Current Compromise on Tax Cuts

[Texsox]

So let's see, the GOP wants to cut programs and the size of government, yet it doesn't matter how big of a deficit we run. The Dems want to repeal the Bush era tax cuts, but it doesn't matter how big of a deficit we run.

 

LOL

[mr_genius]

Not sure if this was sarcastic, but, I actually agree with it. I've always like the guy.

 

i wasn't being sarcastic

[lostfan]

The problem is, who are the bond holders in this country? The same people who we keep getting told don't need the tax breaks.

I'm kind of confused here, don't the bond holders pretty much finance their own tax cuts? Which is probably as ridiculous as it sounds?

[Balta1701]

Senate passes bill, 81-19.

[Texsox]

Which helps Americans the least?

 

dollars spent on defense

dollars spent on social programs

dollars spent on infrastructure

dollars spent on interest payments

 

Cut spending or stop cutting taxes.

[Balta1701]

Tex, the short and medium term interest rates right now are still at near record lows, and a huge chunk of the money spent on interest right now is being paid to the federal reserve which owns the bonds, and thus just puts money right back into the government.

[Texsox]

Tex, the short and medium term interest rates right now are still at near record lows, and a huge chunk of the money spent on interest right now is being paid to the federal reserve which owns the bonds, and thus just puts money right back into the government.

 

 

So then defense, social programs, or infrastructure offer a worse place to spend tax dollars? What if we didn't have interest to pay? What would we do then?

[Balta1701]

So then defense, social programs, or infrastructure offer a worse place to spend tax dollars? What if we didn't have interest to pay? What would we do then?

I'd borrow until people stopped lending me free money.

[NorthSideSox72]

I'd borrow until people stopped lending me free money.

Yeah, if the country literally had zero debt, with the economy the way it is, I'd be all in on like $5T of stimulative spending AND tax cuts.

 

[kapkomet]

I'd steal until people stopped giving me free money.

[Balta1701]

Not what I said.

[Balta1701]

Consider the various narratives of the economic crisis, and what needs to be done about it. Republicans have spent the past year arguing that businesses were uncertain about future tax rates and unsettled by high deficits and were going to sit on their cash until they got a bit more clarity and comfort. So how does last night's deal do on these measures? Terribly. It sacrificed the 10-year fix to the tax rates that President Obama proposed for a two-year fix that retained the breaks for income over $250,000. So there's no certainty in the offing. And it increased the deficit by $860 billion without saying a word about how to pay for it.

 

Democrats did a little better, but only a little. They believe that there's too little demand in the economy because individuals are still digging themselves out of their debt hole. The fix, at least for now, is for the government to borrow and spend so individuals have time to earn and save. The best way to do that would be to spend on things that we need to do anyway, like infrastructure. But this bill doesn't include any direct spending. The second best way to do that would be to give money to people who will spend it quickly. This bill does do a fair amount of that. The tax cuts for income under $250,000, the payroll tax cut, the unemployment benefits, the expanded Earned Income Tax Credit, and other elements of the legislation will put cash in the hands of the people who will spend it fastest. But the cost of all this was $130 billion in tax cuts for the richest Americans -- and those won't be spent.

 

Stripped bare, here's what the deal says about the two parties: Republicans care much more about tax cuts for the rich than about any of their specific arguments about what's impeding recovery, while Democrats don't have the votes to really put their preferred policies into place, and so are left settling for policies that they don't think will work that well and, in some cases, don't think will work at all. What we ended up getting was better than I expected, but it's not a deal that anyone with a coherent view of the jobs crisis would've designed.

Link

[NorthSideSox72]

Link

Interesting article, but the only thing I think it got right is the GOP desire to have more tax cuts for the rich.

 

First of all, the Republican line of thinking that businesses are waiting because of what would or would not happen with the marginal tax rates is just stupid. Most businesses aren't waiting for anything at all, they are just doing what they need to to be effective and/or survive. Those in specific industries subject to a lot of regulatory or other issues in the forefront, like health care or finance, certainly are in a partial waiting mode, and that will have some effect on hiring. But overall, the lack of hiring is NOT about waiting for legilsation. If they are waiting, its because of the general state of the economy - not Congress.

 

Second, the direct spending thing was not meant to be part of this bill anyway - so accusing it of being a failure is like saying the White Sox have failed at hockey. And the UE benefits portion is, to a high degree, directly stimulative, so it has that positive effect.

