The Solution to the Debt Crisis is an Easy One.

Respectfully submitted by Lawrence Rafferty-Guest Blogger

I have a slightly different take on the debt ceiling discussion started by Mike Appleton earlier.  The Debt ceiling issue is on every cable and broadcast TV channel and on just about every website and blog including here on Prof. Turley’s blog. The debt limit and its feared default has controlled the airwaves for weeks now, and it isn’t going to end soon if the news reports are to believed. The Democrats want increased revenue and the Republicans want cuts only to spending in order to convince both sides to do something that was done about 19 times during the preceding administration without much fanfare from either side. No matter who you support there is an easy solution to the problem and the majority of Americans agree with it. The Hill

A very easy solution to the U.S. Debt problem is to simply tax the wealthy and corporations at 1960 levels and according to one source, the debt would be erased within a decade. “Some numbers — from an Institute for Policy Studies report released this past spring — can help us better visualize just how monumental this political failure has been. If corporations and households taking in $1 million or more in income each year were now paying taxes at the same annual rates as they did back in 1961, the IPS researchers found, the federal treasury would be collecting an extra $716 billion a year. In other words, if the federal government started taxing the wealthy and their corporations at the same rates in effect a half-century ago, the federal debt to investors would almost totally vanish over the next decade.” Our Future

The Center for American Progress has provided additional evidence that corporations in the United States are taxed at a low rate when compared to other nations. I know we keep hearing about that corporations are over taxed and if we keep taxing them they will move their jobs out of the country. Here is a link to a series of charts that proves that US corporations are paying lower taxes than some would admit to.  American Progress.org  

‘ “Conservatives like to claim that our budget deficits are purely a “spending problem.” Said Senate Minority Leader Mitch McConnell (R-KY): “We don’t have this problem because we tax too little. We have it because we spent too much.” ‘ It’s a popular talking point, but it simply isn’t true. Deficits do not stem from spending levels alone. They are the product of a mismatch between spending and revenue. And when revenue is as low as ours is, you end up with big deficits.”  American Progress

Now, it may sound trite or sarcastic, but the facts are clear that our so-called debt problems would be solved very easily without any draconian cuts to socially important programs important to the Left, and without deep cuts to the military budget that the Right wants to avoid. So why is it so difficult to reach this seemingly obvious solution? Why do the wealthy and Corporations have such a tight wrap on the DC regulars on both sides of the aisle? Could the answer be that both the wealthy and large Corporations have the funds to buy or at least ‘rent” Congress and convince Senators and Representatives to look the other way on tax increases?

It couldn’t be the money, could it? And all this time I thought that Gordon Gecko was a fictional character!

Respectfully submitted by Lawrence Rafferty-Guest Blogger.

135 thoughts on “The Solution to the Debt Crisis is an Easy One.”

  1. @rcampbell — “No company run by anyone with knowledge of business or economics decides to build a plant or hire people because of a tax. ”

    Stop being a jackass.

    Of course tax consequences factor into the equation. Why do you think Microsoft, for example, has a media distribution plant in Puerto Rico?

    It’s also why George Soros runs his hedge fund from overseas.

  2. Raff,

    Krugman thinks the price of gold hitting 1600 dollars is due to glenn beck’s impeccable salesmanship. You really want to keep backing that horse?

  3. You guys crack me up everytime i come here. Did you ever meet a problem that couldnt be solved by stealing more money from rich people? Healthcare? Tax rich people. Government debt? Tax rich people. I mean do you even have any other solutions besides that? Lets pretend for a minute that you got your way and those evil rich had to pony up for everything. Perhaps this thought has never occurred to you, but suppose there was no rich or poor anymore and any variance is negligable, what do you do when you still cant pay for healthcare, when you still cant fund social security, when your debt to gdp ratio hits somewhere around 500%? What do you do when you get your wish and there are no more rich and poor people, but you find out that your problems are still there? What solution will you offer up when you have eliminated the supposed villian of this story but you are as far away from your happy ending as when you started?

    Back to the specific topic however, you do realize that rich people didnt become rich by just letting other people take their money. Whether they acquired their wealth legitimately or illegitimately, they dont like parting with it. Point being, setting aside all moral dinstinctions we might differ on for your planned course of action, what happens when they decide enough is enough and simply take their money elsewhere? You could jack up the tax rate to 80% but what will it matter when anyone who might make enough to be taxed that high decides his money is better spent sending his resources somewhere else? You can bluster and fling rage filled spittle all you want about “the rich” but what happens when they pick up stakes and leave you to your diatribes?

