Spending is Out of Control?!?

[dcarrigg]

I posted this in another thread, but I thought it deserved a spot out front for discussion.

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So far as government spending goes, I still think it's more of a revenue issue (needs more taxes). Remember when looking at the graph below that the 1930s saw social security / Medicare added in, and under LBJ, it was expanded. The increase over time is in money that 'goes back' to the people.



The only spending cuts that need to happen are medical (medicare/medicaid).



Tax rates on high income earners have not been this low since before WWI. For almost a hundred years it worked. Reagan broke it. He broke it on purpose.



Is it a spending problem, or are we just not taxing the FIRE/upper 0.1% enough? Production workers saw real wage gains of just 4.3% from '90-'05. What if you were paid in financial instruments?



The capital gains tax has never been this low. Even the robber barons of the 19th century would have blushed at what their 21st century counterparts had pulled off:



Reagan broke the capital gains tax system too:



Raw data on historic top marginal US income tax rates is here:

http://www.truthandpolitics.org/top-rates.php.

Meanwhile, no matter what, Obama, Bush or Reagan, they keep starving the beast:



It's starve the beast in action. It's plain and simple. They'll get out the blow horn and scream "spending is out of control." They've been planning on doing it since the 1970s. They will take it from your pay and your retirement. They will freeze your wage. They will take your healthcare. They will give it to the financiers. Obama and Boehner are on the same page with this. The same folks butter their bread. Do not be fooled.

[Chris]

Re: Spending is Out of Control?!?

Government spending is out of control in the US and the UK. How did our forefathers survive when the Leviathan was just a toddler?

[flintlock]

Re: Spending is Out of Control?!?

Government spending is out of control in the US and the UK. How did our forefathers survive when the Leviathan was just a toddler?

That is the same question I always ask myself. Sure, times have changed, its more complex than that. But how did we go from the days of no income tax to what we have now?

The answer, back then people either pulled their weight financially or they perished. A simple but cruel truth. Death was a much more common and accepted fact of life. Today we take extreme measures to keep people alive despite their circumstances. We created a blanket of security so that no one suffers for their circumstances, or their irresponsible actions. And I'm not saying that is always wrong. But it is expensive. Its also expensive to create a world empire where a US presence is in almost every region of the world. In 1801, international incidents like with the Barbary pirates took years to resolve, instead of days. That kind of ability to react almost instantly is expensive to maintain indefinitely. We live above our means, period. The fact we've been able to get away with it for so many years has more to do with our monetary system and demographics than with tax rates.

As far as higher taxes being the answer, I'm not so sure about that. Its fine to compare graphs and charts of marginal tax rates with the past. But a lot has changed since then. The US economy has been subject to massive pressure by a global economy. The US struggles to be competitive. I'm not sure how raising taxes is going to help the US compete. And I'd like to see how much actual revenue raising taxes on high income earners would actually produce. It could merely end up stifling business without raising revenues, the worst of all situations. But I do generally agree that there is some room at the top to raise taxes without killing off a recovery. And I'd like to see ALL income treated the same eventually. Why is the dollar i make breaking my back taxed differently than the dollar some old lady makes off a family trust?

The best answer is probably to attack the issue at both ends. Expenses and revenue. And at some point, people need to be educated about the real cost of bringing a human being into the world, from cradle to grave. Theres more to it than diapers and food.

[DSpencer]

Re: Spending is Out of Control?!?

That is the same question I always ask myself. Sure, times have changed, its more complex than that. But how did we go from the days of no income tax to what we have now?

I think the short answer is personal responsibility + stronger family/community support systems. Worse than the wastefulness in all these social programs is their role in destroying traditional voluntary support structures.

The best answer is probably to attack the issue at both ends. Expenses and revenue. And at some point, people need to be educated about the real cost of bringing a human being into the world, from cradle to grave. Theres more to it than diapers and food.

Right, the obvious solution is to actually have a balanced budget, all the time. "Starve the Beast" seems to me just a convenient way of saying: take the politically easy way out by taxing less and spending more. I guess the point of the original post was that really we just need to raise taxes, but to me showing a graph of ever increasing spending paints a picture that the opposite is obviously true. We simply don't need so many of the current programs.

Today's standard of living costs so much that even with a well-paying job I'd be nervous to have my own kid. Yet few people seem to think twice about the fact that before I even get my paycheck, money is taken from me to pay for irresponsible people to have kids. I guess thinking that taking care of yourself and your family should be first priority is some kind of outdated idealism.

The increase over time is in money that 'goes back' to the people.

For a while. That's how unsustainable/ponzi schemes work. Personally, I consider my social security to just be another tax that I will never benefit me. If you rely on it for retirement, well....good luck.

Also, if your solution to the deficit is to raise taxes on the very rich, then when you say "goes back to the people" what you really mean is "comes from some people and goes to other people".

[chr5648]

Re: Spending is Out of Control?!?

That 3% tea tax George III doled out, doesn't look that bad now, does it? He also didn't shove endless federal agencies, regulations, taxes, social engineering, etc. down our throats.