The above video was a debate on the topic, “Big Government is Stifling the American Spirit.”
This was a great debate, which included Art Laffer (of the Laffer Curve) and Nouriel Roubini on the same stage, as well as Phil Gramm answering for his “mental recession … America is a bunch of whiners” comment from the 2008 election cycle, and Laura Tyson, who served as an economic advisor to President Obama and President Clinton.
I just want to point out one thing that was brought up that I’m tired of: the whole notion that the 2000′s decade was an economic disaster. Excuse me, but I lived during that time? Up until 2006, even as late as 2007, people were having a good old time. Politicians were bragging about the economy. Heck, it wasn’t even a big issue during the 2004 Presidential Election. You can’t write off a whole decade because of a crash. What. Times weren’t good in 1928? They were!
On a side-note: I love how pundits on the left choose to say that Bush’s tax cuts failed because revenues are down. Hello? The economy went south after 2005, regardless of tax policy. I would argue it was the Fed’s policy of keeping interest rates low for an extended period after the 9/11 attacks that helped create the Housing Bubble, not tax rates on the top 1%
I will say, though, listening to IQ Radio yesterday out of San Francisco, I heard an economist suggest that high tax rates on the wealthy may be related to higher wages for the bottom 50% wage earners. He stated that from 1959 through 1980, when tax rates were high on the wealthy, that income for the lower wage earners doubled. He also stated that since then, increases for the lower wage earners have been flat, while wealthy folks, who benefited from reduced taxes, saw their earning rise exponentially. This suggests that wealthy folks are more likely to share their earnings when tax rates are high.
Of course, tax rates may have had nothing to do with this. It could be a mere coincidence. Just like the Bush tax rates being in effect when the economy took a tailspin.
In a related topic, let’s go over the proposed deficit cuts of $4 trillion dollars, as reported on cnnmoney [MY COMMENTS IN BRACKETS]:
Set targets for revenue and spending: The report recommends that taxes be capped at 21% of gross domestic product. It would also limit federal spending initially to 22% of the economy and eventually to 21%. [THIS IS A BRILLIANT IDEA. SPENDING CAPPED BASED ON PERCENTAGES. MAKES SENSE. WHEN WE THE PEOPLE ARE HURTING, THE GOVERNMENT MUST TIGHTEN IT'S BELT. WHEN TIMES ARE GOOD, GOVERNMENT CAN EXPAND. THAT IS FAIR.]
Rein in spending: The report proposes close to $200 billion in domestic and defense spending cuts in 2015. [WE ALL KNOW CUTS WILL HAVE TO HAPPEN. THIS IS REALITY. LET'S HOPE THE POLITICIANS HAVE THE COURAGE TO DO THIS. YEAH, RIGHT.]
Reform tax code: The report would lower income tax rates and simplify the tax code. It would abolish the Alternative Minimum Tax — the so-called wealth tax — and reduce tax breaks. [THIS MAKES SENSE.]
Change Social Security: The report aims to make Social Security solvent over 75 years through a number of measures, including smaller benefits for wealthier recipients, a less generous cost-of-living adjustment for benefits, and a very slow rise in the retirement age (from 67 to 68 by 2050; rising to 69 by 2075). It also would expand over 40 years the amount of workers’ income subject to the payroll tax. [THESE PROPOSALS ALL MAKE SENSE. I NEVER UNDERSTOOD WHY SOCIAL SECURITY WAS ONLY TAXED AT LIKE THE FIRST $95,000 OF GROSS INCOME. IT'S LIKE THE WEALTHY ARE EXEMPT FROM SUPPORTING THE LOWER CLASSES. ALSO, REDUCING BENEFITS FOR THOSE WHO ARE WEALTHIER, AND WHO PROBABLY SAVED FOR RETIREMENT, MAKES SENSE, AND IS IN KEEPING WITH ORIGINAL INTENT OF THE SOCIAL SECURITY PROGRAM TO SUPPORT THOSE WHO NEED THE HELP.]
Control health care costs: The report recommends capping growth in total federal health spending — everything from Medicare to health insurance subsidies — to the rate of economic growth plus 1%. [THIS WON'T FLY. YOU CAN'T MANDATE CAPS ON HEALTH CARE COSTS UNTIL MEDICAL HYPER-INFLATION, WHERE WE ALL SEE INCREASES OF ABOUT 10% ANNUALLY ON OUR PREMIUMS, ENDS. OBAMA-CARE DID NOT ADDRESS THOSE ISSUES, AND NEITHER DOES THIS PROPOSAL.]
We here at the DailySkew endorse setting targets for revenue and spending, reining in spending, simplifying the tax code, and changing social security. This will bring stability to the Government and give the pundits less to complain about. Who knows? Maybe some talk show hosts will lose their jobs if we solve some of these issues!
Since we here at the DailySkew have endorsed these ideas, based on our track record, we fully expect these proposals to be completely rejected. Also, we expect the healthcare idea to be implemented against our better judgment.
“It is what it is.”