Free Markets, Free People

Taxes won’t help

A commenter to my previous post writes: “Tax increases on the wealthiest would keep rates below Reagan era rates, and add some revenue.”

No, they won’t.  Not even close. Here’s why:

Tax Revenues as a Percentage of GDP by Year, 1933-2010

Now, this chart counts all tax revenues. Income taxes, corporate taxes, excises, tariffs, etc.  All of them. It includes the low income taxes of the 1930s, the 90% top tax brackets of the 40s and 50s, the Kennedy and Reagan rate cuts of the 60s and 80s…it’s all there.

And what do we notice about this model? Well, a couple of things. First, the highest tax receipts as a percentage of GDP was 20.9%.  That was in 1944. In 1945, the percentage was just north of 20%.  I think I have a pretty solid–and obvious–explanation of why tax receipts jumped so high in those two years. Sadly, the Nazis are gone and the Japanese seem rather less interested in the Greater Southeast Asia Co-Prosperity Sphere project than they did back then, so a global conventional war seems out of the picture at the moment. Darn our luck!

But the other thing we notice when we look at this chart is that despite top marginal tax rates varying between 28% and 90% since 1945, tax revenues as a percentage of GDP seem to be locked in at about 18%.  There is, in fact, only one explanation for the variations–minor as they are–in the revenue percentage since 1945, and that is economic expansion.  Irrespective of the statutory tax rates, the single, overriding factor in increases or decreases in the revenue percentage has been economic growth.  The percentage rises when the economy expands, and dips when it contracts.

As a practical matter, this chart shows us a very obvious, but little-understood phenomenon, namely, that 18% or thereabouts is the rate at which the electorate consents to be taxed. Think about that for a minute. Dwight D. Eisenhower presided over a system of steeply graduated tax rates with a top marginal tax rate of 90%.  He got 18% of GDP in revenue.  Ronald Reagan slashed tax rates, simplified the structure into three brackets, indexed for inflation, with a top marginal tax rate of 28%…and got 18% of GDP in revenue.

In the past couple of weeks, three different progrssive policy think tanks have released deficit reduction plans, all of which contained substantial tax increases, and which projected revenues as a percentage of GDP rising to over 23%.

Not. Gonna. Happen.

We know it won’t happen, because the American people have told us repeatedly, over the past 60 years, exactly how much revenue they’re willing to pay in taxes. You can jack around with tax rates all you want and you’ll get 18%.  Unless you grow the economy.  When the jobs are plentiful and the money is rolling in, the American people get a bit more generous. They’ll give you 19%.  Maybe, if things are really going swell, 20%.  But if the economy isn’t rolling hard, you’re gonna get your 18%–or less. Assuming you can lift 23% of GDP in tax revenues is just a fantasy.

Because here’s the thing: You can’t force people to make money. If they can make the same take-home pay working 35 hours per week under the new tax regime as they made in 40 hours per week under the old one, they’ll just work 35 hours per week. The more you penalize income, the less desirable additional income becomes.  It’s almost as if people respond to incentives!

Bonus question 1: If the government collects about 18% in GDP irrespective of the statutory tax rates, what is the electorate telling you the desired statutory tax rate is?

Bonus question 2: If the main factor in increasing tax revenues is economic growth, would economic growth likely be greater or smaller under a regime of lower taxes?

Discuss among yourselves.

~

Dale Franks
Twitter: @DaleFranks

Tweet about this on TwitterShare on FacebookShare on Google+Share on TumblrShare on StumbleUponShare on RedditPin on PinterestEmail this to someone

109 Responses to Taxes won’t help

  • For anyone interested, similar discussions can be found throughout the web searching for the “LAFFER CURVE.”

    • I have a question on the chart.  Are activities created by borrowing, i.e. making the debt larger, included in the GDP ?
      If so, the tax level may in fact be larger now than the chart shows.

      • IF memory serves…and damned if it doesn’t…GDP is the total of cost of goods or services sold.  It does not, for instance, include oil in the ground or timber on the slope…or graft payments under the Obamabanana Republic.

  • Interesting… thank you for posting this!

    Steve
    Common Cents
    http://www.commoncts.blogspot.com

  • First, taxes at around 18% or 19% of GDP would be good.  Revenues in 2010 were at less than 15% of GDP.  So your own data show that we could raise taxes.  Second, politically if you don’t raise taxes Democrats won’t make the necessary cuts.  Democrats, if you don’t make real meaningful cuts, the Republicans won’t agree to increase taxes on the wealthy.  Since 1980 the top 1% of the US have had their income level raise 291%.  The top 20% are up 95%.  Everyone below the top 60% haven’t kept up with inflation.   Those who have done really well can pay a little more.  I know Republicans would prefer no tax increases even for the wealthy (not all Republicans — I know many who support it, but at least tea party types).   Democrats often want massively higher taxes and no spending cuts.  Given how our system works, the two have to meet in the middle.  Otherwise, nothing will be done and we’ll keep sinking.

    • “So your own data show that we could raise taxes.”

      No, the reason revenues were down was becasue of 10+% unemployment and an enemic GDP.  The real rationale?  Bad economy = poor revenues.  It does not mean taxes should be increased.  Again, trying to impose Democratic Talking points does not = logic!

      “Second, politically if you don’t raise taxes Democrats won’t make the necessary cuts.”

      Wanna Bet?  I bet if the Republican pass a short term debt increase = to less than $1 Trillion without any increased taxes, the democrats will fold.  Why?  Simple, becasue if they turn it down then the resultant failure to raise the debt ceiling will be on their heads.

      And the rest of your comment, “Blah, Blah, Blah.”

      The top 1% of the country’s tax payers pay over 22% of all tax revenue.  The botom 50% of the tax paying public = less than 3% of all tax revenues.  I got a suggestion, let’s let the bottom 50% bring their total up to 5% – just to make it fair.  but then you would not be able to keep up this class warfare crap.

      And lastly: “Otherwise, nothing will be done and we’ll keep sinking.”

      So show me where the Democrats have put forward anythi9ng – IN WRITING!  Why don’t you take a look at Obama’s 2012 budget submission.  You know the one that was voted down 97-0 by the Senate.  Not even a single Democrat would vote for it.  Or even show me where the Senate Budget Committee has even met in session this year to consider the 2012 budget.  Show me where the President has gotten out in front of this debt issue.  Now show me where he has put forth a proposal to counter anything the Republicans have put forward – IN WRITING!!!  His latest Budget submission – in the form of a speech – where the Head of the Congressional Budget Office, when asked how that would work out said, “We don’t calculate speeches.”

      You keep talking about negotiating – When the Democrats and Obama start putting something down in writing to counter the republicans, i will consider they are serious about negotiating.  Until then all you got is shit!

    • Revenues in 2010 were at less than 15% of GDP.
      Yeah, because of the economic disaster that is Obama.  Revenues are down because so many of us are out of work, and so many are in a lower tax bracket.
      Idiot.

    • Revenues in 2010 were at less than 15% of GDP.

      Well, we know damn well that the Democrats in the Senate (or the House) haven’t lowered taxes since that peak back in 2006/2007, so this drop must be that the rich, the top 10% pay 71% of all incomes taxes, aren’t as rich any more.  The fallacy of taxing the rich more is that when they aren’t as rich you don’t get as much revenue .. so the obvious solution is to make the rich even less rich ?  Only an idiot would believe that would work.

    • There are so many fallacies here, it’s hard to know where to start, but one of the fundamental reasons for this supposed inequality in income between the top percentiles versus lower percentiles has to do with the number of people per household, and thus per tax return.  Since 1970, the percentage of women working fulltime has almost doubled, and the number of dual-income household rose accordingly.
      With that in mind, here’s the share of income by household quintile.

