News Rollback to 2008: How Would It Impact Your Personal Life?

[WhoWee]

With a discussion of a $14 Trillion national debt in the US and the need to raise the debt ceiling, coupled with more than $1.5 Trillion annual deficits scheduled, there is talk of rolling back all spending to 2008 levels. I'd like to ask a question of all PF members.

How would a rollback of US Government spending to 2008 levels impact YOUR personal life - would you be affected in any way whatsoever?

I've considered the question and found that I would not sacrifice any benefits personally. Please discuss actual impacts only 2011 versus 2008 - not a promise of some future benefit that is uncertain.

Would you lose a job or funding for a project or a specific benefit?

 

[Jack21222]

So are you going to leave it to me to go back and see how much federal funding my university was receiving (if any, I assume it got some), then figure out what percentage of that went to scholarships and grants, and then compare that to how it was funded last year, subtract the difference, then divide among the current student population to see how it affected me?

That seems like an awful lot of work on my part.

My point is, it's overly complicated to try to pinpoint individual benefits from federal government spending. In many cases, federal dollars go to the states to spend, and how the states choose to spend varying amounts of money is unpredictable.

For example, if the government lowers funding for highway maintenance, will the state lay off highway workers? Will they do a pay cut, hiring freeze, or something else? Will they fully fund highway maintenance at the expense of another public service? Will the state raise taxes to compensate for the decrease in federal funding?

You're asking a loaded question that cannot be easily answered if at all. Asking lowering government spending will impact anyone individual's personal life is completely meaningless and accomplishes nothing. It's like asking how the velocity of one particular nitrogen molecule is impacted when the air temperature decreases.

 

[WhoWee]

So are you going to leave it to me to go back and see how much federal funding my university was receiving (if any, I assume it got some), then figure out what percentage of that went to scholarships and grants, and then compare that to how it was funded last year, subtract the difference, then divide among the current student population to see how it affected me?

That seems like an awful lot of work on my part.

My point is, it's overly complicated to try to pinpoint individual benefits from federal government spending. In many cases, federal dollars go to the states to spend, and how the states choose to spend varying amounts of money is unpredictable.

For example, if the government lowers funding for highway maintenance, will the state lay off highway workers? Will they do a pay cut, hiring freeze, or something else? Will they fully fund highway maintenance at the expense of another public service? Will the state raise taxes to compensate for the decrease in federal funding?

You're asking a loaded question that cannot be easily answered if at all. Asking lowering government spending will impact anyone individual's personal life is completely meaningless and accomplishes nothing. It's like asking how the velocity of one particular nitrogen molecule is impacted when the air temperature decreases.

Again, let's address actual impacts. Accordingly, it sounds as though your employer would be injured by a rollback and it would eventually impact you negatively - that is the point of the question.

 

[Astronuc]

It is clear that the US cannot keep running annual deficits ad infinitum. It's got to stop sometime, and the bigger the debt gets, the worse it will be when it has to stop. And it will have to stop.

Either we land as gently as possible - or we crash catastrophically.

Federal spending should be dropped back to 2000 levels or less. There should be no off-budget expenditures.

http://www.gpoaccess.gov/usbudget/fy06/pdf/hist.pdf

Standard & Poor gave a negative outlook yesterday on the federal budget and debt.

A cut in federal spending will affect everyone, some more than others, and some directly while others indirectly.

 

[WhoWee]

It is clear that the US cannot keep running annual deficits ad infinitum. It's got to stop sometime, and the bigger the debt gets, the worse it will be when it has to stop. And it will have to stop.

Either we land as gently as possible - or we crash catastrophically.

Federal spending should be dropped back to 2000 levels or less. There should be no off-budget expenditures.

http://www.gpoaccess.gov/usbudget/fy06/pdf/hist.pdf

Standard & Poor gave a negative outlook yesterday on the federal budget and debt.

A cut in federal spending will affect everyone, some more than others, and some directly while others indirectly.

You better be careful - Astro 2012 - has a nice ring to it.

 

[Astronuc]

S.&P. States the Obvious
http://www.nytimes.com/2011/04/19/business/economy/19views.html

Interesting picture on that page, where Ali al-Naimi, the Saudi oil minister, says that the oil market is “oversupplied.” So if the oil market is oversupplied, why are prices continuing to increase. Perhaps there is bottleneck (as in artificial/arbitrary restraint) between the suppliers and consumers.


I would like to hear a candidate suggest that the best way to raise revenue (tax income) is to put people to work, i.e., employed people pay taxes instead of receiving unemployment.

Expenditures on Medicare/Medicaid have to be reduced as does overall health care costs. Health care is cost (economic detriment). However, to reduce cost requires a healthier population. People need to stop eating unhealthy food, and need to start exercising. The nation has to reduce the numbers of folks that develop cardiovascular disease and diabetes.

We need to increase domestic energy production, but without increasing pollution of air and water.

