Ruin before taxes

So, the US government has a problem staying under its debt ceiling, and – according to Slate – is left with the following choices:

Eventually, though, the United States will need to do one of three things: default on its obligations, start making drastic cuts in federal spending, or raise the debt ceiling again.

Hmm. There seems to be an option missing from that list. What could it be?

“Everything should be on the table, except raising taxes,” House Speaker John Boehner (R-Ohio) said on CBS’s “Face the Nation.” “Because raising taxes will hurt our economy and hurt our ability to create jobs in our country.”

Oh, yes. Of course! The only thing off the table is the main thing that the rich don’t like. We can’t fund public services because there’s not enough money. Why’s there not enough money? Because we refuse to collect it. The only thing you can do with public services is cut them or borrow from overseas to fund them, which we’ll then whinge about. Don’t even think about taxing the rich on the huge amounts they inherit, or they pay themselves by exploiting the people who actually produce things. If you even try, they’ll just refuse to take that money – they’ll deliberately live in poverty, just to spite you – and you’ll get nothing.

So there.

No, you want to debate progressive taxation that could fund public services? Sorry, that’s not even on the table. We will not talk about it. Talking about it is SOCIALISM, which is the same as communism, which is the same as brutal authoritarian dictatorship. You say you want to provide dental care, but I know you really just want to put me in a gulag. Or my money, which is just as bad.

You’ve got to hand it to the right – that’s a very effective job they’ve done, defining out of debate anything that would actually threaten their interests. But don’t worry, I’m sure the other side will stand up to them in the interest of the rest of the country.

What else are they going to do? Completely cave like they did on the Bush tax cuts?

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22 responses to “Ruin before taxes

  1. mondo rock

    But don’t worry, I’m sure the other side will stand up to them in the interest of the rest of the country.

    Lefty – you’re forgetting that the Democrats’ primary goal is to represent exactly the same group of super-rich as the Republicans. Hell, the Democrat politicians are that group of super-rich (just like the Republican politicians are).

    This is the fundamental failure in modern US politicis – the government is now wholly owned by vested, monied interests regardless of which party is in power. Both parties are utterly in the thrall of the lobbying industry and the corporations that stand behind it – in many cases the politicians ARE the lobbyists and the huge companies they represent.

    They all draw from the tiny pool of elite super-rich, the pool that now owns the United States.

    The Dem politicians don’t want to raise taxes on the rich any more than the Republicans do – it’s a fully bipartisan consensus.

  2. Mondo “This is the fundamental failure in modern US politicis – the government is now wholly owned by vested, monied interests regardless of which party is in power.”

    Isn’t this pretty much how our system operates and equally a fundemental failure of Australian politics? I mean Gillard’s cuts to middle class welfare were pretty much non existant. A slight difference would be that here the Greens are a party with real power, which would explain the total villification of that party by the Murdoch press and every other vested interest. The other difference, one that is generally hidden from the public and one that is a point of failure in our political system is that whatever government is in power here is totally subservient to US interests.

  3. “A slight difference would be that here the Greens are a party with real power, which would explain the total villification of that party by the Murdoch press and every other vested interest.”

    No, no, it’s “scrutiny” of their “crazy” policies!

    LOL. You’re exactly right, of course.

  4. jordanrastrick

    Isn’t this pretty much how our system operates and equally a fundemental failure of Australian politics?

    In Australia, we don’t have a major structural deficit problem. Our top marginal income tax rate is 45%, versus 35% in the U.S., and it kicks in almost twice as soon. Even when you add in the higher of the state-based U.S. income taxes, our system is still more progressive.

    We also have a marginally higher percentage of overall taxation as a proportion of GDP, which given the government pays for its services rather than perpetually borrowing for them, shows how much better resourced our public sector is than America’s. The comparison gets even more favourable when you consider the respective proporitions of our national budgets spent on areas like Defence.

  5. theyd need to increase tax by $1.1 trillion, or 40% just to balance the budget…then theres the interest on the $14 trillion debt. nobodies going to vote for that

  6. True Jordanrastrick, but we do share the same weakness of being governed by two major parties that are clones of each other and who represent far more the interests of the business elites rather than the interests of the Australian public.

  7. The comparison gets even more favourable when you consider the respective proporitions of our national budgets spent on areas like Defence.

