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Insanity! Let's have a debt commission... and tax cuts!

Discussion in 'Political Discussion' started by PatsFanInVa, Dec 7, 2010.

  1. PatsFanInVa

    PatsFanInVa PatsFans.com Supporter PatsFans.com Supporter

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    I want to specify that I'm talking about the current deal between the president and the Republican leadership in congress.

    Now, deals and compromises always have contradictory elements in them. But this one is just funny, in light of the concurrent conversation about the debt commission's recommendations.

    Leaving aside the extention of hundreds of billions in tax cuts for the wealthy (I know a lot of you guys like that,) and leaving aside the fact that the most stimulative tax cuts are to the middle class, and leaving aside that (boo! hiss!) sooner or later, those cuts need to go too... here's the part that tickles me:

    They're throwing in a 2% cut to everybody's Social Security tax - the dedicated tax to the SS system we're all foretelling the doom of.

    You really think the guys in SSA aren't soiling their drawers at this very moment? They're busily tapping the numbers into the software, and spitting out the next estimate of how many years we just moved up the insolvency date, assuming this package passes.

    Can it be any clearer guys? You can't simultaneously talk about how terrible debt is and how much we need to stop taxing anybody ever.

    All of these measures get the throw-the-hands-up reaction from me. It's inconsistent and it's stupid.

    Our problem right now is employing more of the ranks of the unemployed. Our problem once that's accomplished will be to maintain a certain minimal level of services consistent with the obligations of a first-world government. We see similar economies - Europe, Japan - raising retirement ages from 60 to 62, or 62 to 65. We're looking at 69.

    But even if you're a screw-the-poor-I-want-a-tax-cut type, when you look at the debt commission recommendations, you have to be confused as hell by our current actions.

    Here's my take, which you guys are used to by now:

    - stimulus spending, scary as it may be, is where you need to be in the short term. NON-stimulative spending, like gifts to the rich, are absolutely luxuries we can't afford.

    - Get the unemployment rate under, say, 7%, and then you can restore normal levels of taxation on the middle class. And you have to. We do have this little debt issue.

    - In addition to finally re-balancing the budget one day, we need to still pay the enormous bills, the majority of which were run up in the last 10 years. Nobody likes it, but there ya go.

    - Spare me the voodoo economics. Here's reality: you cut taxes, you get a stimulus by borrowing the money to spend it. You spend the money to put it in pockets, people spend the money, the economy picks up again, and measured against a high-unemployment era, your revenue grows. But once you have a normal level of unemployment, you need to make up the revenue. The cut has to expire. Otherwise you're borrowing 20 bucks to buy a value meal and have 15 bucks left over, claiming you've delivered a free value meal, and planning on how to spend your 15 dollar surplus.

    So here's what you do, in order:
    1) cut taxes on the middle class. Do not cut taxes on the rich.
    1a) Another aspect of digging the hell out of the unemployment hole - which is the opposite of the debt hole concern: Put people to work to give them money. That is, engage in large-scale public works - repair infrastructure, incentivize development of alternative energy (if you don't have the balls to let the government set up nationalized renewable energy utilities, to be privatized at a profit to taxpayers at some later date when everybody wants in.)

    1c) This is one item we can start -- and have started -- toward lower debt: 2Wind down our remaining war - continually minimize our remaining obligation in Iraq


    That's the "getting people employed" part. Then you've got the debt issue. You'll have more of one, of course. But here's what you do about that, at the right time, which is a couple years later.

    2) Figure out how to pay for the last 10 year's tax giveaway to the rich.
    2a) Let the middle class cuts expire, but not until unemployment is "acceptable" and the recovery is a little less fragile than at present.
    2b) Just take the debt commission recommendations or something like them. Accept that idiots on the right must be pacified, unless people wake the hell up in the interim, though I doubt they will.

    I'm a fiscal hawk in normal times, believe it or not. I don't believe in passing out candy to the children to make everybody like you. We're still reacting to the relatively scattered instances of waste, fraud, abuse, etc. etc. etc. But our systemic problem is the abiding belief that any tax rate can and should be cut.

