of that money is diverted elsewhere and doesn't circulate. When money doesn't circulate as before, an economic imbalance occurs and a recession hits. So there you go Kaboom. Thank you. It's one rational and it's as good as anything I see from the politically motivated economic "experts."
You have made several good points, Kaboom, and I'll hit on them as I try adding to your perspective. As I said before, this whole subject can get very complicated, and of course there is little agreement amongst economists, whose views are often politicized. It sometimes helps to first look at the bigger picture, (see Wikipedia Economy of the United States). I'll extract a few points.
For 2009, the nominal GDP for the United States was $14.3 trillion..that's almost three times larger than the economy of China. Our public debt is in excess of $13 trillion, growing at a rate of about $3.83 billion each day. By 2011 it is expected to grow to 100 percent of the GDP (versus 80 percent in 2008).
Adding in the private debt, the total debt number increases to $50.2 trillion at the end of the first quarter of 2010, or 3.5 times GDP. Domestic financial assets totaled $131 trillion and domestic financial liabilities totaled $106 trillion. Yes you are reading those numbers right...hundreds of trillions!! Referring to Tables D.2 and D.3 (pages 8-9) of the Federal Reserve Report of June 10, 2010, I couldn't help but notice that while the federal government added $1.4 trillion in debt in 2009, the financial sector shed $1.8 trillion, reducing their total debt to $15.6 trillion. And similar types of numbers are expected for 2010. What's not in the report is the trillions they loaned to the banks at near zero interest rates.
But what exactly are "financial assets?" A big chunk of them are Credit Default Swaps (CDS) or derivatives. CDS's are essentially bets by the big financial institutions that a housing loan or bond will fail. The Wall Street banks and other financial firms, both in the USA and international, played this gambling game in a very big way. The Bank for International Settlements estimates that outstanding derivatives total $592 trillion.
So with all the money that the Treasury and Fed loaned the big banks to loan to small business, why aren't they lending? Could it be that they are paying off their gambling debts first? I don't know that for a fact...just reading the numbers with suspicion. Remember my earlier note that domestic financial institutions shed $1.8 trillion in debt in 2009 with a similar amount expected for 2010.
Total federal government expenditures for 2009 were $3.55 trillion (including Social security and Medicare) but revenues were only $2.38 trillion resulting in a one year deficit of $1.17 trillion. The NYT estimated that the overwhelming chunk of this deficit resulted from policies of the Bush administration. Only 10 percent was a result of new Obama legislation. The tax payer's tab for servicing the public debt was $202 billion in 2009, but is expected to exceed $700 billion by 2019.
The reason I throw these numbers out is because they are indeed HUGE. And when one thinks about what has caused the current recession, and more importantly what it takes to get us out of the recession, one needs to think big...really, really big. And no matter what you do, you will not get there fast...it took years for us to dig that hole and it will take years to get back out of that hole. Obama's $787 billion stimulus package was considered by some economists as way too small for a big time recovery, but it was enough to perhaps halt the decline into depression.
Getting back to Kaboom's point about "dramatic marginal tax cuts causing recessions," I agree. Instead of spending the money on things that directly help the economy, the rich spent a chunk of their extra cash gambling in Wall Street instruments like CDS's. And while they initially made money doing it, they circulated little of their gambling winnings back into the economy. Like all gamblers, they eventually lost money with the housing mortgage crisis, and that money is gone forever...out of circulation, or if you are a really, really big bank, then it might be sitting on your books waiting for the government to cover their losses...you know..."too big to fail."
