The Back Alley Archives

I thought this thread was gonna be about all the debt the baby boomers amassed and now expect my generation and our kids and grandkids to pay. That's an obscene redistribution of wealth.

Well, this example is ridiculous. The waiter in your example makes, at most, $30,000 a year (and that would be working more than 40/hrs a week). Under Obama's plan, which I assume is what you're no-so-subtly alluding to, only those making over $250,000 a year would see their taxes raised. Under Obama's Earned Income Tax Credit (conceived under that socialist Gerald Ford), which again I am assuming you are alluding to, only those who already work (but make very little) would see this wealth being "spread." Additionally, the upper level brackets would only be raised to the level they were under that socialist Ronald Reagan. Only two Presidents have had lower upper level tax brackets since income tax was first levied federally under the 16th amendment: George W. Bush, and George H.W. Bush.

a serious question johnny - if you were making $250,001 per year....would you like that plan?

Like Eric said, I would be paying 3% more on the one dollar I made over 250,000... I think I could handle it. In fact, if you know of anyone hiring someone of my qualifications for that salary, I would gladly shoulder the burden.

respectfully johnny...you say that now...i guarantee you aint saying that if and when you do get there....trust me.

I don't know, Rad. My sister and her husband make well over 250k a year and have an ungodly amount of money in the market, but they are still some of the most staunch democrats you will ever find. I'm not sure I'll ever change in that regard.

McCain and Palin have promised to balance the budget and I'm sure that is unlikely, so good point. But when it comes to raising taxes to pay for promises made I would bet the farm that it would be more likely to happen under Obama than McCain. Oh well, I guess we won't be expanding our business over the next four years, that's all. Good for me...less stress.

Both candidates got ahead of themselves when it came to balancing the budget and eliminating the deficit. Obama said every one of his spending increases was paid for.

Obama: Now, what I've done throughout this campaign is to propose a net spending cut. ... Every dollar that I've proposed, I've proposed an additional cut so that it matches.

McCain said he could balance the budget within one term.

Schieffer: Do either of you think you can balance the budget in four years? You have said previously you thought you could, Sen. McCain.
McCain: Sure I do. And let me tell you...
Schieffer: You can still do that?
McCain: Yes.

These are pie-in-the-sky predictions. We've looked at McCain's balanced-budget promise before – it's out of reach unless he cuts spending to an unrealistic degree. The Urban-Brookings Tax Policy Center estimates that by 2013, at the end of his first term, McCain's tax plan would have him facing a $662 billion deficit. That could come to more than half of that year's discretionary spending, which the Office of Management and Budget projects to be $1.1 trillion. And we've previously disputed Obama's claim that "every dime" of his proposed spending is covered. The Tax Policy Center estimated that Obama’s plan – and McCain's, too – "would substantially increase the national debt over the next ten years" unless the candidates come up with "substantial cuts in government spending" that they haven't yet specified. More recently, the Committee for a Responsible Federal Budget also estimated that in 2013, Obama’s major budget proposals – including spending cuts – would increase the deficit for that year by $281 billion.

Well, this example is ridiculous. The waiter in your example makes, at most, $30,000 a year (and that would be working more than 40/hrs a week). Under Obama's plan, which I assume is what you're no-so-subtly alluding to, only those making over $250,000 a year would see their taxes raised. Under Obama's Earned Income Tax Credit (conceived under that socialist Gerald Ford), which again I am assuming you are alluding to, only those who already work (but make very little) would see this wealth being "spread." Additionally, the upper level brackets would only be raised to the level they were under that socialist Ronald Reagan. Only two Presidents have had lower upper level tax brackets since income tax was first levied federally under the 16th amendment: George W. Bush, and George H.W. Bush.

a serious question johnny - if you were making $250,001 per year....would you like that plan?

Like Eric said, I would be paying 3% more on the one dollar I made over 250,000... I think I could handle it. In fact, if you know of anyone hiring someone of my qualifications for that salary, I would gladly shoulder the burden.

respectfully johnny...you say that now...i guarantee you aint saying that if and when you do get there....trust me.

I don't know, Rad. My sister and her husband make well over 250k a year and have an ungodly amount of money in the market, but they are still some of the most staunch democrats you will ever find. I'm not sure I'll ever change in that regard.

