CBO: Tax hikes unnecessary

[ag]

I am travelling and incapable of monitoring this thread for the next few days. Please avoid personal insults. I will come back to deal w/ this thread when I am not on the road.

[CARLHAYDEN]

[/quote]

Ah, that was a typo. I was thinking of the debt. But as I'm sure you are well aware that does not matter for the point at hand? That is, 0.2% is still a neglibile share of 7.5%

And, to be clear, I was assuming you were not proposing eliminating all of foreign aid? The spending increases in that department under Obama you mentioned must be extremely miniscule. If they are measured in the billions they can't be a large percentage of a deficit measured in  trillions.

I'm still confused as to where you want to make these magic cuts. Or how you think growth will skyrocket under the burden of a large debt and spending cuts that will negatively impact demand.
[/quote]

First, its nice to get the size of the deficit clarified.

Second, from 2009 to 2011, state department expenditures increased by $7.9 billion.  Now, much of the expenditures in 2009 were unreasonable.  So, if we just subtracted $8 billion a year for four years, we have $32 billion from one department.  I know, to you big spenders that seems like a minuscule amount, but, when added to savings from the EPA, Department of Education, and others, it is significant.

Third, I find it amusing that you refer to a "burden" of spending cuts, and assume that such cuts will negatively impact demand.
[/quote]

A spending cut which is not accompanied by a tax cut is virtually guaranteed to decrease demand? How could it not? Granted, foreign aid cuts wouldn't have this effect but as I pointed out they're rather small.

Furthermore, you can't (1) multiply it by 4 years, since you must then also multiply the deficit by 4 years and (2) I doubt all spending increases are unreasonable. If nothing else rises in nominal wages will normally lead to at least some increases.

But, to a "big spender" like me 8 bilion is neither more nor less than 0.8% of a trillion. So, congratulations, you cut 0.8% of the deficit. If you repeat this for all of the 100+ departments in the government you will have eliminated the deficit. I'm afraid I'm going to need something more realistic to take your proposal seriously.
[/quote]

First, I'm eliminating the older stuff to shorten the panel..

Second, your presumption that a spending cut by the federal government not accompanied by a tax cut will necessarily result in reduced demand is, well, simplistically pathetic.  Real world economics is NOT a zero sum game, but rather the interaction of a multiplicity of interacting factors.  Specifically, the money supply is NOT simply a matter of diktat by goons like Bernancke, but rather a reflection of the velocity of actual exchange by real people in the marketplace.

Third, yes, I am not surprised that you doubt that even the modest spending cuts I outlined are reasonable. 

Fourth, you conveniently ignore the expenditures outside the State Department that I noted (EPA, Education, etc.).

[Lulz]

Carl,

Your last post is incomprehensible.  I think something went wrong with your formatting.

[CARLHAYDEN]

First, if you check the figures, you will see that the United States spends billions every year on foreign aid, and billions more on the EPA.  Now, to advocates of big government, a few billion here and a few billion there may seem as nothing, but to me they are real money.

Carl,

You're being emotional.  Democrats have not made serious moves to shrink the government and Republicans like you have only sought to use the deficit reduction as a gimmick to push your agenda.

A few billion here and a few billion there is peanuts in a $3.7 Trillion budget.  The only thing guys like you make noise about are Planned Parenthood, the EPA, Public Broadcasting, Foriegn aid etc.  We could eliminate all of those tomorrow and you know where we would be?  Right where we are today.

Let's stop talking about all this nonsense and have a serious discussion about paying off the debt.

First, you are correct about one thing, "Democrats have not made serious moves to shrink the government."

Futher, in a news conference Wednesday in the White House east room, President Obama proposed:

 “measures (that) likely would add hundreds of billions of dollars to budget deficits...”

http://www.reuters.com/article/2011/06/30/us-usa-debt-idUSTRE75M80E20110630

Second, you seem to believe that reducing expenditures is "emotional" whereas increasing taxes is the answer to all problems.

Finally, why is it "nonsense" to make efforts to reduce government expenditures?

[Gustaf]

Ah, that was a typo. I was thinking of the debt. But as I'm sure you are well aware that does not matter for the point at hand? That is, 0.2% is still a neglibile share of 7.5%

And, to be clear, I was assuming you were not proposing eliminating all of foreign aid? The spending increases in that department under Obama you mentioned must be extremely miniscule. If they are measured in the billions they can't be a large percentage of a deficit measured in  trillions.

