[Phil McDade]

 None (or very few) of our current or future members of Congress have the guts to make the budget cuts or tax dedcutions removed that are needed to cut the deficit and because of that, things will continue to spiral downward.

John:

Well, here's one -- a guy just elected with 68 percent of the vote in a congressional district that not long ago regularly elected Dems to the seat. Here's his idea(s):

http://www.roadmap.republicans.budget.house.gov/

Note in particular, if you click on those tabs, his ideas for Medicare, Medicaid, and Social Security, the lion's share of non-defense domestic spending.

I'm neither endorsing nor condemning his approach; but, the notion that significant changes to major expenditures received by many in this country, are a political third-rail that no one touches for fear of electability, is slowly eroding, I'd suggest.

[PThomas]

 None (or very few) of our current or future members of Congress have the guts to make the budget cuts or tax dedcutions removed that are needed to cut the deficit and because of that, things will continue to spiral downward.

John:

Well, here's one -- a guy just elected with 68 percent of the vote in a congressional district that not long ago regularly elected Dems to the seat. Here's his idea(s):

http://www.roadmap.republicans.budget.house.gov/

Note in particular, if you click on those tabs, his ideas for Medicare, Medicaid, and Social Security, the lion's share of non-defense domestic spending.

I'm neither endorsing nor condemning his approach; but, the notion that significant changes to major expenditures received by many in this country, are a political third-rail that no one touches for fear of electability, is slowly eroding, I'd suggest.

any politician or candidate that talks about smaller govor tax cuts  or anything like that without proposing specifics should have his/her tongue cut off

[George Pazin]

Congrats on your civility, Paul.

[PThomas]

Congrats on your civility, Paul.

i really dont have to explain that that was sarcasm, do i George??

[George Pazin]

No, I fully realize that was your idea of rational discourse...

[Craig Sweet]

This commission should be called the cat food commission....any commission that does not look seriously at cutting our bloated and fraudulent defense budget is a joke!  Social Security is sitting on a two trillion dollar surplus and will not go broke anytime soon. Simple fixes to that program can be had without cutting benefits.  Medicare is another story, but in theory the OBama health care plan will actuall save Medicare money in the long run....that said, the whole health care fiasco is another argument for another day.

Cut the defense budget..bring our troops home from Japan, Germany, GB, and the middle east....and begin weening us off this military economy we have now.

[JohnV]

Paul,

Until I see Defense on his list, I won't believe he is serious.  Everything should be up for grabs.  There is as much waste in the DoD as there is anywhere in Washington.  Everytime the DoD wants to get rid of a program or a base, the local congressmen try to block it.  Get real about cuts or get out of the way.

[Phil McDade]

Paul,

Until I see Defense on his list, I won't believe he is serious.  Everything should be up for grabs.  There is as much waste in the DoD as there is anywhere in Washington.  Everytime the DoD wants to get rid of a program or a base, the local congressmen try to block it.  Get real about cuts or get out of the way.

John:

There have been attempts, somewhat successful, to get at this issue in a fairly non-(or bi-) partisan way:

http://www.brac.gov/

Defense spending, of course, is predicated in part on this country's political will to engage in wars overseas, and defend what it views as essential places. That's often a moving target, and one reason I think Ryan didn't address the issue fully in his Roadmap plan. Changing demographics -- mainly the enormous number of people entering the Social Security/Medicare systems in the next 10-15 years (the baby boom generation) -- virtually mandate that entitlement programs will be the primary issue surrounding the federal budget debate in the coming years.

The larger point I was trying to make wasn't that Ryan's specific ideas are good or bad, or lacking specifics in some areas (Ryan actually could probably get away with arguing for large cuts in defense spending, because Wisconsin has very little in the way of direct military spending coming here, unlike, say California or North Carolina). It's that he's actually talking about SS and Medicare in a rationale way without paying a price for it politically. That suggests the electorate recognizes the larger issues, and the need to address them.

[Dan Herrmann]

My ideas:
8% Federal VAT on goods and services.
$.15 increase in gasoline tax
$.15 reduction in diesel tax

===============
Cut agricultural subsidies
Means test social securtiy.  Eliminate social security payments if income > $750K
Eliminate the $1 paper bill.  Replace it with a $1 coin.
Transition to the metric system.  You have NO idea how much it costs the USA to be on its own system of weights and measures - I used to work for a large manufacturer, trust me - it's expensive.
Suspend the manned space program for 20 years.
Eliminate dairy subsidies.
Transition the DOD away from Cold War spending.  Do we really need huge bases throughout Europe?
Cut all federal discretionary spending by 20%.
Make more services fee based - I wouldn't mind spending a few bucks to get into the Smithsonian, for example.
Implement a flat tax on income.  Make the first $50K exempt.  No deductions.  No exemptions.

