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Pawlenty's super-rich tax cuts

IMO, Governor Pawlenty is running a campaign that focuses on telling people what they want to hear (basically that Americans do need not sacrifice) and in trying to position himself as the boldest tax cutter of all. Almost certainly, his policies would greatly exacerbate the nation's fiscal challenges. His economic growth number is unrealistic. The last time the economy grew by 5% in a year (just a single year) was 1984. The 1960s and 1970s saw four such years in each decade. However, given the structure of today's economy, not to mention its enormous debt overhang (domestic non-financial debt), it is unrealistic to expect such growth, much less on the sustained basis that Governor Pawlenty projects. In sum, his appears to be a campaign that seeks to evade the difficult choices U.S. policy makers will have to make. Perhaps in a stroke of good fortune, his flat debate performance and oscillating remarks on health reform, have indicated that he probably won't be a credible contender.

Let's hope so. But for argument's sake, wouldn't Pawlenty's plan actually increase the deficit? The swift reduction in taxes would basically decimate revenue at the same time as massive cutting would lead to huge amounts of job losses, either direct or indirect resulting in automatic stabilizers kicking in. As unemployment increases, the already reduced tax rates would bring in even less income at the same time as deficit finances automatic stabilizers would drive the deficit higher. I can't help but think that all of these politicians and users who argue for rapid cuts to spending at the same time as rapid cuts to taxes would leave us in even more red ink.
 
.....Pawlenty's paln would probably double revenues.....to the bewilderment of surprised and unexpected liberal economists.

.

And do you have staistical data showing the only material change to the economy was tax rates?

It's amusing watching people like you cite such graphs as proof that tax cuts work while omitting the ugly fact that government spending went through the roof at the same time. We know for a fact that government spending increases activity and revenue. WWII saw high rates and high government spending at the same time as suppressed consumer demand. Highly suggesting it was government outlays that resulted in strong economic activity.

I have yet to see a single person who harps on cutting taxes provided a single historical period where tax rates were effectively cut but spending remained the same and no major economic changes occurred. I swear, the more you harp on cutting taxes, the less you understand statistics.
 
I'm all for cutting government spending, yet at the current situation, the US needs every penny it can get. Cut spending, then cut taxes a few years later when the situation is more stable.

Obviously, he's a populist, and an idiot if he truly tries (or believes) the tax cuts.
 
Let's hope so. But for argument's sake, wouldn't Pawlenty's plan actually increase the deficit? The swift reduction in taxes would basically decimate revenue at the same time as massive cutting would lead to huge amounts of job losses, either direct or indirect resulting in automatic stabilizers kicking in. As unemployment increases, the already reduced tax rates would bring in even less income at the same time as deficit finances automatic stabilizers would drive the deficit higher. I can't help but think that all of these politicians and users who argue for rapid cuts to spending at the same time as rapid cuts to taxes would leave us in even more red ink.

By any reasonable assessment, the Pawlenty plan would significantly increase the federal budget deficits. I suspect that the campaign understands the math and fudged things by throwing out an absurd growth rate that would generate far more revenue than is likely. Recent economic history and the structural dynamics of the U.S. economy, including massive debt overhang, make such a sustained growth rate improbable. The dramatic increase in the nation's deficits, and the structural component associated with such tax cuts, would increase the risks of a U.S. debt crisis and push forward the timing for such an event.
 
Indeed. Like his little tirade in South Carolina about bringing the Boeing jobs there. Plays well there, but how do the folks in Washington (the state, not DC) feel about that?

Unfortunately, telling people what they want to hear seems to be strategy that works. Worked for the last 3 Presidents.

PeteEU said:
It is frankly horrible and he should be ashamed. The "jobs" he wants to bring to South Carolina, a state he could win an election, would come from Washington State, a state he most likely never would win... this kind of "politics" is disgusting to say the least, and yes both sides use it. Hence the electoral college sucks donkey balls.

