Discussion: The Economy, Fiscal Cliff, National Debt, And Other Financial Issues III

[moraldeficiency]

Originally Posted by hippie_hunter

But the administration is picking and choosing what industries it likes as opposed to the laws of the market. If there is demand for such products, the market will allow it to happen far more effectively without plunking billions of dollars into inefficient companies like Solyndra.

You made a lot of good points but this last one falls flat. The gov. has always picked and chosen which markets to support, furthermore there has never been a truly free market in the way you're speaking of via actual demand.

Two examples I'll toss out, fighter jets and orange juice (I could go on with this historically till I site about every industry and product throughout time).

Fighter jets are made at a rate more than the military actually needs or can use. This is done because the companies that make them want to make them and sell them to us. This actually happens with a staggering amount of gear, I know from being in the service. If you took out things like this and invested in say proper body armor and modified transport vehicles you'd save countless lives. There's an actual demand for these types of products by actual soldiers taking bullets, but they get more jets instead when our tech advantage in the air is so ridiculously overmatched it's insane.

Orange juice is, by mandate served at schools all over the nation during breakfast. It has to be placed out for the students to take. It cannot be handed to them. The reasoning for this is once out, even if properly refrigerated, it must be thrown away regardless of whether it's still perfectly fine or not. This allows orange growers to generate massive profits by schools literally throwing away good food.

The first example is companies and the second a growing consortium but the point is waste and bad spending isn't just the gov. and certainly wouldn't be set up by a free market unless you can eliminate the people that make it so the free market actually can exist which is oddly enough the same people that pour billions into lobbying to keep "their" free market going.

[Fenrir]

Originally Posted by moraldeficiency

You made a lot of good points but this last one falls flat. The gov. has always picked and chosen which markets to support, furthermore there has never been a truly free market in the way you're speaking of via actual demand.

Two examples I'll toss out, fighter jets and orange juice (I could go on with this historically till I site about every industry and product throughout time).

Fighter jets are made at a rate more than the military actually needs or can use. This is done because the companies that make them want to make them and sell them to us. This actually happens with a staggering amount of gear, I know from being in the service. If you took out things like this and invested in say proper body armor and modified transport vehicles you'd save countless lives. There's an actual demand for these types of products by actual soldiers taking bullets, but they get more jets instead when our tech advantage in the air is so ridiculously overmatched it's insane.

Orange juice is, by mandate served at schools all over the nation during breakfast. It has to be placed out for the students to take. It cannot be handed to them. The reasoning for this is once out, even if properly refrigerated, it must be thrown away regardless of whether it's still perfectly fine or not. This allows orange growers to generate massive profits by schools literally throwing away good food.

The first example is companies and the second a growing consortium but the point is waste and bad spending isn't just the gov. and certainly wouldn't be set up by a free market unless you can eliminate the people that make it so the free market actually can exist which is oddly enough the same people that pour billions into lobbying to keep "their" free market going.

Finally, someone who actually gets applied economics. I just can't help but roll my eyes at a lot of Americans who put more faith in the 'free market', as it were, than God and science put together. I don't know why nobody tells these devotees of unrestrained capitalism that a lot of their silly predictions and assumptions are based on perfect competition models that are simplified theoretical abstracts rather than an explanatory representation of reality.

Yes, the idea that if there is demand for a product it will succeed, is sound and the rules of the free market lead to efficiency and yadda yadda...provided that you are looking only at a limited number of variables operating under a ceteris paribus assumption (all things remaining constant) or in isolation and do not take into account externalities and market failures - which do exist in the real world and are influential factors in shaping both policy as well as market conditions.

The 'free market', as you know it from textbooks, does not exist in real life, and even if a particular nation, industry or sector comes close, they are never completely and absolutely free. Unlike scientific theories, economic theories are extremely conditional and cannot be generalized in the same way. It's high time these people stop treating market forces like the laws of physics.