And we need to reverse the chronic trade deficit.

 

[WhoWee]

S.&P. States the Obvious
http://www.nytimes.com/2011/04/19/business/economy/19views.html

Interesting picture on that page, where Ali al-Naimi, the Saudi oil minister, says that the oil market is “oversupplied.” So if the oil market is oversupplied, why are prices continuing to increase. Perhaps there is bottleneck (as in artificial/arbitrary restraint) between the suppliers and consumers.


I would like to hear a candidate suggest that the best way to raise revenue (tax income) is to put people to work, i.e., employed people pay taxes instead of receiving unemployment.

Expenditures on Medicare/Medicaid have to be reduced as does overall health care costs. Health care is cost (economic detriment). However, to reduce cost requires a healthier population. People need to stop eating unhealthy food, and need to start exercising. The nation has to reduce the numbers of folks that develop cardiovascular disease and diabetes.

Perception - especially in the era of sound bites - is a powerful tool.

War in Libya doesn't create an oil shortage in the US. Paul Ryan's Medicare proposal doesn't effect anyone over the age of 55. This is why I posed the question about rolling back to 2008 spending levels - perceptions aside - who (among us) will feel the effects and how?

 

[jtbell]

Federal spending should be dropped back to 2000 levels or less. There should be no off-budget expenditures.

And if taxes are also restored to 2000 levels... voilà, a budget surplus like the one Bush inherited!

 

[Office_Shredder]

And if taxes are also restored to 2000 levels... voilà, a budget surplus like the one Bush inherited!

Is that actually true, or are you assuming the economy is in the exact same state as well

 

[WhoWee]

Is that actually true, or are you assuming the economy is in the exact same state as well

If we rolled back to 2000 levels - Homeland Security didn't exist.

 

[BobG]

I would like to hear a candidate suggest that the best way to raise revenue (tax income) is to put people to work, i.e., employed people pay taxes instead of receiving unemployment.

Expenditures on Medicare/Medicaid have to be reduced as does overall health care costs. Health care is cost (economic detriment). However, to reduce cost requires a healthier population. People need to stop eating unhealthy food, and need to start exercising. The nation has to reduce the numbers of folks that develop cardiovascular disease and diabetes.

We need to increase domestic energy production, but without increasing pollution of air and water.

And we need to reverse the chronic trade deficit.

I think putting people to work was Obama's justification for the tax stimulus bill that increased the size of our deficit. Of course, that bill was padded with enough health care reforms that you really couldn't expect it to raise enough jobs to pay for itself (it was definitely a mixed bag vs being all good/all bad).

And I don't think it's possible for 'the nation' to make people healthier. Individuals generally have to do that for themselves. I guess reducing public health care and leaving the private health insurance industry alone could serve to discourage people from unhealthy lifestyles, since it could directly affect how much they pay for health insurance or whether they could get health insurance at all (waiting until they have pre-existing conditions could be very bad for them).

In other words, a more cold hearted approach to health care could also reduce health costs. Of course, it would have to be a much more cold hearted approach than I think Americans could accept. Part of the cost of health care is that losses due to unpaid medical bills wind up getting passed on to those who can pay. I don't think Americans could accept completely denying health care, including emergency services, to those that can't afford it.

Increasing energy production without increasing pollution requires some radical new technology, as these are generally contradictory goals. However, I guess the net pollution level could be decreased by placing stricter environmental controls on the entire energy industry. That would have the side effect of reducing how much energy people use since stricter environmental controls usually raise the price of energy.

The chronic trade deficit will eventually correct itself even if we do nothing, since accepting a lower standard of living is preferable to being chronically unemployed (i.e. - the cost of American labor will decrease).

Still, it would probably be preferable to encourage corporations to relocate within the US instead of overseas and our tax policies should reflect that. In other words, having corporations outsource to North Dakota is a better option for Americans than corporations outsourcing to India, China, etc.

Or, we can lower the cost of American labor by importing workers (legally or illegally) that will work for lower wages. I guess that wouldn't do much for getting American workers back to work, but it would at least lower prices for American goods.

 

[Office_Shredder]

If we rolled back to 2000 levels - Homeland Security didn't exist.

I'm not sure what your point is. Its budget is only about 50 billion dollars, so cutting it certainly won't solve a trillion+ deficit. And if you're suggesting cutting to 2000 levels is dangerous because the department would be destroyed, Homeland Security absorbed departments and jobs from departments when it was created, so it could still get their funding.

Obviously returning to 2000 levels doesn't mean reset the government to the year 2000, and damn the consequences

 

[BobG]

With a discussion of a $14 Trillion national debt in the US and the need to raise the debt ceiling, coupled with more than $1.5 Trillion annual deficits scheduled, there is talk of rolling back all spending to 2008 levels. I'd like to ask a question of all PF members.

How would a rollback of US Government spending to 2008 levels impact YOUR personal life - would you be affected in any way whatsoever?