Well, first off, the jobs being created in SC to start another line for building the 787 are not effecting the jobs already existing in WA state at all. And the union will lose that fight. A company has the freedom in this country to put its plant anywhere they want.

j-mac
 
By any reasonable assessment, the Pawlenty plan would significantly increase the federal budget deficits. I suspect that the campaign understands the math and fudged things by throwing out an absurd growth rate that would generate far more revenue than is likely. Recent economic history and the structural dynamics of the U.S. economy, including massive debt overhang, make such a sustained growth rate improbable. The dramatic increase in the nation's deficits, and the structural component associated with such tax cuts, would increase the risks of a U.S. debt crisis and push forward the timing for such an event.

So in a partisan kind of way Pawlenty's trying to push the goverment into default?
 
So in a partisan kind of way Pawlenty's trying to push the goverment into default?

I don't think he deliberately wants default. I suspect that his problem is that he doesn't see the big picture how tax revenues and federal expenditures fit together to determine the nation's annual surplus or, in this case, deficit. He has argued that the federal government should not raise the debt ceiling (in effect forcing it to immediately balance the budget) without offering specifics on what programs should be cut/eliminated to avoid default. He hasn't even suggested what he believes are essential services that should be carried out. In addition, he has argued for the balanced budget amendment, a gimmick that has failed at the state level, with the overwhelming number of states bound by such an amendment running up persistent deficits and piling up debt. In sum, if his campaign announcement and debate performance are representative, his is little more than a soundbite candidacy. Substance is lacking, and I suspect that the substance is lacking precisely because the numbers would not add up.
 
let me rephrase...do you understand economic reality? we have to pay for what we need/want, and right now, we can't do that...how is cutting taxes again going to help pay for everything?

Maybe "we" need to want less.
 
if you read on, he also wants to eliminate taxes on capital gains, interest income, dividends and estates...what the hell is he thinking?


Hes jumping on the far right teaparty agenda....all for the rich and stick it to the working class...Im waiting patiently for a republican candidate to tell the teaparty to go suck wind
 
I don't think he deliberately wants default. I suspect that his problem is that he doesn't see the big picture how tax revenues and federal expenditures fit together to determine the nation's annual surplus or, in this case, deficit. He has argued that the federal government should not raise the debt ceiling (in effect forcing it to immediately balance the budget) without offering specifics on what programs should be cut/eliminated to avoid default. He hasn't even suggested what he believes are essential services that should be carried out. In addition, he has argued for the balanced budget amendment, a gimmick that has failed at the state level, with the overwhelming number of states bound by such an amendment running up persistent deficits and piling up debt. In sum, if his campaign announcement and debate performance are representative, his is little more than a soundbite candidacy. Substance is lacking, and I suspect that the substance is lacking precisely because the numbers would not add up.

Raising the debt ceiling raises the debt, what's good about it? Some must think our debt isn't high enough yet. Talk about people wanting us to go into default, look at those who want to increase our debt.
 
Hes jumping on the far right teaparty agenda....all for the rich and stick it to the working class...Im waiting patiently for a republican candidate to tell the teaparty to go suck wind


The phraseology used in your lip pursing post here is illuminating as to where you actually stand politically.

for instance, coupling the notion of getting back to basic constitutional principles of smaller Government, and less taxation for all leaves you using incorrectly the term "far right" to describe the T.axed E.nough A.lready party. And further when you speak of tax breaks going only to the so called "rich" you really display a real ignorance of marginal tax rates, and how in this country small businesses work, and operate. These people aren't rich, yet you and your ilk would decimate them in a rush to take their hard earned money.

Now I ask, is that what the American dream is now? Work hard so you can give it to the Government to redistribute?

I don't think so.


j-mac
 
Raising the debt ceiling raises the debt, what's good about it? Some must think our debt isn't high enough yet. Talk about people wanting us to go into default, look at those who want to increase our debt.

Raising the debt ceiling does authorize the federal government to take on additional debt. It reduces the immediate prospect of a self-inflicted crisis. It is not a substitute for fiscal consolidation.

