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GOP's New Policy: Deficits to help poor = bad. Deficits to help rich = okey dokey.


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Jon Kyle and the Republicans are holding up unemployment insurance because it would add less than $40 billion to the deficit, but he wants to keep the Bush tax cuts for Americans making over $250k a year even though it would add over $600 billion to the deficit.

The stereotype has always been that Republicans are for the rich and against the poor. GOPers are playing right into that stereotype:

Q: The president was on the campaign trail this week and he was trying out new lines of attack against Republicans, and he tried to frame the debate as a choice between his agenda and the Bush GOP policies, which he said drive -- drove the economy into a ditch over the last -- previous eight years. Clearly the polls indicate support for this president is waning. On the other hand, those same polls indicate that voters still don't like what President Bush and the Republicans during those eight years did for the economy.

KYL: I don't think that's right, Chris. The American people strongly support the biggest positive impact that you could have on the economy, the so-called "Bush tax cuts" of '01 and '03. And those tax cuts are set to expire at the end of this year. The president had said that he would protect middle class taxpayers from those tax rates going back up at the end of this year. So far he has not chosen to do so. That's going to be a huge hit to the economy. And you can't blame President Bush for everything, by the way. That which occurred on Wall Street, with Fannie and Freddie and so on -- I mean, we can have a debate about that all day, about who is really responsible. But I -- you can't put that at the foot of President Bush.

Q: But, Senator...

KYL: The reality is...

Q: Senator...

KYL: Yes, go ahead, Chris.

Q: Senator, let me just break in, because I want to pick up on exactly the point that you just brought up, particularly, the Bush tax cuts for the wealthy. That is part of the big Republican growth agenda, let's keep, not let expire, the Bush tax cuts for the wealthy. The fact is those would cost $678 billion over 10 years. At a time Republicans are saying that they can't extend unemployment benefits unless you pay for them, tell me, how are you going to pay that $678 billion to keep those Bush tax cuts for the wealthy?

KYL: Chris, that is a loaded question. The Bush tax cuts applied to every single American. In fact...

Q: I'm talking about the Bush tax cuts for the wealthy, sir.

KYL: Well, OK. So let's, first of all, start with those that don't apply to the wealthy. Shouldn't those be extended? Shouldn't you have a 10 percent tax bracket so that people don't have to pay income taxes who don't make very much money? Shouldn't you do away with the marriage penalty? Shouldn't you have the child tax credit at $1,000 per child, and so on? All of that goes away. Now, with respect to those that apply to the upper brackets, it's very clear that you're going to clobber small business because the bulk of small business taxes are paid in the top income tax rate.

Q: But, sir, how are you going to -- because we are running out of time, how are you going to pay the $678 billion just on the tax cuts for people over -- making more than $200,000 a year?

KYL: ... you should never raise taxes in order to cut taxes. Surely Congress has the authority, and it would be right to -- if we decide we want to cut taxes to spur the economy, not to have to raise taxes in order to offset those costs. You do need to offset the cost of increased spending, and that's what Republicans object to. But you should never have to offset cost of a deliberate decision to reduce tax rates on Americans.

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Tax cuts for the people that actually pay taxes... That is some mother****ing bull**** right there.

honestly these tax cuts being killed are going to harm this economy. housing market is barely standing without the tax credit from the government.

im really starting to agree with people predicting a double dip recession, with an even further dip than before.

political party wise, we need to fix the system. dems and repubs are the exact same. i think a four party or more system might work, but we gotta limit congressional terms. no more than 2 terms for senate, andd no more than 6 for reps.

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Your thread title reminded me of another liberal who is well known for making inflammatory remarks. GOP hates poor people? Okay.

Read.

I never said GOPers hate the poor. In fact, I called that a stereotype. My point is that the GOP is playing right into that stereotype with this BS.

They oppose extending unemployment benefits because of $40 billion added to the deficit. But they're okay with a $600+ billion deficit if it means tax cuts for the wealthy.

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How are you going to pay for them? Or do you not care about the deficit when it means the rich getting tax cuts?

Address the contradiction, if you can.

Pay for what? Letting people keep more of their own money? God forbid the government should have to tighten its belt.

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Pay for what? Letting people keep more of their own money? God forbid the government should have to tighten its belt.

So you don't give a crap about the deficit, huh? You're okay if we continue to go into debt so that the rich can keep a few percent more of their income each year. Gotcha.