      Bottom 20% Households: 3.4% of total income
      Next 20%: 8.6
      Middle 20%: 14.5
      Next 20%: 22.9
      Top 20%: 50.5%

      For interest: top 5% earns 22%

      Again, keep in mind that richer households are larger — an average of 3.1 people in the top fifth, compared with 2.5 people in the middle fifth and 1.7 in the bottom fifth. So the smaller household almost by definition will make less – because fewer people are working. Can’t have two incomes if there are only 1.7 people….

      Now let’s look at percentage of taxes paid:
      Bottom 20%: 0.8 (all federal) and -2.8 (income – they got $ back)
      Next 20%: 4.1 and -0.8 (they also got $ back)
      Middle 20%: 9.1 and 4.4
      Next 20%: 16.5 and 12.9
      Top 20%: 69.3 and 86.3%

      This info is from the Census Bureau and the CBO. So please don’t quibble. You are welcome to look it up.

      No matter how you slice it, the US tax code is steeply progressive, taxes any dollar that a two-income household earns more heavily than a one-income household, penalizes extra effort, and gives back far more to low income households than it takes.

      You are welcome to argue about whether that’s good or bad, but let’s put to rest the tired bullshit that “the reason the top [fill in the blank] should get taxed is because they have all the money.”  When you talk about jacking up taxes, you’re not nailing the Warren Buffetts and Bill Gateses of the world – you’re hitting the HENRYs.  The High-Earning, Not-Rich-Yet people who’ve worked hard, and played by the rules.  Those are the 40% that pay more in taxes than they ever get back, and those are precisely the ones that you apparently believe “can pay a little more.”

      Here’s a suggestion.  If you think you should pay more (and I assume that you’re in that upper 40% whom you so cavalierly dismiss), why don’t you?

      • The oft forgotten consequence of trying to create wage equality is that you end of with less government revenue.
        So when the Democrats get the top rates raised, the obvious method to get more revenue is to make those with the top rate richer.
         

  • So your own data show that we could raise taxes.

    Then you don’t understand the data. As I explained in the post, the data show that economic growth, not tax rates, drive the receipts. Hence, the current low GDP percentage is a result of a horrific recession. You may have noticed that we did not, from 2007-2011, change the tax rates at all, yet revenues still collapsed.  Apparently, you are unable to derive the appropriate lessons from known facts.

    Moreover, If you think that tax increases in the middle of such a recession will help either economic growth or tax revenues, then you’re simply too ignorant of macroeconomics to have an opinion of any worth.

    • ” Apparently, you are unable to derive the appropriate lessons from known facts.”

      No, Dale, Erb is too busy pushing Democratic talking points to even consider the logic of your post.  But then what do you expect from a Democratic Shill?

    • I believe the quick way to say it is that receipts decline quicker than GDP.  There could be a lag in GDP, too.  A lot of things in the works from past years are still being executed by business, but later sold at a lesser profit or a loss.   The GDP only has to decline a little bit to make profits, returns on investment, wage, etc. implode.  This exaggerated effect might only exist in the face of continuing declines and that a fixed contraction might rebound revenues a bit after a few years.

      • I think you have it right. Taxes are levied on wages and on profits. Wages will decline slowly during a recession, but profits drop immediately. This is what Keynesians and other idiots refuse to understand. Economic growth is the best way to gain more receipts to the government.  And marginal tax rates have a huge effect on that growth.

    • How did you get your font size to be bigger? It looks really clear compare to the default font size.

    • First, politics — you won’t get spending cuts without tax increases.  That is the only politically feasible compromise.
      Second, you ignore how the top income earners have gained the most in the last 30 years, while most people haven’t gotten better off.  One reason is that the “growth” we had was mostly not in productive capacity, and much was in speculative bubble economies fed by cheap credit and borrowing.   Finally, you are ignorant of macroeconomics if you want to say tax increases hurt growth while spending cuts do not.  Almost all economists think tax cuts are a poor stimulus because they often go to consumption of foreign produced goods or paying off private debt.  Spending is a much more direct stimulus to the economy.  Nobody with any ounce of economic knowledge would ever pontificate that tax increases are bad for the economy and then advocate spending cuts as not having at least the same, or likely a more negative impact on the economy.  I’m not sure how much you’ve studied economics — I’ve studied quite a bit — but you really need to go back and review before you start insulting others (at least if you were to take that kind of performance outside of a friendly blog and into the real world).

      • Note the fallacies Erp loves…
        Ad hominem
        Appeal to authority
        Appeal to majority belief
        Simple false statements, presented as “fact”
        I don’t suppose condescending BS is a formal fallacy, but in Erp’s case…it should be.

      • First, politics — you won’t get spending cuts without tax increases.  That is the only politically feasible compromise.

        No it’s not, as has already been explained.

        Second, you ignore how the top income earners have gained the most in the last 30 years, while most people haven’t gotten better off.

        That would only make sense if was the same people populating each of the quintiles.  In this country, at least, income mobility is quite large, especially over the long-term.

        Finally, you are ignorant of macroeconomics if you want to say tax increases hurt growth while spending cuts do not.  Almost all economists think tax cuts are a poor stimulus because they often go to consumption of foreign produced goods or paying off private debt.  Spending is a much more direct stimulus to the economy.  Nobody with any ounce of economic knowledge would ever pontificate that tax increases are bad for the economy and then advocate spending cuts as not having at least the same, or likely a more negative impact on the economy.

        I’m willing to bet a large sum of money that your tune would change on spending cuts if the cuts proposed were to the military.  Otherwise, your comment is so vague and generalized as to be meaningless.

        I’m not sure how much you’ve studied economics — I’ve studied quite a bit — but you really need to go back and review before you start insulting others (at least if you were to take that kind of performance outside of a friendly blog and into the real world).

        Do you really expect to get a rise out of Dale with such a transparent playground taunt?  I just can’t believe that you’re are completely oblivious as to who Dale is — you know, the author of the Slackernomics book advertised all over this blog, and  former host of a 4-hour, prime-time radio show on the economy.  Yet, you’re not sure how much economics he’s studied?  Seriously, that’s just lame.

        And for the record, your knowledge of economics is pretty thin at best.

        • And for the record, your knowledge of economics is pretty thin at best.

          Sample assertion by this self-described economics expert:

          Markets do not automatically adjust themselves, there’s no reason to believe they do.”

          This is roughly equivalent to a self-described astronomer insisting that the sun circles the earth.

          • Erb balances his checkbook = his “study” of the topic

          • Apparently you believe markets are magic.   Check out Mark Martinez book “The Myth of the Free Market.”  I use it in my political economy class, it does a good job explaining the errors of free market libertarianism, even as it definitely embraces the idea that market economies are best.   Even Adam Smith knew that markets could not function without certain rules of behavior and social agreements.  In modern industrial systems this is done through state regulation; without it, markets devolve into organized crime and chaos.  Of course, you really insult yourself when you try to claim that markets (human social constructs that often don’t function well) with astronomy. I mean, you really put yourself in a bad light with that kind of comparison — and I’m not sure you even realize why!

          • In modern industrial systems this is done through state regulation; without it, markets devolve into organized crime and chaos.

            What an amazing idiot.  I mean, really…  I am agog.