I've considered the question and found that I would not sacrifice any benefits personally. Please discuss actual impacts only 2011 versus 2008 - not a promise of some future benefit that is uncertain.

Would you lose a job or funding for a project or a specific benefit?

Is that the basic 2008 spending level or does it include the TARP funds and supplemental spending bills for the wars in Iraq and Afghanistan?

That's not a knock on either (in fact, the net cost of TARP will not be anywhere remotely close to the $700 billion we initially forked out in 2008-2009), but, if we're talking about rolling back spending levels, we should at least be talking about what we actually spent; not some fictional number.

 

[WhoWee]

Is that the basic 2008 spending level or does it include the TARP funds and supplemental spending bills for the wars in Iraq and Afghanistan?

That's not a knock on either (in fact, the net cost of TARP will not be anywhere remotely close to the $700 billion we initially forked out in 2008-2009), but, if we're talking about rolling back spending levels, we should at least be talking about what we actually spent; not some fictional number.

Pre-Tarp and any supplemental war spending - those are one time expenses (supposedly?). You've touched upon a very important point - permanent spending should be separated from temporary spending in any discussion (IMO).

 

[Char. Limit]

If we rolled back to 2000 levels - Homeland Security didn't exist.

Good. Homeland Security is the center of the TSA, the only administration authorized to grope children.

EDIT: And lest you think my claim is unsourced, here's a relevant news article.

http://www.wbtv.com/global/story.asp?s=13526724

 

[ParticleGrl]

It depends on how the roll back is accomplished. The majority of the growth in spending between 2008 and today was medicare (which should underscore the fact that we don't have a deficit problem so much as a health care problem. Costs are bankrupting people with private insurance, and causing tremendous public spending).

How do we spend less on medicare in your proposal? Do we give everyone less service, or not let new seniors in? One of my neighbors recently reached medicare age (although I can't remember if it was 2008 or 2009), and she would certainly be effected if we didn't allow new enrollment in medicare.

Also, people in healthcare would be effected, though I haven't thought out about how. Two of my sisters work in medicine.

 

[Al68]

It is clear that the US cannot keep running annual deficits ad infinitum. It's got to stop sometime, and the bigger the debt gets, the worse it will be when it has to stop. And it will have to stop.

Either we land as gently as possible - or we crash catastrophically.

Federal spending should be dropped back to 2000 levels or less. There should be no off-budget expenditures.

http://www.gpoaccess.gov/usbudget/fy06/pdf/hist.pdf

Standard & Poor gave a negative outlook yesterday on the federal budget and debt.

A cut in federal spending will affect everyone, some more than others, and some directly while others indirectly.

I think you're dead-on: 2008 spending levels are way too high.

If we can't change the climate that is capable of viewing the Ryan budget as "cutting too much", despite the fact that it actually increases spending, continuing the same old game of both parties referring to spending increases as "cuts", do we have any hope of preventing disaster?

And even if we pass something very close to the Ryan budget, and if future congresses stick to it (fat chance), government will be about a third bigger (in real dollars) in 10 years than it is now. Seriously, that's what the GOP has to offer?

We need at least one party to get serious, instead of incessantly saying "we need to get serious."

 

[WhoWee]

Other than possible cuts to (Jack's) university budget - would anyone else feel the specific impact (personally) of a rollback to 2008 spending levels?

 

[ParticleGrl]

Other than possible cuts to (Jack's) university budget - would anyone else feel the specific impact (personally) of a rollback to 2008 spending levels?

As I said, it depends on how the rollback is accomplished. Let's say we cut medicare spending back by restructuring medicare advantage plans- then I would guess you (working in insurance) might be affected.

If we roll back spending by reducing benefits for all, then everyone receiving any medicare benefits would be affected. How many over 65 or on dialysis are on the board? I imagine the over 65 are under-represented on web-boards.

 

[WhoWee]

As I said, it depends on how the rollback is accomplished. Let's say we cut medicare spending back by restructuring medicare advantage plans- then I would guess you (working in insurance) might be affected.

If we roll back spending by reducing benefits for all, then everyone receiving any medicare benefits would be affected. How many over 65 or on dialysis are on the board? I imagine the over 65 are under-represented on web-boards.

Would you be impacted by a rollback?

 

[turbo]

Roll back to pre-Bush spending levels. Keeping wars, bribes to foreign leaders, intelligence costs, etc all off-budget is not only dishonest, it imperils our national security and the financial stability of the world (not just the US). Bush's unpaid-for Medicare drug expansion was expensive, yes, but it pales in comparison to the costs of his wars. Add in tax cuts to the super-wealthy, and the fiscal irresponsibility is staggering.