I'm still confused as to where you want to make these magic cuts. Or how you think growth will skyrocket under the burden of a large debt and spending cuts that will negatively impact demand.
[/quote]

First, its nice to get the size of the deficit clarified.

Second, from 2009 to 2011, state department expenditures increased by $7.9 billion.  Now, much of the expenditures in 2009 were unreasonable.  So, if we just subtracted $8 billion a year for four years, we have $32 billion from one department.  I know, to you big spenders that seems like a minuscule amount, but, when added to savings from the EPA, Department of Education, and others, it is significant.

Third, I find it amusing that you refer to a "burden" of spending cuts, and assume that such cuts will negatively impact demand.
[/quote]

A spending cut which is not accompanied by a tax cut is virtually guaranteed to decrease demand? How could it not? Granted, foreign aid cuts wouldn't have this effect but as I pointed out they're rather small.

Furthermore, you can't (1) multiply it by 4 years, since you must then also multiply the deficit by 4 years and (2) I doubt all spending increases are unreasonable. If nothing else rises in nominal wages will normally lead to at least some increases.

But, to a "big spender" like me 8 bilion is neither more nor less than 0.8% of a trillion. So, congratulations, you cut 0.8% of the deficit. If you repeat this for all of the 100+ departments in the government you will have eliminated the deficit. I'm afraid I'm going to need something more realistic to take your proposal seriously.
[/quote]

First, I'm eliminating the older stuff to shorten the panel..

Second, your presumption that a spending cut by the federal government not accompanied by a tax cut will necessarily result in reduced demand is, well, simplistically pathetic.  Real world economics is NOT a zero sum game, but rather the interaction of a multiplicity of interacting factors.  Specifically, the money supply is NOT simply a matter of diktat by goons like Bernancke, but rather a reflection of the velocity of actual exchange by real people in the marketplace.

Third, yes, I am not surprised that you doubt that even the modest spending cuts I outlined are reasonable. 

Fourth, you conveniently ignore the expenditures outside the State Department that I noted (EPA, Education, etc.).
[/quote]

So...if you stop giving money to people, you don't think they will have less money in their pockets? I'm interested i nhearing the reasoning behind this. I'm not really talking about money supply either.

Ok, and I'm not surprised that you took the opportunity at a cheap shot instead of answering the question. Do you really think that if the tasks were left unchanged, there would be no spending increases at all?

Finally, sure, we can add the miniscule percentage of GDP that is EPA if you like. However, I did not conveniently ignore anything. I specifically asked you to outline where you would make the cuts and you said the state department. I would like to see some hard figures here. How large are those cuts going to be? You keep claiming that they will be modest and only reduce excessive bureaucracy, but I've yet to see any evidence for this.

[CARLHAYDEN]

Gustaf,

I must give you credit.

You manage to pack more mistatements into a post than I would have thought possible.

While I understand you really BELIEVE that the more government involvement in the economy is beneficial, let me suggest you try reading the following:

http://www.heritage.org/research/reports/2005/03/the-impact-of-government-spending-on-economic-growth

[Gustaf]

Gustaf,

I must give you credit.

You manage to pack more mistatements into a post than I would have thought possible.

While I understand you really BELIEVE that the more government involvement in the economy is beneficial, let me suggest you try reading the following:

http://www.heritage.org/research/reports/2005/03/the-impact-of-government-spending-on-economic-growth

As a master student in economics, I can assure you that the issues discussed in your link are not new to me. The Heritage Foundation is of course not purely a research institute but a think-tank with a political agenda. I would like to note though that my country (with a substantially larger government spending than the US) has had equal or higher GDP growth per capita compared to the US over the last decade. The difference between US and Western Europe when it comes to GDP per capita is attributable to American sworking more, not due to higher productivity. And, of course, when quality of life or happiness is measured Sweden typically scores higher than the US. That is largely because we have higher social mobility and less inequality.

But this is not, from my perspective, a debate on the ideal size of the government. It's a discussion about the current fiscal woes of the United States. It is my belief that it is politically and socially unrealistic to get rid of the deficit without any increases in taxation. Your belief is that it constitutes no problem to decrease spending sufficiently to get rid of the deficit. I've therefore asked you what cuts we are talking about and you have yet to give me a specific answer beyond vague statements concerning miniscule areas of federal expenditure.