Neither one will balance the budget, and neither one should be responsible for it, as the House controls all spending. Of course, Obama would have a better chance since he will have a majority in Congress just as Bush had a chance when he had a majority. But balancing the budget hasn't seriously been on the table for any politician for decades.

It's impossible to really predict tax revenues. Logically, a strong economy will produce high revenues and a weak one will produce low revenues. The problem is that no one knows what kind of economy is coming down the pike.

So policy-makers have a balancing act when it comes to tax rates. Too low during a strong economy will result in a less-than-optimal revenue to the gub'ment. Too high during a weak economy and you make a bad situation worse by making it more difficult for businesses to buy and sell (and to hire!).

I'm sure taxes have some marginal effect on the economy itself. I think it makes sense to lower rates when you fear a weak economy. Likewise, I think it makes sense to raise taxes when businesses are booming.

And so, since you can't really predict future revenues, the government's main role should be to control its expenditures. That's something that no man - War Hero or Messiah - can accomplish.

a serious question johnny - if you were making $250,001 per year....would you like that plan?

Like Eric said, I would be paying 3% more on the one dollar I made over 250,000... I think I could handle it. In fact, if you know of anyone hiring someone of my qualifications for that salary, I would gladly shoulder the burden.

respectfully johnny...you say that now...i guarantee you aint saying that if and when you do get there....trust me.

I don't know, Rad. My sister and her husband make well over 250k a year and have an ungodly amount of money in the market, but they are still some of the most staunch democrats you will ever find. I'm not sure I'll ever change in that regard.

any btw - you really think your sister and your brother-in-law make over 250K?

forgot you had another sister...thought you were referring to the beaconites...apologies.

Didn't Clinton balance it and leave a surplus? I am not being argumentative but I seem to remember that happening. Please correct me if I am wrong.

As is usually the case in claims such as this, it has to do with Washington doublespeak and political smoke and mirrors.

Understanding what happened requires understanding two concepts of what makes up the national debt. The national debt is made up of public debt and intergovernmental holdings. The public debt is debt held by the public, normally including things such as treasury bills, savings bonds, and other instruments the public can purchase from the government. Intergovernmental holdings, on the other hand, is when the government borrows money from itself--mostly borrowing money from social security.

Looking at the makeup of the national debt and the claimed surpluses for the last 4 Clinton fiscal years, we have the following table:

{TABLE OMITTED}

Notice that while the public debt went down in each of those four years, the intergovernmental holdings went up each year by a far greater amount--and, in turn, the total national debt (which is public debt + intergovernmental holdings) went up. Therein lies the lie.

When Clinton (and others) said that he had paid down the national debt, that was patently false--as can be seen, the national debt went up every single year. What Clinton did do was pay down the public debt--notice that the claimed surplus is relatively close to the decrease in the public debt for those years. But he paid down the public debt by borrowing far more money in the form of intergovernmental holdings.

Interestingly, this most likely was not even a conscious decision by Clinton. The Social Security Administration is legally required to take all its surpluses and buy U.S. Government securities, and the U.S. Government readily sells those securities--which automatically and immediately becomes intergovernmental holdings. The economy was doing well due to the dot-com bubble and people were earning a lot of money and paying a lot into Social Security. Since Social Security had more money coming in than it had to pay in benefits to retired persons, all that extra money was immediately used to buy U.S. Government securities. The government was still running deficits, but since there was so much money coming from excess Social Security contributions there was no need to borrow more money directly from the public. As such, the public debt went down while intergovernmental holdings continued to skyrocket.

The net effect was that the national debt most definitely did not get paid down because we did not have a surplus. The government just covered its deficit by borrowing money from Social Security rather than the public.

I can't see how it could be that hard to balance the budget. All they have to do is say no. I realize that is hard for a politician to do but if the money ain't there, it ain't there.

I can't see how it could be that hard to balance the budget. All they have to do is say no. I realize that is hard for a politician to do but if the money ain't there, it ain't there.

The problem is that to the government, money isn't a finite resource like it is to you and me.

AND...................the united states of america (or any other gov't and/or municipality) can RAISE TAXES on it's constituents to cover it's debt to debt holders.....a similar rated AAA rated corporation can not.