 

[BobG]

Roll back to pre-Bush spending levels. Keeping wars, bribes to foreign leaders, intelligence costs, etc all off-budget is not only dishonest, it imperils our national security and the financial stability of the world (not just the US). Bush's unpaid-for Medicare drug expansion was expensive, yes, but it pales in comparison to the costs of his wars. Add in tax cuts to the super-wealthy, and the fiscal irresponsibility is staggering.

I could live with supplemental bills to pay for temporary expenses, such as a war, as long as there were a temporary supplemental tax to pay for those expenses that would expire when the temporary situation ended.

But, yes, saying we could have both tax cuts and a war was a bit delusional. (Not to mention the delusion that we could have a war and support Rumsfeld's transformation of the military. Especially during Bush's first term, he was a person that couldn't say no to anyone.)

 

[turbo]

I could live with supplemental bills to pay for temporary expenses, such as a war, as long as there were a temporary supplemental tax to pay for those expenses that would expire when the temporary situation ended.

But, yes, saying we could have both tax cuts and a war was a bit delusional. (Not to mention the delusion that we could have a war and support Rumsfeld's transformation of the military. Especially during Bush's first term, he was a person that couldn't say no to anyone.)

Exactly right. There was absolutely no attempt to pay for the wars nor to even acknowledge the costs of the wars. Bush was a very pliable patsy who wanted to be a "war president" and was easily manipulated by Cheney and other hawks.

Since Cheney didn't divest himself of his holdings in Halliburton and its subsidiaries, he was a major beneficiary of the wars. How convenient.

Now, we are stuck with "how do we pay for this?" Can US voters ever be educated to the point at which they won't vote for candidates that say what they want to hear without parsing the viability of the promises? We can't keep voting in "trickle-down" candidates that cut taxes and spend and spend and pass the costs on to lower-income taxpayers and future taxpayers.

 

[Vanadium 50]

This is not a simple question, for two reasons (and please let's not rehash the Iraq war).

One is that there were line items in 2008 that are now complete. What happens to that money? Once the bridge is built, they don't need another one. We can have endless debates on the most logical way to handle this, but we may never agree.

The other is an even more general "2008 is not 2011". The payment on the debt in 2008 was $261B. The debt held by the public is 85% larger today, so there's an extra $220M that needs to come from somewhere. If it comes out of non-defense discretionary, that's a 35% across the board cut.

The other way to look at it is to ask, what's the deficit if we only return to 2008 spending levels. 2008 had a deficit of $240B (8.3%). To that add $220B (interest on additional debt) and another $280B (income tax revenues fell) and you get a deficit of $740B (26%). That's more than the entire non-defense discretionary budget.

One feature of a progressive tax code that is often overlooked by legislatures and their advisors is that the richer you are, the more variation there is in your income year to year. Income tax revenues become increasingly volatile as they become increasingly progressive. This isn't necessarily a problem - provided that the government builds this into their planning.

 

[ParticleGrl]

The other is an even more general "2008 is not 2011". The payment on the debt in 2008 was $261B.

Also, 2008 was a particularly low year revenue wise, because of the recession. As we recover, GDP will (hopefully) return to trend. Sadly, trend isn't growing as fast as healthcare expenditure, which is the long-term problem.

 

[Al68]

Bush's unpaid-for Medicare drug expansion was expensive, yes, but it pales in comparison to the costs of his wars.

Yes, it does. But both, and the rest of the Bush-era drunken sailor spending, pale in comparison to the massive growth in spending since.

Add in tax cuts to the super-wealthy,...

Even if we accept the most extreme of left-wing assumptions (that the overall economic benefit of lower tax rates is equal to zero), the dollar figure associated with that is still tiny relative to the budget. There is a reason Democrats didn't and won't ever offer a stand-alone tax proposal that increases taxes only on the "super-wealthy": such a proposal would expose their fraud.

...and the fiscal irresponsibility is staggering.

The fiscal irresponsibility during Bush was inexcusable, and overwhelmingly dwarfed by the current fiscal irresponsibility of Obama and Democrats. Why is it that so many people talk as if they are completely unaware of the monstrous increase in spending relative to the already bloated Bush budgets?

 

[ParticleGrl]

Why is it that so many people talk as if they are completely unaware of the monstrous increase in spending relative to the already bloated Bush budgets?

The majority of the increased spending was one time stimulus spending to prop a failing economy up. The increased deficits were also due to dramatically lower revenue. Unemployment is still way up.

Much of the current budget woes are directly related to the worse recession since the great depression.

Its one thing to run a deficit in a depression (revenues are down, but the government still has commitments), its quite another thing to run deficits during the boom period.

 

[Al68]

The majority of the increased spending was one time stimulus spending to prop a failing economy up.

Yes, initially. But what was sold as a one-time stimulus was then added to the annual spending baseline. That's a big part of the problem. They added that to the baseline, then added annual increases, then added other spending increases, and new spending programs, then refer to anything less than all that plus more increases they want on top of it as "draconian cuts".

