GOP tax bill doomed by 'class warfare' tactics—Commentary
This article actually illustrates the real issue at hand: "With Republicans like this, who needs Democrats"? If they want to keep Shillery out of the next run, and themselves all out of jail on faked charges, they better dump McConnell and Ryan and find a couple of semi honest creatures that will at least do a "little" something for people. Right now, it is almost like the acceleration seen in the last half of AS, when the looters start to loose all their opportunities to rip everyone else off....
If I were in charge of it, I would want to see the deficit decrease at the same rate as while Obama was president, roughly 100 billion a year. I'd also want to pass the tax cut and simplification. That would mean closing some bases, not doing some next-generation fighter planes, closing prisons, reducing funding of cities and states, and so on-- nothing radical, but enough to cover 100 billion in deficit reduction plus 100 billion in tax reduction. In the future, you could do another round of tax cuts, a straight cut where everyone's goes down, but you'd have to have another debate on which programs to cut.
My suggestion would not be politically feasible because while everyone wants to cut, gov't they want to cut only "waste", i.e. things that in no way benefit them.
I predict they'll not be able to pass tax simplification. They don't even pretend to want to slow the growth in gov't. All that's left is to increase borrowing and do an across-the-board cut guaranteed to cut all tax-payers taxes. Even that is hard to pass because people say it only provides a small cut to middle-class families, and it's hard politically to say, "middle-class families don't pay that much now." They condemned Romney for saying it. "How can you say that. These are hardworking people-- soldiers, nurses, teachers, and so on.." He wasn't saying they're bad people, just stating that they don't pay much in taxes, so a tax cut won't affect them that much.
I wish being registered Democrat meant I got a dividend when Republicans make themselves look like asses. But I get nothing out of it. So I hope they manage to cut taxes, simplify them, and in my dreams cut the deficit. I don't see it happening.
And it is certainly possible to simplify the tax code without raising anyone’s taxes. Eliminating some taxes outright while lowering the remaining tax rates will accomplish this goal. Any tax plan that raises taxes for some while lowering taxes for others is a redistribution scheme and deserves to be “torpedoed”.
As for “because it's borrowed, it's a tax for someone else in the future,” the best short-run solution would be to begin issuing pure “unbacked” fiat money to fund the deficit, rather than going further into debt. The inflationary impact of unbacked dollars would be no different than the inflationary impact of the same amount of debt-backed dollars, and such a policy would call a halt to the increase in the national debt and its crushing $400+ billion in annual interest payments. See www.fixourmoney.com .
But deliberately directly inflating the money supply would be disastrous. They also won't do it because the effects are too immediately and starkly obvious as visible prices are seen increasing. They will continue to devalue the money in more hidden manipulation while lying about the real price inflation rate.
Fiat money is inferior to money backed by hard assets. But some forms of fiat money are superior to others. Here are just a few of the advantages of issuing “debt-free” instead of “debt-based” fiat money:
Issuing pure fiat money freezes the national debt at its current level. This gives the economy “breathing room” to begin paying down the debt. It prevents the national debt from growing to the point of triggering an economic collapse.
It allows us to slowly pay down the national debt, without massive tax increases and politically unacceptable cuts to “entitlements”. A large majority of the federal budget, including Social Security and Medicare, requires increased spending each year but is politically “untouchable”. Under these circumstances, the continued use of debt-based money will require a substantial increase in the national debt, while debt-free money will permit us to begin retiring it.
It steadily reduces the amount of taxpayer funds diverted to pay interest on the debt. Most people are unaware that annual interest on the national debt is currently approaching $500 billion dollars, an amount equal to $2,000 annually per adult American! Decoupling the deficit from the debt allows these funds to be invested in more productive enterprises.
It removes a major impediment to implementing deep, across-the-board tax cuts. We no longer have to “pay for” tax relief by taking on more debt.
It eases debt-related pressure on the federal budget. Instead of increasing each year and “crowding out” funding for necessary government services, interest on the national debt decreases each year and frees additional funds for other priorities.
It shifts some of the Federal Reserve’s power back to Congress. While transitioning away from debt-based money does not “end the Fed”, it does limit the power of the Federal Reserve to control U.S. monetary policy, restoring much of this authority to Congress as originally specified in the Constitution.
It ends our financial dependence on our international creditors. Debt-free money removes any influence on U.S. policy that foreign governments might enjoy by virtue of their ownership of U.S. government bonds.
It removes a major cause of government “shutdowns”. Ending the debt “backing” of our currency puts an end to the periodic political crises brought on by the continuous need to raise the national debt ceiling. It thus reduces uncertainty about the ability of the government to perform its responsibilities without interruption.
And it halts the practice of “kicking the can down the road”. Any adverse consequences of overspending will be felt in the near term, with no additional mess left for our “grandchildren” to clean up at a later date.
And the money supply actually needs to increase a certain amount each year to keep the value of the dollar stable. Under a gold standard, the government provides a mechanism for this necessary increase in the money supply: turning gold bullion into coins. Each gold coin minted increases the amount of money in circulation without impacting the federal budget.