    That’s another non-negotiable aspect of US politics, as far as I can tell. Just as the concept of the rich paying their fair share of tax is completely unthinkable, so also there’s never any limit to be placed on the amount of money that can and should be spent on the US’s endless wars.

    Stand by for a bit of wingnut bingo, too.

  8. Isn’t this pretty much how our system operates and equally a fundemental failure of Australian politics?

    In Australia, we don’t have a major structural deficit problem.

    We don’t worship our billionaires to the point of idolatry either.
    Or cultivate the illusion that hard work is a substitute for “Lucky Sperm Club” membership.

    If one of those things doesn’t give, neither will this.

  9. jordanrastrick

    True Jordanrastrick, but we do share the same weakness of being governed by two major parties that are clones of each other and who represent far more the interests of the business elites rather than the interests of the Australian public.

    Public Choice Theory predicts, correctly, that vested interests will always be able to get disproportionate influence in any democratic system that resembles the ones humanity has devised so far. I don’t think the problem is notably worse in Australia than in other nations.

    I dispute the idea that Labor and the Coalition are clones, although there is a natural tendency for them to copy the most popular aspects of one another’s platforms. Partly this is just a question of consensus building; e.g. the current basic structure of our society, as a welfare state with moderate levels of progressive taxation and regulated free markets in most economic sectors, is supported by not just the two majors but also the Greens and several of the most prominent smaller parties.

    That’s another non-negotiable aspect of US politics, as far as I can tell. Just as the concept of the rich paying their fair share of tax is completely unthinkable, so also there’s never any limit to be placed on the amount of money that can and should be spent on the US’s endless wars.

    It wasn’t always the case that a huge defence budget was considered a necessary part of American government, and I assume the situation won’t last for ever.

    Of course the irony is that having a huge and expensive standing military is a terrible way to maintain superpower status. The U.S. dominated WWII despite having a much smaller defence spend pre-war than they do today, and despite Pearl Harbour, precisely because their economy was so strong relative to everyone else and thus able to ramp up so successfully in to war time production. They won the cold war because the Soviet Union couldn’t afford to divert such a huge proportion of GDP into defence without putting unsustainable strain on their economy.

    However the cold war is over. Their defence spending should have come down to provide some relief to the enormous stress on their budget. They can cut funding to social services or raise taxes, and will probably need to do both, but there comes a point at which doing either of those things will start to significantly hamper the longer term growth of their economy. A serious chunk of their deficit needs to come out of the Pentagon’s purse.

  10. jordanrastrick

    We don’t worship our billionaires to the point of idolatry either. Or cultivate the illusion that hard work is a substitute for “Lucky Sperm Club” membership.

    If it weren’t for the fact it tricks the middle classes to vote against their own economic interest, I’d say the illusion is actually helpful for most ordinary people.

    The majority aren’t really inclined to pursue the billionaireship careers, even if they do think they are possible. If your goals in this area don’t extend beyond a stable 9-5 job that you enjoy, its in your interests for a minority to punish themselves working towards the delusional goal; you get a share of the economic benefits of the wealth they generate but aren’t exposed to that much of the risk from their highly probable failures.

  11. returnedman

    Huh?! Where’s SB?!?!

  12. narcoticmusing

    It’s all pretty ridiculous when you consider countries like Ausralia and the US bitch about our taxes the most and yet, in the OECD, the US and Australia have the lowest tax revenue proportional to total GDP.

    See here for an interesting read on how we have a high demand for Government services and yet pay one of the lowest tax levels out of any nation (US pays less proportionally).
    http://www.oecd.org/document/35/0,3746,en_2649_34533_46661795_1_1_1_1,00.html

  13. Splatterbottom

    RM I don’t see an issue with considering taxes in the mix. However, the main goal must be to stimulate the productive sector of the economy. Sadly the unproductive sector offers better job security and better compensation. That, more than anything else, is why the Yanks are doomed. It is countries where there is a strong incentive to work in the productive sector that are becoming wealthier.

  14. Yours is an interesting comment SB, and I think I agree with you in principle.

    I assume that the ‘unproductive sector’ to which you are referring are the public sector jobs, and that the “Yanks are doomed” because of their growing addiction to big government?

  15. Splatterbottom

    That’s broadly correct Mono, although rentseekers in the private sector are on the unproductive side and some small part of the public sector is on the productive side.