    But if you want to "attrit" the federal workforce down to a lower level, and it works, be my guest. If you want to freeze federal pay as "part of the complete breakfast" of austerity measures, I'm down. Maybe you feel "security theater" is costing too much and doing no good. Okay, worth considering.

    BUT, I don't believe that the working class should be pushed over the edge into poverty, and I don't believe that the poor should be pushed into homelessness. Even in a heartless analysis, you must realize that it's cheaper to pay unemployment benefits (for example) than to pick up the basic functions of life through other programs. Push people out of their homes and you have homelessness... then you need shelters, soup kitchens, and all the rest.

    So that's my take on the rational way to do this. Step 1, get unemployment down. Step 2, ah say step 2, you panicky b1tches, deal with debt.

    But complaining about debt when you're trying to stimulate the economy is just plain dumb. When you bolt it together with "yayyyyyyy cut some more taxes!!!" the results are downright self-contradictory.

    PFnV
     
    Last edited: Dec 7, 2010
  2. apple strudel

    apple strudel Banned

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    If Obama signs off on this (seriously, can he even try threatening a veto? just try, once, for me, please?) I'm voting socialist or green party for the rest of my life.
    The complaints about debt are really only because the debt isn't subsidizing military contractors enough. Hey, that's my pork!
     
  3. PatsFanInVa

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    Yeah well. I'll vote for the guy with the best chance of making progress and (in cases when it's needed) saving the country from oblivion. I don't like the capitulatory style of this Administration of late, but it's always been their style. Meanwhile, the accomplishments of this administration to date have been pretty impressive.

    It's just a WTF moment, and I think it signifies the "uniter" role Obama wants to play -- despite the wrongness of the "deal" meant to "unite" us.

    Before going protest vote (let's be honest,) consider the causes of and "response" of Bush economic meltdown:

    - Collapse of the West's market economy
    - One tranch of life-support TARP funding, then no intervention in an ever-worsening crisis after the election
    - Gigantic tax giveaways and a general policy of hyperindebtedness
    - Invasions and occupations of Iraq and Afghanistan, another mess Obama's administration has to deal with

    Realize that these overreactions to teabagger midterm results we're seeing now, while on the somewhat silly side, do not wipe out the reforms of health care, consumer credit, and the financial sector that have been managed. None of them are perfect, but they're all good starts. Compare that with the equivalent Republican actions, had we hired on a Bush clone, an ultra-conservative know-nothing, or a random-acting "maverick."

    The 2000 election permanently engraved in my mind that the right can squeek by far too easily in a close election... Without playing the woulda-shoulda-coulda alternate history game with the righties, in terms of outcomes, how would you have felt about the outcome, had we elected the probably luke-warm, compromising, center-left Gore, vs. what we got?

    This kind of stuff baffles me too. But I'm not going to reward the hardcore wrong guys, because I don't like my guys' negotiating prowess. If I don't like the right wing using their "superminority" to get 70% of what they want, why would I want them to get 100% of what they want?

    PFnV
     
  4. DarrylS

    DarrylS PatsFans.com Supporter PatsFans.com Supporter

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    Do we need to spend more than 3X more than any other country on Defense, military madness has ruined my country..

    58% of our budget goes toward military expenditures.. the military industrial complex runs this country, the rest are all just puppets..

    How Our Trillion-Dollar Empire Is the Cause of Our 'Deficit Problem' | Economy | AlterNet

     
  5. PatriotsReign

    PatriotsReign Hall of Fame Poster

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    #18 Jersey

    In all honesty, our gov't shouldn't even be trying to "stimulate the economy". All that does is create artificial growth and we don't need artificial growth, we need REAL growth.

    The whole reason (as in 100%) we are in this mess is because our gov't (along with our banking system) created artificial growth for far too long. The solution to our economic woes isnt to continue to do what we did to get us into this mess...which is what "stimulating" does.

    For once, Americans need to be patient. No economy has ever been "fixed" by it's gov't. See Japan for the best example.

    Let's all remember that the definition of insanity is doing the same things over and over again and expecting different results.
     
