I'm at Reason magazine's headquarters, watching the debate. Sudden switch to the economy, not surprisingly. My first thought is that I don't understand why the moderator is letting McCain and Obama talk about their budget proposal as if there is a snowball's chance in hell that they will be enacting any of these plans. They won't. The current crisis has blown any chance of big spending plans or tax cuts. Even without the bailout package, America's tax revenues are going to look pretty anemic next year. As goes Wall Street, so go income taxes.
I say that not in the "what is good for GM is good for America sense"; it's just an empirical observation. The Clinton surpluses were entirely capital-gains based. Bush's happy surprises were buoyed by stock options and executive bonus packages, almost all of which is in stock. So if the stock market is down next year, hello massive deficit.
If we add another $250 billion for bank bailouts, we're talking about cutting spending and raising taxes, not merely standing pat. And right now, that seems like the most likely future to me.
Copyright © 2009 by The Atlantic Monthly Group. All rights reserved.
I think Dean Baker has it right. If we go into the credit markets and borrow another 700 billion that only raises the national debt by 7%. Also, we can get a really good rate right now. I don't see what the big deal is...
At least in the first half hour of the debate, they didn't spend much time actually talking about the recent turmoil, did they? Obama just kept repeating different ways of saying "I didn't do it, it wasn't me! They did it, I didn't do it, I told them not to!"
And McCain actually had some strong statements to make but didn't. Why didn't McCain point out that Republicans tried to increase oversight of Fannie and Freddie in 2005, but the Democrats blocked it? And in the process, Obama in 4 years got more money from Fannie and Freddie than anyone else over nearly 2 decades except for Dodd, another Democrat who blocked greater oversight of Fannie and Freddie (along with Barney Frank).
The Clinton surpluses were entirely capital-gains based.
Federal taxes on wages and salaries were eliminated in 1998?
Bush's happy surprises were buoyed by stock options and executive bonus packages, almost all of which is in stock.
A few hundred thousand people receive those sorts of packages in a workforce with north of 140,000,000 earners in it. They cannot account for more than a small share of the tax revenue generated each year.
At least insofar as I understand it, the consensus among the tax people is that the surpluses--not the base of 18.5-19.5%, but the excess--reflects capital gains and other stock-market related income effects.
Money is fungible.
Why not? Look we've decided as a country that there is no connection between what we spend and what we're capable of paying off. Why should the executive feel any pressure to balance the books at all? What's the difference when you're adding several hundred billion to trillion dollar debts and deficits?
This was the funniest part of the debate for me (humorously paraphrased)
Moderator: What aspect of your agenda will change given the financial crisis?
Candidate A (they were really interchangeable here): We'll find unnecessary spending and trim it.
Candidate B: We'll make the tough decisions about spending.
Moderator: And the criteria for unnecessary/tough will be...?
Candidate A: My opponent wants to reduce taxes on fewer of you!
Candidate B: My opponent want to increase spending!
Moderator: Come on now, how does the financial crisis affect your policy plans? Give me something, anything about your policy *priorities*. What's the first thing to go? Honestly.
Candidate X: This is a tough time financially and we all have to come together as a nation.
"What's the first thing to go? Honestly."
...given that this debate was supposed to be about foreign policy, the moderator should've been able to figure that one out for himself.....
"The Clinton surpluses were entirely capital-gains based."
Shame on you, Megan! There were no Clinton surpluses. The national debt increased every single year.
http://www.letxa.com/articles/16
I have heard others say that taxes will have to be raised in the coming years. Who has the courage to actually vote for increased taxes? On the other hand, who has the courage to propose, much less actually vote for, a substantial reduction in government?
It is clear that neither party will vote to cut government and increase taxes without the other party's cooperation. Can you imagine the GOP giving up the "tax and spend" mantra?
I think we are at a stalemate, in part because the American public has been persuaded that there is no end of services they can get from the government, and no need to pay for them. What congressman has the courage to explain otherwise to that person's constituents.