[moraldeficiency]

Originally Posted by Fenrir

Finally, someone who actually gets applied economics. I just can't help but roll my eyes at a lot of Americans who put more faith in the 'free market', as it were, than God and science put together. I don't know why nobody tells these devotees of unrestrained capitalism that a lot of their silly predictions and assumptions are based on perfect competition models that are simplified theoretical abstracts rather than an explanatory representation of reality.

Yes, the idea that if there is demand for a product it will succeed, is sound and the rules of the free market lead to efficiency and yadda yadda...provided that you are looking only at a limited number of variables operating under a ceteris paribus assumption (all things remaining constant) or in isolation and do not take into account externalities and market failures - which do exist in the real world and are influential factors in shaping both policy as well as market conditions.

The 'free market', as you know it from textbooks, does not exist in real life, and even if a particular nation, industry or sector comes close, they are never completely and absolutely free. Unlike scientific theories, economic theories are extremely conditional and cannot be generalized in the same way. It's high time these people stop treating market forces like the laws of physics.

Well said only I'd say a free market is exactly like physical laws only with such an influx of maxwell's demons gravity itself would cease working.

People always talk about how something like communism in practice is perfect but since people will never allow it to properly function it can never work but disregard the same argument to unregulated capitalism. If the common denominator to the failure of the system is human intervention than any system unchecked contains the exact same flaws and will inevitably lead to corruption of the system.

[chaseter]

Since there are so many economists in here...what does raising taxes in a recession do to the economy?

[moraldeficiency]

Originally Posted by chaseter

Since there are so many economists in here...what does raising taxes in a recession do to the economy?

What has lowering taxes and deregulating industry done to avoid the recession?

You don't need an economics degree to see things with your eyes.

[Sardaukar]

Nobody truly knows what's going to happen. But personally, I think raising tax rates on the rich will do nothing other than help pay down the deficit.

[chaseter]

Originally Posted by moraldeficiency

What has lowering taxes and deregulating industry done to avoid the recession?

You don't need an economics degree to see things with your eyes.

You didn't answer my question.

[chaseter]

Originally Posted by Sardaukar

Nobody truly knows what's going to happen. But personally, I think raising tax rates on the rich will do nothing other than help pay down the deficit.

First off, $250k is not rich if you own your own business and have employees.

Secondly, it's common sense what raising taxes does in a recession. I challenge you to find me any point in the history of the US where taxes were net raised during a deep recession (I have to say net as people always try to point to Reagan who lowered taxes by a lot and then adjusted up a little but overall a net decrease).

[moraldeficiency]

Originally Posted by chaseter

You didn't answer my question.

I'm not an economist, that said reverting tax rates back to what they were during a time of growth doesn't strike me as particularly bad.

But I'll try to answer your question as best I can if you'll answer mine. First we have to accept there's an improbability in anything to do with financial situations based on the human element. Also we have to explain the type of recession we're in and whom we are raising taxes on. In this situation the recession has still made it so the upper classes and corporate profits are at an all time high. So the group that would be taxed isn't actually part of the recession they're just the ones that created it. Now raising taxes on that group which I will mention even while they were doing very well before this recession weren't actually job producing machines or doing anything about raising wages for others would influx money desperately needed to balance a debt that would otherwise fall on the solders of those hurt worst by the recession. So best I can answer your question is to say this: You've broken things down to such simple and basic terms it doesn't apply and even if it did apply the people we're speaking about aren't actually in the recession. So from my point of view raising taxes on the people still making a profit the same ones who put us in the recession over raising taxes on those hurt by the recession would be a smart move and frankly fair.

[chaseter]

You still did not answer my question and closed your justification with the 'fairness' meme. If you look back at all the recessions, the investor class always rebounds faster and higher than the working class for the simple fact that they have money to invest in the rebound boom. A worker at McDonalds isn't going to see a 400% pay increase when the stock market rebounds.