        • Michael, you won’t get deep spending cuts without agreeing to a tax increase.  You claim “no its not, that’s already been explained.”  No, it hasn’t been “explained.”
          I can find more info, but class mobility in the US low compared to the rest of the industrialized world, we’re right below France.  This site shows that we’re behind even Social Democratic Scandinavia in class mobility.  We’re low in class mobility, and yet disparities of wealth have been growing tremendously.  If this continues, class war will be a theme within a few election cycles.
          I also don’t know what you mean about “changing my tune.”  If you’ve been reading, I’m in favor of large spending cuts, including entitlement reform.  I’m closer to the GOP on a lot of this, I disagree with Krugman and others on the left (I tend not to follow any partisan line – I think independently).  I just know that it won’t happen without a tax increase, and gave information showing that the wealthy can afford it.
          I didn’t know he wrote a book or hosted a show, but that really doesn’t mean anything in terms of how well one understands economics.  In any event, he did the first playground taunt, so turn about is fair play.  If he doesn’t taunt, I don’t taunt.  I’m pretty consistent that way.   (I will respond to a taunt or an insult, but if there is a response to mine I’ll usually let that one go, sort of a modified tit for tat strategy a la Axelrod.)

          • “(I will respond to a taunt or an insult, but if there is a response to mine I’ll usually let that one go, sort of a modified tit for tat strategy a la Axelrod.)”

            The payoff matrix for tit for tat assumes that both sides benefit from cooperation. That’s clearly not true in your case. As many dozens of people have been documenting for at least twelve years, trying to have an honest discussion with you is impossible. You bring no ideas of any consequence or relevance, you treat your own opinions as facts, you assume the mantle of “world’s greatest expert” on stuff you don’t remotely understand, and you handwave aside anything substantial people bring to bear to contradict your arguments.

            Therefore, no one has any incentive to cooperate with you. On the other hand, we do have a minor incentive to taunt you, because you’re a condescending prick. Plus, insulting you tips off new readers right away that there’s no reason to take you seriously. Otherwise, they waste time trying to “engage” you, as you call it, only to eventually come to the same conclusion as the rest of us.

      • you won’t get spending cuts without tax increases … unless the IMF tells you otherwise when you go into receivership.

  • This is sometimes called Hauser’s law.  http://en.wikipedia.org/wiki/Hauser’s_law

    • Laffer Curve vs Hausser’s Law

      While the two concepts are similar, Hauser’s law was put forward as an empirical observation whereas the Laffer curve was thought of theoretically.

  • So, the takeaways should be:
    Economic growth is really, really useful for delivering more revenue. In fact, you’d think the Democrats would eventually come around to realizing that if the economy was allowed to grow, they could spend more money and not be reckless at all! But its seems like that is much harder work than just raising prices revenue.
    The way Erb wants to manage the problem is just to raise taxes until everything is back at 18% but it doesn’t work that way. You might in fact push us into a double dip recession by doing that, and then, poof! With 15% unemployment now, the economy is even weaker and your higher taxes did not make up enough revenue. Do you raise taxes again, then?
    The classic business story of this sort of thinking is Wang Word Processors (remember them?) They started losing market share to PCs in the early 80’s, so to make up for the lost sales, they raised their prices. Then they lost even more market share, and their sales volume shrank again. So, they had to raise prices again, losing yet more business. The company eventually went under.
    Its funny but maybe this business anecdote will explain it better to Erb that when the economy is weak, its difficult to just raise prices (or taxes) to replace lost revenues.
     
    Here’s my latest idea to promote deregulation which would probably create more growth than tax cuts would at this point. Randomly selected small business owners from each congressional district and each state will hand over the regulatory duties to their Congressman or Senator, who must personally manage all of the paperwork for said company, and be financially responsible for any problems occurring. They may not have the use of any staff to assist them in this work, but may have one hour per day to ask questions of the business owner. Any calls they make to the state agencies cannot mention who they are. (Admittedly this idea is becoming more and more totalitarian in order to make it work…) OK, no calls allowed. Only letter allowed and may not use the politicians name anywhere…public records would insure no cheating.
    That way, the lawyers who lead our country, who carelessly make massive amounts of law, can eat their own cooking. I guarantee you when they return to DC, they will have many, many bright ideas on making regulation less burdensome. California should do this at a state level, too. These people have no idea what they foist upon others. I wonder if the concept of the billable hour poisons their mind where they think adding hours and hours of “work” is good. After all, it would be good for their law practices, so why not John’s Muffler Shop?
    Inspiration for this idea: George McGovern
    http://www.inc.com/magazine/19931201/3809.html
     
     

    • You miss the entire point of people like Erb and the democrat party.  Even if they understand that they can get lots more revenue with low taxes and a growing economy they will reject it. Because economic growth does not give them what they truly want, which is more people dependent upon big government. 

      It’s not about what is best for the country with them, it’s all about power.

      • For some yes. For others, they don’t really get that the economy grows and shrinks with tax rates. They think its automatically a big pie and doesn’t respond to incentives. Which is why they are always saying look how Clinton…blah blah blah… they have a disconnect between government and the economy as in its negative. They think there all these rich people can be tapped with no real effect on the economy. Like its static and exists by itself, and over here government exists by itself and can just have a small flow to support the really valuable program…yeah, but some are “how can we get more leverage so we can start planning everything.”

      • Power is the Collective’s “ethic”.  Always with the elite in the driver’s seat.  VDH wrote a good piece about how there are no real socialists.  They always give themselves a pass on the crap they impose on others.
        See Erp, Professor.

      • Nobody wants people dependent on government.  On my own blog I have written that the goal of social welfare programs must be to liberate people, and make them self-sufficient and willing to take responsibility for their own lives — and I criticize many current programs for taking the bureaucratic easy way out.  To want more people dependent would be cruel and downright evil.   Saying Democrats want that is the rhetorical equivalent to saying Republicans want the wealthy to be able to stomp on the poor and laugh at their suffering.   When you get into that kind of absurdity, you’ve either drank the koolaid, or you’re engaged in fundamentally dishonest rhetoric

        • Scott “Nobody wants people dependent on government”

          You are wrong.  Dem politicians do.  That is how they hold power over them. You simply refuse to admit it.  Yet we have people who have been on welfare and govt assistance for 40 years and they are no better off now than they were 40 years ago.  And what is the constant other than their situation>?   THey overwhelmingly vote democrat.

        • To want more people dependent would be cruel and downright evil.   Saying Democrats want that is the rhetorical equivalent to saying Republicans want the wealthy to be able to stomp on the poor and laugh at their suffering.

          Only if by “rhetorical equivalent” you mean equating an empirical truth with a complete lie.
          There may be SOME Collectivists who actually believe what you say you believe, but many of the vanguard know exactly what they are doing.  It is cruel and downright evil.  Duh.
          Note that cynically or mistakenly fostering a destructive idea has the same effect.
          But believing a delusion is not a virtue.  Consider that you believe in the Gorebal Climate Whatever myth, too.  And, again, in the face of empirical evidence.

    • De-regulation is one of the causes of the current recession.  Derivatives trade allowed big financial institutions to manipulate the system and think they were pushing aside risk.  Even Alan Greenspan admitted his “world view was wrong” when he thought that “markets get it right.”  They don’t.  That’s the lesson of this great recession.
      Also, tax cuts are a poor stimulus to the economy, spending does more.  Tax increases do less harm to growth than spending cuts.  Now, I’m not advocating spending increases (I disagree with folk like Krugman) because I think our debt to GDP ratio is too high.   Tax increases are viable because the top income earners have made off so well in the last 30 years, while most of the population has not seen improvement.  They can afford to pay a little more — our wealthiest 10% makes more than the top 10% in any other country (but that advantages disappears when you go down the income chart — our poorest 10% are about on the level of the poorest in Greece and the Czech Republic).   AND, lest you forget, THAT IS THE PRICE OF DEEP SPENDING CUTS.  You will never get political agreement for significant cuts or entitlement reform if there aren’t tax increases as part of the deal.   That’s reality.

