Debate 2 --Varner mops floor with Kerry

[island911]

VARNER: Thank you.

Senator Kerry, would you be willing to look directly into the camera and, using simple and unequivocal language, give the American people your solemn pledge not to sign any legislation that will increase the tax burden on families earning less than $200,000 a year during your first term?

KERRY: Absolutely. Yes. Right into the camera. Yes. I am not going to raise taxes.

....

In the past, Kerry wobbled and equivocated on this question. . ..said some reasonable things like "well if an unforseen emergency (war) then yes, we would have to raise taxes on the middle class.. ."

So what happened here, on Varner's Q?

Did Kerry think to himself;

-- If I roll-back "GW's tax cuts," that then won't be a "tax increase."

or

-- Oh crap, I just got suckered into a "read my lips, no new taxes" blunder.

or

-- I'm not going to win anyway, I may as well take this time to change/repair my fickle image.

or. . .?

[928ram]

-- If I roll-back "GW's tax cuts," that then won't be a "tax increase."

This is exactly what I got out of it.

Of course the other plan I'm sure is to raise taxes even more on those "wealthy" American, thereby stifling the economy.
Would $200K a year make you "rich"? I know my definition includes more zeros.

[Bleyseng]

Someone HAS to pay for Bushes war, why not his biggest supporters, the people earning over $200k a year.
"Kerry drew the first real laugh of the night one hour into the debate, when he explained his plan to roll back Bush's tax cuts for Americans who earn more than $200,000 a year. "Looking around at this group here, I suspect there are only three people here who are going to be affected," he noted. "The president, me, and, Charlie, I'm sorry, you too."

Geoff

[BillyIdaho]

Originally posted by Bleyseng
Someone HAS to pay for Bushes war, why not his biggest supporters, the people earning over $200k a year.

Geoff

Exactly - those who profit the most, pay the most.

Kerry had no problem answering the "tax" question.

Kerry scores, Bush snores.

Same old "fear agenda" for the Republicans, and no humility for all of the obvious mistakes his administration has made.

It will be his undoing.

[island911]

Originally posted by Bleyseng
Someone HAS to pay for Bushes war, why not his biggest supporters, the people earning over $200k a year.
"Kerry drew the first real laugh of the night . .

Okay, sure, I can go along with that. But who's going to pay and pay and pay for all of Kerrys other pricey "plans"?

Kerry is not some hard-working guy who made money. His shtick is taking peoples money. Yet you give me the feeling that you actually believe that Kerry (holding back laughter here) that Kerry won't find ways to raise taxes ON EVERYONE. . .. .unless the own lots of off-shore ketch-up factories.

Oh, and I agree; Kerry drew the first real laugh of the night . . .talking about not raising taxes.

[jyl]

I hear a lot of teeth-gnashing about repealing the Bush tax cuts on those earnings over $200K/yr.

I don't hear any "ideas" of alternative revenue increases or spending decreases, that you all would use to to eliminate the budget deficit.

Nor do I hear any "ideas" about why it is okay for the country to maintain multi-hundred-billion-dollar-per-year budget deficits.

How about some ideas, to go with the complaining?

[A Quiet Boom]

Fact, Kennedy lowered taxes and government income went up. Fact Reagan lowered taxes and government income went up. Fact Kerry says he'll reduce the deficit and then makes wild claims about all the plans he has including $2.2 trillion for medical care. Kindergarden math can tell you Kerry's promises just don't add up. Cut taxes even further, support the growth of small businesses and watch the total taxes collected increase. Spending on both sides is out of control but watching the two so far it is clear kerry will outspend Bush by a huge margin if Congress let's him.

[928ram]

What Quiet Boom said. Govt. at all levels makes their income when money moves, put more money in the hands of the consumer and more of it moves about and more tax revenue is collected; simple.

Start heaping taxes on the guys who employ workers and the economy flounders, jobs are lost and outsourcing accelerates.

As to those who profit the most; they already pay the most both in pure dollars and percentage of income.

[jyl]

put more money in the hands of the consumer and more of it moves about and more tax revenue is collected

That is so-called "supply-side economics". The evidence that it works is virtually non-existent.

Take the Reagan example - since he was the first President to rely on supply-side economics, might as well start there.

Reagan pushed through a large tax cut in 1981, at the beginning of his Presidency. Federal revenues were flat during 1981, 1982 and 1983.

During those years of flat revenue, Federal spending rose. The budget deficit grew. The deficit was $79BN in 1981, reflecting the last Carter budget. After Reagan's budget took effect, the deficit was $128BN in 1982, and $207BN in 1983.

In 1982, Reagan reversed course and increased taxes, partially rolling back the 1981 corporate and individual tax cuts (by about a third). In 1983 Reagan increased taxes again, this time increasing the Social Security payroll tax.