    Last edited: Dec 8, 2010
  6. The Brandon Five

    The Brandon Five Experienced Starter w/First Big Contract

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    #75 Jersey

    I find the language around this kind of thing pretty interesting. Were tax rates brought down on tablets from Mt. Sinai? Why are the current rates treated as "cuts"? The old rates are permanent and unchangeable? Isn't it just a case of keeping the current rates rather than letting an automatic increase kick in?

    I am not arguing for or against them. To me, the GOP are being dumb by holding out. Why not build in a small-business exemption if you are worried about jobs? Protecting millionaires is proving very unpopular in a tough economy.
     
  7. apple strudel

    apple strudel Banned

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    The hallmark of a good politician is that he can sell or justify something to you that is against your own self interest.
     
  8. Holy Diver

    Holy Diver Pro Bowl Player

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    #80 Jersey

    Obama sucks.
     
  9. Real World

    Real World Moderator Staff Member

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    I wouldn't call those types "good" politicians. Maybe "lying scumbag establishment" types for short. :D
     
  10. Real World

    Real World Moderator Staff Member

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    As far as I understand this isn't a "cut" in taxes, as much as it is a matter of maintaining the status quo. The SS issue aside. That one I'm trying to figure out. SS taxes are matching, so it might be a means to put more $$ into the hands of both businesses and employees. With it being SS money, the actual expense won't be felt for years down the road, whereas actual income rate deductions are felt immediately. At least in their view. The reality is that the gubmit already includes excess SS funds as revenue, as it confiscates them from the fund, and replaces them with IOU's in the form of Treasuries. Nice!


    What's one's definition of wealthy btw? $250k per certainly isn't wealthy is some parts of this country. I've got no issues with giving everyone a fair shake here. If one guy gets one, so should the next. Those who earn more already pay a disporportionate size of the bill.

    We don't have a revenue problem. We have a spending problem. How about slashing programs across the board? Military programs included. It's going to have to happen at some point, so we're better off starting now.
     
  11. PatriotsReign

    PatriotsReign Hall of Fame Poster

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    #18 Jersey


    Nice! I'm going to use that if you don't mind!;)

    I think what the gov't is doing is "Hoping" that people will take the SS deduction savings and spend it. Kind of a stimulus directly to consumers. The problem is that Americans are a long way from "spending extra cash". We as a nation are in a reduce personal debt & build savings mode...and we'll be in it for a while longer.
     
  12. PatsFanInVa

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    In 2001 and in 2003, the Bush administration pushed through "temporary" cuts in taxes.

    The cuts are set to expire this year. It so happens that this coming year is a pretty inconvenient time for these "temporary" cuts to expire.

    Make no mistake, the Bush cuts are a prime reason we are swimming in debt. It's borrow-and-spend Republicanism, the only kind there has been since about 1980 (so please don't bother painting Bush as an aberration.)

    Yes, we have a revenue problem. When you make an unrealistic tax cut, that's the same damn thing as spending. When you spend on top of it -- lavishing money (as the Republican congress did) on "homeland security" projects (including a whole new cabinet level department), on two huge foreign wars, on largesse for corporations in general, you're going to have a debt issue.

    The teabaggers are the latest GOP flip-flop by proxy: Now that they're out of power, the GOP is the party of fiscal responsibility (thanks, teabaggers!!! We're worried about debt now! Yeah that's the ticket!!!)

    This bullsh1t about "we don't have a revenue problem we have a spending problem" is like someone who voluntarily took a pay-cut (the equivalent of a tax cut) at his job, where he only works 10 paid hours a week (the US's already-low tax rates.) Then he buys a home, saying "I don't have an income (revenue) problem, I have a mortgage (spending) problem."

    It is a modest home. It's structurally sound. Let's say he buys at a nice low point in the market. It's an otherwise okay investment. Other neighborhoods have more lavish homes. But of course, those other neighborhoods are irrelevant, because his "spending" problem has kept him from having two pennies to rub together.

    Now he's on the verge of selling the home, making nothing or declaring bankruptcy in the process of a short-sale. Why? His "spending" problem.

    With more revenue, his problem goes away. But he can also attempt to eke out another 10 bucks a week by switching to generic brands, not using deoderant, and walking 2 miles each way to work and back and selling the car. Problem solved - he only needs to get his profligate "spending" under control.