On the subject of "loosey-goosey economy being more susceptible to the negative effects of commodity price swings," many experts believe that the big spike in oil prices in 2008 was caused by speculators...investing in the "dark market" and "swap loopholes" to game the market.. These are the same type of rich that invested in CDS's. There were other factors for the price increase, of course, but price speculation on the futures exchanges was the largest factor. This extract from an AlterNet article, Why Oil Prices Are So High, of June 10, 2008, captures the essence of what Kaboom is saying: After all, back in the middle of the 20th century, our economy didn’t careen from one bubble to another. Why now all the bubbles — and busts? Here’s why. We’ve become too unequal. We have too much wealth concentrated in too few pockets. Grand concentrations of private wealth, history tells us, have a nasty little habit of nurturing wasteful and witless speculation. Wasteful and witless speculation, news reports last week revealed, just happens to be the economic joker in the deck that's turbocharging our current surge in crude oil prices. So instead of investing in America, the rich gambled on oil prices driving them to record highs. The resulting high prices at the pump took spending money away from middle class consumers and diverted it to the oil exporting companies. If anyone has doubts, just take a look at these photos of the transformation of Dubai over the last 20 years. So in effect, oil price speculators had a double negative effect on the economy.
There are other factors that enter into the equation, but Kaboom has hit on the two big ones. And Obama's $787 billion stimulus package seems rather puny when one considers the magnitude of the problem. Those hurt most by the recession, the unemployed middle class workers, will likely be the last to see any benefits of any economic revival that may be years away yet.
For my part, I am going on vacation tomorrow to stimulate the hotel/restaurant/beer economy.
Aloha, What a wonderful progressive mind you have, Frank; your an encyclopedia of high-powered information, and always forthright, humble, and honest: a Democrat's Democrat. To elaborate on my position, the more top-heavy an economy is, the more likely it is to fall over....and even more so when it becomes top heavy in an illegitimate manner.... Now, if the wealthy want to maintain their wealth, they must invest a portion of their wealth that they can't spend, so as to produce wealth with their wealth, in-order to offset banking costs, future inflation, taxes, ….and hey, its always nice to have your money work for you, instead of the other way around... Tax cut/ deficit spending is expansionary; by way of government borrowing, new money is added to the economy via government spending, but with the interest payments on the debt that go to the wealthy, on top of their tax cut, there is a wealth transfer going on that outpaces the real economic expansion that is necessary in-order to provide a viable return on the new investments made with the tax-cut/interest payments wealth-transfer. Here's where things get weird..with private investment opportunity too risky and/or too expensive, there are more willing takers of US Treasury debt....
With the tax-cut/interest payments wealth transfer, the rich take their extra-wealth and buy even more US debt, bidding down the price of interest paid out by the government, which thus helps the government finance even more debt to continue the wealth transfer....
Today, what's going on in monetary policy, goes far and beyond anything Alexander Hamilton could have imagined. As part of a condition of forming a central bank chartered by Congress, Hamilton consigned the limitation that the bank would not buy or sell US treasury debt. It was thought that the independence of our democracy was threatened by such market orchestration, yet that is exactly what the FED is doing today....and ironically, will likely remain a tool used by the FED to fight inflation, and as a bulwark against rising interest rates on the government's debt, should prices start heading north again.
Bottom line: the middle class got the shit kicked out of it by the Bush administration, and now we cannot buy what the rich are selling. The America we all knew and love is no more. There is no chance to eek it out with dignity anymore. We have all been reduced to suffer the consequences of a legacy of waste, decadence, and genocide. We are all stained before the almighty; insufferable savages amongst whom depravity is the norm. The world is a hyper-ballad now; a boom and a buzz, alongside loud popping noises, resembling a snare drum digitized by the sounds of modern warfare. The “Big Darkness” has given way to the Big Empty, and we are all left to stare and wonder about all the coulda', woulda', shoulda' did, done, and beens. It is a very strange time to be alive, and we are all doomed if we don't get with it. The straight dope is from Lewis Carroll, We're “Through the Looking-Glass.” The 'free' market never existed. The American people have been sucked into a fairy tale, written not by Adam Smith or Thomas Paine, but by fascist revisionists fueling insufferable revanchism. And the rats are now closing in. Mahalo, Kaboom