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Michael_Mayo
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That is also part of the Ryan Path to Prosperity.
Ah…referring to the likely striking down of the individual mandate?
That and the conversion of Medicare to a voucher system.
We need to cut spending and raise taxes no matter what.
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Ridgerunner
Guest
Even Obama once said that raising taxes in a recession is a bad idea. Why, then, is it now a good idea?
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Michael_Mayo
Guest
What is the priority? Reduce the deficit or cope with recession.
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Ridgerunner
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The two are linked. The recession grinds on beyond its time partially because of the deficit and partially for other reasons.
One of the parts the deficit plays is related to the expectation of ballooning interest rates not too far down the road. So business people won’t borrow to expand or invest unless they can pay it off very quickly. Any community banker who makes business loans to small businesses or farmers will tell you that.
Right now, bankers are courting businesses desperately, trying to get them to borrow. But they won’t borrow unless they can pay it off within six months to a year. That’s just not conducive to expansion on any kind of scale.
Another part the deficit plays is in exacerbating the balance of payments problem. Foreigners holding dollars don’t have to spend them here because they can buy U.S. debt in abundance with them. If they did not have that option, they would have to buy American goods and services and/or investments. That they can just buy debt is very destructive to American jobs.
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Michael_Mayo
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Am I hearing you correctly in saying the deficit has a strong influence an the recession and so may be a priority when it comes to interventions that effect each in different ways? Like taxing?
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Ridgerunner
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Taxing additionally won’t do it. Tax increases exacerbate recessions and reduce government revenues. If you only taxed “the rich” every cent they earn, it still wouldn’t be enough.
So, what percentage of your income do you want to pay so the government doesn’t have to cut spending?
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Michael_Mayo
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Oh, as I have said back in #240, we do need to cut spending but across the board.
How did Clinton get us out of debt?
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rlg94086
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He didn’t.
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Michael_Mayo
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My bad, out of defcit spending.
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jwinch2
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In my opinion, it’s a bit hard to make such comparisons.
President Clinton had the benefit of the dot.com boom with the advent of the internet and the housing bubble by encouraging Fannie Mae and Freddie Mac to take on more risk by lowering standards for housing loans in an effort to make home ownership possible for low income persons. Both of those things were artificial booms which played a significant role in creating a strong economy. He also was not dealing with an economic meltdown in Europe at the time.
I’m not sure if you follow the same blueprint today that you end up in the same place regarding strength of the economy.
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rlg94086
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Didn’t do that either, but the “way” he got closer was to have a robust economy. So, we need to cut spending and have a robust economy. Easy peasy lemon squeezey.
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Michael_Mayo
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How about telling me why this is wrong:Didn’t do that either, but the “way” he got closer was to have a robust economy. So, we need to cut spending and have a robust economy. Easy peasy lemon squeezey.
factcheck.org/2008/02/the-budget-and-deficit-under-clinton/
And how do we get back to a robust economy? Cut taxes?
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Michael_Mayo
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I agree. Part of the irrational exuberance.
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rlg94086
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No idea…don’t care, to be honest. I’ve read some reports that there wasn’t a surplus, some that there was. It makes no difference in regards to the question at hand.
It depends on the economist you ask. The best I’ve heard is cutting corporate tax rates, since ours is one of the highest. We need to cut spending, since we are spending ~25%. Certainly, increasing taxes at this time is not a good idea. If we are going to reverse the Bush tax cuts (or let them lapse), it should be the whole shebang though…not just on “the wealthy,” IMO.
As others have noted, even if we taxed the top 1% at a rate of 100% (i.e. everything), we still would not have enough to balance the budget.
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He_Man
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Or raise taxes and prolong the recession? Great idea. When Bill Clinton and Obama disagree, you are running out of endorsements for bad economic ideas.
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Michael_Mayo
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The economy is such a complex system there is no agreement on how it really works or doesn’t work, hence the many different fiscal & monetary theories and interpretation of data. Maybe I am just a simple guy but in my own house I try to increase income and cut expenses when I see deficit. Sometimes it means lifestyle change.
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rlg94086
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Yep…same here. It doesn’t work the same because if you increase “income” through taxation, you are basically decreasing spendable income people have, which hurts the economy. In a booming economy, revenue goes up without increasing tax rates.The economy is such a complex system there is no agreement on how it really works or doesn’t work, hence the many different fiscal & monetary theories and interpretation of data. Maybe I am just a simple guy but in my own house I try to increase income and cut expenses when I see deficit. Sometimes it means lifestyle change.
Of course, when you cut expenses, it means a lifestyle change for the country, too. But, then you get complaints from the USCCB committee.
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