With the Grand Bargain silly season upon us, most celebrity pundits, along with too many Democrats are talking about what cuts to make. Never mind that this is a completely artificial ‘crisis’, unlike, let’s say, a wall of water from a tropical storm. Just to pose a hypothetical situation.
While I support some deficit reduction measures, such as raising taxes on the wealthy are good for their own sake (reduction of high-end inflation, lessening the political power of the wealth, favoring wage income over interest income), the four trillion dollar target over ten years is a number pulled out of someone’s ass. Why not 3.85 trillion over nine years? With unemployment at 7.8 percent, underemployment double that, and workforce participation still circling the bowl, reducing government purchasing power over the next decade, especially with all sorts of unmet infrastructure needs, is fucking moronic.
That said, if one wants to make a serious proposal to get to four trillion over the next decade, Robert Reich’s proposal is a good one (boldface mine):
First, raise taxes on the rich – and by more than the highest marginal rate under Bill Clinton or even a 30 percent (so-called Buffett Rule) minimum rate on millionaires. Remember: America’s top earners are now wealthier than they’ve ever been, and they’re taking home a larger share of total income and wealth than top earners have received in over 80 years.
Why not go back sixty years when Americans earning over $1 million in today’s dollars paid 55.2 percent of it in income taxes, after taking all deductions and credits? If they were taxed at that rate now, they’d pay at least $80 billion more annually — which would reduce the budget deficit by about $1 trillion over the next decade. That’s a quarter of the $4 trillion in deficit reduction right there.
A 2% surtax on the wealth of the richest one-half of 1 percent would bring in another $750 billion over the decade. A one-half of 1 percent tax on financial transactions would bring in an additional $250 billion.
Add this up and we get $2 trillion over ten years — half of the deficit-reduction goal.
Raise the capital gains rate to match the rate on ordinary income and cap the mortgage interest deduction at $12,000 a year, and that’s another $1 trillion over ten years. So now we’re up to $3 trillion in additional revenue.
Eliminate special tax preferences for oil and gas, price supports for big agriculture, tax breaks and research subsidies for Big Pharma, unnecessary weapons systems for military contractors, and indirect subsidies to the biggest banks on Wall Street, and we’re nearly there.
End the Bush tax cuts on incomes between $250,000 and $1 million, and — bingo — we made it: $4 trillion over 10 years.
And this would mean Grandma–or you down the road–doesn’t have to buy catfood as an entree. It means that we wouldn’t have to cut Pell grants, plunging students even further into debt. It means that Medicare recipients wouldn’t have to pay more in co-payments many already can’t afford.
And what all of that means is that, with the leftward pole of acceptable discourse being Rockefeller Republicanism, the elderly, the poor, and children are screwed.
mikethemadbiologist
Thanks a bunch for your posts on economics and the such. I haven’t been able to find the time to study up on the topic as much as I would like so I look to your blog pretty often when I get into arguments with my conservative father. I have a question for you, or any other readers. I vaguely recall reading a year or more ago an argument on your blog (it may have been another blog…I’m having a hard time remembering where) where you set up a counter-argument to the “socialism is the same thing as taking an A grade from a good student and splitting it with a underachieving student and giving them both Cs”. Does it ring a bell? If so, I was hoping someone could help me understand a good counter-argument as I’m having trouble coming up with one of my own. Much thanks!
I’d suggest not bothering with any “counter-arguments” because you’re dealing with dishonest idiots who are quite immune to things like ‘facts’ and ‘reason’. A google search of the terms “snopes”, “socialism”, and “grades” turned up the expected result at the top of the page.
http://www.snopes.com/college/exam/socialism.asp
Those immoral cretins define “socialism” as anything they please at any given moment. Take the example of Jonah “doughy pantload” Goldberg plucking out the word Socialism from the German Nationalsozialismus to prove Liberals are just the same as Nazis – hence his laughable book Liberal Facism. But hey, when great thinkers like Thomas “Uncle Tom” Sowell praise it to the heavens, it must be some swell stuff. If you ever feel the need to reduce your IQ by 20-30 points, this is one of the more painful ways to do the deed.
In my first reading I totally blew by the part about your “conservative father”. I didn’t mean to imply he’s a classical idiot, but if he’s like some of my kinfolk, he watches Fox and listens to Rush ‘druggie’ Limpaugh. Sometimes it’s difficult to distinguish between a person who can’t think and one who won’t.
I talk quite a lot with an elderly relative, and the other day she remarked that Obama was a Communist! This person isn’t at all stupid, but 1) she couldn’t define the word “Communist” except to say that’s what Obama is, and 2) she wasn’t about to change her mind. Needless to say, she rejected everything I said about the matter.
@ Jake.
Well, let’s first point out that to make the scenario work, it requires that the Teacher (or Government) arbitrarily limits the available grades. Nothing is actually preventing the teacher from giving A’s to both, and we need the teacher to represent an ebil guvmint, we’ll go ahead and play along with it for a bit.
Let’s go ahead and suppose that for some reason the teacher only has the ability to give out grades according to a pool of points that is out there. As in, as points are earned, they are removed from the pool entirely. Then let’s assume that a couple score really really well on tests to begin with and take a large share of the available points. From then on, since the pool is never replenished, they will always have a huge advantage and the remaining are competing for the remaining points. Now let’s go ahead an assume that the couple are really smart and they always take the lion’s share of the points for tests and such, meaning that the remaining students, competing for the fewer points are ALWAYS going to be getting less points. So, at the end of the semester, we have a few with say 40-50% of the points and the rest splitting the points among the rest of them. So you’ve probably got a few A’s and a whole bunch of D’s and F’s. But we haven’t really measured what grade people SHOULD have got. Few would argue that the top people should get A’s (unless they are cheating…), but do the rest deserve to fail because there weren’t enough points to accurately reflect their grade?
So a fairer minded teacher (read ebil socialist govmint) comes along and says to the highest graded persons, “Hey, these others deserve to pass this class because they worked hard and learned things and did everything they were supposed to. I’m going to strip off your A+++’s and give out those points to the rest so they don’t fail. You’ll still get A’s and the rest will pass.”
In the conservative version of the story of course, the highest grades students responses should be a complete hissy fit because they earned their grade and everyone else were lazy and are now trying to mooch off of them and it’s horrible horrible horrible. That it was a rigged game and they are still getting A’s (or in real life rich beyond imagining) is completely beyond them, because fairness is them getting everything.
Thanks for the replies – I appreciate it.
I usually try give people the benefit of the doubt and try to have an intelligent discussion with them before I write them off completely.