[Gustaf]

Gustaf,

I must give you credit.

You manage to pack more mistatements into a post than I would have thought possible.

While I understand you really BELIEVE that the more government involvement in the economy is beneficial, let me suggest you try reading the following:

http://www.heritage.org/research/reports/2005/03/the-impact-of-government-spending-on-economic-growth

Oh, and feel free to actually state what you think my mistatements are. I'm all ears. But I would prefer it if you didn't slander me without backing it up.

[CARLHAYDEN]

Yes, Gustaf, I realize you want to impose more and higher taxes on my country. 

Now, if you had read (and understood) the article whose link I posted you would see that your assertion that a reduction in government expenditures does NOT mean a reduction in the economy.

I recognize that you believe that government expenditures are the most efficient type of expenditures in the economy, but, that simply is NOT the case.

When you finally understand that point, I will introduce you to Paul Samuelson's comments on the variability of the velocity of the money supply.

[Gustaf]

Yes, Gustaf, I realize you want to impose more and higher taxes on my country. 

Now, if you had read (and understood) the article whose link I posted you would see that your assertion that a reduction in government expenditures does NOT mean a reduction in the economy.

I recognize that you believe that government expenditures are the most efficient type of expenditures in the economy, but, that simply is NOT the case.

When you finally understand that point, I will introduce you to Paul Samuelson's comments on the variability of the velocity of the money supply.

Jesus. You really have to shut up about being an arrogant prick.

1. I realize you want to impose lower taxes on my country.
2. You seem to have no understanding of the differenec between the short term and the long term. The link you posted regards long-term effects on the overall efficiency of the economy, I'm talking about short-term demand effects. There is no contradiction between the two, but you sem to know very little about economics.
3. I do not think government expenditure is the most efficient type in the economy. I'd like you to apologize for that lie about my views since I never indicated that I had it.


Then, I'd like you to respond to any of the points I've raised, which you keep dodging. Are you afraid of the facts Carl?

[CARLHAYDEN]

Yes, Gustaf, I realize you want to impose more and higher taxes on my country. 

Now, if you had read (and understood) the article whose link I posted you would see that your assertion that a reduction in government expenditures does NOT mean a reduction in the economy.

I recognize that you believe that government expenditures are the most efficient type of expenditures in the economy, but, that simply is NOT the case.

When you finally understand that point, I will introduce you to Paul Samuelson's comments on the variability of the velocity of the money supply.

Jesus. You really have to shut up about being an arrogant prick.

1. I realize you want to impose lower taxes on my country.
2. You seem to have no understanding of the differenec between the short term and the long term. The link you posted regards long-term effects on the overall efficiency of the economy, I'm talking about short-term demand effects. There is no contradiction between the two, but you sem to know very little about economics.
3. I do not think government expenditure is the most efficient type in the economy. I'd like you to apologize for that lie about my views since I never indicated that I had it.


Then, I'd like you to respond to any of the points I've raised, which you keep dodging. Are you afraid of the facts Carl?

Gustaf,

First, I really don't care what taxes you impose on your country.  However, I do care about the taxation system (both level and structure) in my country.  Or, are you now claiming to be an American? 

Second, ah, the old canard about 'short term vs. long term.'  For the benefit of those who are unfamiliar with economic thought, when Keynes was caught on his theories, he dismissed criticisms of his theories with the non sequitur that, 'in the long term we're all dead" and 'our children will pay for it.'  Well, we're the 'children' who are now being presented with the bill for Keynesian policies. 

Third, but Gustaf, you indicated your belief that a reduction in government expenditures would result in a decrease in demand in the economy, totally disregarding that greater efficiency of the private sector would make with the funds not spent by the government.

Now, are we ready of money supply variable velocity matter?  I'm really not a fan of Samuelson, but, he nailed that matter quite well.

[Gustaf]

Yes, Gustaf, I realize you want to impose more and higher taxes on my country. 

Now, if you had read (and understood) the article whose link I posted you would see that your assertion that a reduction in government expenditures does NOT mean a reduction in the economy.

I recognize that you believe that government expenditures are the most efficient type of expenditures in the economy, but, that simply is NOT the case.

When you finally understand that point, I will introduce you to Paul Samuelson's comments on the variability of the velocity of the money supply.