If the worst happens, it will be mostly because Democrats have been so successful at selling their fraud to the general public. It's not too late to save this country: the fraud of Democrats is the only barrier.

 

[ParticleGrl]

Yes, initially. But what was sold as a one-time stimulus was then added to the annual spending baseline.

What parts of the stimulus were added to the baseline?

If you look at charts you can find here http://www.usgovernmentspending.com/ you'll see that 2009 sending was higher than expected from the long term trend, but 2010 is back near the trend. The reason that the deficit has exploded is mostly the drop in revenue, not massive new spending- apart from the stimulus, the growth of spending of this administration has been near trend.

 

[Al68]

What parts of the stimulus were added to the baseline?

If you look at charts you can find here http://www.usgovernmentspending.com/ you'll see that 2009 sending was higher than expected from the long term trend, but 2010 is back near the trend.

The "near trend" spending increases you notice are increases on top of those stimulus expenditures. That's what I was talking about. We're increasing spending "near trend" over and above the budget that included that "one-time" stimulus spending.

I'm too lazy to research and tell you the details of which parts were added to the baseline. But the big picture is pretty clear: the "trend" is a trend toward insolvency that has existed for a long time. It's just more accelerated now.

And of course revenues are a factor, and you're right that they depend on the health of the economy, ie the tax base. Notice that by today's standards, the deficit problem was all but fixed until the mortgage/banking crisis hit.

What is obviously not true, looking at the numbers, is that the loss of revenue was caused by the tax rate reductions over 10 years ago. Revenues increased every year after that until the recession hit. And a growing economy is the key to future revenues.

 

[ParticleGrl]

The "near trend" spending increases you notice are increases on top of those stimulus expenditures. That's what I was talking about. We're increasing spending "near trend" over and above the budget that included that "one-time" stimulus spending.

No, they aren't on top of those stimulus expenditures, which is my point.. If spending grew at its average rate from before Obama was president, and we never had a stimulus, 2010 would still cost about the same. The biggest reason that spending is growing so rapidly is health care costs. As such, the single deficit reducing measure in the last decade was the health care bill.

What is obviously not true, looking at the numbers, is that the loss of revenue was caused by the tax rate reductions over 10 years ago. Revenues increased every year after that until the recession hit. And a growing economy is the key to future revenues.

What numbers are you talking about? Revenues increase in normal time because GDP grows- but tax cuts can change the rate-of-increase. If you look at the Bush tax-cuts they very dramatically changed the trend. PART of the loss of revenue DOES come from the Bush tax cuts. Much more from the ridiculous unemployment rate we have right now. Also, allowing the estate tax to lapse almost certainly cost a substantial amount of money.

Also, there isn't any evidence that the Bush tax cuts did anything to grow the economy.

 

[Al68]

No, they aren't on top of those stimulus expenditures, which is my point.. If spending grew at its average rate from before Obama was president, and we never had a stimulus, 2010 would still cost about the same. The biggest reason that spending is growing so rapidly is health care costs. As such, the single deficit reducing measure in the last decade was the health care bill.

Now that's just too silly. Too silly for me to bother with.

What numbers are you talking about? Revenues increase in normal time because GDP grows- but tax cuts can change the rate-of-increase. If you look at the Bush tax-cuts they very dramatically changed the trend.

I just looked at those charts again, and I don't think so.

PART of the loss of revenue DOES come from the Bush tax cuts.

Sure, since they included far more than "tax cuts for the super-rich".

Also, there isn't any evidence that the Bush tax cuts did anything to grow the economy.

Are you really going to claim that confiscating capital from capitalists isn't harmful to capitalism?

Sounds silly when it's worded in plain English instead of fraudspeak, doesn't it?

 

[Vanadium 50]

Also, 2008 was a particularly low year revenue wise, because of the recession.

Income tax revenues for 2008 were $1.25T. The highest they have ever been.

 

[mugaliens]

The biggest reason that spending is growing so rapidly is health care costs.

http://www.thirdway.org/taxreceipt" .

As such, the single deficit reducing measure in the last decade was the health care bill.

Not even close.

Much more from the ridiculous unemployment rate we have right now.

It's normally around 6%, but lately has been averaging around 9%. That's not a "ridiculous" difference.

 

[WhoWee]

Roll back to pre-Bush spending levels. Keeping wars, bribes to foreign leaders, intelligence costs, etc all off-budget is not only dishonest, it imperils our national security and the financial stability of the world (not just the US). Bush's unpaid-for Medicare drug expansion was expensive, yes, but it pales in comparison to the costs of his wars. Add in tax cuts to the super-wealthy, and the fiscal irresponsibility is staggering.

OP - would a rollback to 2008 have an impact on you?

 

[ParticleGrl]

Income tax revenues for 2008 were $1.25T. The highest they have ever been.

Look at http://www.usgovernmentrevenue.com/#usgs302a Total revenue was slightly down in 2008- when revenue normally grows each year this is a bad revenue year. Revenue then dropped substantially in 2009- which is an extremely bad revenue year.

