The deficit is going down

[Wasillaguy]

Originally Posted by BlueStreak

How about focusing on ways to generate more revenue? What about finding ways to make more money rather than cut? Or have we grown too lazy for that? How about serious cutting of waste and corruption within our institutions instead of simply hacking them off or reducing benefits? Why don't we just stop trying to portray our elderly as "freeloaders"? Is there anything in the Ryan budget about dealing wth the real "welfare" freeloaders? I doubt it. Oh no, instead we focus on giving more to those who have no need of it, at the expense of those on fixed incomes.

But, then, hasn't that been the plan all along?

Dave

Cutting the size of government IS a way to generate more revenue. Cutting taxes IS how to make more money. Simply hacking off many of these institutions IS serious waste cutting. Nobody's portraying Granny as a freeloader. The portrayal is of conservatives throwing her over a cliff.

[d-ray657]

Originally Posted by Wasillaguy

Cutting the size of government IS a way to generate more revenue. Cutting taxes IS how to make more money. Simply hacking off many of these institutions IS serious waste cutting. Nobody's portraying Granny as a freeloader. The portrayal is of conservatives throwing her over a cliff.

Are we still relying on the Laffer curve?

Regards,

D-Ray

[whell]

Originally Posted by d-ray657

Are we still relying on the Laffer curve?

Regards,

D-Ray

We still want to refute an entire idea with 1/2 the argument?

It is about revenue, and it is about spending. Our government is currently being dishonest about both. They understate revenues, they refer to a "loan" as revenue for purposes of declaring a balanced budget while having zero intention of making payments on the loan principle. They declare a budget plan a success if if fixes a current problem 6 to 8 years hence.

If we can't agree on fundamental principles of economics when we discuss government financing, then the argument is lost before it starts between us, and the winner is the the guy in Washington who keeps us distracted with an argument while he continues to steal us blind.

So, let's try some fundamental principles, at least one to start with.

When a particular activity is penalized do you get more or less of that activity?

When a particular activity is subsidized, do you get more or less of that activity?

The answer, of course, is that subsidies increase the occurrence of an activity, while penalties decrease it.

Are taxes a penalty or a subsidy when engaging in an activity? They are, of course, a penalty.

So, which do you think would be the best fuel for economic activity: an increase or decrease in the penalty? If we can agree that a reduction in penalty, or subsidy, increases the likelihood that a particular activity will be repeated, then should the goal of encouraging economic growth focus on increasing subsidy or increasing penalty? Hopefully, we're still on the same page at this point, and can a agree that a subsidy encourages growth.

So, if the economic value of producing one widget is $1.00, and the widget is currently taxed at 50%, the government takes home $0.50. While, on its face, the government might be satisfied with retaining that $0.50, that $0.50 must also abide by the fundamental principles of economics.

If the government decided to test the Laffer curve, and drop tax (penalty) on producing that widget to $0.40, the widget will now cost $1.40 rather than a $1.50 in the marketplace. The law of supply and demand suggest that the widgets demand level will increase at the lower price point. We now have to produce more widgets to meet demand.

Increasing productive output has a whole host of positive effects beyond just the production of the widget. Certainly Widget Inc. will now be operating with potentially increased efficiency / capacity to produce more widgets. Widget Inc will be buying more raw materials to make more widgets, they may have to add to the workforce to increase demand, converting capital into product and wages.

Let's say the demand in creases by 50%: Widget incorporated must sell 1.5 widgets for every one widget that they sold previously. Well, the government used to collect $0.50 for each widget sold, now they're collecting $.40 for each widget, but more widgets are being sold. At a 50% increase in demand, that's $0.40 on the first widget sold, and an extra $0.20 on the additional 1/2 widget sold due to increased demand. So, now the government is collecting $0.60 when it used to collect $0.50.

You can start to put other names on this: Laffer curve, Reaganomics, whatever. Those names refer to government economic policies and budget law: Of course, the old joke about not wanting to see either sausage or laws get made has to apply here as well. But in a classic economic sense, the principles are sound.

The reverse is also true. If you increase the penalty for widget production, you will get less widgets. If you tax an activity, you will get less of it, and therefore antcipated revenue from the tax increase will fall as well (tax policy projections are typically based on an assumption of static demand, which doesn't exist in economics).

Therefore, making bold economic projections about balancing the budget by increasing taxes (whether its just on the "1%" or more broad-based) is Fantasyland to me. Further, those folks in the "1%" who have the means to do so will be particularly adept at changing their tax strategy to avoid a tax. Its the 99% for don't have the means - or the expert tax advice - who typically become collateral damage when Washington plays with tax policy.

Of course, if we can't agree on the application of fundamental economic principles in these discussions, then what's the point?

[BlueStreak]

Originally Posted by Wasillaguy

Cutting the size of government IS a way to generate more revenue. Cutting taxes IS how to make more money. Simply hacking off many of these institutions IS serious waste cutting. Nobody's portraying Granny as a freeloader. The portrayal is of conservatives throwing her over a cliff.

Then, what's up with the Ryan plan to eliminate Medicare? Is that not a program for the elderly? Are we planning to replace it with anything? The language I hear coming from the right, for the last thirty years, paints anyone who recieves anything from the government as a "freeloader" even when they paid into it, or worked for it.

Am I wrong in that?

Dave

[Charles]

Originally Posted by BlueStreak

Then, what's up with the Ryan plan to eliminate Medicare? Is that not a program for the elderly? Are we planning to replace it with anything? The language I hear coming from the right, for the last thirty years, paints anyone who recieves anything from the government as a "freeloader" even when they paid into it, or worked for it.

Am I wrong in that?

Dave

I'm not familiar with the Ryan plan. It really doesn't matter what his plan is at this moment.

The fact that someone is willing to touch the 3rd rail of politics is long overdue.

In a way, the Democrats deserve some credit for having the guts to address healthcare with PPACA, although they handled it like the dumbest, shade tree mechanic in existence.

Had they have done it right, they and Obama would be guaranteed reelection. The Republicans couldn't even block what they did, and they for sure couldn't have blocked them if they had a plan which gathered public support.

Just some thoughts,

Chas