Jesus. You really have to shut up about being an arrogant prick.

1. I realize you want to impose lower taxes on my country.
2. You seem to have no understanding of the differenec between the short term and the long term. The link you posted regards long-term effects on the overall efficiency of the economy, I'm talking about short-term demand effects. There is no contradiction between the two, but you sem to know very little about economics.
3. I do not think government expenditure is the most efficient type in the economy. I'd like you to apologize for that lie about my views since I never indicated that I had it.


Then, I'd like you to respond to any of the points I've raised, which you keep dodging. Are you afraid of the facts Carl?

Gustaf,

First, I really don't care what taxes you impose on your country.  However, I do care about the taxation system (both level and structure) in my country.  Or, are you now claiming to be an American? 

Second, ah, the old canard about 'short term vs. long term.'  For the benefit of those who are unfamiliar with economic thought, when Keynes was caught on his theories, he dismissed criticisms of his theories with the non sequitur that, 'in the long term we're all dead" and 'our children will pay for it.'  Well, we're the 'children' who are now being presented with the bill for Keynesian policies. 

Third, but Gustaf, you indicated your belief that a reduction in government expenditures would result in a decrease in demand in the economy, totally disregarding that greater efficiency of the private sector would make with the funds not spent by the government.

Now, are we ready of money supply variable velocity matter?  I'm really not a fan of Samuelson, but, he nailed that matter quite well.

Ok. In the sense of political engagement I don't care what taxes you impose on your country either.  I'm engaging in a theoretical discussion and I don't think being an American citizien is a prerequisite for understanding fiscalpolicy (it certainly i snot a sufficient condition, as your posting indicates).

Finally, you seem to be under the misconception that when spending decreases and there is no corresponding decrease in taxation, more money ends up in the private sector. This is not the case. In fact, if anything there is less money in the private sector, since some of the government spending presumably ends up there. That's why I made the initial qualifier. It's hard for me to see too how removing money from the economy can stimulate it.

I'm still waiting for you to quit dodging and actually respond to my previous posts, but I guess you can't because you know that you're wrong.

[CARLHAYDEN]

Gustaf,

First let me suggest that you go ahead and load your own country up with more and more taxes if you want.  It should provide a nice example for the rest of the world. (BTW, do you remember why Ingmar Bergman fled Sweden?)

Second, let me point out that we are NOT limited to "fiscal theory," as monetary policy is also involved (as I have noted).

Third, nowhere have I stated nor implied that being an American citizen is either "a prerequisite for understanding fiscalpolicy" as you alledged, nor "a sufficient condition."

Finally, yes, as spending for the government decreases, the money supply does (to varying extents) increase, partially to to an increase in velocity, and partially due to efficiency (which is where Dr. Samuelson, and his notes on the variable velocity of monetary supply applies).

[Gustaf]

Gustaf,

First let me suggest that you go ahead and load your own country up with more and more taxes if you want.  It should provide a nice example for the rest of the world. (BTW, do you remember why Ingmar Bergman fled Sweden?)

Second, let me point out that we are NOT limited to "fiscal theory," as monetary policy is also involved (as I have noted).

Third, nowhere have I stated nor implied that being an American citizen is either "a prerequisite for understanding fiscalpolicy" as you alledged, nor "a sufficient condition."

Finally, yes, as spending for the government decreases, the money supply does (to varying extents) increase, partially to to an increase in velocity, and partially due to efficiency (which is where Dr. Samuelson, and his notes on the variable velocity of monetary supply applies).

You seem to be unaware of the fact that Sweden has been cutting taxes for several years. Top marginal rates are certainly nowhere near the disastrous levels they were back in the 70s when Ingmar Bergman had to flee the tax authorities. Again, you seem to be committing the fallacy of just assuming that I want higher taxes in order to slander me. I support the tax cuts that have been going on in Sweden. I don't want to increase taxes forever. It's quite bizarre that you would just assume this. If you want to know what I think about taxes, you should ask me.

You seemed to imply that I shouldn't have an opinion on American fiscal policy because I'm not an American citizen. I'm glad to see that you now retract that position. It does, however, call into question whether you are lying and are on purpose trying to dishonestly change your position on this issue (see, I can make up things about your positions too! makes for a fun debate, doesn't it?)

So, why would the velocity of money increase because people have less money in their pockets? See, what you want to do is reduce government money while keeping private sector funds unchanged. How does this increase velocity, exactly?