      • De-regulation is one of the causes of the current recession.  Derivatives trade allowed big financial institutions to manipulate the system and think they were pushing aside risk.
        Again, too many stupid false statements in that post to deal with.  But this one is blatantly false.
        First, derivatives are, by their nature LESS risky than their component parts.  Greenspan was right the first time.
        Second, CRAP loans mandated by BIG GOVERNMENT where HUGELY risky.  Their derivatives could not be different in character from the components from which they derived.  See?  Hence, we see Greenspan was right the second time, as well.
        Third, nobody “manipulated the system” as a result of deregulation.  That is just a boogy man you stupidly cling to.  People acted in rational and PREDICTED ways to a VAST market distortion.
        This is what you get from BIG GOVERNMENT “brights”.  Duh again.

        • Most of the problem was not from any loans mandated by the government.  Most subprime loans were NOT mandated by the government but were engaged in because no one had the risk.  The mortgage brokers sold them to the big banks who sold them as bonds, everyone thinking that they were passing risk on to someone else (they were creating systemic risk).  Lending standards disappeared because the big banks didn’t care if the loan was risky, they just wanted something to use to create these profit making bonds.  Rags, I believe your ignorance is willful, but if you want to educate yourself to the true nature of the crisis, non-partisan books include “All the Devils are Here” by Nocera and McLean, an enjoyable “The Big Short” by Michael Lewis, or “The End of Wall Street” by Lowenstein.  Of course, for a really cutting left wing take, you could try “Griftopia” by Matt Taibbi.  I think the Nocera and McLean book is the most fair and thorough.  I use the Lewis book in class because for students its the best at explaining OTC derivatives trade and market basics to college kids who don’t really have any background in this (Nocera and McLean expect their readers to understand the basics).  Lowenstein is very good too.  I won’t even try to get you to read Taibbi, but his work is accurate and cutting.   I think you need to read on this, you’re parroting talk radio bits (e.g., trying to blame Fannie and Freddie), which is stuff sold to people who don’t understand what happened and want some way to simply re-inforce their ideological bias.  You seem smart enough to learn about this if you really wanted to, Rags.

          • You are full of sh!T, Erp.  Impure and simple.  When did these loans start?  Under want impetus?
            Answer: WITH THE IMPOSITION OF GOVERNMENT MANDATES TO VIOLATE ALL PREVIOUS LOAN POLICY.
            You dont seem smart enough to admit obvious FACTS.  Freddie and Fannie are two of the MOST corrupt outfits in US history, and you are simply an idiot if you can’t follow the money.
            Pathetic.

          • This really is too precious an example of how stupid Erp is to pass up.

            Most subprime loans were NOT mandated by the government but were engaged in because no one had the risk.

            Consider that statement carefully.
            First, consider the term “subprime”.  Where did that come from?  Where did you see it in, say, the 1960s?
            Who created the idea that mortgage lenders HAD to loan money to people they NORMALLY would not?  To people all INDUSTRY STANDARDS (not regulations) said were too great a credit risk?
            Second, consider the idea that “no one had the risk” WRT a CRAP mortgage.  Where did THAT idea come from?  Where else but the LIE (as it turned out) that the Federal government or its quasi-governmental agencies would back the risk?
            My point was that the CRAP mortgage collapse came from a VAST market distortion imposed by BIG GOVERNMENT PHUCING up the market.  Erp is, in his own monumentally stupid comment, agreeing with me.

          • If you read the link I left, it was written by George McGovern. Do you think he was a stooge for Big Hotel?
            We need a lot of new jobs in this country, and many of the regulations that need to be cut or amended (see you don’t have to have NO regulation, just better regulation sometimes) have NOTHING  to do with finance or the financial collapse.
            I will give you a couple of examples…The Lacy Act requires composite wood products manufacturers to have a document for each order that says what species were uses in the MDF or fibreboard used. This is to protect endangered species supposedly. What is the point of requiring law abiding companies to fill in huge amounts of paperwork to stop illegal logging? Do you think this regulation will catch the bad guys? Do you think there is anyone even checking these docs? No. Instead of making law-abiding companies send in reams of paperwork, I have a novel idea…catch the illegal loggers where they work. I do not see how it helps to make every single importer of furniture to document the species used in their materials, since it is self-reported anyways, the bad guys can just LIE. Also, why are we trying to enforce illegal logging regulations in other countries? Shouldn’t Thailand or China handle their own laws? If you want to help them, send over some park rangers or fund their own program to stop logging.

      • It wasn’t so much that de-regulation was the culprit, but rather, it was bad regulation.
        When you have a new international agreement on the level of banking reserves that makes you reserve 5x more for business loans than for MBS (mortgage backed securities) including those with the subprime, Alt-A and Option-ARM, you are on a road to disaster.
        The de-regulation argument could possibly be valid if this banking panic had been confined to the US, but this was international, with a real estate bubble that existed in the US, as well Spain, Ireland, and most of the EU states.

  • Scott “They can afford to pay a little more — our wealthiest 10% makes more than the top 10% in any other country ”

    The top 2 percent pay like 20 percent of the taxes.  The bottom 50 % pay asbout 3%.  THEY ARE ALREADY PAYING MORE.

    YOU COULD DOUBLE THE AMOUNT OF TAX REVENUE FROM THE TOP 50% of TAX PAYERS and you still WOULDNT PAY FOR THE DEFICIT FOR THIS YEAR ALONE.

    WE DONT HAVE  A PROBLEM WITH TAXES BEING TOO LOW.  WE HAVE A PROBLEM WITH SPENDING BEING TOO HIGH.,

    • retired militaryYOU COULD DOUBLE THE AMOUNT OF TAX REVENUE FROM THE TOP 50% of TAX PAYERS and you still WOULDNT PAY FOR THE DEFICIT FOR THIS YEAR ALONE.

      I suggest that raising taxes is not about closing the deficit but rather about some goofy standard of fairness: “WAAHHH!!!  Those people have too much money and it’s not FAAAIIIIRRR!  We gotta make ‘em pay more!!!!”

      • “WAAHHH!!! Those people have too much money and it’s not FAAAIIIIRRR! We gotta make ‘em pay more!!!!”

        This is particularly prevalent among academic types with advanced degrees who are smugly convinced of their own brilliance, and just can’t figure out why in the real world they are low paid professors with no influence or respect. 

        • Heh, heh, heh…
          But there is SOOOOOOOOOOOOOOOoooooooooo much certain “academics” can’t figure out….

        • Billy HollisThis is particularly prevalent among academic types with advanced degrees who are smugly convinced of their own brilliance…

          While academics are certainly not immune from this belief, I suggest that it’s more widespread.  Basically, it’s jealousy: somebody has more than other people and – somehow – that’s wrong, so wrong that it must be punished.  It’s the motivation that led people to support the communists and even the nazis (I believe that the root of anti-Semitism is jealousy over Jews’ perceived affluence).  Academics are merely good at cloaking an ugly motive with flowery, noble language.

          • Certainly, envy is widespread. But I maintain that academics and others in the intelligentsia are particularly susceptible, and the reasons are well presented in this essay. Here are some key paragraphs:
             

            What factor produced feelings of superior value on the part of intellectuals? I want to focus on one institution in particular: schools. As book knowledge became increasingly important, schooling–the education together in classes of young people in reading and book knowledge–spread. Schools became the major institution outside of the family to shape the attitudes of young people, and almost all those who later became intellectuals went through schools. There they were successful. They were judged against others and deemed superior. They were praised and rewarded, the teacher’s favorites. How could they fail to see themselves as superior? Daily, they experienced differences in facility with ideas, in quick-wittedness. The schools told them, and showed them, they were better.

            The schools, too, exhibited and thereby taught the principle of reward in accordance with (intellectual) merit. To the intellectually meritorious went the praise, the teacher’s smiles, and the highest grades. In the currency the schools had to offer, the smartest constituted the upper class. Though not part of the official curricula, in the schools the intellectuals learned the lessons of their own greater value in comparison with the others, and of how this greater value entitled them to greater rewards.