Now, mugaliens, looking at one year of tax receipts doesn't tell you a thing about where the growth is coming from, but if you look at multiple years, you'll see that the biggest long-term growth is in healthcare costs. Before the recession, healthcare costs were growing something like 3-4% faster than GDP, and medicare grows with healthcare costs.

Unemployment moved from between 4 and 5% to about 9%. If you don't think a doubling of unemployment (and tons more people dropped out of the labor market all together. The labor participation rate moved from about 67% to about 64%) is a ridiculously high shift in unemployment, then I'd hate to see what you think of as serious.

AL68, if you actually looked at those charts and don't believe that the Bush tax-cuts changed the revenue trend for the worse, then you aren't arguing in good faith. You are entitled to your own opinions, you aren't entitled to your own facts.

 

[Ryumast3r]

Standard & Poor gave a negative outlook yesterday on the federal budget and debt.

A cut in federal spending will affect everyone, some more than others, and some directly while others indirectly.

True on the second line, but I would like to address the first one.

Yes, S&P gave a negative outlook, but to say it in such a way is... disingenuous. S&P basically said that the U.S.A. is currently "Stable" however, if the debate over the budget continues it could turn "Negative."

Basically, if politicians in Washington keep refusing to agree on anything we'll go negative, if they find something to agree on, we'll remain stable. Most likely anyway.

It's normally around 6%, but lately has been averaging around 9%. That's not a "ridiculous" difference.

http://www.google.com/publicdata?ds...ue&dl=en&hl=en&q=unemployment+rates+in+the+us

In the last 11 years the average has been closer to 5%, if not closer to mid 4.something% (excepting the last few years due to the recession). And, at one point during the recession, unemployment was above 10.6%, which means one in 10 americans had no job. I'd say that's significant.

Either way, that's almost doubling the unemployment... from let's say 5% to 9%. I'd say that a jump like that is significant.

 

[Al68]

AL68, if you actually looked at those charts and don't believe that the Bush tax-cuts changed the revenue trend for the worse, then you aren't arguing in good faith.

Nonsense. After an initial dip, revenues started increasing faster than the previous "trend" as the marginal tax rate reductions gradually kicked in between 2001 and 2006, and continued rising until the mortgage/banking crisis:

In other words, the facts obviously support exactly what you claim I'm arguing in bad faith: that tax rate cuts are not only beneficial to the people and economy in general for the obvious reason that a smaller percentage of their wealth is being confiscated by government, they result in increased government revenues over time, because of economic growth and a greater tax base.

You are entitled to your own opinions, you aren't entitled to your own facts.

I'm using the facts from the link you provided.

 

[ParticleGrl]

Nonsense. After an initial dip, revenues started increasing faster than the previous "trend" as the marginal tax rate reductions gradually kicked in between 2001 and 2006

Draw out what the revenue would have looked like had revenue growth continued along the older trajectory (or plot a best fit line). Is the revenue higher or lower in 2002? 2003? 2004? 2005? 2007 is the only year that comes close to the old revenue trend (still below it slightly) and as we know now, we were at the height of unsustainable bubble. And then the economy blew up, so comparisons are somewhat meaningless.

 

[Vanadium 50]

Look at http://www.usgovernmentrevenue.com/#usgs302a Total revenue was slightly down in 2008- when revenue normally grows each year this is a bad revenue year. Revenue then dropped substantially in 2009- which is an extremely bad revenue year.

That's a very difficult site to navigate. If you aren't careful, it rolls in state income taxes.

Getting to federal income taxes, that site claims that 2008 was only the second best year of all time for income tax revenue: 2% lower than the 2007 taxes. Hard to call it a "particularly bad year" when your own reference gives it the silver medal.

I think that illustrates a key problem - people look at the best (or possibly second-best) revenue year and think that it is abnormally low, and that it is safe - indeed prudent - to plan for much higher revenues in the following years.

 

[WhoWee]

Nonsense. After an initial dip, revenues started increasing faster than the previous "trend" as the marginal tax rate reductions gradually kicked in between 2001 and 2006, and continued rising until the mortgage/banking crisis:

In other words, the facts obviously support exactly what you claim I'm arguing in bad faith: that tax rate cuts are not only beneficial to the people and economy in general for the obvious reason that a smaller percentage of their wealth is being confiscated by government, they result in increased government revenues over time, because of economic growth and a greater tax base.I'm using the facts from the link you provided.

Does the projected change in tax revenues from 2009 to 2016 (nearly double) confuse (or terrify) anyone else?

 

[Ivan Seeking]

Tax revenues under Bush approximately track GDP, which we would expect.

It is interesting to consider what happened to growth in the GDP under Bush

We had diminishing growth under Bush I. Growth improved under Clinton but dives again under Bush II.