Raising taxes on anybody during a recession is idiotic. No one has ever done it for a reason and the only reason this is being circulated is because its how Obama bought votes. Here's the wonderful irony...Obama runs $1.3 trillion deficits each year and people actually believe taxing the rich is going to help cure our deficit and debt issues. We will net about $800 billion over 10 years in tax revenue if taxes go up on $250k+ individuals. That is less than $100 billion a year. So the Obama deficits go from $1.3 trillion to $1.22 trillion. It's a joke that people believe this crap.

While I agree the tax rates we are at now are too low, that is for all of us. We need to all go back to Clinton era rates and we need more than just 53% of this country paying federal income taxes. But, that needs to happen after a recession. The cure for a recession is lowering taxes and increasing spending. Obama did one and he couldn't even do that one right and nearly a trillion bucks was wasted. Even Onama in 2009 said raising taxes on anyone during a recession is a bad idea. There's a reason why companies like Google flee the US. There's a reason why Obama couldn't reinvigorate the economy in 4 years. Is it because he needs $80 billion a year from the rich?

[moraldeficiency]

Originally Posted by chaseter

You still did not answer my question and closed your justification with the 'fairness' meme. If you look back at all the recessions, the investor class always rebounds faster and higher than the working class for the simple fact that they have money to invest in the rebound boom. A worker at McDonalds isn't going to see a 400% pay increase when the stock market rebounds.

Raising taxes on anybody during a recession is idiotic. No one has ever done it for a reason and the only reason this is being circulated is because its how Obama bought votes. Here's the wonderful irony...Obama runs $1.3 trillion deficits each year and people actually believe taxing the rich is going to help cure our deficit and debt issues. We will net about $800 billion over 10 years in tax revenue if taxes go up on $250k+ individuals. That is less than $100 billion a year. So the Obama deficits go from $1.3 trillion to $1.22 trillion. It's a joke that people believe this crap.

While I agree the tax rates we are at now are too low, that is for all of us. We need to all go back to Clinton era rates and we need more than just 53% of this country paying federal income taxes. But, that needs to happen after a recession. The cure for a recession is lowering taxes and increasing spending. Obama did one and he couldn't even do that one right and nearly a trillion bucks was wasted. Even Onama in 2009 said raising taxes on anyone during a recession is a bad idea. There's a reason why companies like Google flee the US. There's a reason why Obama couldn't reinvigorate the economy in 4 years. Is it because he needs $80 billion a year from the rich?

I did, you've equated a complex situation to a simple one which does not apply. I answered the question as it related to the actual happenings of the day but here I'll help you out.

In the land of make-believe where all economics are equal, there is no national debt, then a recession is never helped by raising taxes. But this applies only in that case. I answered your question in terms of what was actually happening but you clearly didn't want to talk about that, you wanted a sound bite. It would be like talking about welfare reform and me saying, "when is letting babies starve to death a good idea"? I didn't know you just wanted a gotcha answer I thought you actually wanted to talk about this.

I'm not looking back on all the recessions, I'm looking at this one. The upper class doesn't need to bounce back because they're doing fine. The rich are still rich and getting richer. Corporate profits are up, it's just that jobs are down, the housing market is down, people who aren't rich are in a recession but this isn't an across the board hit thing.

Your macdonald's analogy doesn't fly. More apt would be to say the owner of that macdonalds is still generating a profit but cutting employee hours and salary anyway. That's the recession we're in.

Raising taxes when you owe people isn't idiotic. Being in constant crippling debt is idiotic. Forcing the military to take money it doesn't want and keeping tax breaks which were supposed to be temporary when our national debit is getting worse and while those same breaks did nothing to help grow the economy to begin with is idiotic.

Let's break it down to simple household economics. If you owe lots of money you may have to both cut back on spending and pay a bit more to keep that debit down. That's where we're at. Spend less, pay more, bite the bullet and act like an adult.