After the tax increases, Federal revenues began to rise, starting in 1984. But Federal spending also continued to rise. The budget deficit continued to rise. The deficit was $185BN in 1984, $212BN in 1985, $221BN in 1986. This was despite the help of the economy, which by roughly 1983 had recovered from the start-of-the-decade recession.

In 1986, Reagan raised taxes on corporations and long-term capital gains. In 1987, after the stock market crash, Reagan raised taxes again.

After 4 tax increases, Federal revenue finally began to rise faster than Federal spending. The budget deficit was $150BN in 1987, $156BN in 1988, $153BN in 1989.

It is, therefore, inaccurate to say that Reagan shows that tax cuts eliminate a budget deficit. His tax cuts froze Federal revenues; they did not increase Federal revenues. The budget deficit did not decline; the deficit soared 150% in two years. It wasn't until Reagan admitted his error and started raising taxes that Federal revenues began to rise and the budget deficit stopped soaring. It wasn't until Reagan had raised taxes in four years that the budget deficit started falling. Even so, when Reagan left office he left a greatly increased Federal debt, and an annual budget deficit almost 100% higher than when he arrived. The people who advocate supply-side economics forget these inconvenient facts.

By the way, you notice it is also inaccurate to say that Reagan was a tax-cutter. He cut taxes in 1981 and raised them in 1982, 1983, 1987 and 1987. That inconvenient fact gets ignored a lot.

Here are the numbers. In billions of dollars. Source: Cato Institute chart.

year revenue spend deficit
1981 599 678 79
1982 618 746 128
1983 601 808 207
1984 667 852 185
1985 734 946 212
1986 769 990 221
1987 854 1004 150
1988 909 1065 156
1989 991 1144 153

(edited for clarity)

[campbellcj]

I'm not a huge Bush fan, but Kerry's "Robin Hood Economics" just fly in the face of common sense and grade school mathematics.

The economic plan document on his web site includes such fascinating elements as "Increasing Efficiency of the Government", which he values at $50B. Now how is he going to do that when his other plans seemingly are to TRIPLE spending on homeland security, healthcare, and education, among other lavish expansions that will GROW the government dramatically?

Increasing the tax burden on small businesspeople and high-income individuals is absolutely the wrong thing to do. Depending how far it goes, I might need to lay off one or two people to stay profitable and competitive. The laid-off persons would of course fall within the "working middle class" that Kerry claims to love so much. While unemployed, they would also get to enjoy paying higher prices for goods and services, since manufacturers will have to pass on their higher costs to customers.

But, at least they'll have federalized healthcare, right? Well, that assumes that any quality medical practicioners actually join the govt plan, which will undoubtedly offer crappy reimbursement rates and massive bureaucratic hassles. Does Kerry really think he can undercut the big HMO's using civil servant labor? Does he really think the big pharmas are going to cut their drug prices (and profits) by 75% just because he asks them nicely?

I wish somebody could explain to me how taking money from our investors and employers to redistribute to the "middle class" and social/welfare causes will benefit our overall economy. Kerry or Edwards sure have not made that clear in my mind thus far.

[A Quiet Boom]

Originally posted by campbellcj
I'm not a huge Bush fan, but Kerry's "Robin Hood Economics" just fly in the face of common sense and grade school mathematics.

The economic plan document on his web site includes such fascinating elements as "Increasing Efficiency of the Government", which he values at $50B. Now how is he going to do that when his other plans seemingly are to TRIPLE spending on homeland security, healthcare, and education, among other lavish expansions that will GROW the government dramatically?

Increasing the tax burden on small businesspeople and high-income individuals is absolutely the wrong thing to do. Depending how far it goes, I might need to lay off one or two people to stay profitable and competitive. The laid-off persons would of course fall within the "working middle class" that Kerry claims to love so much. While unemployed, they would also get to enjoy paying higher prices for goods and services, since manufacturers will have to pass on their higher costs to customers.

But, at least they'll have federalized healthcare, right? Well, that assumes that any quality medical practicioners actually join the govt plan, which will undoubtedly offer crappy reimbursement rates and massive bureaucratic hassles. Does Kerry really think he can undercut the big HMO's using civil servant labor? Does he really think the big pharmas are going to cut their drug prices (and profits) by 75% just because he asks them nicely?

I wish somebody could explain to me how taking money from our investors and employers to redistribute to the "middle class" and social/welfare causes will benefit our overall economy. Kerry or Edwards sure have not made that clear in my mind thus far.

Exactly! The problem is most Americans are too ignorant of the workings of economics to understand the point. 401k's are changing this somewhat as more and more people want to learn about how their retirement funds are performing.

