One of the touchstones for GOP members has been the pledge to “pay as you go” — covering any increases in spending with corresponding cuts in spending or new revenue. The campaign season appears to have taken its toll on that pledge with tax cuts that can add nearly $1 trillion to the federal debt.
I am obviously more conservative on economic and tax issues than many on our blog. (It is probably the hold of the University of Chicago education in my impressionable youth). However, I remain alarmed by our continuing mounting debt at a time when countries around the world are facing defaults and crisis ager periods of rising state debt. We just discussed the deficit figures this week. I was a critic of Bush for his runaway spending, including the two wars, and I also believe that Obama has shown a lack of spending control (as has Congress). While debt is part of the reality of modern economics for any state, our debt is massive and we are spending an inordinate amount of every dollar to simply pay for that debt.
The economists differ on where the redline may be for debt as a percent of GDP. We are currently eleventh in that ratio. Japan is over 180 percent while Greece is just under 150 percent. Italy is in third place at 109 percent. We stand at around 61 percent of GDP. Some economists view 70 percent as the red line.
Despite this concern, the U.S. is actually paying less on its debt service due to the effort to keep interest rates low. We are paying about seven percent on that debt which is down from the 1990s due to the shifting interest rates. That leads some to argue that we can add even more debt to offer incentives for growth. I admit that I have long been a skeptic of government programs to jump start an economy of this size. What we saw under Bush and Obama in federal subsidies, bailouts, and “growth” programs seemed highly wasteful and often involved dubious accounting of the true costs.
Jeffrey Dorfman has an interesting article in Forbes rejecting the GDP ratio as a measure. He notes:
This also offers a better comparison because different countries have very different levels of taxation. A country with high taxes can afford more debt than a low tax country. Debt to GDP ignores this difference. Comparing debt to tax revenue reveals a much truer picture of the burden of each country’s debt on its government’s finances.
When I compute those figures, Japan is still #1, with a debt as a percentage of tax revenue of about 900 percent and Greece is still in second place at about 475 percent. The big change is the U.S. jumps up to third place, with a debt to income measure of 408 percent.
The most recent measures allows for some positive changes like $155 billion research and development tax credit and a $90 billion expansion of the child tax credit to higher-income families. However, in the past, the GOP has insisted on paying down or at least covering such costs so not to add to the national debt. The failure to do so was attacked by Minority Leader Nancy Pelosi as hypocritical. Pelosi was not championing the “pay-as-you-go” policy but noting that past Democratic measures have been opposed on the basis for that policy.
The fact that these measures involve tax cuts will likely insulate the members from a backlash on the campaign trail but the “pay-as-you-go” approach just seemed to morph into “spend-as-they-went” back home to campaign.
Both sides are guilty of spending frivolously, but face the truth, the Dems are the biggest spenders and tax hikers around–it’s part of their MO.
Certainly you wouldn’t expect a republican to be conservative with your resources would you…. They just spend…..
Now get those tax and spend liberals out… We don’t need no balanced budget…. We like our balloons…..
Karen S,
Sorry that video was someone else.
If you tax citizens and corporations, aren’t you really taxing citizens twice?
A country is composed of citizens. A corporation is composed of citizens. Consumers are citizens.
How many ways and times do you intend to tax citizens.
To tax ONLY citizens is clear and understandable.
To tax citizens AND corporations deliberately confuses the issue.
Wow! Samantha’s history of NZ since the 50s is very interesting…
Right, Spinelli, its Dems & Reps. Never trust or vote for either unless you really know the candidate and he does not toe the line. While you’re at it, support America by NOT supporting the troops as long as they are working for the Illuminati & against the people here and abroad which is certainly the case right now and since before Vietnam..
thanks Darren!
“you indicated that you removed the “affirmative action” for American-Americans of the late 18th and early 19th centuries?”
No that wasn’t me. Are you referring to slavery?
John – no I have not posted any video. You are confusing me with someone else.
I still don’t see the point you are trying to make, that somehow a corporation is not paying taxes, because that money comes out of sales instead of a paycheck. If he has $10 left after paying all his taxes, during his startup phase, or even loses money, that would be pretty meaningful to the owner.
Karen – well, if he loses money he can take it off last year’s taxes. 🙂
Well, John. Where to start.
Option A: You go to work. You work 9 hours. You get a paycheck, with the taxes already deducted. Your employer pays additional taxes on your behalf, as well as other costs such as work comp.
Option B: You own a small business. You work 12-15 hours a day. You risk your own personal money to grow your business. If the business fails, you go bankrupt. You pay work comp (which means you have to match 30% of each employee’s wages in CA). And you pay taxes, in advance, quarterly, and then you pay more taxes at the end of the year.
Are your taxes that you paid less meaningless if you earned them as a small business rather than an employee?
Paul C. Schulte
Dredd – we know how it is supposed to work, but the Democratic Senate has refused to do their part.
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They have done their part well by telling the servants of the elite 1% to stuff it.
Dredd – they have done their part by not doing their part. Well, that makes a lot of sense.
Karen S,
Let’s pick one taxpayer. The corporation or the citizen. Citizens make up corporations so that’s pretty broad and equitable.
Is your intent DOUBLE taxation or obfuscation? You wouldn’t want to overtax and bloat the government, right?
P.S. Was your intent with affirmative action neutrality…you indicated that you removed the “affirmative action” for American-Americans of the late 18th and early 19th centuries? Why not remove affirmative action for the superior women/minorities (as demonstrated by your video.)? That was your video of the attractive advanced degreed, female corporate climber, right?
Click on the YouTube button on the lower right …
Paul C. Schulte
When the House has continually passed budgets as required by the Constitution and the Senate has not, the House cannot put a gun to their heads. There is also the problem of these committees that rewrite the bills after different versions are passed in the House and Senate. The best laid plans of mice and men oft go astray in committee.
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The house is charged with originating the basic bill.
Then the Senate works on it.
When there are disagreements between them, they negotiate.
That is the way bi-cameral legislations work.
It is not designed for anal retentive egotistical jerks who suffer from terminal ignorance sent there by T-Baggers in la la land.
Dredd – we know how it is supposed to work, but the Democratic Senate has refused to do their part.
Nick Spinelli
The US has the highest corporate tax rate in the world. That’s the impetus to moving out of this tax hell.
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Wrong-wing talking point myth.
maxcat – Sorry! I read and responded to your post before John’s, so hadn’t the context. Didn’t get in the loop until later.
My apologies. 🙂
Karen S – no problem. I think we’re on the same wavelength. Good luck!
Karen S,
My barber doesn’t get a pay check from a company.
My cousin has a restaurant.
The government should be limited to security and infrastructure.
Taxes should be massively lower and simpler.
Citizens generate income from many sources.
Citizens should pay the tax to run their government.
Business doesn’t pay tax, their customers do.
Karen S, the ball is in your court…have fun with this argument.
Karen S
Does every citizen get a pay check from a company?
Trust me, when you’re left with a tiny fraction of your income left, it hurts, regardless of whether you received income from a paycheck or from sales that you spent 12 hours a day toiling for.
Do clients have a boss? Does he pay them?
John:
By your reasoning, consumers don’t pay any taxes, either. They take money from their employers, and out of that pay taxes and expenses.
What does it matter if income is from sales or from a paycheck? You still have to write a check to the IRS!