We Have a Spending Problem

celticwar17 said:

It seems pretty obvious we have a spending problem.

I think we have plenty of revenue to fund a government. It just has to be more efficient...

I come to this conclusion by looking at average tax revenue per capita. I think this statistic is important because it shows how much actual revenue the US government gets per person in comparison to other countries.

In 2015 the U.S. had 14.79k of revenue per person on average. This is actually slightly above the average among the 35 ish countries in this study https://data.oecd.org/tax/tax-revenue.htm. And in 2015 we were almost right in the same ballpark as Germany, they got around 15.3k per person.

Countries like the U.K., Canada, Spain, Russia, Italy.... the U.S.A get's quite a bit more revenue per person than any of them.... and some of these have much higher taxes than we do.

Countries that get higher revenue per person are countries like the Netherlands, Sweden, and Denmark.... and these countries debt to GPD ratio is very high

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Your last assertion is incorrect. The Netherlands, Sweden, and Denmark have less public debt as a percentage of gross domestic product than the United States. Norway and Finland also have less public debt as a percentage of gross domestic product than the United States.

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2186rank.html#da

Helix said:

that's odd. we just cut taxes significantly, and the argument was that resulting growth will fill the gap. has that changed in the past month?

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That was the argument when Reagan and Bush II cut taxes, especially for the well to do. It did not work then. I doubt it will work now.

SmartCat said:

That was the argument when Reagan and Bush II cut taxes, especially for the well to do. It did not work then. I doubt it will work now.

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perhaps we're impatient. perhaps not.

washunut said:

Look not saying that the CBO is a partisan group and their projections are biased.
...

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First, the CBO is non-partisan.
Second, they've been pretty accurate predicting deficit forecasts over the years.

CBO Forcast vs Actual
(trillions)
Year CBO Actual Delta
2009 $1.20 $1.41 $(0.21)
2010 $1.30 $1.29 $0.01
2011 $1.50 $1.30 $0.20 https://www.cbo.gov/publication/21999
2012 $1.10 $1.09 $0.01 https://www.cbo.gov/publication/42905
2013 $0.85 $0.68 $0.17 https://www.cbo.gov/publication/43907
2014 $0.51 $0.48 $0.03 https://www.cbo.gov/publication/45010
2015 $0.47 $0.44 $0.03 https://www.cbo.gov/publication/45010
2016 $0.55 $0.59 $(0.03) https://www.cbo.gov/publication/51129
2017 $0.56 $0.56 $0.00 https://www.cbo.gov/publication/52370

Helix said:

that's odd. we just cut taxes significantly, and the argument was that resulting growth will fill the gap. has that changed in the past month?

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The question to ask is what does history say? It would seem from the below graph that when tax rates are cut, revenue falls and when tax rates increase or tax-cuts expire, revenue rises. The theory that tax-cuts increase revenue have no empirical support.



There is also no clear correlation between lowing capital gains rates and GDP growth:



There is also no correlation between changes in corporate tax rates and GDP growth:



Based upon history, we can expect higher deficits in the future -- like what existed under Bush when he cut taxes, with no growth improvement.

MTAtech said:

The question to ask is what does history say? It would seem from the below graph that when tax rates are cut, revenue falls and when tax rates increase or tax-cuts expire, revenue rises. The theory that tax-cuts increase revenue have no empirical support.

There is also no clear correlation between lowing capital gains rates and GDP growth:

There is also no correlation between changes in corporate tax rates and GDP growth:

Based upon history, we can expect higher deficits in the future -- like what existed under Bush when he cut taxes, with no growth improvement.

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the latest round of trickle down will probably do what it has always done : make a lot of money for a few people while inflating bubbles that pop and hurt a lot more people, resulting in government having to swoop in and fix the damage.

MTAtech said:

First, the CBO is non-partisan.
Second, they've been pretty accurate predicting deficit forecasts over the years.