[Jud_T]

Dan,

I generally like it but the gas tax should ramp up to $1.00 IMHO

[Don_Mahaffey]

Well one thing for sure, raise taxes on fuel and cut ag subsidies and you'll have a lot of cheap land to build more golf courses.

[Dan Herrmann]

I don't want to be unfair to our farmers.  Let's tax equity and bond transfers too.  I don't like day traders!

[Phil McDade]

My ideas:
8% Federal VAT on goods and services.
$.15 increase in gasoline tax
$.15 reduction in diesel tax

===============
Cut agricultural subsidies
Means test social securtiy.  Eliminate social security payments if income > $750K
Eliminate the $1 paper bill.  Replace it with a $1 coin.
Transition to the metric system.  You have NO idea how much it costs the USA to be on its own system of weights and measures - I used to work for a large manufacturer, trust me - it's expensive.
Suspend the manned space program for 20 years.
Eliminate dairy subsidies.
Transition the DOD away from Cold War spending.  Do we really need huge bases throughout Europe?
Cut all federal discretionary spending by 20%.
Make more services fee based - I wouldn't mind spending a few bucks to get into the Smithsonian, for example.
Implement a flat tax on income.  Make the first $50K exempt.  No deductions.  No exemptions.
--------------------------------------------------------------------------------------------------------
Dan -- You are no longer welcome to play at Lawsonia.

Aren't ag and dairy subsidies partially a result of a long-standing, informal but well-entrenched, federal cheap-food policy?

[Jeff Goldman]

"I’m just trying to understand how more money in circulation is bad, but government stimulus spending is good."

It isn't that "more money in circulation is bad", but that, under current conditions, it won't do much.  Short term interest rates are zero, and demand for money is low, so putting more money out there isn't going to help.  The thought of the Fed is that buy tossing more money in they will lower long term rates, or maybe spark expectations of increased inflation, either of which (particularly the latter), would be good, though there really isn't much historical basis for the former -- didn't work in the depression or in Japan, but is worth trying I guess.

Stimulus is good because of the collapse in private demand.  Again, interest rates are zero, demand is too low for business to expand, nobody sees demand expanding any time soon and so only government can provide demand that will bring employment down (btw, this is a very rare situation which we haven't seen here since the 1930s.  Contrary to some beliefs, money was tossed in by the fed, but didn't do much; possibly a lot more should have been tossed in, but it was WWII that cured the depression, in essence a huge stimulus).  Again, we needed a program of about $1.4 trillion; we got maybe $600 billion, most of which was cancelled out because of budget cuts in the states.  In the current climate, it's hard to see anything pulling us out for a long while.  Balancing the budget, or cutting spending signficantly NOW would be really, really bad.  unemployment would go way up, tax receipts would fall even more than they have, and the deficit wouldn't get much smaller, if it got smaller at all.  We might even end up in a worse debt position than we are now.  (that's one part of what's  called "the paradox of thrift" which is generally talked about in connection with private action).

[Sean_A]

My ideas:
8% Federal VAT on goods and services.
$.15 increase in gasoline tax
$.15 reduction in diesel tax

===============
Cut agricultural subsidies
Means test social securtiy.  Eliminate social security payments if income > $750K
Eliminate the $1 paper bill.  Replace it with a $1 coin.
Transition to the metric system.  You have NO idea how much it costs the USA to be on its own system of weights and measures - I used to work for a large manufacturer, trust me - it's expensive.
Suspend the manned space program for 20 years.
Eliminate dairy subsidies.
Transition the DOD away from Cold War spending.  Do we really need huge bases throughout Europe?
Cut all federal discretionary spending by 20%.
Make more services fee based - I wouldn't mind spending a few bucks to get into the Smithsonian, for example.
Implement a flat tax on income.  Make the first $50K exempt.  No deductions.  No exemptions.

Dan

Believe me, the last thing you want to do is start surcharging petrol.  That is an easy tax that will continue to climb if we start now.  Just look at why petrol and diesel costs so much in western Europe - its stupid.  

You don't want to encourage the use of diesel in the States with a dramatic difference in tax structure or you will have loads of diesel cars in cities - the worst place for diesel because of particulate matter which pollutes the air, seeps into ground water etc - makes sense because the oil is less refined than petrol.  Diesels have been pushed by the UK government because of less  CO output (greenhouse gas), but I am not convinced this is a better tradeoff compared to particulate matter in countries with many large cities such as the US.  I know catalytic converters and city diesel haven't been properly explored for diesels and perhaps they should be soon because diesels are more efficient engines (partly because of a lack of catalytic converter) cars and diesel fuel has more energy per gallon than petrol.  

