Spending up 9%

[Individual]

Exactly so... so the question then becomes - what is the best way of expending the needs of business so that they need to employ more people? Supply vs. Demand.... which side to stimulate? Back at the beginning of the 20th Century we had an extreme supply-side investment-oriented economy. It built the industrial age and caused America to become an economic super-power. But it also led to an enormous underclass. The poor lived crowded into tenement housing and worked long hours for little pay. Lot of Supply, little Demand. The result was the Great Depression.

Then came the New Deal, and we turned things in the other direction... it became about the common man. More protections, higher wages and all the rest. Focus on demand and the supply will be found to meet it. The result was the consumer age of the 50's and 60's. However, by the 1970's, this, too, had played itself out.... more and more demand met less and less ability for supply to match it, and the result was stagflation.

Then came the Reagan Revolution.... we turned the needle back to the supply side again. More incentive was given to investment. Business boomed and the technological revolution re-made society. However, now we're reaching the limits of that... demand can't sustain more supply and it's taking more and more stimulus to produce even meager growth.

Demand and supply are the air and fuel of our economic engine. You need both in the right mixture for the conditions you find yourself in order to make things run efficiently. Right now we just happen to be running too rich.

Why would a business want to need more people for any reason than to produce output to meet demand? Without taking government into account, no sane person would start a business simply for the purpose of employing people

You've got my vote for understatement of the year. So what's the answer? Do we keep'em out of sight and out of mind? Or do we do what LBJ tried to do in the 1960's? See a problem and try to hit it head-on and try to fix it?

Subsidizing the problem has not turned out to be a fix for the problem.

 

[Cordelier]

Why would a business want to need more people for any reason than to produce output to meet demand? Without taking government into account, no sane person would start a business simply for the purpose of employing people

Exactly so... so how does cutting Corporation Taxes address the problem? Seems to me if you wanted to boost demand, the way to go is to cut taxes on the Middle Class.

Subsidizing the problem has not turned out to be a fix for the problem.

Ahhh... That's the thing, though. The War on Poverty wasn't a subsidization program.... back in the 1960's and 70's, we used to do a lot more on job training, community & regional development, and other programs as well and the results spoke for themselves. The poverty rate in 1979 was about half what it was in 1959... you can't tell me that's because the economy as so much stronger. The problem is that during the 80's, we slashed all of the pro-active anti-poverty programs and just ended up the money into public assistance. That's just throwing money at the problem.

This chart is a few years old, but it gives you an idea of what I'm talking about. The Black line is the overall poverty rate... the shaded areas are the percentage of GDP spent on the different areas - just look at how much they get reduced and swallowed up by Public Assistance (in red) during the 1980's:

 

[Lord Tammerlain]

I couldn’t have asked for a better example of why it’s important to correct for inflation and population growth, both of which tend to make revenues grow regardless of tax policy.

It also indicates the importance of when to select data. 2009 would have been a low point, 2008 was higher

 

[Individual]

Exactly so... so how does cutting Corporation Taxes address the problem? Seems to me if you wanted to boost demand, the way to go is to cut taxes on the Middle Class.

I never said cutting Corporation taxes addresses any problem. But neither does government raising taxes and redistributing money to non/low income earners solve the problem.

Ahhh... That's the thing, though. The War on Poverty wasn't a subsidization program.... back in the 1960's and 70's, we used to do a lot more on job training, community & regional development, and other programs as well and the results spoke for themselves. The poverty rate in 1979 was about half what it was in 1959... you can't tell me that's because the economy as so much stronger. The problem is that during the 80's, we slashed all of the pro-active anti-poverty programs and just ended up the money into public assistance. That's just throwing money at the problem.

This chart is a few years old, but it gives you an idea of what I'm talking about. The Black line is the overall poverty rate... the shaded areas are the percentage of GDP spent on the different areas - just look at how much they get reduced and swallowed up by Public Assistance (in red) during the 1980's:

View attachment 67258395

I don't find charts and graphs to tell the full story without seeing the complete numerical data from which they were created, and even then, what data was ignored in the presentation.

 

[jonny5]

Enough? Our current deficit is over 5% of GDP.

Yes, 3.5 trillion is enough to fund the necessary functions of govt. Its certainly enough to fund all the pork and handouts.

 

[jonny5]

Revenues for this year are running at 16.1% of GDP... do you know when the last time a level like that would have balanced the budget? 1956!

Exactly. Spending hasnt been below 20% of GDP since 2007. Simply freeze spending at current levels and the budget would balance in 5 years.

 

[jonny5]

I can give you and idea to help fix Social Security right off the bat.... remove the Social Security Wage Base restriction and subject all wage and salary income to the same FICA taxes. By my estimate, that alone would increase OASDI receipts by 16.5%.

Would you also increase the payout since the payout benefit is based on tax base?

 

[MTAtech]

Yes, 3.5 trillion is enough to fund the necessary functions of govt. Its certainly enough to fund all the pork and handouts.

What, in your view, are these "handouts?"