            The wider market society, however, taught a different lesson. There the greatest rewards did not go to the verbally brightest. There the intellectual skills were not most highly valued. Schooled in the lesson that they were most valuable, the most deserving of reward, the most entitled to reward, how could the intellectuals, by and large, fail to resent the capitalist society which deprived them of the just deserts to which their superiority “entitled” them? Is it surprising that what the schooled intellectuals felt for capitalist society was a deep and sullen animus that, although clothed with various publicly appropriate reasons, continued even when those particular reasons were shown to be inadequate?

             

        • I’m totally happy with my pay, my life, and all that (heck, I even got paid to take 42 students to Italy this May).  In fact, I find such joy in teaching I’d probably do it for much less money.  But it’s interesting how instead of actually dealing with the issues you prefer to fantasize bad personal things about those with whom you disagree.  That says something about you — and I think you know it!

          • “I’m totally happy with my pay, my life, and all that…”

            Of course you are, Scottie, of course you are. You’re just as good and special as anyone else, and don’t let those mean boys tell you any different.

          • I think we should tax you much higher. Taxes for people with tenure should be double the normal rate because you don’t risk losing your job like everyone else has to fear.

      • Posted by Billy HollisSchooled in the lesson that they were most valuable, the most deserving of reward, the most entitled to reward, how could the intellectuals, by and large, fail to resent the capitalist society which deprived them of the just deserts to which their superiority “entitled” them? Is it surprising that what the schooled intellectuals felt for capitalist society was a deep and sullen animus…

        Good essay, but I am not entirely persuaded because “the market” has placed a premium on education since at least World War II.  At least, certain types of education: while business majors, lawyers, accountants, engineers, and some types of scientists have done well because their education makes them valuable to modern businesses, other types of education are not especially valued.  Hmmmm… If we narrow, the argument a bit, it does make: people with degrees in such things as social sciences and humanities – which tend NOT to be especially valued in the market – probably DO resent the fact that their exhaustive knowledge of sociology, Womyn’s History or African-American Literature of the Middle Ages doesn’t net them a big salary and corner office like the one that their smug MBA friend got.

    • That doesn’t deny that the wealthiest have made the most income gain in the last 30 years — 291% for the top 1%, 95% for the top 20%, and below 60% gains have not kept up with inflation.  If you look at a chart (I can direct you to one on my blog), you’ll see that as tax rates declined there is a direct correlation to an increase in debt.   And if you want spending cuts, you’ll have to accept some tax increases — not necessarily large ones — on the wealthiest.  Otherwise the Democrats won’t go along with spending cuts of the sort we need (and I agree we need).   Bottom line: without tax increases, you will not get serious spending cuts.  Ever.

      • Post hoc, ergo propter hoc.
        Debt is the result of spending more than you bring in.  Raising or lowering taxes changes how much revenue you plunder.  But when you write the budget for the government, it’s your decision how much to spend.  When there’s a debt, it means you spent more than you had.  If you chose to spend less, you have less debt.
        Thus, debt is 100% tied to the decisions of how much to spend.  Always.
        You can have spending cuts without tax increases.  The politicians simply have to decide to spend less.  Why lie and pretend they are incapable of doing this?

  • And yet again, Erb, like the democrats with no budget in hand, insists we can’t have cuts in spending without a tax increase.

    Scott, you’re sliglty brighter than a parrot.

  • Second, you ignore how the top income earners have gained the most in the last 30 years, while most people haven’t gotten better off


     
    That’s completely irrelevant to the subject of the debt ceiling.  But if you’re saying that the Democrats refuse to do what must be done — cut spending — unless they get something that won’t have any effect upon revenues, then you’re telling all of us that the Democrats aren’t interested in doing what’s right, they just want to punish high wage-earners.
     

    • It’s relevant in that a tax increase on the wealthy is a legitimate part of a deal to get the Democrats to sign on to significant spending cuts.   It’s the kind of compromise this country needs — and less political grand standing.

      • You ignore…again…some more…continually…the 1/2 of all Americans NOT paying ANY FLUCKING THING for their government.
        Civics, you idiot.

        • I doubt anybody doesn’t pay anything — taxes and fees are pervasive in the system.   But that’s not relevant to any point I’m making in any event.  As usual, you don’t address the argument, you don’t support your position, and you make irrelevant assertions as if they make a difference.

          • Now you are just lying.  You know that 1/2 the working population pays no income tax.
            None.
            Zip.
            Nada.
            You have made no cogent “argument”.  You have chanted that raising taxes on highly productive people is mandatory to fixing the debt crisis.  Which is opposite to ONE of the positions of Obama (he always has at least two)

          • You know that 1/2 the working population pays no income tax.

            And still he pretends.

      • It’s relevant in that a tax increase on the wealthy is a legitimate part of a deal to get the Democrats to sign on to significant spending cuts.
         
        It’s NOT relevant to whether spending must be decreased.  You keep parroting this line, but you refuse to understand that it is not relevant to the blindingly obvious fact that spending must be cut.
        Again, if the only way Democrats will agree to do the right thing is by raising taxes — despite the fact that changing the tax rates has absolutely no effect on revenue as a percentage of GDP — then the only thing we can conclude is that Democrats don’t care about doing right ,they just care about sticking it to their perceived enemies.
         

        • Steverino[I]f the only way Democrats will agree to do the right thing is by raising taxes — despite the fact that changing the tax rates has absolutely no effect on revenue as a percentage of GDP — then the only thing we can conclude is that Democrats don’t care about doing right ,they just care about sticking it to their perceived enemies.

          BINGO!

  • So Erb, if you’d teach for much less, do you voluntarily send in more to the treasury?
     
    PS- Nice new site style….

  • The new style is nice except not liking the font.  The style isn’t that nice to look at.  But that’s a matter of taste.
    Although a little more objective, the font characters are also not quite close enough together.  I feel like I’m reading a child’s book.  Or something that a teenager typed to stretch his 9 1/2 pages into a 10 page report.  Its the same in Firefox as IE.

  • Needs more Ott Scerb.

  • Billy, I think your bit on “intellectuals” is a bit broad and a bit of an ad hominem.   I’ve seen similar diatribes about “conservatives” and anytime you ad hominem a large group, it’s not very persuasive.   I do think there is an elite bias towards government, driven by self interest, which I blogged about long ago: http://scotterb.wordpress.com/2008/05/26/intellectuals-and-ideology/
    I admit I wasn’t a good student through high school — I worked 30 to 40 hours a week, and getting gas for my car and heading to concerts was more important than homework.  It wasn’t until college that I realized “this is my future,” that I started to focus (though I still worked 30 hours a week, 60 + in summer).  After I got my MA I worked for Senator Pressler, and decided politics was too power driven for me, so I got a management job at Rocky Rococo’s pizza in Brooklyn Park, MN.  My dad thought I was crazy — how could he explain to his friends that his son went from traveling to Greece and Turkey with a Senator to managing a pizza place.  It was a decision I made at 25 that I am still proud of.  I didn’t follow what most people said was the right path (I could have stayed in DC in a foreign policy think-tank, for instance) and decided to break from a city and future I didn’t want.  I liked restaurant management but it’s a sucky job — and the fun part (customer service and working in the kitchen) gets lost if you advance.  So I applied for a Ph.D. program and got in.
    I have seen people who fall into the stereotype of the ivory tower elite — often they didn’t work outside of school, and didn’t connect their “theory” with reality.  That’s one reason I chose to go to a teaching university and not a research one — teaching forces one to confront the students’ world and its realities and not get lost in theory.   Luckily, I’m at a place where nearly everyone thinks that way.   As for pay – I’m honestly not materialist.  To me the spiritual matters most, and though that sounds corny and I know I’ll be flamed for it, I’ve found that whether I was a poor grad student or now making a household income probably in the top 5 or 10% of Americans my happiness level has been the same.  If one loves life and takes responsibility for it, as long as you’re not starving or jobless, you can find real happiness.