Just don't whine about the debt or the deficits, because you've just proven you don't care about those things.

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So you don't give a crap about the deficit, huh? You're okay if we continue to go into debt so that the rich can keep a few percent more of their income each year. Gotcha.

Just don't whine about the debt or the deficits, because you've just proven you don't care about those things.

I'm not as worried about the taxing side as I am about the spending side. Congress is like a teenage girl with credit cards. Everything is maxed out and we are just making the minimum payment.

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The U.S. government owes $13 trillion. That is also known as our national debt. It is also the total amount of U.S. government bonds we have sold. You can see the real time amount of it zooming up like a rocket car odometer at http://www.usdebtclock.org/.

Furthermore, we are increasing the national debt each year by the amount of our annual deficit spending. The 2009 deficit was $1.9 trillion. The deficits for the next ten years are projected by Obama’s own administration to be about $1 trillion a year. Most likely, the actual deficits will be higher than those projections.

The national debt and interest on it can only be paid from U.S. tax revenues. Those are about $2.1 trillion a year. But we spend $3.5 to $4 trillion a year.

To payoff the national debt, we would have to cut spending enough that we ran a government surplus each year, and use that surplus to pay down the debt. There is no plan to ever run a surplus. Obama has projected trillion-dollar deficits for each of the next ten years. He did not stop projecting them at the ten-year point because we are going to stop deficit spending at that time. Rather, he stopped projecting them then because he is not required to project a budget more than ten years. If he had projected another ten years, there is no reason to believe there would not be another ten years of trillion-dollar annual deficits.

In other words, we cannot pay off the debt until we start running surpluses and there are no plans to ever run a surplus. At some future combination of interest rate, national debt, and national tax revenues, the total taxes collected will not even be enough to pay just the interest on the debt. For example, if the interest rate on the national debt were 10%, our current tax revenues of $2.1 trillion would exceed the interest of 10% x $13 trillion = $1.3 trillion, but not by much. When the national debt reaches $20 trillion seven years from now, our $2 trillion of tax revenues would all go to interest with none left for the military, Social Security, Medicare, FBI, and so on.

In short, we cannot pay off the debt now and with each passing day, we become less able to pay off the debt.

Cutting federal spending by the amount of the current federal deficit—$1.427 trillion according to the national debt clock would at least stop the national debt from growing.

Since that same clock says we are spending $3.558 trillion a year, that means we need to cut by $1.427 trillion ÷ $3.558 trillion = 40%. That would mean cutting federal payroll by laying off 40% of all federal employees, cutting people’s Social Security and federal pension checks by 40%, refusing to pay 40% of Medicare and Medicaid bills, etc. You get the idea.

If we cut the federal spending by more than 40%, the additional cuts would enable us to start paying off part of the national debt.

Can we do that?

Yes we can.

Does the political will exist to do that?

Not at the moment.

Will it ever?

Sure. When the world bond market makes that the only choice by refusing to buy U.S. government bonds.

We will have to default on the national debt when the world bond market stops buying our new bonds. Our annual U.S. government bonds coming due and needing to be paid off each year are now around $3.25 trillion. That is more than $1 trillion in excess of our current annual tax revenues of $2.1 trillion. In other words, when the world bond market says, “No thanks” to our bond auctions, we will be forced to cut federal spending 40% AND default on our national debt BOTH.

It’s not my opinion. It’s arithmetic.

Our only real alternative to defaulting is to just “print” the money to pay off our debt. I am afraid that is what the politicians will do on the theory that they will be able to blame retail merchants like Exxon, Wal-Mart and McDonald’s for higher prices.

That would cause hyperinflation. Hyperinflation of the U.S. dollar would be a disaster for the nation and the world. Who would it hurt? Everyone on earth who owned a dollar or a dollar-denominated asset like a U.S. government, corporate, or municipal bond or any U.S. mortgage or account receivable.

Hyperinflation is so bad that it cannot last for long. The most famous hyperinflation was in Weimar Republic Germany, where it was perpetrated in response to the reparation burden imposed by the victorious countries of World War I. That hyperinflation lasted 16 months, but arguably led to the election of Hitler to chancellor of Germany and World War II.

Who would be hurt if the U.S. government refused to pay off its bonds? The people who bought U.S. government bonds in the last 30 years or so.