    Or closer to our reality - he doesn't understand why he can't maintain his modest home mortgage, AND the payments and gas costs of the tank he insists on driving around the neighborhood to prove he's a badass. Of course the tank is on the spending side... but he insists that deoderant and name-brand mayonaise is his spending issue.

    The idiocy is to have an out-of-whack balance sheet and to come up with a bumper sticker that says "no no, it's not the assets, it's the liabilities!!!"

    You can fix it by getting more assets. You can fix it by shedding liabilities. You can fix it, as is almost certainly the only workable solution when your problem is such a big one, by looking hard at both, until they zero out like they're fugging supposed to.

    Now - you want to get serious? You have to do something like the debt commission is doing. That's why everybody hates it.

    Righties: consider the problem without a "magical" solution. There's no "magical" something-for-nothing effect to cutting taxes. To the extent you cut middle-class taxes, you do get a bump on the demand side. Cutting the taxes of the wealthy helps the economy in general less and less. The richer the person (or Corporation) we're talking about, the less effect on the demand side.

    To claim that there is not money to capitalize businesses (the "job creation" argument) ignores that there is a great deal of capital available to invest or lend, that has fled to other non-equity markets (such as bonds or currency trading.)

    That money's slowly making its way back into the market, but we're nowhere near where we need to pour money into the hands of the monopoly guy - he's still just buying luxury goods with it, or saying "thanks for the free cash... now let's see the best place to put it other than capitalizing businesses."

    So there's your tax cuts. If you're gonna do 'em, you do 'em to address the economic effect you will have.

    But you are still ignoring -- because you have a bumper sticker that says "we don't have a revenue problem, we have a spending problem" -- the effect of these disasterous cuts on our national debt.

    Pick 1:

    1) I want the money, so the debt doesn't matter... keep cutting my taxes!

    or

    2) Debt matters, and I am willing to endure my taxes eventually going up.

    When you actually start looking at the revenue and the liabilities, the bumper stickers don't work... unless you want to abandon anything resembling a first-world society in America.

    That "unless" is understandably tempting to righties who urge belt-tightening for other people, such as elderly poor on fixed incomes and the like. But understand when you slap that bumper sticker on the beemer, that's what you're urging. And by the way, turning every local park into a homeless encampment still doesn't eliminate the debt, on its own.

    PFnV
     
  13. The Brandon Five

    The Brandon Five Experienced Starter w/First Big Contract

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    #75 Jersey

    The question is: what is the best way to raise more revenue? As has been posted here before, the percent on GDP that can be raised in revenue averages 19.5% (~18-20, depending on which paper you read) regardless of what the top marginal rate is.

    Taxation and economic performance - Google Books

    The key is to create a system that is fair and that promotes GDP growth. I am all in favor of eliminating Federal income taxes for those making less than say, 50k...if they actually paid them now.

    Half of Americans pay no federal income tax - Business - Tax Tactics - msnbc.com

    More and more of that capital is now tied up in government debt. So yes, the last 30 years of deficits have dug a hole that wore out the only shovel.

    At this point, our choices are either bad or worse. I fully expect Washington to choose worse.
     
  14. Harry Boy

    Harry Boy Look Up, It's Amazing PatsFans.com Supporter

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    Why would any American that is now working from January well into spring just to pay Taxes to this Tax Happy Government be against "Tax Cuts" why would hard working democrats who are trying to make ends meet and have a decent life for their children be against "Tax Cuts"

    :confused::confused:
     
  15. Real World

    Real World Moderator Staff Member

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    Sorry to break it to some people, but the Bush tax cuts reaped record revenues for the federal government. So like I said before, we don't have a revenue problem, we have a spending problem. ;)
     
  16. PatsFanInVa

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    I hate to break it to you, RW, but those insanely low tax rates are still in effect, plus additional tax cuts from Obama in the stimulus package.

    So they use to work but now they don't, genius?