[CARLHAYDEN]

Gustaf,

First let me suggest that you go ahead and load your own country up with more and more taxes if you want.  It should provide a nice example for the rest of the world. (BTW, do you remember why Ingmar Bergman fled Sweden?)

Second, let me point out that we are NOT limited to "fiscal theory," as monetary policy is also involved (as I have noted).

Third, nowhere have I stated nor implied that being an American citizen is either "a prerequisite for understanding fiscalpolicy" as you alledged, nor "a sufficient condition."

Finally, yes, as spending for the government decreases, the money supply does (to varying extents) increase, partially to to an increase in velocity, and partially due to efficiency (which is where Dr. Samuelson, and his notes on the variable velocity of monetary supply applies).

You seem to be unaware of the fact that Sweden has been cutting taxes for several years. Top marginal rates are certainly nowhere near the disastrous levels they were back in the 70s when Ingmar Bergman had to flee the tax authorities. Again, you seem to be committing the fallacy of just assuming that I want higher taxes in order to slander me. I support the tax cuts that have been going on in Sweden. I don't want to increase taxes forever. It's quite bizarre that you would just assume this. If you want to know what I think about taxes, you should ask me.

You seemed to imply that I shouldn't have an opinion on American fiscal policy because I'm not an American citizen. I'm glad to see that you now retract that position. It does, however, call into question whether you are lying and are on purpose trying to dishonestly change your position on this issue (see, I can make up things about your positions too! makes for a fun debate, doesn't it?)

So, why would the velocity of money increase because people have less money in their pockets? See, what you want to do is reduce government money while keeping private sector funds unchanged. How does this increase velocity, exactly?

So, you merely want to tax America to death?  I never though you were one of those anti-American types.  It seems however that you want to afflict the United States with a plague of taxes but don't want the same for your country.  Hmm.

Yes, having read your posts I an well aware you "can make up things."

Next, when people are understandably frightened of Leviathan coming to tax them to death, they do tend to convert their wealth into forms (like gold) which they can access, and which they hoard for emergencies.  This slows the velocity of the money supply.

Sophisticated types will engage in complex currency exchanges, sending their money out of the country to escape confiscation, er, the kind of taxes you propose.  This too slows the velocity of the money supply.

[Gustaf]

Gustaf,

First let me suggest that you go ahead and load your own country up with more and more taxes if you want.  It should provide a nice example for the rest of the world. (BTW, do you remember why Ingmar Bergman fled Sweden?)

Second, let me point out that we are NOT limited to "fiscal theory," as monetary policy is also involved (as I have noted).

Third, nowhere have I stated nor implied that being an American citizen is either "a prerequisite for understanding fiscalpolicy" as you alledged, nor "a sufficient condition."

Finally, yes, as spending for the government decreases, the money supply does (to varying extents) increase, partially to to an increase in velocity, and partially due to efficiency (which is where Dr. Samuelson, and his notes on the variable velocity of monetary supply applies).

You seem to be unaware of the fact that Sweden has been cutting taxes for several years. Top marginal rates are certainly nowhere near the disastrous levels they were back in the 70s when Ingmar Bergman had to flee the tax authorities. Again, you seem to be committing the fallacy of just assuming that I want higher taxes in order to slander me. I support the tax cuts that have been going on in Sweden. I don't want to increase taxes forever. It's quite bizarre that you would just assume this. If you want to know what I think about taxes, you should ask me.

You seemed to imply that I shouldn't have an opinion on American fiscal policy because I'm not an American citizen. I'm glad to see that you now retract that position. It does, however, call into question whether you are lying and are on purpose trying to dishonestly change your position on this issue (see, I can make up things about your positions too! makes for a fun debate, doesn't it?)

So, why would the velocity of money increase because people have less money in their pockets? See, what you want to do is reduce government money while keeping private sector funds unchanged. How does this increase velocity, exactly?

So, you merely want to tax America to death?  I never though you were one of those anti-American types.  It seems however that you want to afflict the United States with a plague of taxes but don't want the same for your country.  Hmm.

Yes, having read your posts I an well aware you "can make up things."

Next, when people are understandably frightened of Leviathan coming to tax them to death, they do tend to convert their wealth into forms (like gold) which they can access, and which they hoard for emergencies.  This slows the velocity of the money supply.