[A Quiet Boom]

The Reagan example stated above misses one very important point about those deficits. Reagan ran up the deficit in an effort to outspend the Soviet Union and bring about it's demise, a small price to pay for eliminating the possiblity of a full scale nuclear war and the threat the Soviets placed on the entire world. Deficit spending for national security should not be viewed as bad if it has the desired results.

[ErVikingo]

He should ask those he wants to tax more. I know I pay way more than my fair share to keep all those jokers in congress and senate happy.

Tax the freaking casinos, OK a lot are owned by Native Americans, what about those floating tax "law loopholes"........

If I add up my taxes (property, self employment, income) I end up paying over 50% of my take. That's clearly not fair.

Lets move to a national sales tax and cut this crap. I already work 6 months of the year to pay my taxes. And yes, in my small business I keep 30 individuals on the payroll all making over 50K a year. I guess that makes me the bad guy...

[campbellcj]

Juan, a national consumption tax and flattened income tax make a lot of sense to me too. Honestly, given our national debt situation, which has very little to do with GWB or any other single regime, I am not even totally opposed to a -slight- increase in tax burden; however, right now I have no real clue where all the money goes! So I sure as hell am not going to offer up any more.

What this nation needs, more than anything, is full disclosure! The looney tunes accounting schemes going on with social security, medicare, etc. are being used to mask the fundamental problem of our massive national debt and habitual overspending. Again, IMHO this has little to do with GWB in particular as it has been going on for many years!

Last time I checked, the national debt burden was up to $50,000 for every working adult in the US. To clear that debt over 5 years would be around $1000 a MONTH for every one of us. No wonder it is never mentioned in the debates or popular media. Try telling Joe Nascar that he needs to catch up on $2K/month in back bills for him and the wife due to gub'mint past overspending.

[Overpaid Slacker]

Quiet Boom, jyl et. al --
This particular crap comes up every time somebody who's read one issue of The New Republic or the Village Voice believes they can "debunk" the Reagan Revolution...

First, Congress doesn't budget just for the next year -- if you're going to contract w/ the private sector or anybody else (and this is what I do, so don't EVEN tell me this is not how it happens) you don't just do so for one year. Carter, having botched everything he touched and having been advised he was particularly weak on defense and international security spending, forwarded a plan, which made it through Congress, to save his a$$ to have enormous amounts spent. Those commitments were what Reagan inherited. And, for those of you whose lips move when you read anything having to do with economics, it's not as though Reagan's policies were all put into effect upon his swearing in, nor that they'd have immediate impact once they were implemented. He had to lobby; he had to get legislation passed; he had to build confidence -- which is far and away the number one driver of investment. This turning-around of Carter's Stagflation economy (an economy w/o confidence, w/o faith and w/o the US' dominant swagger) takes time.

So this bullshyt canard about how Reagan "increased" spending and deficits in his early years is absolute fiction. If you're going to lie, jyl, don't insult us while doing so, flagrantly believing that nobody out here is going to see through it. OK, maybe you weren't lying. Maybe you were just suckered. Maybe you believe the largest economy in the world, battered within an inch of its life by feckless domestic and foreign policy can just turn upwards in a mere month, or fiscal quarter, or even fiscal year. Especially when the gov't has made spending commitments for several future fiscal years that Reagan inherited and had to manage.

But, even if the Reagan example was an innocent mistake, why did you so conveniently ignore Kennedy's fiscal and monetary successes in cutting taxes? You slap the "supply-side" label on the theory so you can deal with 1981 forward and just so happen to completely gloss over the fact that this theory, whatever you need to call it, has worked before. Feeble. Transparent. Sophomoric.

Reagan -- longest, strongest peacetime economy EVER. One non-recession bump, called a "recession" to get GHWB out of office, and Clinton takes credit for the remainder just for staying out of the way of the freight train Reagan let loose -- even if you must slavishly, blindly look at only '81-'83. It worked. Get TF over it.

QB -- I agree with your characterization of some of the Reagan spending, but you fell for one of the most flagrant leftie lies ever told about Reagan. Don't do so again, 'K? It just makes their lies bolder next time round.

JP

Edit -- Reagan didn't have to "mange" Carter's disaster, he had to "manage" it.... oops

[jyl]

Originally posted by A Quiet Boom
The Reagan example stated above misses one very important point about those deficits. Reagan ran up the deficit in an effort to outspend the Soviet Union and bring about it's demise, a small price to pay for eliminating the possiblity of a full scale nuclear war and the threat the Soviets placed on the entire world. Deficit spending for national security should not be viewed as bad if it has the desired results.

Debt is debt, regardless of the goodness or badness of the reason for it.

Whether your family goes $50,000 in the hole to buy a luxury car or to put your kids through college, you are still $50,000 in the hole. Either way, you have to cut spending or increase income, to pay it back.

Same for the USA. Whether we incur $400BN/yr of national debt to fight a war, to drive the Soviets to bankruptcy, or to cure cancer, we are still ballooning the national debt burden, and we have to cut Federal spending or increase tax revenue, to pay it back.