    Here's the shell game, once again:

    1) You borrow money, to cut taxes, to stimulate demand, in a down economy. Bully. You've got three trillion in tax cuts, 2001-2010 (upward of 50% of which went to the wealthiest 5% of people.) That wasn't an unending march of down economies, mind you.

    2) Now that you've borrowed 3 trillion for the cuts, you note that by taxing the resulting commerce, you've got the highest tax revenues evah!

    3) Because you insist on continuing what can only be defended on an emergency basis, as if it is normal tax policy; and because the economy has to eventually grow again unless the entire capitalist world collapses (came close there recently, but not yet,) you get a bump in revenues. Record profits, record taxes paid. Bully.

    4) Here's the right-leaning Tax Policy Center's page on tax revenues by source. You'll note that under Clinton both individual and corporate taxes were higher than the first several years of Bush:

    Historical Amount of Revenue by Source

    In 2000, individual tax revenues were $1.004 trillion. They were under a trillion from 2001-2005. It was 2006 before they returned to the Clinton level (during a year of surpluses, I might add - as opposed to every year of Bush's presidency. But that's because Bush had to borrow to hand over the wealth of the nation to his cronies.)

    In 2000, corporate revenues were 207 billion. It was not until 2005 that revenues recovered to that level.

    In 2006-2008 revenue continued to skyrocket, and then came the crash; throughout 2009, wall street wrote down their titanic losses, and individuals lost their jobs in droves based on the collapse of late 08. When trillions of dollars of phony wealth evaporates, you get lots of write-offs.

    Yet, the same - in fact, lower, after all the stimulus - tax rates have been in effect the whole time since 2001.

    Let's do the math, on the individual side. Take 2000's tax revenues as the norm:
    Clinton standard
    2000 1.004 trillion (baseline)
    2001-2010 10.040 trillion

    Aberrantly low actual receipts, 2001-2010 - Bush rates
    2001 .994
    2002 .858
    2003 .794
    2004 .809
    2005 .927
    2006 1.044
    2007 1.163
    2008 1.146
    2009 .915
    2010 (est.) .936

    9.585 trillion, 10 years actual experience. Well, 9 plus the 2010 estimate.

    Now, you have to also remember that we've had normal 2-4% inflation from 2000 to 2008 -- starting with the full year 2009, it got close to zero. You had economic growth from 2001 to 2010. Yet none of that was captured. You would have been better with zero increase in the tax base (which has never happened) and the Clinton rates.

    Oh and by the way, 2000 was a surplus year. We didn't put anything on the national credit card.

    You can do something similar with corporate taxes, although the bubble years from 2005 to 2008 we more aberrant and the lows are lower. That's because they can write down their losses in off years.

    In the eight years of the Clinton presidency (93-2000), personal income tax revenue increased from .510 trillion to 1.004 trillion (nearly doubling.) Corporate taxes went from .118 trillion to .207 trillion (also on the order of doubling.)

    From 2001 to 2008, personal income tax revenue went from .994 trillion (first year under Bush) to 1.146 trillion, and never went higher than 1.163 tr. On the corporate side, revenue went from .151 trillion (first bush year, vs. the
    .207 under Clinton,) in 2001, to .304 trillion in 2008. In 2009, Corporate tax revenue was .138 trillion. At no time did the tax revenue increase at the pace of the Clinton years.

    That's because Clinton's presidency was marked by economic growth, which was taxed at a more historically normal rate.

    trotting out the fact that the economy almost always grows, and crediting low taxation for the almost certain fact of economic growth, seems a bit dim-witted, the stuff that snake-oil salesmen trot out to gullible fools.

    PFnV
     
    Last edited: Dec 9, 2010
  17. The Brandon Five

    The Brandon Five Experienced Starter w/First Big Contract

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    #75 Jersey

    Even under Bush, total revenues remained around 18% until the recession hit and brought them down to 15%. Not sure why you are focused on revenues from one source rather than total revenues. Revenues from one source are irrelevant. Taxes from other sources (say sources that are directly related to the level of economic activity) offset lower receipts from individuals. You are inadvertently making the GOP's point.
     
  18. Real World

    Real World Moderator Staff Member

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    You're attempting to talk economics and taxation to someone who couldn't understand that paying a $75 annual fee for fire protection, was a lot cheaper than paying $1,000 in taxes to the government.