In a fiat money system, however, the amount of money in circulation at any time is tied to the government’s accumulated budget deficit. If the goal is a stable unit of account and medium of exchange, one which neither appreciates nor depreciates, the growth rate of the money supply must approximate the growth rate of goods and services in the economy. In a fiat economy, this means that the federal government must spend more money than it receives in taxes. But the government does not have to go further into debt to do so, it can simply “print” enough money to cover the deficit. The inflationary effect, if any, will be the same in either case. If the deficit is too large, price inflation will result regardless of whether the money is “printed” or “borrowed”.
Rejecting inflation as a substitute for debt is not an endorsement of the current system, which is doomed to eventual failure. If they continue, which it appear they are, to accumulate borrowing they will reach a point in which all the borrowing goes to nothing but paying interest. That is a major reason why they are artificially depressing interest rates now -- it manipulates how much the government has to spend on interest payments. And that is only one element of the many current machinations. Another form of borrowing is the government borrowing from itself as it spends taxes collected for Social Security and Medicare that the government will eventually be unable to pay. out of the alleged trust fund that does not exist.
True
“ . . . and you are advocating inflation to avoid debt.”
Not true. Nowhere in my posts do I advocate inflation, I simply propose that if the government runs an excessive deficit (as it is doing now), “printed” money is less harmful to the economy and to individual rights than “borrowed” money. (Of course, hard money is superior to any form of fiat money, and in an Objectivist society money would be issued privately.)
Here’s why “printing” money does not necessarily produce inflation, why a budget deficit is necessary in a fiat economy, and why debt-free fiat money is superior to debt-based fiat money:
Imagine for a moment that you live in a country on a gold standard. One day the government decrees that henceforth it will no longer issue any new gold coins, and further decrees that its existing gold coins are the only forms of legal tender that will be officially sanctioned. The country’s money supply is now “stable”, but its value is not. As the economy continues to grow and the demand for money increases, existing gold coins quickly acquire a premium over other forms of gold, because of their value as that country’s units of account and media of exchange. If the “no new coinage” policy continues for long, this premium will continue to increase, and distortions such as trade and credit imbalances will begin to appear. By freezing the money supply, the government undercuts the ability of gold to effectively perform its vital role as a stable unit of account and medium of exchange. Eventually such a country must either resume gold coinage or consider itself, for all practical purposes, to be off the gold standard.
The above exercise demonstrates that an increase in the money supply is not bad in itself. Within a productive economy, it is a natural and necessary means of providing a reasonably stable unit of account and medium of exchange. This is true whether a country’s monetary system is fiat or gold-based.
Under a gold standard, the government provides a mechanism for this necessary increase in the money supply: turning gold bullion into coins. Each gold coin minted increases the amount of money in circulation, even though the existing amount of gold in the country and the world remains the same. And the government can transform any amount of gold into coins and release them into circulation without creating an imbalance in its budget. Under a gold standard, both a balanced federal budget and a continuing increase in the money supply can easily coexist, because neither policy creates a problem for the other one.
The exact opposite is true in a fiat money system. A balanced federal budget and an increase in the money supply cannot coexist at all, because the amount of money in circulation at any time is tied to the government’s accumulated budget deficit.
If the U.S. government begins balancing its budget, it will issue no new money. Therefore the money supply will remain constant while the amount of goods and services increases. This will lead to the same distortions that would be encountered in a hard-money economy if the mintage of gold coins were suspended: the value of each dollar will increase relative to the amount of goods and services it can buy. This may appear to be a good thing compared to the opposite situation we face today, but it isn’t. At present, excess money creation favors debtors over creditors, allowing them to discharge their debts in ever-cheaper dollars while their nominal wages are rising. Freezing the currency in place would favor creditors over debtors, who would be forced to pay back their debts in appreciating dollars as their nominal wages were being forced down. Neither of these outcomes is desirable. Either too much or too little money creation leads to imbalances within the economy. If the goal is a stable unit of account and medium of exchange, one which neither appreciates nor depreciates, the growth rate of the money supply must approximate the growth rate of goods and services in the economy.
To create the additional money needed to keep the dollar’s value stable in a fiat economy, the federal government must spend more money than it receives in taxes. There is no way around it. But the consequences of this deficit spending are very different for debt-based money and debt-free money. Under a debt-based monetary regime, the national debt (and its taxpayer-funded interest payments) must increase in lockstep with the increase in the money supply. Under a debt-free system this money supply increase can be accommodated even as the national debt is being slowly paid off. Clearly debt-free fiat money is the better alternative in this regard.
The more recent bout of unrestrained money printing in Zimbabwe, which led to hyperinflation, was facilitated by massive government corruption, draconian political and economic controls, and widespread expropriation and destruction of farms and other productive enterprises. These preconditions for hyperinflation do not exist in any advanced market-based economy. If such circumstances do arise someday in the U.S., backing our fiat money with government bonds will not save the country from a financial meltdown; it will likely make matters worse.