The cure for a recession? Are you an economist? Why is the cure the same thing that brought on the recession? I can't overspend my mortgage down. The cure for a recession is to be fiscally responsible and take a bit of a hit in some ways.

[Paradoxium]

http://www.sco.ca.gov/Files-EO/12-12summary.pdf

November's tax receipts fell 10.8% short of expectations contained in the 2012-2013 State Budget, although they were above the year-ago level. Total revenues year to date are now 2.6% less than anticipated at this time, with shortfalls among all of the major sources.

Expenditures are 4.9% above estimates contained in the Budget, with assistance to local governments driving the overage.

Total revenues were $806.8 million below projections in November, with corporate taxes accounting for a significant amount of this divergence. Compared with a year ago, total revenues year to date were up by 2.5%, with an impressive gain in income taxes offset-ting shortfalls in the other revenue sources.

The difference between actual and estimated numbers is larger on the spending side. For the first five months of the fiscal year spanning July through November, actual disbursements exceeded projections by $2.2 billion, or 4.9%. Education and health care accounted for the majority of the difference.

Static tax analysis FTW. Actual receipts down from expectations. Spending up from expectations.

Rich people have the money to move, and will do it. They did it before, and will do it again. Capital flight. I expect further tax hikes because the static tax analysis outcome won't meet expectations. This will push for more taxes which will exasperate capital flight... again it will require more tax hikes.

[Kelly]

That is exactly what Erskin Bowles is saying will happen....and the fact that even if we go back to the Clinton tax rate that will only bring in 400 billion, 40 billion each year for the next 10 years. That is laughable without REAL Entitlement reform.....because as he said, it is not a revenue problem it is a spending problem, and not just a spending problem, but a huge overwhelming spending problem...

[Paradoxium]

The Clinton years presided a giant expansion of (artificial) credit. Credit is not moving now, period. This is why they have been trying to reflate (credit is the lifeblood of the economy ********). That's why the revenue is super duper awesome and everyone was happy. Not the same situation now.

The tax analysis math the government is running on, is going to be so comically off. And it will only encourage the vicious cycle of capital flight and further tax hikes. I say let Darwinism do it's work. I am enjoy watching California burn, why not take it up a notch?

I hope they eliminate the state tax deduction. **** you Bloomberg and **** Hollywood get errr done

[Paradoxium]

If they eliminate State Tax Deductions, Cali and NY is going to be tax hell hahahah. Hell every big spending state is going to be hell. The voters wanted higher taxes, give it to them.

[chaseter]

Originally Posted by Paradoxium

http://www.sco.ca.gov/Files-EO/12-12summary.pdfStatic tax analysis FTW. Actual receipts down from expectations. Spending up from expectations.

Rich people have the money to move, and will do it. They did it before, and will do it again. Capital flight. I expect further tax hikes because the static tax analysis outcome won't meet expectations. This will push for more taxes which will exasperate capital flight... again it will require more tax hikes.

Look at all the states with dumb high taxes. California? New York? Where did all those businesses and rich people go? Now look at our country..where are all the businesses and rich people keeping their money?

RAISE TAXES!

Also, more recent example...France.

[chaseter]

Originally Posted by moraldeficiency

The cure for a recession? Are you an economist? Why is the cure the same thing that brought on the recession? I can't overspend my mortgage down. The cure for a recession is to be fiscally responsible and take a bit of a hit in some ways.

Please tell me what brought on the recession.

Fiscal responsibility? Adding $5 trillion to the national debt in 4 years is fiscal responsibility? Adding another $4 trillion to bring us past $20 trillion in 4 more years is fiscal responsibility? The President has had no serious discussions about responsible spending cuts and all anyone from the left can do is parrot taxing the rich and tax fairness that nets less than what we add to the debt in a month. We still have over 10% unemployed/underemployed and all anyone from the left has brought forth is the Buffet tax. It's laughably sad. I am with Dox, just let the president have his taxes and see how pathetic we still are in a couple of years. Then maybe people will wake up.