The national debt does matter. Over 12% of total Federal spending goes to pay interest on the national debt (appx $350BN in FY05). The US government spends more on debt service than on anything else besides Social Security, Medicaid/Medicare, and the military. Most of that debt service is paid to foreigners (increasingly Japanese banks and Chinese government), who hold the majority of Treasury securities. Your and my tax dollars are being sent straight to foreigners.

As the national debt increases, along with Social Security, Medicare/Medicaid, and defense spending, the pressure on every other Federal program will grow.

A country's use of borrowing should be analogous to a person's. When you are young, you borrow a lot (first from your parents, then from banks, student loans, credit cards, etc) because you need to accumulate productive assets (your education, start a business, etc) and your income is small but growing fast. When you are older, your income is larger and still growing well, you repay the debt and start accumulating net savings. When you are older yet, your income growth slows and you use the savings to live and to help your children get their own start in life.

The US is like a 50-year old with a negative net worth, who is still living on credit cards, accumulating more and more debt. His kids aren't going to inherit anything. In fact, he's going to bequeath them all his accumulated debt. Thanks, Pop.

We've gotten away with it because (1) the US has been the fastest-growing major economy with the best investment opportunities, (2) the dollar has been the world's unrivaled reserve currency, and (3) our will and ability to repay the debt in full has been unquestioned.

We are no longer the fastest-growing major economy - that is now China with other Asian countries and India close behind - and foreign investment is increasingly flowing to those countries. The dollar is now challenged by the euro, which has done very nicely against the dollar in the past two years. As for repaying the debt, we're still committed to that, but there is increasing pressure to weaken the dollar to improve the competitiveness of our exports, and to a foreign investor a weaker dollar is the same as not being repaid in full since the debt payments no longer buys him as much.

We will not get away with an ever-growing Federal debt forever. The longer we wait to balance the budget, the more painful it will be.

[nostatic]

tax the churches.

tax the businesses owned by the churches.

[jyl]

Originally posted by Overpaid Slacker
So this bullshyt canard about how Reagan "increased" spending and deficits in his early years is absolute fiction. If you're going to lie, jyl, don't insult us while doing so, flagrantly believing that nobody out here is going to see through it. OK, maybe you weren't lying. Maybe you were just suckered.

Sorry to offend, but the numbers are the numbers. During Reagan's 8 years, Federal government spending rose faster than Federal government revenue, the annual Federal budget deficit rose to record levels, and the Federal debt grew by leaps and bounds (increased +188% from 1981 to 1989, or nearly tripled). This is not fiction: it is fact. If you think I am lying, please refer to the US Treasury Department. http://www.treas.gov/education/fact-sheets/taxes/fed-debt.shtml If you think the Treasury Department is lying, well, maybe I'm not the one who's been suckered.

Here's an excerpt, cut and pasted from that site. It gives the Federal debt by year.

1989
$2,868,039 million

1988
$2,601,307 million

1987
$2,346,125 million

1986
$2,120,629 million

1985
$1,817,521 million

1984
$1,564,657 million

1983
$1,371,710 million

1982
$1,137,345 million

1981
$ 994,845 million

1980
$ 909,050 million

If you want to argue that breaking the Soviet Union was "worth" spending trillions, I won't disagree - I would probably agree, in fact - but that doesn't change the debt incurred.

If you want to argue that all the spending revived a stagnant economy, I would disagree - I think the economy goes through cycles and recessions end naturally with or without government help - but anyway that doesn't change the debt incurred.

If you want to argue that the national debt doesn't matter, then we can have an interesting discussion. Actually, a minority of economists do think that. I (and most economists) disagree, but it is a reasonable issue on which to differ.

But, even if the Reagan example was an innocent mistake, why did you so conveniently ignore Kennedy's fiscal and monetary successes in cutting taxes?

I admit that I don't know much about the Kennedy Presidency's economics. Maybe I'll do some research. Can you post some facts, or links to credible websites?

P.S. I've never read the New Republic or Village Voice. I assume those are liberal magazines. I'm liberal on some things, but for economics I stick to The Economist, the Wall Street Journal, government data, and other pretty mainstream stuff. And I voted for Reagan.

[island911]

Originally posted by jyl
Debt is debt, regardless of the goodness or badness of the reason for it.

Whether your family goes $50,000 in the hole to buy a luxury car or to put your kids through college, you are still $50,000 in the hole. Either way, you have to cut spending or increase income, to pay it back.

Same for the USA. . . ..

No, it is NOT the same. Most people will use the same model as you just did, but that does NOT make it correct.

[jyl]

Originally posted by island911
No, it is NOT the same. Most people will use the same model as you just did, but that does NOT make it correct.

Explain?