It’s worth noting that the U.S. today has one thing in common with postwar Germany and Hungary: the presence of a government debt that we are increasingly unable to pay back. We can continue “kicking the can down the road” as our national debt continues to become more unmanageable, or we can begin to gradually pay it down. Given our present political and economic circumstances, the only way we can accomplish this is by breaking the link between the federal deficit and the national debt.
I didn't call it that, and I don't care what they call it, if they actually reduce the deficit. (I agree completely it's the normal economic cycle that reduced the deficit.) They're masters of telling you who's to blame for something and how someone else shouldn't get credit. That's fine. Just get us the results, and they can pass a resolution along with it blaming President Obama for things and stroking rednecks' fragile egos. None of that matters to me.
"it is certainly possible to simplify the tax code without raising anyone’s taxes. "
This is the line that critics of a tax cut are using. It's technically true, but saying all taxes must go down makes the job harder.
"the best short-run solution would be to begin issuing pure “unbacked” fiat money to fund the deficit"
I'm intrigued by this idea. I wonder how the financial markets would respond to the bonds being just bought back with unbacked money rather than held on the Fed's balance sheet. I don't understand the monetary system enough to know.
I agree completely. That's cutting taxes- easy. I'm saying it's hard to do three things at once: 1) cut taxes, 2) simply taxes, and 3) have no one's taxes increase. The reason is simplifying means getting rid of tax breaks and loopholes. If the attacks that someone's taxes went up are politically effective, they should pick #1 and #3 and put off #2.
But when it comes to lies and looking like asses, it's totally bipartisan.
Do as I say, not as I do? Hopping thunder lizards! Me dino thought only the Jackasses did that.
Say, wait, I know, maybe me dino shouldn't capitalize (j)ackass anymore like when I write "the Jackass Party."
On this board me dino should strive to be objective and acknowledge reality by spreading the jackasses around to both parties.
After all, J is J just like A is A, don't y'all know.
Me dino originally wrote, "Hopping grasshoppers!"
Then me dino decided I could do better than that.
thing about repeal of the individual mandate in Oba-
macare the other day, but if they pass the rest of the bill, I'm not sure that even then it would be worth it.
Perhaps in the primaries, somebody could get some of these people out by pulling a Dave Brat, as was done in Virginia; I don't know what else will work.
I don't think big government can be made cheap. What I want is abolition of government departments. Sure, go try to get integrity from politicians.
If the spending and borrowing are not curtailed there will ultimately be a catastrophe. There is no sustainable method for continuing this.
Any catastrophe brought on by excessive spending and borrowing will be much worse and harder to correct than a catastrophe brought on by excessive spending alone.
It also leads to an 'easy money' policy that is inflationary (which reduces the value of the principle of any fixed investment -- like cash in the bank -- from what it otherwise would be). The easy money policy is a major factor in why the stock market has risen so much despite the economy not being nearly as good as you might otherwise think it is from stock market values. Price inflation is not uniform across the economy; prices go up first where the new money is being spent. As the effects build up over time inflation wrecks the whole economy; a large monetary inflation is even worse.
The are so many gimmicks in place now with spending, borrowing, inflation, and controls that is practically impossible to track what is happening while we wait for a the inevitable chickens coming home to roost.
~slosh, slosh, slosh~
Here those creepy critters come, there they slime off to go.
Despair all ye taxpayers who prop up this mucky wasteland of woe.
That's why cottonmouths prefer to lurk unseen below the surface of fresh water. Water that conceals them with weeds and lily pads is all the better for those sneaky snakes.
Every once in a while you can see one poke its head above the surface to look around. Unlike most water snakes, a cottonmouth will make a ripple as it submerges.
In a way that's how you can by their actions perceive a RINO for what that sneaky evil creature really is.
Never mind the sweet nothings that come from that pretty cotton mouth when it is to be reelected . . . again, again and again.
https://nyti.ms/2icXs4P
It's not even the increased borrowing that makes it hard to pass. It's everyone with their hand out, "hey, why did my neighbor get a cut and I didn't?" It's so bogus b/c your tax situation changes every year. Simpler and lower taxes are generally better.
The winners/losers chart in the NYT article shows exactly why we need lower and simpler taxes.
“Deficits can be a source of inflation if they are accommodated by monetary policy-that is, if the Federal Reserve responds to higher deficits by increasing the growth of money. The Federal Reserve has two ways of responding to higher deficits:
1. The central bank directly purchases the securities issued by the government to finance the deficits.
2. The private sector purchases these same securities; then, the central bank attempts to limit any potential interest rate increases.
Under either scenario, deficits lead to greater money base growth, which can create inflationary pressure.”
https://www.stlouisfed.org/Publicatio...
So an excessive deficit will be inflationary regardless of whether the money is “printed” or “borrowed”. The difference is that “printing” the money does not create a huge national debt and its accompanying interest burden on the taxpayers.