CBO Forcast vs Actual
(trillions)
Year CBO Actual Delta
2009 $1.20 $1.41 $(0.21)
2010 $1.30 $1.29 $0.01
2011 $1.50 $1.30 $0.20 https://www.cbo.gov/publication/21999
2012 $1.10 $1.09 $0.01 https://www.cbo.gov/publication/42905
2013 $0.85 $0.68 $0.17 https://www.cbo.gov/publication/43907
2014 $0.51 $0.48 $0.03 https://www.cbo.gov/publication/45010
2015 $0.47 $0.44 $0.03 https://www.cbo.gov/publication/45010
2016 $0.55 $0.59 $(0.03) https://www.cbo.gov/publication/51129
2017 $0.56 $0.56 $0.00 https://www.cbo.gov/publication/52370

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Are those ten year forecasts??? Since that is what we are talking about here.

washunut said:

Look not saying that the CBO is a partisan group and their projections are biased. I am saying that ANY 10 ten projection of the American economy and tax receipts thereof is a guess at best. In addition it is one piece to the growth puzzle for American based companies. For example if we had elected Sanders and went to a single payer system corporations would benefit more than from a tax cut. Firms would be more likely put their workforce here as just one small example.

Not sure if you ever tried to do a five year projection at a large company. Many companies stopped spending a lot of time on it. Too many things changed so all that work turned into a waste of time. Hard enough to do a one year plan.

We have problems both with spending and it taxing. Politicians are not up to the job of fixing either.

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I don't disagree with anything you wrote there. I was arguing a couple of points:
1) Dynamic Scoring, while not inherently good or bad, is frequently misused as a sort of vehicle for generating prophecy fulfillment. They cut taxes as much as possible, then take those numbers and dynamically project growth that will cover the revenue they just eliminated.

2) On the spending side - if you have a deficit you need to lower spending before you lower taxes. In fact, you need to lower spending until you are running a surplus, and then debate whether to head back toward break-even via tax cuts or spending increases. This is never done, and dynamic projections are used to create some false sense of sanity.

I don't even disagree with cutting some taxes while running a deficit, as long as it's part of an overall restructuring that makes sense. Example: Corporate tax rates are still too high. I would cut them further, but eliminate practically every loophole, if not all of them. That wouldn't make the big boys happy, but it would go a long way towards leveling the playing field and the majority would benefit from that.

<alt>doxygen said:

I don't disagree with anything you wrote there. I was arguing a couple of points:
1) Dynamic Scoring, while not inherently good or bad, is frequently misused as a sort of vehicle for generating prophecy fulfillment. They cut taxes as much as possible, then take those numbers and dynamically project growth that will cover the revenue they just eliminated.

2) On the spending side - if you have a deficit you need to lower spending before you lower taxes. In fact, you need to lower spending until you are running a surplus, and then debate whether to head back toward break-even via tax cuts or spending increases. This is never done, and dynamic projections are used to create some false sense of sanity.

I don't even disagree with cutting some taxes while running a deficit, as long as it's part of an overall restructuring that makes sense. Example: Corporate tax rates are still too high. I would cut them further, but eliminate practically every loophole, if not all of them. That wouldn't make the big boys happy, but it would go a long way towards leveling the playing field and the majority would benefit from that.

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1. While I agree that dynamic scoring can be played with, so can (and is) static scoring. For example the static score would show we tax corporations on their worldwide earnings. We know in practice this is B.S. Most corporate earnings never come back here to be taxed. Under this new system, Apple for example has said it will pay an additional $38 billion in taxes to bring back its approximately $ 250 billion cash from overseas.

We are a huge and dynamic economy, so looking at one thing and saying what the change will be is not possible without knowing what other changes will be made over the next ten years to either offset or enhance the tax changes. All that being said, to say that these changes will have zero impact is not believable.

2. Totally agree with what you say on the spending side. As a matter of fact I believe that we should always be looking for cuts regardless of our budget status. I always said while working you can almost always save 5% on spending by working smarter and looking for spending on things that are not accretive.

I have no problem cutting loopholes. We just want to make sure that is what they are. The largest deduction taken by corporations is health care expenses for their employees. The biggest area which is never discussed is how to tax stock given to CEOs and founders that is NEVER taxed. For example Jeff Bezos and Warren Buffett the two richest Americans, have never paid a penny on most of their wealth and never will. Also fix the charitable deduction so that you get a tax benefit for your basis in the gift not the present value.

washunut said:

The biggest area which is never discussed is how to tax stock given to CEOs and founders that is NEVER taxed. For example Jeff Bezos and Warren Buffett the two richest Americans, have never paid a penny on most of their wealth and never will. Also fix the charitable deduction so that you get a tax benefit for your basis in the gift not the present value.