 

[jonny5]

Such as? How would you spend more wisely? The biggest items are Medicare, Social Security, military and interest on the debt. 3 of those 4 will undoubtedly increase due simply to demographics.

Our real problem is that the politicians who created all those benefits knew they would be long gone by the time the bill was due. But it got them the votes they wanted. Apparently people never tire of hearing they can get something for nothing. We're just suckers for Ponzi schemes.

BTW; I kinda agree with you that tax cuts won't help. The premise is that tax cuts stimulate spending, hence growth, producing more in new tax revenue than the cost of the cuts. That won't work anymore. Old people just don't spend much, except maybe eventually on health care. What we need is for the Millennials to all get married and have a bunch of kids. But that ain't gonna happen. So there is no massive group of consumers salivating to spend that tax money as fast as they can. They are more likely to hoard it for future health care costs, or if they are younger, pay down some debt. As it is, we're pretty saturated with consumer goods already.

But so what? Its their money. And they pay more than their share of taxes. If the purpose is simply to get more taxes, why not make everyone pay instead of just the top 20%?

 

[jonny5]

What, in your view, are these "handouts?"

Medicare B and D, medicaid, SCHIP, SNAP, Housing grants, education grants. Grants here and there and everywhere. 700bn alone is just medicaid and income support programs.

 

[MTAtech]

Medicare B and D, medicaid, SCHIP, SNAP, Housing grants, education grants. Grants here and there and everywhere. 700bn alone is just medicaid and income support programs.

Got it, you are against the safety net, including those that have dedicated taxes. You essentially want to go back to the federal government that we had in 1900.
Housing grants aren't really something we spend a lot of money on. The vast spending is in Social Security, Medicare, Medicaid, defense and interest on the debt. So that if you want to spend less, you are talking about cutting the big five or you have no idea what you are talking about.

 

[jonny5]

Got it, you are against the safety net, including those that have dedicated taxes. You essentially want to go back to the federal government that we had in 1900.
Housing grants aren't really something we spend a lot of money on. The vast spending is in Social Security, Medicare, Medicaid, defense and interest on the debt. So that if you want to spend less, you are talking about cutting the big five or you have no idea what you are talking about.

Those i mentioned do not have dedicated taxes. But yes, Im against the federal safety net, whether it does or doesnt. And we spend 50bn on housing assistance for low income specifically. There are billions of ways to cut spending. Yet, we never seem to talk about ANY of them. Its just more and more and more.

 

[Waddy]

But so what? Its their money. And they pay more than their share of taxes. If the purpose is simply to get more taxes, why not make everyone pay instead of just the top 20%?

Kinda missed the whole point of the post, didn't Ya'?

 

[Cordelier]

I never said cutting Corporation taxes addresses any problem. But neither does government raising taxes and redistributing money to non/low income earners solve the problem.

I agree with this... I'm not looking for re-distribution - what I'm talking about is investment. Invest in our greatest resource - our people. Get them off of welfare and working and leading productive and fulfilling lives. Seeing to it that poor parents have access to a quality daycare that doesn't leave their kids stunted and gives them a chance to go out and find work. Get them the training they need to get a decent paying job. Re-invigorate the communities they live in - give them a stake in making things better. I want to turn people from being tax-eaters and make them into taxpayers.

I don't find charts and graphs to tell the full story without seeing the complete numerical data from which they were created, and even then, what data was ignored in the presentation.

That's fair... I got the spending and GDP figures from OMB's Historical Tables and the Poverty figures were from the Census Bureau. I can track down the specific tables if you're interested.

 

[Cordelier]

Exactly. Spending hasnt been below 20% of GDP since 2007. Simply freeze spending at current levels and the budget would balance in 5 years.

Exactly... ideally, I'd like to set the Budget so that it pretty much balances itself (via lower income support payments + higher tax receipts) when the economy is running at 4% real growth. Anything over that, I'd run a surplus to keep inflation from taking off, anything under a deficit to spur growth. I figure a 19.5% of GDP target point is probably the most realistic end-goal for achieving that.

 

[Cordelier]

Would you also increase the payout since the payout benefit is based on tax base?

Absolutely. And all of the income taxes collected from current Social Security beneficiaries would be put back into the Trust Fund.

 

[jonny5]

Exactly... ideally, I'd like to set the Budget so that it pretty much balances itself (via lower income support payments + higher tax receipts) when the economy is running at 4% real growth. Anything over that, I'd run a surplus to keep inflation from taking off, anything under a deficit to spur growth. I figure a 19.5% of GDP target point is probably the most realistic end-goal for achieving that.

That sounds random. Why not 15%?

 

[jonny5]

Kinda missed the whole point of the post, didn't Ya'?

Nope,

The premise is that tax cuts stimulate spending, hence growth, producing more in new tax revenue than the cost of the cuts. That won't work anymore. Old people just don't spend much, except maybe eventually on health care. What we need is for the Millennials to all get married and have a bunch of kids. But that ain't gonna happen. So there is no massive group of consumers salivating to spend that tax money as fast as they can. They are more likely to hoard it for future health care costs, or if they are younger, pay down some debt. As it is, we're pretty saturated with consumer goods already.