    • “I admit I wasn’t a good…………………………………………………………….”

      Jeebers. Narcissism personified. Erp talks more about himself than anyone I have seen on any blog I have read. And it is so boring. Not one iota of humor or insight to alleviate the nausea. It amazes me that he thinks such a mundane story is of any interest, importance or informative value to anyone.  

      Oscar Wilde is alledged to have said
      “Life imitates art far more than art imitates life.”, and in this case art is Ted Baxter.

    • “As for pay – I’m honestly not materialist. To me the spiritual matters most…”

      Yeah, those grapes were sour anyway.

    • I got a management job at Rocky Rococo’s pizza in Brooklyn Park, MN.  My dad thought I was crazy — how could he explain to his friends that his son went from traveling to Greece and Turkey with a Senator to managing a pizza place.  It was a decision I made at 25 that I am still proud of.

      Then you stole from the man who paid you to manage his store.  About a decade ago, when you were already a professor, you stated that you didn’t think you did anything wrong.  Only after being shamed did you retract that, a year later.
      Funny how your biography always leaves out that part.
      A quarter of a century ago, I drove tractors and dug ditches beside migrant workers who didn’t speak English.  I’ll bet most other people here had low-paying manual labor jobs, served in the military, or some similar “character building” experience.  So you’re not impressing anyone and nobody gives a runny spit about the mundane details which you so seem so self-absorbed.
      Narcissism.

      • Except, Elliot, I did not steal.  You’re drifting into slander, with that level of ad hominem you must be feeling the heat.  Anyone who refuses to pay taxes, on the other hand, is a thief of the worst sort.

        • Except, Elliot, I did not steal.  You’re drifting into slander…

          Ever get the feeling of deja vu?
          We’ve been over this for years and years:

          http://groups.google.com/group/alt.fan.rush-limbaugh/msg/cc9872b26deb97bd

          Newsgroups: talk.politics.misc, alt.politics.democrats.d, alt.current-events.usa, talk.politics, alt.fan.rush-limbaugh, alt.politics.usa.republican, alt.activis
          From: scotterb [at] maine [dot] maine [dot] edu (Scott Erb)
          Date: 1997/05/15
          Subject: Re: For the kiddies, no health insurance

          I remember as an 18 year old night manager at a pizza place.  I had risen
          quickly through the ranks — mastering those dishwashing and busing skills,
          before moving on to prove my mettle at rolling out dough and running ovens :)
          I strictly enforced the fact employees had to pay half price for all meals.  
          Then one day the “owner” came into town.  He was an obnoxious lout, who had
          our boss hire him a prostitute, and bragged about how much money he made.  I
          looked at the employees working hard and thought to myself, “god, we’re
          working hard to make money for this fat a[**] who sits around, drinking and
          hiring whores.  F[***] him.  From now on we all eat on him.”
          Was I stealing?  Sure, according to the law. But I felt morally justified
          and still do.  He was stealing from us, having us work hard to make him rich,
          paying minimum wage to most of us.  I continued to work hard and manage well,
          but the employees ate free from then on when I was in charge…
          cheers, scott

          Salty language censored by me to conform to Q&O comment rules.  Emphasis added by me.

          • You mean the glorious professor just lied?  Who’d have ever imagined that would happen?
            It’s funny to see him proven wrong by his own words.

        • I note that your story about being a pizza manager changes.  In 1997, you said you were 18 years old.  Above, you say you were a 25 year old, with an MA and a political internship under your belt.
          I suppose you could have done it before and after college.  Otherwise, at least one version is false.  That would be about the least surprising thing I’ve seen all day.

  • For anyone confused by the lies that Erp published here…
    Government-Sponsored Meltdown
    Fannie Mae did not contribute ‘marginally’ to the financial crisis. It was the source of the declining mortgage underwriting standards that brought down the system.
     
    http://online.wsj.com/article/SB10001424052702304760604576423670655568418.html

  • Erb, your argument about the necessity of swapping spending cuts for tax increases is like fireman saying they won’t put out a house fire until they get glasses of ice tea with lemon chilled to 45 degrees.
     
    It’s like the crew of a sinking ship demanding roast tenderloin and new potatoes before they lower the life boats.
     
    The two DON’T have to be linked, and Steverino is right, it’s nothing more than a continued attempt to pander to class warfare and the basest instincts of jealousy against those who have more wealth than others.
     
    And the not paying Taxes schtick – let’s just stop pretending any of us are talking about sales taxes, property taxes, excise taxes or any other taxes in question other than the freaking INCOME tax levied by the US Federal Government.
    If you can’t do THAT, you’re demonstrating your intellectual dishonesty in spades (which I expect, based on previous performance, will continue.)
     
     

    • looker[A]rgument about the necessity of swapping spending cuts for tax increases is like fireman saying they won’t put out a house fire until they get glasses of ice tea with lemon chilled to 45 degrees.

      I suggest that it’s more like the firemen saying that they won’t put out the fire until they get to key Mom’s BMW or knock a hole in Dad’s bass boat.  Doesn’t do anything to put out the fire, but it pays Dad and Mom back for “making too much money”.

      • We can refine it – it’s like them saying they won’t put out the fire until the owner agrees to distribute 40% of his property to his neighbors because the firemen decided the owners have too much stuff.
         
        What I really like is dillweed thinks there will be a disaster if the Republicans don’t raise taxes and he’s okay with that rather than seeing spending cuts.

  • I don’t believe the Democrats will agree to any significant spending cuts unless they’re linked.  That’s why our political system works.  Moreover, I’ve given you reason why the wealthy can pay more — and how they’ve reaped the benefits of the last 30 years, while the bottom 60% haven’t kept up with inflation.  If that isn’t changed there will be a class war – leftist populism will come back with a vengeance.   Not the kind of “we’ll not raise marginal rates and just close some loopholes” increases Obama wants, or even the moderate Democratic “we’ll still be below Reagan’s rates.”  It’s already growing.  As Nate Silver points out, the GOP in the House are farther from their own constituency (the GOP public) than the GOP public is from the Democratic public.
     
    So keep up your fantasy as that somehow the House Republicans can parlay control of one part of government into the capacity to demand their way, not compromise, and some how get the President and Democratic Senate to simply follow their lead.  That ain’t going to happen.  Meanwhile, the country’s future is in jeopardy…all because an rabidly ideological group refuses to accept any kind of tax increase, despite the fact our taxes are historically low, lowest in the world, and the debt has grown as taxes have been cut.    Simply, you are out of touch with reality if a small ideological core can somehow force the whole country to go over the cliff with them, defaulting and potentially destroying the economy because “the super wealthy shouldn’t have tax loopholes closed.”  That’ll be fun to campaign on!

  • By the way, on that graph in the post, look how tax revenues dropped after 1982 — after the Reagan tax cuts went into effect.  Those declining revenues happened just as deficit spending hyperstimulated the economy (under Reagan debt went from 30% of GDP to 60% of GDP created an illusion of prosperity — oil prices were declining too, adding to the stimulation effect).   Despite all that stimulation and tax cuts, revenues went down and stayed at a lower level.   Note a similar drop after the Bush tax cuts, with a bump up only during the heyday of the bubble economy.    That graph has one clear message: tax cuts decline revenues, and correspond to periods of increased debt (the 90s, when taxes were stable, saw the budget go out of deficit and even yield a small surplus).   Reality.   Deal with it.