Ideally, its increase would come attached to a credible fiscal consolidation program (probably unlikely). Ultimately, the U.S. needs to get serious about fiscal consolidation. Among other things, credible fiscal consolidation will need to address the entitlement programs that are the key drivers of the nation's long-term fiscal imbalances. A key will be health care reform that tackles the excessive cost growth issue. Health expenditures cannot increase at a multiple of national income indefinitely. Health costs, particularly hospital and related services, cannot continue to increase at a multiple of inflation indefinitely. According to the IMF's latest projections, the net present value of U.S. health care spending between 2010-50 will increase 1.645 times as fast as the economy grows (highest in the world and nearly 30% faster than any other country), meaning such spending will absorb a growing share of national income/tax revenue. Those broader structural reforms will need to extend beyond the parameters of Medicare and Medicaid. As a result, they will almost certainly be controversial.
 
Raising the debt ceiling does authorize the federal government to take on additional debt. It reduces the immediate prospect of a self-inflicted crisis. It is not a substitute for fiscal consolidation.

Ideally, its increase would come attached to a credible fiscal consolidation program (probably unlikely). Ultimately, the U.S. needs to get serious about fiscal consolidation. Among other things, credible fiscal consolidation will need to address the entitlement programs that are the key drivers of the nation's long-term fiscal imbalances. A key will be health care reform that tackles the excessive cost growth issue. Health expenditures cannot increase at a multiple of national income indefinitely. Health costs, particularly hospital and related services, cannot continue to increase at a multiple of inflation indefinitely. According to the IMF's latest projections, the net present value of U.S. health care spending between 2010-50 will increase 1.645 times as fast as the economy grows (highest in the world and nearly 30% faster than any other country), meaning such spending will absorb a growing share of national income/tax revenue. Those broader structural reforms will need to extend beyond the parameters of Medicare and Medicaid. As a result, they will almost certainly be controversial.


Wow, ya think? We have in this country turned a blind eye to health care ever since 'insurance' stepped in because with that magic little card, our visits were free. No need to monitor what doc's were charging, or being charged. That coupled with fraud, and a willingness to not think of how baby boomers were going to effect the system until it is too late, are what's causing this squeeze. And proponents of Universal care think that by making it less accountable to the consumer are going to make it better?

That just doesn't pass the smell test.

j-mac
 
Wow, ya think? We have in this country turned a blind eye to health care ever since 'insurance' stepped in because with that magic little card, our visits were free. No need to monitor what doc's were charging, or being charged. That coupled with fraud, and a willingness to not think of how baby boomers were going to effect the system until it is too late, are what's causing this squeeze. And proponents of Universal care think that by making it less accountable to the consumer are going to make it better?

That just doesn't pass the smell test.

j-mac

In my view, single-payer would not work in the U.S. It would come with all the disadvantages of a monopoly and it would be an attempt to create a new framework without addressing the structural problems responsible for today's health system failings.

Robust reforms will need to be demand- and supply-based. On the demand side, changes that create a more consumer-oriented approach should be pursued. On the supply-side, barriers that limit the growth in the number of medical professionals and competition will need to be removed. Reforms will need to focus on outcomes (life expectancy, access to care, etc.) not tired alibis that disparities in outcomes should be ignored. The disparities in outcomes are real. They are important. Most importantly, they are a direct consequence of a structurally flawed, underperforming system in which costs are spiraling on an unsustainable path.
 
In my view, single-payer would not work in the U.S. It would come with all the disadvantages of a monopoly and it would be an attempt to create a new framework without addressing the structural problems responsible for today's health system failings.

Agreed, however even with the "failings" of the current system, we still have the best care in the world, UN propaganda aside.

Robust reforms will need to be demand- and supply-based. On the demand side, changes that create a more consumer-oriented approach should be pursued. On the supply-side, barriers that limit the growth in the number of medical professionals and competition will need to be removed. Reforms will need to focus on outcomes (life expectancy, access to care, etc.) not tired alibis that disparities in outcomes should be ignored. The disparities in outcomes are real. They are important. Most importantly, they are a direct consequence of a structurally flawed, underperforming system in which costs are spiraling on an unsustainable path.

As a person about to be on the other side of 50 next year, I for one hope that this look at outcomes doesn't lead to doing away with methods that can only be learned by application. If you are saying, and I am not assuming you are, but if you are saying that looking at outcomes means that taking that medical step to save the 72 year old isn't worth the cost of treatment, then I guess we have learned all we can medically because innovation stops there.

j-mac
 
As a person about to be on the other side of 50 next year, I for one hope that this look at outcomes doesn't lead to doing away with methods that can only be learned by application. If you are saying, and I am not assuming you are, but if you are saying that looking at outcomes means that taking that medical step to save the 72 year old isn't worth the cost of treatment, then I guess we have learned all we can medically because innovation stops there.