I am also not sure then US wants to go the route of Europe style VAT.  This too can get out of hand.  A lot of western Europe is hovering around 20% VAT and I see no reason why this won't continue to rise since most European govt's are still in debt no matter how much taxes are raised.  No, first and foremost, the US should be looking at cuts rather than incresed tax revenues.  If worst comes to worst, perhaps in a few years if things are improving quickly enough your sort of regressive taxes could be put in place, but for only one or two years then automatically repealed, but even then I am very dubious of tax hikes the sort of which you describe.  That said, I could see higher taxes on tobacco and alcohol, but I think tobacco has been hit pretty hard already.  In any case, these are luxury items in the way petrol and diesel are not and so I think the justification for higher tax is an easier sell.  Of course, the end result will likely be reduced tobacco and alcohol consumption so the trick for the government is to not become dependent on this revenue and keep raising the tax commmiserate with its decreased use.  

I like the idea of flat tax, but 50K starting limit is way too high.  The tax needs to start at ~25K.  You are already taking the SS away from the wealthy, folks need to pay for their services man, it can't just be a matter of taxing the well off and handing money over to the less well off.  Of course, much depends on what the flat tax is!  

I do like scrapping manned space crap, reduction of the military (is it time to scrap the concept of fighting two wars at once?) and 20% cut in discretionary spending.  

Ciao  

[Dan Herrmann]

Sean,
What I'm getting to is that we should change from an income/earnings tax on individuals to a consumption tax.  The numbers were just a swag better left for minds greater than my own.  

I'd also overhaul the way the USA taxes its citizens to pay for basic education.  K-12 is a big money-drain, and you often don't see great education based on high tax rates.  Again, I'd set this up as a VAT type tax and eliminate school taxes based on property values.  (actually this one would hurt me because I actually don't pay a lot in school tax today because of the relatively low assessment of my home).  And get this - every school district would be sharing money from the same pool.

Of course, this would all change the way golf clubs operate.  Take a cart, pay tax.  Take a lesson, pay tax.  Eat lunch, pay tax.  But there'd be a lot less tax paid on your earnings.

Time to change the paradigm, because the current one isn't working.

[Craig Van Egmond]

As soon as Congress and the White House take a 10% cut in pay, switch over to Social Security for their retirements and move off their cadillac health care plans then they I might start believing some change is coming. 

[Jud_T]

Couple of points:

1.  Taxing equity and bond transfers is a bad idea:  We need more liquidity not less. Less liquidity and higher transaction costs affect everyone from the government and corporations financing down to mom and pop investors.  If day trading is your big concern, there are other ways to approach that problem.

2. I agree that a Euro style VAT is probably not a good idea.

3. Sean, I think a gas tax is one of the best ideas out there, it's just not politically correct since it's not a progressive tax.  They could easily produce a plug-in diesel electric that gets 100 mpg but nobody thinks the american consumer wants it.  In fact, few offer 4 cylinder cars in the US because they think the consumer only wants a V-6 or V-8.  I can't think of a single simple solution that has so many far reaching effects in terms of foreign policy and the environment.  Virtually the ONLY think Obama's done that I'm fully behind was ramping up the MPG requirements.  And for those who think the economy would come to a screeching halt, the math is pretty simple.  If you drive a car that gets 15 mpg and gas costs $3/gallon and you switch to a car that get 60 mpg and gas costs $9/gallon, you're way ahead of the game.  fyi-if we weren't on the mid-east oil teat, we could have saved a TRILLION on invading Iraq, just for starters.

[Phil McDade]

3. Sean, I think a gas tax is one of the best ideas out there, it's just not politically correct since it's not a progressive tax.  They could easily produce a plug-in diesel electric that gets 100 mpg but nobody thinks the american consumer wants it.

Jud -- Historically, have significant changes in tax policy ever driven technological innovation? Not a sarcastic question; I'm genuinely interested in this. The various tax systems in this country, in part because they are so prevelant (everybody pays them), seem like oft-targeted tools to drive this kind of policy/behavioral change, or that kind of innovation, when my reading of history is that other factors are more at work (i.e., the Internet went from being a curiosity to a real driving engine of economic growth, it seems, when someone figured out the ease-of-use issue that took us from complicated software coding to www.whatever)

[Jud_T]

That's an interesting question Phil.  I'm not sure I know the answer.  But economic incentives are not to be underrated IMHO.  How many great ideas at MIT etc. have been driven by subsidies, grants, etc.? Tax breaks for R&D, education etc. have probably had a huge influence.  And the only reason car companies are beginning to come out with more fuel efficient vehicles is that they're being forced to.  In fact they and the oil companies have spent god knows how much fighting it tooth and nail every step of the way...Sure while gas is cheap and plentiful, joe and jane blow will drive a huge SUV to pick up their 1 kid and the groceries.  They don't really care about how it incentivizes the military/industrial complex or what it does to the environment.  Only when it really hits their pocketbook will they change behavior...And don't get me started on sugar subsidies....