    • You have the temerity to use the term “reality”…!!???!!!  Too funny…!!!
      ‘K.  Here’s a dose…
      January 2009:

      President-elect Barack Obama pledged yesterday to shape a new Social Security and Medicare “bargain” with the American people, saying that the nation’s long-term economic recovery cannot be attained unless the government finally gets control over its most costly entitlement programs.
      That discussion will begin next month, Obama said, when he convenes a “fiscal responsibility summit” before delivering his first budget to Congress. He said his administration will begin confronting the issues of entitlement reform and long-term budget deficits soon after it jump-starts job growth and the stock market.
      “What we have done is kicked this can down the road. We are now at the end of the road and are not in a position to kick it any further,” he said. “We have to signal seriousness in this by making sure some of the hard decisions are made under my watch, not someone else’s.”

      Now it is a bargaining chip…???  But TWO years ago, it was a pledge….????
      BTW, how many Deemocrat Senators voted to raise the debt ceiling in 2006?
      0bama said it was irresponsible.

    • Yes, revenues did drop after 1982. That was the result of a back-to-back recession that saw the unemployment rate rise to 11%. Your point about the Bush tax cuts is not only similarly co-located with a recession, but the drop in revenues began the year before Bush took office, as a result of the dot com crash. Ascribing the tax cuts to a revenue decrease that began more than year before the tax cuts were implemented is an…interesting…rhetorical tactic.

      I note also that you don’t endeavor to explain why the Kennedy tax cuts, where all rates were lowered, and the top rate fell from 90% to 70% didn’t cause a similar decrease in the revenue percentage. Nor do you explain why, in the abscence of any changes to tax rates at all, the revenue percentage declined sharply after 2007.

      Nor do you make any attempt whatsoever to explain the huge declines and increases in the immediate post-WWII years, when tax rates remained relatively stable, at least in terms of high marginal top rates.

      It’s strange that you’re so selective with the data.

      Naw, I’m just joshing you. It isn’t strange at all.

      • Tax cuts CAN increase revenue, but they don’t always increase revenue.   Look, you can waffle about, you can decide to “ban” me and all that.  But deep down you know I’ve got a point.   In the 80’s debt went from 30% of GDP to 60% of GDP, even as oil prices sunk.  That’s a huge stimulus of the economy, that’s what got Reagan morning in America.  Also note that the current account went into deficit in the early eighties, and while bouncing up briefly around 1992, it continued to fall to 7% of GDP.   So we’ve been living on debt, our current account gets to a 7% of GDP deficit, and our economy is defined by bubbles.  Meanwhile, again, the wealthiest 1% increase income in those 30 years by nearly 300%, the wealthiest 20% increase in total by 95%, and when you get to the bottom 60% they don’t keep up with inflation.  The manufacturing sector continues to decline in terms of employment.   These are huge imbalances, and given how the wealthy have benefited so much — are the wealthiest top 10% of any country (that’s not true for the rest of the country — our bottom 10% is about as well off as the bottom 10% in Greece or the Czech Republic), and even Germany is growing better than us with much higher tax rates, the argument that tax increases should not be part of a compromise that cuts spending just doesn’t make sense!
         
        Look, those are a lot of facts I gave you — details that are real, and not just insults, assertions, or bravado.  My conclusion: that Republicans are right that we need spending cuts and entitlement reform (I don’t believe in the Krugman thesis that we need a huge stimulus — I think the debt to GDP ratio is too high), but Democrats legitimately note that the wealthiest can pay a slightly higher share.   Also note that tax increases do less harm to the economy than spending cuts because the money they generate otherwise is likely to go to foreign consumption or other things that do not stimulate the economy.  So the “it hurts the economy” bit is false.
         
        I notice nobody addresses all those points.  Instead it’s personal insults or some kind of political point like “democrats renege on deals” (based on some apparently vague promise 30 years ago!)   To me, it’s clear — you don’t want to deal with difficult points that go against your ideology, it’s easy to insult, ban or pretend the other person isn’t saying anything of value.  But deep down you know that’s not true — deep down you know I’ve studied political economy, I know my history, and while on some cases I may be wrong and you may be right, on others I may be right and you may be wrong.  You know that behind the ridicule is realization that I am giving real statistics, facts and arguments — ones you prefer to ignore.  I do not expect you to acknowledge that publicly, but I hope you have the intellectual honesty to at least in private as you analyze the next moves for the economy to take some of these things into account.   The insults don’t bother me.  What bothers me is how so many people left and right just don’t listen to each other or engage each other, but shout each other down.  That’s how a country falls.

        • Tax cuts CAN increase revenue…that cuts spending just doesn’t make sense!

          And literally none of that has any relevance whatsoever to the point I was making.  It’s a really simple point: Irrespective of tax rates, which have varied from 90% to 28% at the top bracket, tax receipts end up being about 18%-19% of revenue. The overwhelming driver of tax receipts is GDP performance. Therefore, changes in the tax code that are expected to increase tax receipts to nearly 24% of revenue wimply will not have the desired outcome.
          We can already see what happens when huge changes are made to the tax rates, which is…not much of anything.
          You elide past this, by pointing out two tax reductions where revenues decreased, then don’t note that those tax changes were made either concurrent with or immediately after, recessions. Indeed, in the case of the Bush tax cuts, the decline in revenues started a full year prior to Bush assuming office.
          Seriously, I’d be fascinated to learn how the Bush tax cuts–the 2001 version of which were not even fully implemented until the 2003 revision and which were not even originally scheduled to go into full effect until 2006, caused the decline in revenues that began in 2000. But apparently, you aren’t interested in addressing that timeline difficulty.
          Instead, you change the subject to spending, Krugman, income inequality, blah, blah, blah.
          I don’t address the points you made because they aren’t germane to the post, or nobody seriously argues against them. So, I conclude you either don’t understand the data, or you are deliberately obfuscating.  Then you wonder why people ridicule you.
          As I remember, a few years ago, you promised not to return and comment here, yet…here you are, playing the same games.
          I think you’ll find that I have rarely, if ever, responded to you. This experience reminds me why.

  • It’s strange how you’re so selective with the data.

    No, Dale.  It isn’t.  He is a Collectivist.  They lie.  He is also an idiot who insists he’s the smartest guy in the room, like his MEEEEEsiah.

    • The simplest thing to do with Erb is to ask him this question:  “If I can prove that you are incorrect, will you change your mind?”  It’s a good question to ask of anyone, because if he’s not going to change his mind, there’s no point in arguing with him.

      I’ve proven Erb wrong in the past, and he refused to admit it, so I know it’s pointless to argue with him.  He’s intellectually dishonest, and not nearly as bright as he thinks he is.

      • All granted, Steverino.
        The whole exercise is one of exposition…like interrogating a pathological liar on the stand.  Juries see them, know them, and really loath them.
        Same-same here.  Plus, it is FUN.

        • It stops being fun after a while.  Erb is the reason I don’t hang out here more.  Every thread becomes The Scott Erb show, and I have no stomach for it.

          • If it were up to me, I’d ban him. He produces literally nothing of value, and arguments with him are essentially pointless.

          • Dale FranksIf it were up to me, I’d ban him.


            I hope that this doesn’t happen.  I understand getting frustrated with trolls, hijackers, and just plain ol’ pests, but I think that people ought to be able to speak (write?) their mind unless they become abusive.  I also think that sunlight is the best disinfectant and that it’s useful to see how a leftist really thinks.  It’s one thing to read that lefties are dishonest and stupid, but quite another thing to see it first-hand.