Not to mention the debt-to-GDP ratio, which worsened under Bush I, improved under Clinton, and takes off under Bush II. In fact, our debt problems began with Reagan.

 

[ParticleGrl]

Getting to federal income taxes, that site claims that 2008 was only the second best year of all time for income tax revenue: 2% lower than the 2007 taxes. Hard to call it a "particularly bad year" when your own reference gives it the silver medal.

Barring recession, GDP should grow every year. That means that (without changes in the tax code) most years are the "best year of all time" for revenue, so its a meaningless distinction. Economies grow. To decide if a year was a good or bad revenue year, you need to look at the trend in GDP growth, not if it was smaller than previous years. Any year that's not a "best year ever" signals a tax cut or a recession.

When you think about the deficit, you need to look at two issues- the short term "explosion" in the deficit that happened between Bush and Obama. This is a revenue problem. The economy is recovering, and this huge number will shrink down to numbers comparable (though larger) than Bush's.

The second issue is the long-term problem- the growth in spending is outpacing the growth of the GDP. To address this issue, we need to ask why. The answer is health-care costs. Health care costs are consistently growing faster than GDP, and for obvious reasons medicare is closely tied to these costs. Therefore, the way to address the long-term cost is a combination of rationing care under medicare, and reforming the health care system to try to slow the growth of cost. The debate over the health care law was largely a debate over the long term deficit problem, though most people don't seem to realize it.

Does the projected change in tax revenues from 2009 to 2016 (nearly double) confuse (or terrify) anyone else?

It should do neither. The assumption is (fair or not) is that the economy will grow rapidly once the recovery solidifies. After a recession, there are idle resources. A fast way to grow the GDP (and hence revenue) is to put those people back to work.

 

[Vanadium 50]

I am still objecting to this statement.

Also, 2008 was a particularly low year revenue wise

Which you defend with:

Barring recession, GDP should grow every year. That means that (without changes in the tax code) most years are the "best year of all time" for revenue, so its a meaningless distinction. Economies grow. To decide if a year was a good or bad revenue year, you need to look at the trend in GDP growth, not if it was smaller than previous years. Any year that's not a "best year ever" signals a tax cut or a recession.

Your source has 11 years of data for which the indiviual income tax for the previous year is available. In 6 of them, the total revenues are smaller than the year before.

I find it difficult to define a year as "particularly low" when a) it is the second highest ever, b) has only a 2% dip from the peak, and c) having a dip happened in 6 of the 11 years for which you have data.

 

[CAC1001]

Part of the problem with this whole issue of trying to figure out whether tax cuts increase or decrease revenues is that we have had bubbles. You could cut tax rates and assuming GDP continues growing at a normal rate, see an overall decline in revenues, but if you cut tax rates, and then get a bubble, in say the stock market or real-estate, you can see revenues increase irregardless.

We had diminishing growth under Bush I.

Bush I had to deal with a recession. Those things happen, just as Obama has had to deal with one. Bush I signed a tax increase, but I do not believe spending was reduced the way it should have been.

Growth improved under Clinton but dives again under Bush II.

Clinton benefited from the Dot Com bubble and had a lot of stuff occur under him that Democrats did not like (NAFTA, welfare reform). Bush II had a recession from the Dot Com bubble, and then a real-estate bubble, then a real-estate crash in 2007, then a really bad 2008.

Not to mention the debt-to-GDP ratio, which worsened under Bush I, improved under Clinton, and takes off under Bush II. In fact, our debt problems began with Reagan.

Due to the Fed repairing inflation and also Reagan did, to a degree, exactly what the Democrats saying we should do not: run a deficit to stimulate the economy. Only instead of spending money on stimulus, Reagan signed tax cuts, a good chunk of which was demand-side stimulus I think (Reagan also signed over a dozen tax increases in his eight years, but overall, he was a tax cutter).

 

[ParticleGrl]

Your source has 11 years of data for which the indiviual income tax for the previous year is available. In 6 of them, the total revenues are smaller than the year before.

Just to be clear, I'm consistently talking about total federal revenue.

That being said, the site has decades of data, not just 11 years. If you select a decade, you can then select the year by year data. i.e. select 1970, and then you can get 69-80 or so.

I find it difficult to define a year as "particularly low" when a) it is the second highest ever, b) has only a 2% dip from the peak, and c) having a dip happened in 6 of the 11 years for which you have data.

a. Highest ever is a totally meaningless distinction, and second highest ever is even more meaningless. GDP grows- if taxes aren't cut, and we aren't in recession, every year will be higher than the next. This point is meaningless.

b. A 2% dip when you are expecting 3-4% growth is a substantial change- its enough to double the 2007 deficit. When you add in the fact that state revenue dropped by about 1/4, and only the federal government can deficit spend (and hence must help prop up states in times or crisis), and you should expect massive growth in the deficit from the revenue side alone.

c. The 2000s saw two major tax cuts and the start of a massive recession, of course it will have more declines than most decades. Look at the 70s, 80s and 90s.