Sophisticated types will engage in complex currency exchanges, sending their money out of the country to escape confiscation, er, the kind of taxes you propose.  This too slows the velocity of the money supply.

I don't want to tax America to death. See, it's really easy to defeat your arguments as long as they are predicated on attributing opinion to me that I do not hold. Sweden, again, isn't taxed to death despite much higher tax levels than the US. We tend to beat you on most ranking concerning quality of life. So you seem to worry too much.

Now you're explaining why higher taxes might decrease velocity, which is all fine. I never contested that. WHat I asked is why a decrease in government spending would increase the velocity. Just to remind you, in case you forgot, this is a decrease in government spending WITHOUT any corresponding tax decrease. So taxes are staying the same.

Now try again.

[CARLHAYDEN]

Gustaf,

You have been calling to more taxes on Americans throughout this thread, but now you claim you don't want to tax America to death. 

Its really oh so kind of you to be willing to allow us to keep enough to survive.

However, if the proposal for the massive tax increases you and Obama want to impose on Americans were ever put on the American ballot, I believe it would be massively rejected. 

But, even when Americans make it clear they want cuts in spending rather than tax increase, you and Obama want to punish us with more taxes, but not (quite) to death.

Here’s some evidence from a recent Gallup Poll (which being an ‘adult’ poll, is somewhat more liberal than the actual electorate)

USA Today/Gallup Poll. April 20-23, 2011. N=1,013 adults nationwide. Margin of error ± 4.

"Are you worried or not worried that the Democratic plan for reducing the federal budget deficit in the long-term would . . . ?"
                                                                                                 Worried Not worried Unsure         
                                                                                                 %              %              %         
"Not go far enough to fix the problem"                                     71            24              4
"Use the deficit as an excuse to raise taxes"                           62             36              2     
"Cut defense spending too much"                                            49              48             3

So, the American people agree with me, rather than you and Obama.

Next, you suffer from the inability to understand that government spending does not materialize out of thin air. 

Now, when the government tries to create spending without direct taxes, it does it by effectively monetizing the deficit, thereby leading to inflation, which is simply an indirect tax.  Moreover, in many instances, the government using inflation as a means of kicking people into higher tax brackets (where there is no automatic adjustment), thereby effectively increasing tax rates (I had that happen to me under Carter).

[Gustaf]

I wouldn't say that I've been calling for more taxes on Americans. I've said that I don't think it is politically realistic to cut spending as much as would be necessary to eliminate the deficit without any tax increases. And I've said that it would hardly destroy the economy, since successful countries with high quality of life such as those in Western Europe have considerably higher taxes than the US.

I'm sure you're right that the American people does not want taxes to be raised. I don't see how that is relevant. As I'm sure you know, the American voters also elected Obama to the presidency but I don't think you would see that as a strong argument in favour of him, would you?

While I agree that unfinanced spending is generally speaking a bad idea and leads to higher inflation, I don't see how it enters into this discussion. Are you saying that velocity of money increases with lower inflation or something along those lines?

[CARLHAYDEN]

I wouldn't say that I've been calling for more taxes on Americans. I've said that I don't think it is politically realistic to cut spending as much as would be necessary to eliminate the deficit without any tax increases. And I've said that it would hardly destroy the economy, since successful countries with high quality of life such as those in Western Europe have considerably higher taxes than the US.

I'm sure you're right that the American people does not want taxes to be raised. I don't see how that is relevant. As I'm sure you know, the American voters also elected Obama to the presidency but I don't think you would see that as a strong argument in favour of him, would you?

While I agree that unfinanced spending is generally speaking a bad idea and leads to higher inflation, I don't see how it enters into this discussion. Are you saying that velocity of money increases with lower inflation or something along those lines?

Gustaf,

First, yes you have been calling for higher taxes on Americans.

Second, as I previously pointed out, eliminating the deficit should not be expected to be accomplished all in one year.  However, just holding spending in check will in and of itself cut the deficit.  With some prudent cuts in outrageous waste (EPA, State Department, and other agencies), the deficit can be reduced, and eventually eliminated.  Or, to use an old adage, 'Rome was not built in a day.'

Third, yes I know you want to turn the United States into a socialist land like much of western Europe, but real Americans (unlike most of the posters on this forum) do NOT want you 'success.'  Oh, and you really should check out what is happening in western Europe.  Ever hear of Portugal, Ireland, Italy, Greece or Spain?  