      • Just to be fair, I did force him to admit he was wrong regarding the Kerry vs. swiftboat vets. It took a bit of doing, but…

  • “Meanwhile, the country’s future is in jeopardy…all because an rabidly ideological group… “–Fessor Erp
    Obama officially threatens to veto ‘Cut, Cap and Balance’
    “Neither setting arbitrary spending levels nor amending the Constitution is necessary to restore fiscal responsibility,” the White House said in its statement. “Increasing the federal debt limit, which is needed to avoid a federal government default on its obligations and a severe blow to the economy, should not be conditioned on taking these actions. Instead of pursuing an empty political statement and unrealistic policy goals, it is necessary to move beyond politics as usual and find bipartisan common ground.
    Isn’t exactly how we got here…???
    Is a BB Amendment “politics as usual”….????

    • Is a BB Amendment “politics as usual”…..?
       
      Depends on who is in the White House.
       
      Here’s the NY Times article from February 1995 which announces Biden’s plan to vote for the proposed constitutional amendment:

      Two more Democrats today joined the ranks of senators who support a balanced-budget amendment to the Constitution…The two Democrats who declared today, Senators Joseph R. Biden Jr. of Delaware and Tom Harkin of Iowa, opposed the amendment last year, the last time it came before the Senate…
      Both Senators said their doubts had been overtaken by fears that uncontrolled Federal spending was wrecking the economy and pilfering prosperity from future generations.
      Senator Biden said he had concluded that an amendment would force the Republican Congress to confront the need for broad spending cuts and tax increases, not merely cuts in unpopular social programs. But the true imperative, he said, is to prevent the Federal debt from consuming the resources for programs of every political stripe.
      “Unless this thing gets focused,” he said in an interview, “by the time we face the music, everything I care about is going to be gone.”

      In case you’re wondering, the proposed amendment went down to defeat one month later by one vote.

    • “Rabidly ideological” = “Doesn’t agree with me”

      True for both sides of the political aisle.

  • Steverino
    “I’ve proven Erb wrong in the past, and he refused to admit it, so I know it’s pointless to argue with him. He’s intellectually dishonest, and not nearly as bright as he thinks he is.”
     
    He is a coward as well.
     

  • Scott
    “(the 90s, when taxes were stable, saw the budget go out of deficit and even yield a small surplus). ”
    Umm your nice little bit of “reality” left out the peace dividend where Clinton gutted the military. The “surplus” (There was no actual surplus since social security was and still is counted in as part of the + side of the equation) was built on the back of the military. Cutting 25% + of the active duty force including at least one entire air force wing.
     

  • Just remember ScottYou can take all the income of folks who make 250K+ and you still wont balance the deficit for this year much less the debt.  We dont have a problem with taxes being too low.  We have a problem with TOO MUCH SPENDING.  

  • (the 90s, when taxes were stable, saw the budget go out of deficit and even yield a small surplus).
     
    Three things were at work in the 1990s, only one of which had anything to do with tax rates.  First, the economy was expanding after a cyclical recession right at the time the tech industry took off.  That meant a lot of jobs, and a lot of revenue for Uncle Sam as a result.  Second, the Republicans running Congress in 1995 forced Clinton into spending cuts which ended up balancing the budget.  Before that, Clinton’s own budget director predicted deficits in excess of $200 billion forever.  But the Republicans held Clinton’s feet to the fire:  Clinton had to submit 5 budgets before one was finally approved.  Finally, the Republicans cut the tax rate on long-term capital gains.  This allowed a lot of gains to be realized (and subsequently taxed), when before that they would have been rolled into similar investments and avoiding any taxation.

  • Something interesting about those wildly disparate tax rates and the narrow range of revenues they raise…
    When you have a 70 or 90% rate, essentially NOBODY is paying at that level.  If you look, you’ll find that that was the era of real loop-holes, which proliferated in response to those insane tax rates.  The people with a lot to loose have a lot to spend to influence tax policy, and for creative, very bright, motivated people who will find ways to help preserve their assets legally.
    Obama is dogging private jet owners, and Erp even mentioned “loop-holes” in the same context.  But I think you’ll find that Obama is talking about CHANGING the depreciation for a private jet from 5 to 7 years, not doing away with it.  That may seem like small ball, but if you bought a very expensive capital asset UNDERSTANDING from your government you could make certain assumptions about its economics…and then they change those rules fundamentally, that is significant.
    I remember the INVESTMENT TAX CREDIT, which was an IMMENSE market distortion (like the FREDDIE/FANNIE one Erp lied about).  One day, Congress did away with it.  That was a major cause of the Savings And Loan collapse, IMNHO, as a LOT of people had sheltered money in capital equipment, levered with loans, and their was a HUGE wave of defaults as DISTORTED economics adjusted to reality.
    Really, this is all so simple.  Scrap the tax code.  Start with a clean sheet of paper, and tax essentially ALL Americans the same rate.  Stop screwing with the economy.  Stop screwing with the money supply.  Allow markets to work, and people to make choices.  People WILL take care of each other.  America in the late 19th and early 20th Centuries has proven that.

  • Here is a quote that Scott Erb reminds me of.
     
    “Of all tyrannies, a tyranny exercised for the good of its victims may be the most oppressive. It may be better to live under robber barons than under omnipotent moral busybodies. The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end, for they do so with the approval of their own conscience.”
    C. S. Lewis
     
    and some  that maybe he should pay attention to
     
    “Remember, people will judge you by your actions, not your intentions. You may have a heart of gold — but so does a hard-boiled egg.”
     
    “Public servants say, always with the best of intentions, “What greater service we could render if only we had a little more money and a little more power.” But the truth is that outside of its legitimate function, government does nothing as well or as economically as the private sector.”
    – Reagan
     
    “With Obama we can talk, we are almost from the same generation, one can’t deny that Obama is different (from Bush). He’s intelligent, he has good intentions and we have to help him.”‘  – hUGO Chavez
     
     “The road to hell is paved with good intentions”

  • Dale, what I posted was germane to the debt crisis issue and the issue of taxation.  In fact, it’s the core of this crisis — 30 years of building economic imbalances starting with wrong moves in the 80s.  I know you think you know this stuff better than others, and thus are willing to discount my perspective out of hand.   I think you should be a tad more modest.   What makes democracy work is people listening to each other.  I read blogs outside of where I am on issues to learn from them, and getting insulted is just part of the cost of trying to engage others — too much of the blog world is people grouping into like minded gangs and then attacking someone who comes in with a different perspective, left or right.   Don’t let the noise of blog flame wars blind you.  Get past the emotion and look for substance.
    Retired, I’m chicken because I’m not taking a bet you want to make?  Wow, new definition of a coward: you can label anyone a coward if they don’t accept a bet you want to make.  I would never want you to stop posting, I wouldn’t even want to win that bet!

    • WE. ARE. NOT. A. DEMOCRACY. YOU. ALLEGEDLY. EDUCATED. BOOB.
       
      ” I think you should be a tad more modest.”
      truer words never spoken, YOU should be, a whole lot more modest.
       
       

    • …thus are willing to discount my perspective facts out of hand-WAVE

      There, FIFY.
      Amazing lack of self-awareness.  Typical of narcissists.

  • Scottie

    I even offered to make a gentleman’s bet or for you to set the wages   Trouble is  you know Obama is going to lose which is the only excuse you have to not make the bet in the first place.  How about say $100 to the winnner’s charity even?  Since you want to help folks out so much by taking other people’s money and giving it to whom you feel is deserving of it why not try to take my money and have me donate it to your favorite charity?  Surely you cant argue with that now can you?

  • BTW Scottie

    If the bet doesnt mean anything then why are you so opposed to making it? 

  • Hey Scottie. Tell you what. Since you feel that people should pay more taxes why not voluntarily write a check out to the Treasury. You know to put your money where your mouth is.