Here is a pie chart of who that is. http://en.wikipedia.org/wiki/File:Estimated_ownership_of_US_Treasury_securities_by_category_0608.jpg

In other words, a lot of U.S. citizens and entities as well as many foreign citizens and entities and governments (about 27.9% of U.S. bond ownership), especially Japan and China.

Do America’s bond owners deserve to lose all of the money the trusted the U.S. government with?

Actually, they sort of do.

How so?

For decades, knowledgeable observers have warned that Social Security was going to bankrupt the U.S. The 78 million Baby Boomers have generally not yet begun receiving Social Security. They can, without income limits, starting in 2013. Social Security already went into the red as far as the amount paid out exceeding the amount received in Social Security taxes.

For decades they have also been warned that Medicare and Medicaid were going to bankrupt the U.S. The 78 million Baby Boomers are eligible to start receiving Medicare in 2011.

All the warnings were true, yet the bond buyers still bought.

Since January 2010, they have also been warned that Obamacare was going to bankrupt America, which it most definitely will.

Canada and almost all of Western Europe are also going bankrupt because of too many entitlement programs. It has been in all the papers.

Someone should have stopped the U.S. Congress and Oval Office from all this government spending. Who could have done that? No one but the bond buyers. They could have, and should have, just said no. The voters never had a fiscally-responsible alternative. Democrat politicians created most of the entitlement spending, but Republican politicians were afraid to oppose it for fear of losing elections.

The bond buyers have been the enablers of the “drunken sailors” in Congress and the White House during the last 77 years.

When Congress and the president said, implicitly, “We want to place a huge debt burden on our children and grandchildren,” the current U.S. bond owners answered, “I want to own a piece of those children and grandchildren.” Screw the bond buyers who helped perpetrate that crime against those children and grandchildren!

Our children and grandchildren would be the beneficiaries of the default. They would be born into a debt-free America. America would have the cleanest balance sheet in the world.

Perhaps even better, Congress’ and the White House’s credit cards would have been sliced up and cancelled.

Various efforts to pass a balanced budget amendment to the Constitution have failed. They should be renewed until successful.

In the interim, default on the national debt would have the same effect. It would prevent the Congress and White House from engaging in any deficit spending. It takes two to tango. And it takes two to deficit spend: legislators to pass an unbalanced budget and bond buyers to lend the U.S. government the money to spend more than it takes in in taxes.

A default on the national debt would at long last force America to live within its means. It is disgraceful that America’s “leaders” have to be forced to behave in a responsible manner. But no one can claim they did not have to be forced. Other than six-term Republican Wisconsin Congressman Paul Ryan and New Jersey Republican Governor Chris Christie and Tea Party-supported Nevada Republican Senate candidate Sharron Angle, there is no one in politics who has even suggested cutting entitlements. But it is also mathematically impossible to solve the nation’s fiscal problem without cutting entitlements.

Borrowing money that is to be paid back by our children and grandchildren is immoral taxation without representation. Children and unborn grandchildren cannot vote. Yet bond buyers will be indignant if and when the upcoming generations refuse to pay those debts. The bond buyers should have thought of that when they bought the bonds

Should the citizens of Germany have had to pay back the debts of Hitler’s Third Reich after World War II? Are Russian citizens obligated to work for decades to pay off the debts of the former Soviet Union? The Soviets sure as **** renounced the Czar’s debts right after the Russian Revolution. And the current Russian government also defaulted on its bonds in the late 1990s.

Our current impossible debt level (including unfunded liabilities for future entitlements) was generally created by Democrat politicians to buy votes and the loyalty of voters to cement themselves into power forever. Republicans went along because they felt it would be political suicide not to. In other words, they placed their own political careers ahead of the needs of the nation and the oath they took when they got elected.

A pox on BOTH their houses.

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I'm not as worried about the taxing side as I am about the spending side. Congress is like a teenage girl with credit cards. Everything is maxed out and we are just making the minimum payment.

So the answer is to take out a high-interest loan (higher deficit) so that the girls can go buy $500 outfits even though they've got a closet full of clothes already? Makes no sense.

We can spend $40 billion to keep the unemployed from being financially devastated. Nope, too expensive. But we're going to extend over $600 billion in taxes for the wealthy and not worry about the deficit/debt impact it's going to have.

Penny wise and pound foolish.

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So the answer is to take out a high-interest loan (higher deficit) so that the girls can go buy $500 outfits even though they've got a closet full of clothes already? Makes no sense.