I would profoundly disagree with any approach that institutionalizes barriers to innovation. The pursuit of innovation and a focus on outcomes are not inherently contradictory. Pitting one against the other is a false choice. Innovation is almost certainly one of the keys to achieving better outcomes. Moreover, finding approaches that materially improve the quality of life of older persons could well represent a breakthrough in flattening the age-related cost curve and, given demographic trends, make an important contribution to a more financially-viable health system.
 
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i'm guessing you have nothing more to add to the conversation? the question was, where are the jobs? the conservative/republican mantra has always been cut taxes, cut taxes, cut taxes, cut taxes...they say it will stimulate the economy, CREATE JOBS...i'm simply asking, with bush tax cuts in place, why are we not seeing tons of jobs created? if lower taxes are equal to more jobs, WHERE ARE THE JOBS?

The only thing that is trickling down is bull****.
 
The only thing that is trickling down is bull****.

No, that isn't true at all. Tax cuts alone reach a point where their effect on economic outcomes reaches a static point, we may be there. But to say that the cuts that Bush put in place after 9/11 didn't help turn the economy and steer it out of the recession at that time is either willful ignorance, or talking point pap from liberal sourcing.

If the tax rates that Bush enacted after 9/11 weren't helpful at all, then why did Obama extend them?

j-mac
 
No, that isn't true at all. Tax cuts alone reach a point where their effect on economic outcomes reaches a static point, we may be there. But to say that the cuts that Bush put in place after 9/11 didn't help turn the economy and steer it out of the recession at that time is either willful ignorance, or talking point pap from liberal sourcing.

If the tax rates that Bush enacted after 9/11 weren't helpful at all, then why did Obama extend them?

j-mac


Two reasons.

1) The Republicans didn't want him to
2) He does not have a backbone
 
Two reasons.

1) The Republicans didn't want him to
2) He does not have a backbone


1. I believe at the time the republicans were a minority in both houses, so that one is out considering how he rammed through unpopular bills like HC without bipartisan support.

2. Backbone? So, he should buck the will of the people?

j-mac
 
1. I believe at the time the republicans were a minority in both houses, so that one is out considering how he rammed through unpopular bills like HC without bipartisan support.

2. Backbone? So, he should buck the will of the people?

j-mac

Did the Republican not pressure him to not eleminate the tax cuts? And please... the will of the people????
 
Did the Republican not pressure him to not eleminate the tax cuts?

So? What could they do legislatively? NOTHING! So Obama played for political expediency and to you that means an opportunity to blame it on republicans? Nice disingenuous tactic you have there.

And please... the will of the people????

There you have it folks, the true unmasked face of liberals....Care about the people? hell no.....

j-mac
 
I don't think he deliberately wants default. I suspect that his problem is that he doesn't see the big picture how tax revenues and federal expenditures fit together to determine the nation's annual surplus or, in this case, deficit.

I get this feeling from every Republican except Romney and Huntsman. What really bothers me about Bachmann is that she's a tax attorney but does not appear to understand how taxes can promote growth through spending and immediate cuts to spending and closing loopholes have the potential to be major job killers. Someone in her field should know better.

He has argued that the federal government should not raise the debt ceiling (in effect forcing it to immediately balance the budget) without offering specifics on what programs should be cut/eliminated to avoid default.

To be fair, it is a bit early in the race and I honestly don't see him as a specifics kind of guy.

He hasn't even suggested what he believes are essential services that should be carried out. In addition, he has argued for the balanced budget amendment, a gimmick that has failed at the state level, with the overwhelming number of states bound by such an amendment running up persistent deficits and piling up debt.

Or constantly pulling money from rainy day funds. I do agree that an annual balanced budget amendment is stupid.

Substance is lacking, and I suspect that the substance is lacking precisely because the numbers would not add up.

No disagreement there.
 
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