 

[CAC1001]

b. A 2% dip when you are expecting 3-4% growth is a substantial change- its enough to double the 2007 deficit. When you add in the fact that state revenue dropped by about 1/4, and only the federal government can deficit spend (and hence must help prop up states in times or crisis), and you should expect massive growth in the deficit from the revenue side alone.

States can deficit spend, but it is against some of their constitutions. New York and California have deficits for example.

 

[BobG]

The second issue is the long-term problem- the growth in spending is outpacing the growth of the GDP. To address this issue, we need to ask why. The answer is health-care costs. Health care costs are consistently growing faster than GDP, and for obvious reasons medicare is closely tied to these costs. Therefore, the way to address the long-term cost is a combination of rationing care under medicare, and reforming the health care system to try to slow the growth of cost. The debate over the health care law was largely a debate over the long term deficit problem, though most people don't seem to realize it.

This is somewhat true. Taking the data from the site you linked to previously and plugging it into my own spreadsheet, GDP increases about 5.37%, while spending increases at about 5.44%. Health care does indeed increase at a higher rate than spending overall at about 6.11% and it's rate of increase is increasing. So, it truly is a problem that has to be addressed.

None the less, the real reason spending outpaces GDP just slightly is that spending increases at a steady flat rate, while GDP has dips due to recessions. We never make up the difference from recessions (in fact, being an optimistic people, our Congress always forecasts strong growth in the future GDP and never forecasts recessions). Likewise, when we make one-time expenditures like the stimulus bill, we never make up that difference either. We nickel and dime ourselves into a chronic debt that only increases.

Generally, a recession reduces all revenue. Even without the Bush tax cuts, revenue would have decreased in 2001 and 2002. However, income tax cuts did make the decrease in revenues more severe and the tax cuts probably have no long term increase on the GDP (in fact, as Ivan's chart noted, the rate of growth was lower than normal even after the tax cuts). Taxes are a revenue/spending issue for government and, unless they get outrageously high, have a tiny impact on the overall economy if at all.

In fact, one could argue that high taxes encourage long term growth if the taxes are likely to become lower in the future. It becomes better to invest net 'profits' back into the company rather than take the profit out of the company and lose it to high tax rates. In other words, investing for the future is cheaper than it would be at low tax rates. Of course, that's predicated on the hope that one could eventually recoup those investments at some later time at a lower tax rate. Likewise, low current tax rates encourage one to pull those profits out of the company rather than reinvest them into the company if tax rates in the future are going to be higher.

Of course, that whole preceding paragraph pretends a company owner has enough to live on, plus enough extra money to invest/spend as he pleases. In reality, a very small business owner pulls out enough to live on, plus saves for the future, if he's lucky, and only reinvests money into the business when he can no longer keep up with demand from customers. He keeps costs low as long as possible regardless of the tax rates.

 

[WhoWee]

Tax revenues under Bush approximately track GDP, which we would expect.

It is interesting to consider what happened to growth in the GDP under Bush

We had diminishing growth under Bush I. Growth improved under Clinton but dives again under Bush II.

Not to mention the debt-to-GDP ratio, which worsened under Bush I, improved under Clinton, and takes off under Bush II. In fact, our debt problems began with Reagan.

Without re-hashing the past 30 years Ivan - I think we agree Reagan spent a lot of money (some will argue the space tech lead to advancements and others the collapse of USSR > wrong thread for both), we might also agree Bush I paved the way for Clinton and that Newt was influential in cutting costs, we might also agree that radical terrorist attacks on September 11, 2001 had a major impact on our economy and we might also agree the housing bubble may not be fully addressed for another 2 to 5 years, and I think we agree from your post that GDP expectations are not always met due to unforseen causes?

With all of that aside Ivan - (as per OP) would a roll back to 2008 spending have any impact on you personally or do you know of a specific situation that would be impacted?

 

[Al68]

Draw out what the revenue would have looked like had revenue growth continued along the older trajectory (or plot a best fit line). Is the revenue higher or lower in 2002? 2003? 2004? 2005?.

Yes, it's lower, due to the initial dip, because of the parts of the tax bill that kicked in right away, like taking millions of taxpayers off the tax rolls altogether. The marginal rates were reduced in stages over time. Not the way I would have liked it done, but the way it was done nevertheless for political reasons. The revenues were trending upward at a very good pace until the recession. But more importantly is the reason why: growing tax revenues as a result of economic growth instead of as a result of government draining the economy.

That's one thing that left-wingers never seem to take into account: the financial health of government is secondary to the financial health of the people. Plus, in the long run, draining the economy and stifling growth through high taxes is not only bad for the people, it's bad for government revenues.

But you're sidetracking the point I was making with the graph: that the revenue drop we see now is obviously due to the recession, not the tax rates, and the recession would be worse, not better, with higher tax rates.