Friday, August 12, 2011

10 to 1 Turned Down?

Fortunately, Joe Lawler did the prison-time equivalent of watching the Iowa debates.

During last night's debate, Bret Baier asked all the candidates to raise their hand if they would refuse a deficit deal that was 10-1 spending cuts to tax increases. All raised their hands.

I share Lawler's reaction, which was "They're all idiots."  (Lawler was more polite.)

For a measly $100Bn in tax hikes you get $1Tn in spend reductions?  Take it.  All day.  Every day.  You can get $100Bn in taxes by letting the Bush tax cuts expire, which will happen on 1/1/12 anyway. 


jimspice said...

What's the cutoff? 8 to 1? 4 to 1? 1 to 1? 1 to 10?

Dad29 said...

Making the assumptions that the cuts are real and that the (D) Party doesn't renege (both very dangerous), I'd take anything greater than 5 to 1

Jeremy R. Shown said...

The worst part was the way they did it. Every one of them looked around first to see if the others were raising their hands. They looked like lost sheep. I fear there's not a leader in the bunch.

jimspice said...

See, and for a minute there I was getting ready to compliment you on your reasonableness (is that a word?). Correct answer: 1 to 1. At a time when you only control one chamber, that would be a GOOD deal. I can't believe we live in a day and age when the word "compromise" is viewed as obscene by half the population, particularly when it is used to tackle a problem that is of vital importance of the nation.

Dad29 said...

You asked a hypothetical question; I gave a hypothetical answer.

Given the growth of the FedGov since 1970, by the way, I think 5-to-1 is a very generous offer to you LeftOWackies.

steveegg said...

Point of order - that's on top of the Bush tax rates expiring and the AMT no longer being "patched" (remember, that's been baked into the debt-ceiling deal). The CBO estimated that, if full expiration/non-"patching" happens on schedule, the fed tax take hits 18.6% of GDP in 2013 (the first year, and well above the post-WWII average of 18.1% GDP), 20.8% (the post-WWII record) in 2021, and 21.0% (the all-time record) in 2022.

Hell - even under the "alternate fiscal scenario", which assumes both the Bush tax rates continuing and the AMT being "patched" to not catch a higher percentage of taxpayers, the tax take goes above the post-WWII average in 2018 and hits 18.4% GDP by 2021. The Heritage Foundation, running their own model of continuing the Bush tax rates/AMT "patching", pegs the return (yes, return) to above-historical levels of taxation as happening by 2014.

Repeat after me - It's the (expletive deleted) spending, stupid.

Dad29 said...

Eggster: that's exactly why I took (min) 5, (max) 10 X cuts in spending.

If that happens, we hit debt-reduction pretty quickly, allowing tax-reduction to happen.

It's a trap for the Spend-a-holics, not the tax-cutters.

neomom said...

I'm with Jeremy... those hands all went up a bit hesitantly - a few up-and-down. Lots of looks around.

Looked like a group of 4th graders, not leaders of the free world.


Side note - it made the news how that damned bell made dogs (mine included) run around the house barking whenever it went off.

steveegg said...

My point is that there is already a $3.5T-$4T/9 year tax hike built into the deal that nobody has to vote on. At best, the ratio of reductions-in-planned-spending
-increases to tax increases beyond current policy is something worse than 2:3, and likely approaching 1:2, rather than the ficticious 10:1 tossed out in the debate the other night.

As for the "surpluses will force tax cuts" argument, we don't have to go back all that far to explode that. Tax rates didn't change one iota between the 1996 and 2000 elections even though we finally started running surpluses. Indeed, the end of that era saw the highest non-WWII tax take in terms of GDP to date. Had Gore's team been allowed to complete the theft of Florida, there wouldn't have been tax cuts of any flavor (rate, percentage of GDP, or current dollars) in 2001 or 2003, even as the economy tanked at Great Depression ratios.

To explain that, there have been 3 times since WWII that the fed tax take has approached 20% GDP. Each time, the economy went into a recession that lasted until the tax take dropped to below the historical 18.06% GDP average.

Dad29 said...

So. You're telling us that:

1) The "best deal we could get" is going to include another tax increase which will be LARGER than the spending 'reduction'; and

2) You don't really ever expect a serious and responsible Congressional/Executive majority again.

You made my day, Steve.......

steveegg said...

That's because nobody bothered to define from what baseline the "deficit reduction" was to come from before the final bill was crafted. Up until Boehner and Reid did their non-WH two-step and abandoned "$4 trillion in deficit reduction", most people assumed it was off the WH-submitted FY2012 budget. That is something the House-passed budget (and "Cut"/Cap/Balance? even without adoption of the Balance) would have easily done. More importantly, after the GWOT spending was knocked down to what everybody agreed to, the CBO extended-baseline would have came within a few hundred billion of doing with no further tweaks.

It's a case of not being careful of what we were calling for, or more-correctly, allowing "spending cuts" to be transmuted into "deficit reduction". The fact that happened, and the fact that "deficit reduction" is measured from the (modified) CBO extended-baseline, tied the end of the Bush/Obama tax rates into the equation.