Fourth, yes the American people did elect Obama, but, there are three points relevant to that error, which you either are unaware of, or deliberately ignore:

(a) McCain was (and is) a worthless SOB who voted for the bank bailout opposed by the majority of the voters!  The majority of the voters opposed the bailout, but both major party candidates supported it

(b) the voters were (I believe understandably) angry at Bush and the Republicans in Congress for their spendaholic ways (remember the bridge to nowhere),

(c) Obama ran his campaign on vague (hope and change) basis.  He did not loudly proclaim his desire for more and higher taxes.  The last time a major party presidential candidates openly proclaimed his desire for more and higher taxes (Mondale in 1984), he suffered a crushing defeat.

Fifth, I'm sure you do not [perceive the relevance of the desires of the American people with respect to government policies.  To many europeans, the mass of the populace are subjects to be ruled over by the government rather than citizens who tell the government what policies to pursue.

Sixth, the velocity of money is dependent upon a number of factors.  Do you really want to get into a discussion (rather lengthy) of those factors?

[Gustaf]

First, no.

Second, I've already pointed out that those agencies make up for a small part of the deficit.

Third, I never said I wanted to turn anything into a socialist land. I'm not a socialist. Furthermore, you should check out the countries I was talking about (namely, Scandinavian ones, which are vastly different to the Southern European ones you're mentioning). It's especially amusing that you'd mention Ireland, a state that has pursued exactly the type of policies you seem to like with low taxes.

Fourth, yes, I know all these things, which was partly my point.

Fifth, what policy the people wants is obviously relevant for what will actually happen. But it's irrelevant to what I argue in a discussion. The point of a democracy is to convince others of one's view through debate, not to mindlessly accept the tyranny of the majority. I'm surprised you do not agree with this, but think that the majority opinion should be accepted without questioning.

Sixth, I know the velocity of money depends on different factors. I just can't understand why you say most of the things you say. Your claim is that reducing the amount of money in an economy will increase growth substantially. You still have not given a coherent explanation as to how this works.

[CARLHAYDEN]

First, no.

Second, I've already pointed out that those agencies make up for a small part of the deficit.

Third, I never said I wanted to turn anything into a socialist land. I'm not a socialist. Furthermore, you should check out the countries I was talking about (namely, Scandinavian ones, which are vastly different to the Southern European ones you're mentioning). It's especially amusing that you'd mention Ireland, a state that has pursued exactly the type of policies you seem to like with low taxes.

Fourth, yes, I know all these things, which was partly my point.

Fifth, what policy the people wants is obviously relevant for what will actually happen. But it's irrelevant to what I argue in a discussion. The point of a democracy is to convince others of one's view through debate, not to mindlessly accept the tyranny of the majority. I'm surprised you do not agree with this, but think that the majority opinion should be accepted without questioning.

Sixth, I know the velocity of money depends on different factors. I just can't understand why you say most of the things you say. Your claim is that reducing the amount of money in an economy will increase growth substantially. You still have not given a coherent explanation as to how this works.

Gustaf,

I really wonder if you can comprehend what I have posted?

First, with respect to the large mandated programs, simply freezing them (no inflation indexing) will save a massive amount of money.

Second, I have given a short list of some of the worst spenders in the federal government.  There are many more (BATFE for anoher example).  Now, just as I believe 'too big to fail' is a bad policy, your supposition of 'too small to cut,' is also a bad policy.

Third, money in private (non-governmental) hands is more efficent than money in the governmet's hands.  So, when we cut back government, we improve the economy.

Let me give you an example, much money is spent on accountants, financial advisers and tax attornies to avoid taxes rather than to produce profits.

[Torie]

When a study is out that illustrates how limiting federal government spending to 18% of the GDP while doing something other than slashing entitlements as the population ages and expensive developing medical treatments become ever more available, along with keeping sicks alive longer to treat for ever longer periods (just thinking of the ballooning hideously expensive nursing home population is a good way to get depressed in a hurry), wake me up.  And Gustaf, you are clearly a masochist.  Seek help!  

[CARLHAYDEN]

First, if you check the figures, you will see that the United States spends billions every year on foreign aid, and billions more on the EPA.  Now, to advocates of big government, a few billion here and a few billion there may seem as nothing, but to me they are real money.

