Deficit Reduction Garbage

So the Catfood Commission meets and lo and behold, they come back with some of the same things I recommended years ago. Except for one small piece…


Which, just so you know, means it won’t work and will effectively end the middle class in this country. In fact, the Commission advocates making the tax code even less progressive. See here and here if you don’t believe me.

Under any analysis, changes need to be made to SS. But making steelworkers stay in the mills (the few that are left) until they are 69 is just insane. Any rational decision to modify the retirement age MUST take into account the type of work being performed during the retirees lifetime. Sure, it’s great that we’re talking about removing the income cap on SS taxes. However, making people who’ve done 40 years of hard labor retire at the same time as some fatass who has never worked a day in the sun is something that only retards like Erskine Bowles and Alan Simpson would think is a good idea. Seriously, does anyone think that the lifespan of all Americans is rising at the same level, regardless of occupation?

And then there is the idea of only $100 billion in cuts at the Department of Defense? Really? I thought we were looking at making some real changes to spending, not some minor cuts. DoD runs close to $1 trillion per year… how about we shave that down by $250 bn. Seriously, do we really need to spend as much on defense as the rest of the planet combined? Frankly, we could cut it by half and still be able to defend ourselves.

Then there is the 15 cent increase in the gas tax. Good idea. But how about 10 cents and then index the gas tax to transportation cost inflation which will completely remove politics from transportation funding? The pain is less upfront and we always have the money we need to meet demand for infrastructure going forward… earmark that money for the transportation bank and portion it out to the states based on population, not the whims of a Senator.

Then there is the $3 bn cut out of bloated farm subsidies. How about we eliminate them altogether?

As for the corporate tax rates, the commission thinks they need to be lower (possibly) but doesn’t make any specific recommendations regarding the elimination of loopholes which have already lowered the effective rate of US corporate taxes to below 10%. In effect, any change to the US corporate tax code will be an effective increase. Which, I’m all for since it’s already too low which is one of the many reasons corporate tax rates are a really stupid issue for the simple minded from the AEI, CEI and Cato.

The ironic thing about this commission specifically and all the deficit hand wringing in general is that all we really need to do is scale back DoD and restore the top tax rate to Clinton era levels. But that’s too easy. It’s almost as easy as realizing that jobs=deficit reduction. Yes, that’s right… if you create more jobs, more people pay taxes and the deficit kind of takes care of itself. The other issue, with regard to the debt, is that reducing the debt to GDP ratio can be easily accomplished… by, you know, GROWING THE ECONOMY.

Which brings us to economic growth. This plan doesn’t really do much to promote it and, as in Europe, would actually depress economic growth as structured. In fact, the government seems kind of hamstrung regarding the fiscal stimulus measures that are necessary to actually get the economy growing at a rapid pace. So the Fed had to act with Quantitative Easing, version 2. Of course, that’s drawn the ire of QuitterDummy

Here are some cold, hard facts from the real world: The first is the 8.7% 2012 unemployment rate predicted by the Survey of Professional Forecasters of the Federal Reserve Bank of Philadelphia. It seems the Obama administration’s record spending binge won’t result in job creation, but in unacceptably high long-term unemployment. The second fact is that long-term interest rates have actually gone up following the Fed’s recent QE2 announcement. The markets took one look at the Fed’s pump-priming plans and decided they had to increase interest rates—probably in order to compensate for the expected rise in inflation.

Now, it’s time to look at some cold, hard facts… the unemployment rate, absent the Obama Administration’s ‘record spending’ would be north of 12%. Had people like Palin shut the hell up and let the experts talk, and if the Obama Administration and the blue dogs not been so short sighted, we might have passed a large enough stimulus package that would have already driven unemployment to below 8% and falling precipitously. Those are facts. As for the assertion that long term rates are up, sure, but not because of inflation expectations. In fact, inflation is at a record low rate. Frankly, long term rates are up from a historic low which was negative in inflation adjusted terms. We’re not even back into positive territory yet and the QuitterDummy thinks the sky is falling.

Tell you what, morons in America who love them some Sarah Palin… LET HER INVEST YOUR RETIREMENT MONEY. If you think she’s so goddamn smart, hand it over to her.

There’s also a letter from someone here in Austin…

Our economic problem is manifested in insufficient jobs, pure and simple. This is brought on by lack of private investment, which is caused by the uncertain environment created by the Obama administration and the incessant meddling of the Federal Reserve.

Which sounds great until you realize it’s not true. As I’ve pointed out MANY times, businesses hire to meet increased demand. No demand, no hiring. What the government does in regard to taxes or regulation is hardly relevant because the marginal cost of those changes is completely outweighed by the potential profit from more sales.

You know, this isn’t terribly hard. Except if you’re a politician like QuitterDummy or President Obama or any member of the Republican Party who just won because they campaigned against doing the very thing that President Obama didn’t do enough of.

Funny how history repeats itself.

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2 Responses to Deficit Reduction Garbage

  1. mblockhart says:

    A Principled Solution for the Deficit and Recession
    Guiding Principle: Those who caused and profited from the deficit and the recession should pay back the money they’ve taken from the American people.
    Four Revenue Solutions:
    1) Raise the highest bracket income tax back where it was before Reaganomics trickled down on the rest of us
    2) Raise the capital gains tax on speculative investment income. Tax earnings from speculation at least as high as earnings from labor.
    3) Keep the inheritance tax
    4) Raise the cap on income subject to Social Security withholding
    Four Spending Solutions:
    1) Cut defense spending, especially contracts
    2) Cut subsidies for big oil and unnecessary farm subsidies
    3) Establish a public plan option in health insurance to lower health care costs
    4) Invest in jobs (now!) to grow the economy by adding taxpayers

  2. mcblogger says:

    1) won’t work… that rate was on the wrong side of the curve. The top marginal rate doesn’t need to exceed 45%.
    2) Agreed, but make the limit 1 year at put the rate at ordinary income for the first year, then drop to 20% for the second year. Dividend income should be taxed as ordinary income until 60. After 60, tax rate on dividends should drop to 20% up to $150k per year. Over that amount, it’s taxed at the normal rate for the taxpayer.
    3) Agreed, but lower to 35% and increase the cap to $5mn along with a provision for large landtransfers and payments of taxes over time.
    4) Agreed and eliminate any SS payment to those making in excess of 10 times poverty level. Seriously, they don’t need it and it was never for them.

    1) Agreed, I would say by half.
    3) BINGO.
    4) Absolutely… if only the President would push for it.