    Id be happy to hear an argument that the us empire should have the purview to confiscate resources on a global scale. Let me know how that works out for you.

  4. The only thing corporate taxes affect are dividends and the price owners pay to withdraw money from the company. Neither of those qualifies to justify the GOP’s position that obnly the middle class should bear the burden of the debt problem.

    Taxes do not affect expansion or hiring decisions nor officers/managers’ bonuses. As a former board Chairman of a publically traded company, I do know about business decisions and economics. No company run by anyone with knowledge of business or economics decides to build a plant or hire people because of a tax. Such decisions are made based on the impact to the PRE-TAX bottom line. The decision to expand or build is most affected by having potential customers with money in the hands to buy what’s being sold or made. Therefore, the more important holder of tax breaks are the 98% rather than the 2% of high income earners. The wealthy don’t need tax breaks or more money in their pockets, consumers need it. The tax rates have been what they are currently since 2001 and still no jobs. There’s tons of profit, but the low tax rates have not produced jobs——-because it’s a LIE, another GOP fantasy. Time for the wealthy to shut up and pay up.

  5. all taxes on business activities are paid for by the consumer. It is a common misunderstanding of those with limited understanding of economics and business in general.

    If a company wants to make $5 dollars per unit, the tax burden is figured into their costs.

  6. kd

    Your nonstop nonsense is why conservatives deserve no respect or attention from Americans.

  7. Mike Spindell:

    Lets say I am an executive of an oil company drilling for oil in Nigeria. The rig is a big ocean going one and costs me a couple of million dollars a day to operate. My main focus is making sure that rig is drilling because that is how I measure my money, number of feet drilled per day. The more I can drill in a day the faster I hit oil or gas.

    I dont like to have the rig idle because it is a waste of money. Now lets say I hit a snag and use a special piece of equipment [I have 2 on the rig because they cost $100,000 each] which is instrumental for my operation and it breaks. I now have one left and I still need to have a reserve on hand.

    If I ship it by Fedex or some other carrier it may take 3-5 days to get there, if I use my corporate jet it will take me 36 hours. You do the math.

    All corporate jets are not about stroking their egos. Some actually are doing work. And the construction of a corporate jet puts a good many people to work.

    I imagine the young man or woman who works on the assembly room floor of Lear would not have the same disdain for those executives you have. Their livelihood depends on those executives stroking it.

  8. Actually the percentage has nothing to do with economics 101. ACtually Economics 101 tells you that any corporate taxes will often be passed right along to consumers in the form of higher prices. Why do you hate the poor so much, Mike , that you want to raise their prices on everything?

  9. It’s not about how much a company pays out, it is about the percentage of income it pays and with it in Exxon’s case the amount of money it gets from government. Economics 101.

  10. Mike Spindell, how much did Exxon pay out last year in federal income taxes, find out and get back to me. Now find out out what the bottom 49% paid in federal income taxes and compare the two. Which is more?

  11. “Not sure if you’ve actually ever worked in finance at any multi-billion dollar firm,”

    Max,

    What was the percentage GE paid out last year in taxes, find out and get back to me.

  12. “a corporate jet can be an important time saving tool.”

    That is just the bullshit used to justify them to weak minds. A corporate Jet is a penis for Executives.

  13. @rafflaw, I know how fond you are of proof, so where is the empirical evidence that shows where government spending is capable of getting us out of a recession/depression other than when there is national unity, such as during a war, specifically WWII. (Also, other than the appeal to Krugman Authority. which seem to invoke as some sort of economic talisman.)

  14. kderosa,
    I have said too much already, but there are many experts, Krugman is one of them, that think the best way to get out of a hole like this is to spend your way out of it. Corporations aren’t creating jobs here so the demand has to be created in order to jump start the economy. Thanks for commenting.

  15. @rafflaw, By your theory, why don’t we just spend a quadrillion dollars and get ourselves back to full employment? Each job onlys costs about $200k to “create or save” Let’s go for it.

    Krugman’s brand of Keynesianism was even opposed by Keynes.

  16. kderosa,
    you did not ask how much they cost, you claimed that the stimulus bill did not create or save significant numbers of jobs. You would be incorrect.
    Name your economists and stack them up againsts Krugman and Krugman still wins. Have a nice day.

  17. A corporate jet can be money saving too. They get a tax deduction for the jets. More trickle up economics…………..

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