[Sean_A]

Couple of points:

1.  Taxing equity and bond transfers is a bad idea:  We need more liquidity not less. Less liquidity and higher transaction costs affect everyone from the government and corporations financing down to mom and pop investors.  If day trading is your big concern, there are other ways to approach that problem.

2. I agree that a Euro style VAT is probably not a good idea.

3. Sean, I think a gas tax is one of the best ideas out there, it's just not politically correct since it's not a progressive tax.  They could easily produce a plug-in diesel electric that gets 100 mpg but nobody thinks the american consumer wants it.  In fact, few offer 4 cylinder cars in the US because they think the consumer only wants a V-6 or V-8.  I can't think of a single simple solution that has so many far reaching effects in terms of foreign policy and the environment.  Virtually the ONLY think Obama's done that I'm fully behind was ramping up the MPG requirements.  And for those who think the economy would come to a screeching halt, the math is pretty simple.  If you drive a car that gets 15 mpg and gas costs $3/gallon and you switch to a car that get 60 mpg and gas costs $9/gallon, you're way ahead of the game.  fyi-if we weren't on the mid-east oil teat, we could have saved a TRILLION on invading Iraq, just for starters.

Jud

Hang on, Dan was on about fuel tax as a form of tax revenue.  You are talking about fuel tax as an environmental issue - essentially an incentive to drive greener cars.  These are two separate issues and would require separate approaches.  With your approach, the government needs to be FAR more diligent in requiring better performance on a fleet basis and also provide incentive for car companies to roll greener cars quicker.  Additionally, the government would need to be more proactive in organizing infrastructure for radical green cars.  I am all for greener cars and less dependency on oil.  Three years ago I would have been gung ho about the government becoming more heavy handed and generous to accomplish greener driving, but I am not convinced now is the time for sort of movement.  For sure, Americans in general are going to have to be kicked off the fuel teet because they don't show much sign of doing it willingly, but not now my friend - there is the debt which should be taking up any spare cash and more.  The debt should be far and away the number 1 priority which all efforts are geared toward dealing with it.  Nothing short of this amount effort and care will come close to taking care of business.

Ciao 

[Jud_T]

 Well raising the gas tax also raises revenue at least until everyone retools, no? It has more fringe benefits than a lot of the other proposals IMHO.  I actually think the commission's proposal is mostly pretty responsible, but there's problems with almost every bit of it.  For instance, how are you going to cut the mortgage deduction while the housing market is still the main drag on the economy?

[John Kirk]

More related fuel to the fire:

http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=200

One thing I want you to notice is that tax receipts in 2009 were 14.8% of the GDP, the lowest percentage since 1950.  The depressed economy produced paltry tax receipts.

Spending jumped dramatically from about 20% to 24%.  This appears to be mostly about the stimulus package.

Here's another common talking point bandied about that I'm not buying.  In fact, I can't believe anybody believes this one:

"The stimulus package did nothing to help the economy."

Whether it's government or individuals, if money is spent on goods and services, it's money spent.  If the government buys $760 billion of stuff, that gets recorded on the books, same as everything else.  And it probably avoided an immediate depression.  Whether you believe it was a good idea, or will have a lasting impact, is another question.

What I would like to see is a sensible long-term investment in the country's infrastructure.  If one assumes, like I do, that there's something like 30-100 years of easily obtainable oil left, depending on how it is used, then one might conclude that money should be spent on alternative energy sources, especially nuclear power.  I also think that improvements in the national rail system may be more valuable than upgrading the highway system.  Big railroads look like a very sensible long term investment to me, and when I say long-term, I mean lifetime investment.

[Sean_A]

Well raising the gas tax also raises revenue at least until everyone retools, no? It has more fringe benefits than a lot of the other proposals IMHO.  I actually think the commission's proposal is mostly pretty responsible, but there's problems with almost every bit of it.  For instance, how are you going to cut the mortgage deduction while the housing market is still the main drag on the economy?

Jud

As I said earlier, its one or the other.  If for revenue purposes the goverment should do nada that costs money to push alternatives.  imo this is a terrible idea unless perhaps there is a cap on the tax to end automatically in a year or something like that - because if there isn't a cap it isn't likely the gov't will ever ditch the tax - thats how politicians roll.  However, if the government wants to raise the tax as part of an overall plan to reduce fuel use and uses that extra revenue to pour into resolving the problem, then I think its a good idea.  As I say, two totally different issues which would reruire separate approaches.   

Ciao   

[Dan Herrmann]

Sean,
That's one of the reasons I'd cut taxes on diesel fuel (which are quite a bit higher than gasoline in the States).  Our economy runs on diesel (trucks, trains, etc). 

Cutting taxes on diesel would improve the health of transportation companies and give citizens an incentive to buy efficient diesel automobiles.

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