 

Third, the fact is that the Dems could have decided to play hardball. They could have sent all these items individually to the floor, but did not - and Obama was forced to come to a reconciliation with the GOP directly instead. The Dems failed because they did a bad job trying to make this work (along with the fact that the 60 vote fake-buster is still an issue, which is out of their control).

 

Finally, much as I detest the estate tax changes and the tax break for the uber-rich who simply don't need it, the bill overall is a good, compromise measure - the first that I've really seen from Congress in a long time. I think its the right move.

 

[Balta1701]

I could give a more detailed response...but I'm just absolutely flabbergasted by this statement.

the fact is that the Dems could have decided to play hardball.

No, playing hardball would have involved actually putting 2 bills on the floor, one of them for the upper crust tax cuts, one for everyone else, and whipping hard enough on the upper crust tax cuts that it lost and the Republicans were on record supporting them and opposing the lower class ones. The only reason we even got to this point was that the Democrats didn't have the stomach for a fight.

 

Oh, and regardless of how silly the "Businesses aren't hiring because of uncertainty" line is, that doesn't change the fact that it's the official Republican explanation for why the economy is stalling.

[Rex Kickass]

I could give a more detailed response...but I'm just absolutely flabbergasted by this statement.

 

No, playing hardball would have involved actually putting 2 bills on the floor, one of them for the upper crust tax cuts, one for everyone else, and whipping hard enough on the upper crust tax cuts that it lost and the Republicans were on record supporting them and opposing the lower class ones. The only reason we even got to this point was that the Democrats didn't have the stomach for a fight.

 

Oh, and regardless of how silly the "Businesses aren't hiring because of uncertainty" line is, that doesn't change the fact that it's the official Republican explanation for why the economy is stalling.

 

That's sort of exactly what NSS said. The Dems COULD have played hardball but they didn't.

 

At the same time, I have to say - in terms of the other business this Congress will get to acheive in the lame duck as a result of this compromise is also pretty good. Looks like we'll get START ratified, DADT repealed, and the DREAM act will get a vote in the Senate (even though it will fail.)

 

Two weeks ago, none of these things (which I generally find to be important) were even on track to get a vote in the broken Senate.

[NorthSideSox72]

That's sort of exactly what NSS said. The Dems COULD have played hardball but they didn't.

 

At the same time, I have to say - in terms of the other business this Congress will get to acheive in the lame duck as a result of this compromise is also pretty good. Looks like we'll get START ratified, DADT repealed, and the DREAM act will get a vote in the Senate (even though it will fail.)

 

Two weeks ago, none of these things (which I generally find to be important) were even on track to get a vote in the broken Senate.

Yes, I think Balta was agreeing with me and not realizing it. And I agree that it looks like the lame duck Congress is actually going to get a few things done.

 

[Rex Kickass]

Yes, I think Balta was agreeing with me and not realizing it. And I agree that it looks like the lame duck Congress is actually going to get a few things done.

 

Actually, a lot of things done.

[bmags]

imo more than the congress of 2002-2006

[Balta1701]

imo more than the congress of 2002-2006

Well see about that. Those Congresses passed the Iraq war, the Medicare insurance company bailout act of 2003, and a whole ton of tax cuts, in addition to the general business of government.

 

(You didn't say they had to be good things).

[bmags]

Well see about that. Those Congresses passed the Iraq war, the Medicare insurance company bailout act of 2003, and a whole ton of tax cuts, in addition to the general business of government.

 

(You didn't say they had to be good things).

oooo the general business of government? tell me more!

[Balta1701]

oooo the general business of government? tell me more!

You know, confirming judges, spending bills covering most of the things government does like the now-failed omnibus spending bill, etc.

[Texsox]

Link

 

Democrats did a little better, but only a little. They believe that there's too little demand in the economy because individuals are still digging themselves out of their debt hole. The fix, at least for now, is for the government to borrow and spend so individuals have time to earn and save.

 

The government needs to pay off all individual debt to get the economy going again.

[StrangeSox]

[Balta1701]

The government needs to pay off all individual debt to get the economy going again.

Would have been a more effective use than a lot of the bailout dollars the fed sent out.

[Texsox]

Would have been a more effective use than a lot of the bailout dollars the fed sent out.

 

 

exactly. at the minimum sending $10,000 to every American could really spark the economy