We can spend $40 billion to keep the unemployed from being financially devastated. Nope, too expensive. But we're going to extend over $600 billion in taxes for the wealthy and not worry about the deficit/debt impact it's going to have.

Penny wise and pound foolish.

I didn't give an opinion on renewing the tax cuts.

But as far as the analogy goes, the first thing the girls need to do before anything else is to quit spending more money than they have.

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So you don't give a crap about the deficit, huh? You're okay if we continue to go into debt so that the rich can keep a few percent more of their income each year. Gotcha.

Just don't whine about the debt or the deficits, because you've just proven you don't care about those things.

You are amazing. This application is as simple as looking at your own budget. If you need to come up with $678 extra dollars, do you go out and find a job that will pay you the extra money, or do you find that $678 within your own expenditures?

If you want to find someone to raise taxes on, try taxing the people that pay absolutely nothing in income taxes right now.

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The U.S. government owes $13 trillion. That is also known as our national debt. It is also the total amount of U.S. government bonds we have sold. You can see the real time amount of it zooming up like a rocket car odometer at http://www.usdebtclock.org/.

Not going through all of that point by point, but there are a few things that need to be corrected.

First, the $1.9 trillion deficit last year was purely a function of TARP and the bailouts, a short-term spending increase due to extreme economic circumstances. The White House has projected less than $1 trillion deficits over the next ten years. However, the CBO estimates are higher and eventually hit about $1 trillion a year after a period of lower deficits, so it really depends on whether you trust Obama or the CBO (I tend to go with CBO estimates over WH ones).

Also, the paper presents a false dichotomy (or trichotomy, depends on how seriously you take the default argument). Cutting spending is needed, but we don't have to cut 40%. In fact, we can raise taxes on the upper class by 3-5% and cut the deficit by a good deal. An economic recovery will also boost revenues over the next ten years, meaning that the projections are likely a bit overstated. We got to surpluses during the Clinton years through a combination of spending freezes, tax increases on the wealthy, and an economic boom. It's not so simplistic as "cut spending 40% or default on the debt".

Finally, the deficits are the real problem, not the debt. GDP always grows exponentially, meaning that if we had a balanced budget over the next twenty years and had 3-5% average GDP growth, the debt as a percent of GDP would shrink dramatically and we would be on fiscally sound standing. The debt number is used to scare people, but the deficits (which continue adding to the debt) are what we should be focused on.

Lower deficits will shore up the bond markets, which will keep interest rates low and put more money in the pockets of Americans with mortgages and other debt.

Finally, high inflation is not bad for everyone. It's not economically sound, but it actually does benefit people who have large debt relative to their income (usually middle and lower class individuals) and it disadvantages lenders/banks most. The reason is that wages have to grow with inflation. Suppose a person makes $56k a year and has $180k in debt before inflation. Then, after a decade of high inflation, his income grows to $120k while his debt remains at $180 (or perhaps shrinks slightly due to payments on the principle). The person now has an easier time paying off that debt. Put differently, a $1400 payment each month is a lot easier on a $120k salary than it is on a $56k salary. So again, while inflation isn't good for the economy, it can be good for certain sectors in the economy. I'm not advocating high inflation, just saying....

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I didn't give an opinion on renewing the tax cuts.

But as far as the analogy goes, the first thing the girls need to do before anything else is to quit spending more money than they have.

You're mixing up the analogies. The girls have plenty of clothes and don't need another expensive dress. The parents would be foolish to borrow more money to give back to the girls so they can buy luxuries when the parents are up to their eyeballs in debt already. In this case, it's silly to borrow money so that the rich can have an extra 3-5% of their incomes even while we kick people off of their unemployment benefits because we're concerned about it costing OVER SIXTEEN TIMES LESS than the tax cuts to the rich.

Again, penny wise and pound foolish.

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You are amazing. This application is as simple as looking at your own budget. If you need to come up with $678 extra dollars, do you go out and find a job that will pay you the extra money, or do you find that $678 within your own expenditures?

If you want to find someone to raise taxes on, try taxing the people that pay absolutely nothing in income taxes right now.

Uh, a lot of people do take extra jobs to raise money they need. But if your solution is to cut government spending to pay for the tax cuts to the rich, then what specific programs do you propose cutting to make up that money?

And this isn't about raising taxes, it's about allowing taxes to revert to what they were during the Clinton years. Bush's own legislation allowed the tax cuts to expire this year, so if anything Bush is the one "raising taxes" because his legislation didn't make them permanent.

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