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these are uber trivial issues when we are $20 trillion in debt and sinking. If you want to be at all serious first step is Balanced Budget Amendment.

Helix said:

the latest round of trickle down

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what does that mean?? govt spending and waste is growing just as liberals want so is that what you call the latest trickle down??

washunut said:

Are those ten year forecasts??? Since that is what we are talking about here.

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Each link enclude 10 year forecasts.

James972 said:

what does that mean?? govt spending and waste is growing just as liberals want so is that what you call the latest trickle down??

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Liberals want gov't waste? Who knew?

But what I'm reading is an example of mirror thinking.

Conservatives say they are for small government and low taxes as a goal of its own, so conservatives think that liberals must believe the opposite and thus be for big government, more spending -- regardless on what, and high taxes as a goal.

The reality is that liberals want government to do certain things, like provide essential health care; a safety net and old age benefits. The size of government per se isn’t the objective. But when we have worthy spending objectives, we provide the funding method. That's why Obamacare had special taxes.

But reviewing recent history, the size of government increased the most under Republican Administrations. Moreover, conservatives say they are for low taxes but they are really only for low taxes on the wealthy. That's why they invented Frank Luntz terms like "skin in the game" -- which really means raise taxes on poor people.

Helix said:

that's odd. we just cut taxes significantly, and the argument was that resulting growth will fill the gap. has that changed in the past month?

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No, but youre only talking about 100bn a year. The spending problem is 600bn to 1 trillion a year. Even if you froze discretionary spending, GDP growth would still take a decade to overcome mandatory spending increases. The tax cut should speed that up a little, but certainly not with with them ADDING to spending. They just wiped out the tax cut benefit.

SmartCat said:

That was the argument when Reagan and Bush II cut taxes, especially for the well to do. It did not work then. I doubt it will work now.

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It did work, except as usual they ****ed it up with spending. We have a spending problem.

Under Bush tax cuts, revenue rose by 200bn prior to recession, Spending rose by 600bn
Under Reagan , revenue rose by 300bn. Spending rose by 500bn

All they had to do was slow down spending, and revenue would have caught up. Same as now. Same as we did under Obama with the sequester.

This happened under Bush. It is clear that Republicans are only fiscal conservative when it comes to undermining a Democratic POTUS. As soon as they get in power they spend and lower taxes as if they are drunken sailors. Even the biggest of conservatives have to concede that now. But at least the Dems try to raise the taxes to pay for their craziness. The Repubs are totally out of control reducing the taxes coming in while spending a ton or more. I have said it before. The Republicans no that it is political suicide to cut medicare or Social security.
so their strategy will be to bankrupt this nation and then they can come to the people and say they have to gut both programs to the bone.

Fraggle Rock said:

This happened under Bush. It is clear that Republicans are only fiscal conservative when it comes to undermining a Democratic POTUS. As soon as they get in power they spend and lower taxes as if they are drunken sailors. Even the biggest of conservatives have to concede that now. But at least the Dems try to raise the taxes to pay for their craziness. The Repubs are totally out of control reducing the taxes coming in while spending a ton or more. I have said it before. The Republicans no that it is political suicide to cut medicare or Social security.
so their strategy will be to bankrupt this nation and then they can come to the people and say they have to gut both programs to the bone.

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Perhaps you didnt notice that the majority of Democrats just voted for a spending a ton more. I didnt hear them demanding tax increases to pay for it. All I saw was them trying to get 'dreamers' legalized. I didnt see Obama once push for paying for the trillion in new spending he approved. Nor the democrat congress in 2009. Just the opposite he signed making permanent the Bush tax cuts for 97% of tax payers. The affordable care act is costing hundreds of billions, and the wealthy taxes in it dont even collect a tenth of that cost.

jonny5 said:

No, but youre only talking about 100bn a year. The spending problem is 600bn to 1 trillion a year. Even if you froze discretionary spending, GDP growth would still take a decade to overcome mandatory spending increases. The tax cut should speed that up a little, but certainly not with with them ADDING to spending. They just wiped out the tax cut benefit.

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Raise taxes, then. If we can afford massive handouts to corporations and two decades of perpetual war, then we can afford to deliver on the promises made to our own citizens.

Helix said:

Raise taxes, then. If we can afford massive handouts to corporations and two decades of perpetual war, then we can afford to deliver on the promises made to our own citizens.