    One way to collect more tax is to have a profitable economy. Raising the tax rates may well have the opposite effect. Maybe the US should lower the tax rates for self-employed people who have more than five employees.

  16. returnedman

    One way to collect more tax is to have a profitable economy.

    Another way is to have an exceptionally efficient bureacracy in all areas of the civil service.

  17. Splatterbottom

    RM: “Another way is to have an exceptionally efficient bureacracy in all areas of the civil service.”

    What? You mean more vicious tax collectors? How do the other areas get more tax in?

  18. returnedman

    What do businesses need to operate, SB? Licences, compliance with regulations, all sorts of paperwork. You make that paperwork efficient and the business manages to stay efficient.

    You also keep the cowboys out of the business sector – these clowns effectively act as a handbrake on the smooth running of the economy. Less inefficient business practices, less work days lost due to sickness, injury, stress and so on. Less corruption, too – there’s a massive haemorrhage of the economy!

    What I’m implying is not esoteric, SB, just one of those things that is not generally acknowledged (especially by the Limited News media) but merely common sense if you stop and think … and disregard the “vicious tax collector” stereotype.

  19. mondo rock

    One way to collect more tax is to have a profitable economy. Raising the tax rates may well have the opposite effect.

    Ahh yes – the Right’s favoured chestnut.

    The reality is that the argument is true, but only up to a point. It applies far more to corporate tax rates than it does individual , and it assumes that the government will re-invest the additional money in a less productive way than the taxpayer would have (which, to be fair, is a not unreasonable assumption most of the time).

    However when the money is needed to pay off spiralling national debt then we know exactly how the government will ‘invest’ it, and any economist with a brain should favour policy that at least includes tax increases in some areas.

    After all, even the most die-hard capitalist would accept that there comes a point where cutting taxes simply means that the government collects less money.

  20. narcoticmusing

    Profitable economy? So, like one that makes money? Perhaps, where the state generates its own revenue? So like, the State would need to have assets.

    [looks around for assets not already sold off by the same asshats claiming we need a profitiable economy; the same asshats who don’t understand the role of the public service.]

    Awww crap.

  21. If it weren’t for the fact it tricks the middle classes to vote against their own economic interest, I’d say the illusion is actually helpful for most ordinary people.
    The majority aren’t really inclined to pursue the billionaireship careers, even if they do think they are possible. If your goals in this area don’t extend beyond a stable 9-5 job that you enjoy, its in your interests for a minority to punish themselves working towards the delusional goal; you get a share of the economic benefits of the wealth they generate but aren’t exposed to that much of the risk from their highly probable failures.

    The illusion that ordinary people have a chance to join the Lucky Sperm Club helps ordinary people, premised on a rewording of Mr Hobbes’ “state of nature”?

    Hear that squeak? The door that says “Trickle Down” could do with some oil.

    Speaking of which…
    Hello SB. Glad you could make it.

  22. jordanrastrick

    The illusion that ordinary people have a chance to join the Lucky Sperm Club helps ordinary people, premised on a rewording of Mr Hobbes’ “state of nature”?

    Its nothing to do with trickle down, its not about joining any lucky sperm club, and it does create a very unequal society.

    If some people are inclined to take huge risks with their own time and/or money into pursuing success that is realistically speaking unlikely – whether its years of drudgery as a graduate student for an academic career that’s not likely to eventutate, working two jobs while you try to write a novel that’s probably never going to be published, starting a business that has a 90% chance of failing, etc – the losses from those efforts fall mainly on the people making them. Especially in a society like America where there’s not much of a social safety net. The lucky people for whom the gamble pays off – your Sergey Brins and JK Rowlings – end up extraordinarily well off. Everybody else, who doesn’t take the gamble at all but just chooses a path based on a realistic view of their chances in life, shares in some of the benefits of the successful people.

    If it weren’t for the fact that some of the gamblers succeed by parasitically sucking wealth out of the economy instead of creating it, and the other aspect I mentioned earlier – that the illusion of a full meriocracy reduces the political support amongst the middle class for taxing the rich – then the non-gambling types would be clearly better off from the risks taken by the gamblers.

    As it is I still think its a net positive for the world that many people have overconfidence in their ability to succeed.

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