Second, NO I did NOT quote the CBO!!!  Let me note that the CBO is biased to understate domestic spending and understate revenue from tax cuts.  So, apparently YOU are confused!  You are the one who introduced CBO projections.

Third, you really need to understand the difference between the United States and Sweden.  You see, the federal government is the creation of the states, into the United States.  Unlike Sweden, the people of the United States, or at least those legally here, are citizens not subjects of the governments.

Now, the shortfall in government revenue is primarily on the federal government which used the Federal Reserve to create money out of nowhere (monetizing the debt) to cover their spending.

Generally speaking, the state and local governments have acted far more responsibly than the federal government (Illinois being a major exception).

Eh...the billions are not large sums compared to the trillions that the debt is made up of. My point, which I stated explicitly, was that cutting the increases in foreign aid and EPA under Obama will have no effect on solving the problem of the deficit. Do you agree to that?

Your headline of this thread, which you started, was: "CBO: Tax hikes unnecessary" So i twas rather natural for me to use their figures in the discussion, since you introduced them. If you have other projections you prefer, by all means, present them. I doubt they will change the overall picture though.

What the distinction between subjects and citizens has to do with this escapes me. I'm not interested in the ideology of this but in the economics.

I notice that you avoided answering my question: how is the deficit going to dissappear if you use the same revenue as today (not raising any taxes) and only cut spending by 6% at the federal level?

First, you make assumptions which are incorrect.  Revenues will not remain static if we rein in the government, but rather increase. 

This is history, not just a theory. 

Second, as I pointed out, in addition to freezing the manditory spending (i.e. no increases), we should cut expenditures from a number of agencies/departments.  Now, you probably have never seen the GPU publication of the federal budget, but, when printed, it stands several feet tall.  Virtually every department and agency has expenditures which can (and should be) cut.  Listing all of them would take up more room on this forum than Mr. Leip would like to provide.

Third, its interesting to see your changing definition of "Western Europe" to exclude the countries I listed and to consist of "Scandinavian ones." 

Let me suggest that if the people of the scandanavian countries want to emulate lemings and continue on their path to the cliff, its their right.  However, most Americans have some foresight, and do't want to continue on that.

Finally, I am really perplexed by what school of economics believes that unemployment is reduced by increasing taxes?

Heck, even a certain slimebag realized that increasing taxes is bad for the economy.

“You don’t raise taxes in a recession.”

Barrack Hussein Obama, II

August 5, 2009, Elkhart Indiana

[True Federalist (진정한 연방 주의자)]

Third, money in private (non-governmental) hands is more efficent than money in the governmet's hands.  So, when we cut back government, we improve the economy.

Let me give you an example, much money is spent on accountants, financial advisers and tax attornies to avoid taxes rather than to produce profits.

CARL, what your example argues primarily for is tax simplification, not any particular tax rate.  If we were to get rid of all the various loopholes, deductions, and other special gimmicks in the tax code, then the tax accountants, tax advisers, and tax attorneys would have to find more productive work to do. It also would simplify the job of tax enforcement, which would allow for some combination of more revenue from tax cheats that are caught and a reduction in the IRS payroll, as it would no longer have to have agents engage in so many arguments over creative interpretations of the tax code.

[CARLHAYDEN]

Third, money in private (non-governmental) hands is more efficent than money in the governmet's hands.  So, when we cut back government, we improve the economy.

Let me give you an example, much money is spent on accountants, financial advisers and tax attornies to avoid taxes rather than to produce profits.

CARL, what your example argues primarily for is tax simplification, not any particular tax rate.  If we were to get rid of all the various loopholes, deductions, and other special gimmicks in the tax code, then the tax accountants, tax advisers, and tax attorneys would have to find more productive work to do. It also would simplify the job of tax enforcement, which would allow for some combination of more revenue from tax cheats that are caught and a reduction in the IRS payroll, as it would no longer have to have agents engage in so many arguments over creative interpretations of the tax code.

Ernest,

My example (just one of many I could provide) illustrates how the greater the tax burden, the more incentive there is to avoid it.

Let me provide another example, in my city the abutting Indian reservations make major profits from sales of items (primarily tobacco) which avoid local sales taxes.

Now, if those sales taxes were lower (when I was a kid they were 5%, now they're 9.1%), there would be less incentive for trips to the reservation.