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We can afford all three. We cant afford all three AND all the other things on top of that. I described that in the OP.

3.3 Trillion revenue - 1.3 trillion Social Security/Hospitals - 700bn Defense - 300bn interest = 1 trillion left over.

With that 1 trillion we can afford some of

Roads
Justice
Science
Education
Environment
Foreign Affairs
Agriculture
Healthcare
Veterans
Energy
Housing

We cant afford all of it. So what can we do without?

jonny5 said:

We can afford all three. We cant afford all three AND all the other things on top of that. I described that in the OP.

3.3 Trillion revenue - 1.3 trillion Social Security/Hospitals - 700bn Defense - 300bn interest = 1 trillion left over.

With that 1 trillion we can afford some of

Roads
Justice
Science
Education
Environment
Foreign Affairs
Agriculture
Healthcare
Veterans
Energy
Housing

We cant afford all of it. So what can we do without?

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first, we end all of the wars and transition towards a peacetime military while taking care of our veterans. second, we keep our promises to all those who have paid into SS and Medicare for their entire careers. part of the shortfall can be addressed by reversing the tax cuts, because now it seems like they don't pay for themselves and we can't afford them (surprise, surprise.) i also support taxing all income as income above a cap.

i'm under no illusions that Republicans will do anything other than to try to take away the benefits i've earned in order to give them to rich people and to build the Great Wall of Derp, so point three will be voting as many of them out as possible. it's sad that the inept Democratic party is the only other viable choice, but it is what it is. it's like bringing spitballs to a gunfight, but at some point, it's any port in a storm.

Helix said:

first, we end all of the wars and transition towards a peacetime military while taking care of our veterans. second, we keep our promises to all those who have paid into SS and Medicare for their entire careers. part of the shortfall can be addressed by reversing the tax cuts, because now it seems like they don't pay for themselves and we can't afford them (surprise, surprise.) i also support taxing all income as income above a cap.

i'm under no illusions that Republicans will do anything other than to try to take away the benefits i've earned in order to give them to rich people and to build the Great Wall of Derp, so point three will be voting as many of them out as possible. it's sad that the inept Democratic party is the only other viable choice, but it is what it is. it's like bringing spitballs to a gunfight, but at some point, it's any port in a storm.

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Youre focused on small things and ignoring the big things. The great wall of DERP is a tiny cost. Tax cuts are a tiny reduction. Even Social Security and Medicare A arent much of a deficit. They have direct taxes and pay for themselves. Even if we cut military in half, it still wouldnt make much of a dent. The real costs are the other trillion in social spending, and the trillion in random govt things from infrastructure to ag subsidies.

And if you want to go off on taxes, the real issue is the half the country that isnt paying ANYTHING towards what general revenue funds. How can we move forward if youre focused on the standard talking points?

jonny5 said:

Youre focused on small things and ignoring the big things. The great wall of DERP is a tiny cost. Tax cuts are a tiny reduction. Even Social Security and Medicare A arent much of a deficit. They have direct taxes and pay for themselves. Even if we cut military in half, it still wouldnt make much of a dent. The real costs are the other trillion in social spending, and the trillion in random govt things from infrastructure to ag subsidies.

And if you want to go off on taxes, the real issue is the half the country that isnt paying ANYTHING towards what general revenue funds. How can we move forward if youre focused on the standard talking points?

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i've already heard the talking points and deflections. i've paid into SS and Medicare for my entire career, and i intend to collect those benefits. i will vote against any politicians who want to deny me those benefits in order to give rich people more money or to do other stupid things with it, and i'm not alone. if the programs need additional funding, raise taxes. we should have had single payer health for all Americans care during the Truman administration. then we wouldn't be pounding money down a rat hole at a rate faster than any other first world nation.

MTAtech said:

Liberals want gov't waste? Who knew?
.

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anybody who reads the papers knows that we pay 4 times more than Europe for health care because of massive liberal involvement and no Republican capitalist incentive to lower price and raise quality. Do you get it now?

MTAtech said:

But when we have worthy spending objectives, we provide the funding method. That's why Obamacare had special taxes.

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don't be silly! if liberals were not commies they would pass a BBA and make it illegal not to provide a funding method. Do you understand now?

jonny5 said:

All they had to do was slow down spending,

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we 200 years into it and, really, all we have to do is make federal debt illegal and the problem is solved forever.