[moraldeficiency]

Originally Posted by chaseter

Please tell me what brought on the recession.

Fiscal responsibility? Adding $5 trillion to the national debt in 4 years is fiscal responsibility? Adding another $4 trillion to bring us past $20 trillion in 4 more years is fiscal responsibility? The President has had no serious discussions about responsible spending cuts and all anyone from the left can do is parrot taxing the rich and tax fairness that nets less than what we add to the debt in a month. We still have over 10% unemployed/underemployed and all anyone from the left has brought forth is the Buffet tax. It's laughably sad. I am with Dox, just let the president have his taxes and see how pathetic we still are in a couple of years. Then maybe people will wake up.

Deregulation of the banks and financial industries as well as lax watchguards over housing. Toss in our downgraded rating brought on by staggering debt.

I completely agree with you about the debt thing. I believe in a balanced approach to things. We should raise the social security age, cut medicare some, cut back military spending and reposition that into areas that would actually help our troops not what weapons manufactures and congressmen want to shove down our throats. Welfare needs a major overhaul.

In addition we should definitely let the bush tax cuts on the wealthy expire. Glass-Spiegal needs to be reinstated immediately. Far better regulation needs to be in place over the housing market. Vicious laws need to be instated against predatory lenders and high level white collar criminals (one burnie madoff = about a million welfare frauds). That would be a good start on things.

I don't see anything wrong with the buffet tax, personally I don't see anything bad about any ideas warren buffet has ever had. I'd vote for that guy for any office.

The way I see it neither side is completely right or wrong. We do need to raise taxes or at least let tax cuts which didn't grow jack expire. We should definitely cut spending as well in several forms both sides would be uncomfortable with. I don't see how just saying lower taxes is the answer. I don't see how increased spending is either.

Do you simply find nothing about raising any taxes or any regulations worthwhile? Because if you're just a zealot about this and can't find anything the other side says making any sense I'm afraid we should just call it a day on this.

The one thing I'm sure about is anyone that says one side is completely right about finances is definitely wrong, misguided and dangerous.

[Paradoxium]

Eliminate the following deductions:

- State Tax
- Charitable
- Home mortgage

Get yourself a wad of cash. To celebrate, they should reduce the age of retirement. To say 50.

[Paradoxium]

They need to eliminate deductions for charity. I want to see Warren Buffet and Bill Gate's face when that happens.

After this, when people donate, you know who is truly sincere and not some status climbing whore.

You don't have to worry about Bush tax cuts, it will be moot as hell (they can run with it still ON TOP OF THIS). By eliminating these deductions, the butthurt will be fast and furious. Bloomberg has premptive butthurt from even discussing state tax deductions. This needs to happen. When it does, Congress should give themselves a pay raise for a job well done.

[SV Fan]

Originally Posted by Paradoxium

Eliminate the following deductions:

- State Tax
- Charitable
- Home mortgage

Get yourself a wad of cash. To celebrate, they should reduce the age of retirement. To say 50.

What they should do is allow a certain amount of deductions(say like 50k)

[moraldeficiency]

Originally Posted by SV Fan

What they should do is allow a certain amount of deductions(say like 50k)

That seems quite reasonable.

[wiegeabo]

Just get rid of all deductions (except maybe charitable) and lower the tax rates.

It's a lot harder to defraud the government if you don't have the deductions to play with.

[moraldeficiency]

Charitable too. I think that works, I mean the idea of giving to charity is actually giving, not redirecting tax funds to what you would like then getting a building named after you.

[Kelly]

LOL, it is so amazing to me how the talk still revolves around taxes, which IS NOT THE PROBLEM....but ok....keep that as the main talk, the administration definitely loves that. Lets forget how much our government keeps spending, and not look at "in reality" how little what people keep talking about will actually do to fix the deficit. But by all means, keep up the talking points...