The point here was that we shouldnt cut taxes because people wont spend it and that we need more consumer spending. Whereas MY point is that what people do with their money is none of the govts business. Collect a little from everyone, pay for listed powers of govt, and dont worry about the economy. The govts job is not to steer the economy.

 

[jonny5]

Absolutely. And all of the income taxes collected from current Social Security beneficiaries would be put back into the Trust Fund.

There isnt a trust fund, and cant be with such large numbers. Wouldnt it make more sense to set the SS tax equal to the current outlay? Which, since the govt would now be taking millions from Actors would eventually have to go way up, when they retire since we're upping the benefit with the tax.

 

[Cordelier]

That sounds random. Why not 15%?

I'm sorry... I thought we were being realistic here.

Median Outlays for the 1962-2018 period were 20.2% of GDP, with a standard deviation of 1.6. I think hitting 19.5% would be a pretty fiscally prudent target to hit.

 

[Cordelier]

There isnt a trust fund, and cant be with such large numbers. Wouldnt it make more sense to set the SS tax equal to the current outlay? Which, since the govt would now be taking millions from Actors would eventually have to go way up, when they retire since we're upping the benefit with the tax.

I don't see the logic there... it's like the balanced budget amendment. It's puts you in the position of having to cut spending at the exact same time you ought to be increasing it.

 

[Waddy]

Nope,



The point here was that we shouldnt cut taxes because people wont spend it and that we need more consumer spending. Whereas MY point is that what people do with their money is none of the govts business. Collect a little from everyone, pay for listed powers of govt, and dont worry about the economy. The govts job is not to steer the economy.

Where did I say I was against tax cuts? I merely pointed out that the usual justification for them doesn't work any longer, mainly for demographic reasons. As far as government getting out of the economy business.., that ship has sailed, a long time ago. We now have the FED, and government taxes, and government regulation. Those won't be going away. So the only argument left is how much and who to tax, how much and who to regulate, and how much money should the FED print, and at what interest rate. Well, everybody has a dog in that fight.

 

[Individual]

I agree with this... I'm not looking for re-distribution - what I'm talking about is investment. Invest in our greatest resource - our people. Get them off of welfare and working and leading productive and fulfilling lives. Seeing to it that poor parents have access to a quality daycare that doesn't leave their kids stunted and gives them a chance to go out and find work. Get them the training they need to get a decent paying job. Re-invigorate the communities they live in - give them a stake in making things better. I want to turn people from being tax-eaters and make them into taxpayers.

If our employment needs were greater than our employable population I would agree we would be making a reasonable investment, but jobs, especially what might be considered decent paying jobs are becoming fewer. Perhaps government should focus assistance spending primarily on day care, training some employed to fill that occupation, while allowing others to focus more greatly on finding means of employment.

That's fair... I got the spending and GDP figures from OMB's Historical Tables and the Poverty figures were from the Census Bureau. I can track down the specific tables if you're interested.

I also look at figures from the census bureau, and the St Louis Fed, but the individual sources from where those numbers were acquired is where the true issues needing solved will be found.

 

[Cordelier]

If our employment needs were greater than our employable population I would agree we would be making a reasonable investment, but jobs, especially what might be considered decent paying jobs are becoming fewer. Perhaps government should focus assistance spending primarily on day care, training some employed to fill that occupation, while allowing others to focus more greatly on finding means of employment.

I disagree... I think the problem isn't so much that decent paying jobs are becoming fewer so much as that the labor force - especially blue collar labor - hasn't been equipped with the flexibility to adjust to shifting market conditions. Take the Transportation sector, for instance - the shift to online shopping has caused a loss of service retail jobs, but those workers haven't been adequately equipped to shift to the newly-created jobs in logistics, maintenance, driving, cargo handling, dispatching, etc. Not only that, but there's also the ongoing to need to update physical infrastructure. If we start focusing on job training programs - with an emphasis on giving low-income workers the skills they need to take advantage of changing conditions, then it can pay dividends in the flexibility and efficiency of our workforce.

Bloomberg - Blue Collar Worker Shortage Turns US Labor Market on It's Head

I also look at figures from the census bureau, and the St Louis Fed, but the individual sources from where those numbers were acquired is where the true issues needing solved will be found.

I'm not sure what you mean.

 

[Media_Truth]

Where did I say I was against tax cuts? I merely pointed out that the usual justification for them doesn't work any longer, mainly for demographic reasons. As far as government getting out of the economy business.., that ship has sailed, a long time ago. We now have the FED, and government taxes, and government regulation. Those won't be going away. So the only argument left is how much and who to tax, how much and who to regulate, and how much money should the FED print, and at what interest rate. Well, everybody has a dog in that fight.

The BOLDED above has always been the case. We should look at the past successes. Clinton/Gore balanced the budget by working in non-partisan way, with a Republican Congress. They raised the upper-tier tax rate, while cutting spending. That's the model of success.