    There was never any surplus. Ever. There hasn't been one since the 50's. The figures from the last 30 years all include excess SS tax receipts, as annual revenue. These excess receipts are then written off to SS in the form of an IOU treasury. It's why SS is an underfunded liability. It's Arthur Anderson accounting at its best. So when you see those "surpluses" from a few years ago, or even worse, when you see the annual deficits of the last 30 years, add in a couple hundred billion per that the government has to pay back to the SS fund. What the government has done to count revenue, is akin to me counting my borrowed mortgage dollars I owe the bank, as salary. It's sad that so few people realize how big a hole we're in.


    PARKERSBURG, W.Va., March 16, 2010

    Social Security to Start Cashing IOUs

    For First Time since 1980s, Retirement Program Projected to Pay more in Benefits than it Collects in Taxes

    (AP) The retirement nest egg of an entire generation is stashed away in this small town along the Ohio River: $2.5 trillion in IOUs from the federal government, payable to the Social Security Administration.

    It's time to start cashing them in.

    For more than two decades, Social Security collected more money in payroll taxes than it paid out in benefits - billions more each year.

    Not anymore. This year, for the first time since the 1980s, when Congress last overhauled Social Security, the retirement program is projected to pay out more in benefits than it collects in taxes - nearly $29 billion more.

    Sounds like a good time to start tapping the nest egg. Too bad the federal government already spent that money over the years on other programs, preferring to borrow from Social Security rather than foreign creditors. In return, the Treasury Department issued a stack of IOUs - in the form of Treasury bonds - which are kept in a nondescript office building just down the street from Parkersburg's municipal offices.


    Social Security to Start Cashing IOUs - CBS News
     
  19. PatsFanInVa

    PatsFanInVa PatsFans.com Supporter PatsFans.com Supporter

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    B5, the hope was that the enduring stupidity of the bumper-sticker slogans could be shown by concrete example to be patently untrue and absurd. But that would mean people would read and think.

    Instead, we have people like RW here.

    Tell him that 1000 people are paying 75 bucks, and he's convinced you've said they are each paying 1000 bucks - his gallant reference above.

    Sorry, RW. I forgot you've willfully constructed a bubble-world pasted over with bumper-stickers, and called it "real".

    I'm sure you remember the thread, B5 -
    http://www.patsfans.com/new-england...e-department-lets-mans-house-burn-page22.html

    Post #212 is where RW repeatedly points, where I recommend that instead of people "voluntarily" paying 75 bucks, if they "choose" to have fire services, you just have a $75 tax. I'll recount the source of this idiocy because RW likes to embarass himself from time to time by recounting his mischaracterization again:

    Because RW's math skills are poor, he has decided I have recommended a $1,000-a-head tax, rather than a $75-a-head tax. In his bumper-sticker world, the number of times his poor math skills are displayed is irrelevent. All that matters is the bumper sticker.

    And yeah, this is the guy who is now the guru of tax policy.

    Tell that voodoo economics lie often enough and it becomes true, that's the theory, right? Same basic premise.

    B5, I take your point at the macro level, that the stats you read say tax rate is actually irrelevant to economic activity.

    I focused on the rates we're debating - personal and corporate income tax - for the sake of simplicity. You can add in the excise taxes and end up with the same conclusion: The rate of growth prior to the Bush rates was better than during the Bush rates.

    There is no proof of this specious argument that low taxes equal economic growth on a sustained basis.

    What you do get is a great deal of debt.

    So don't turn around and claim that the debt is because of the other guy's bad habit of feeding someone who's starving.

    PFnV
     
  20. The Brandon Five

    The Brandon Five Experienced Starter w/First Big Contract

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    #75 Jersey

    There is no doubt that revenues went up under Clinton, but, as RW points out, there was never a surplus.

    If you look at the Federal debt by year (from the U.S. Statistical Abstract), you see that it goes up every single year (even during the years when we were supposedly running a surplus).

    http://www.census.gov/compendia/statab/2010/tables/10s0458.pdf

    Our debt is not financing starvation prevention.
     

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