I notice that advocates of supply side economics no longer use that tattered label. Could it be that even they are sick of the fiscal failures attributed to tax cuts and increased spending based on debt? Since they're still pitching tax cuts as a economic driver without including associated deficits maybe they need a new buzz word to worship. It's obvious they don't read Walker's audit comments or treasury department analysis reports.

Re Tax Cuts vs Revenues:

I liked Reagan. I liked Reaganomics. I Really like tax cuts. But to make a blanket statement like ProudAmerican did in #47 is incorrect. The best response I've seen so far is the last part of Goober's in #57

If tax rates are Oppressively high (oppressive as in resulting in a restriction of economic activity, not just a restriction of reasonable freedoms), reducing them can often result in higher revenues. This requires a very high initial tax rate and a significant cut. Reagan's tax cut probably met these requirements.

Many on the right tried to invoke the 'increased revenues' arguement to support W's tax cuts. That was either BS or ignorance, depending on who was talking. The initial tax rates weren't high enough. I'm happy we got tax cuts anyway, but that was not a legitimate reason for supporting them.

Tim's remark is just one example chosen from the sliding scale of sorts: If tax rates are reduced from 100% to, say, 80%, I'd bet a paycheck (heck, a Salary) you will get more revenue. 40% to 30%, you'll very probably get less. 10% to 0%, you'll Definitely get less revenue.

__________________
Today's forecast: Government corruption.

Tomorrow's forecast: 100% chance of more 'politics as usual'

Maybe it's finally time to vote Libertarian

Re the SS Trust Fund:

Okay, using that definition, yes, you are mostly correct. There were surplusses, which were also raided, before Reagan, but he Greatly increased the practice.

While it sounds like we'd get along well ideologically, Hudson, but in this case you're unfortunately mistaken. The shortfall was inevitable. The only way to Really alter the impact was/is to reduce benefits to the boomers. The tax hike and subsequent surplusses simply inflated the paper trust fund, making the coming payback or default seem even larger than it is or will be. (With the Real reason for the tax hike being having those surplusses available to raid to at least partially cover deficit spending at the time.)

__________________
Today's forecast: Government corruption.

Tomorrow's forecast: 100% chance of more 'politics as usual'

Maybe it's finally time to vote Libertarian

Please feel free to report me for this but it just simply cannot go without asking HOW STUPID ARE YOU!!!!!!! If you do not understand the distinction between Japan and China recognizing IOUs from the United States Government as net assets on their national balance sheets and the United States Government recognizing that those very same IOUs in its OWN accounts are merely promises to pay itself money at a future time than no wonder you are a liberal!!!!!

If I issue an IOU to someone, they have an asset with no offsetting liability. If I write an IOU to myself, the IOU may represent an "asset", but there is an equally large LIABILITY and the NET effect on my worth is ZERO.

If anyone but goverment tried to misrepresent an IOU to itself as an asset, they would go to prison for criminal fraud.

And yes, in terms of future tax obligations cash sitting in a governemnt vault WOULD be preferable to utterly misleading IOUs from the government, to the government. At least if it were cash it would represent PRIOR tax collections from the people who would eventually receive it back in benefits rather than IOUs from the government to the government representing a promise from today's workers to have tomorrow's workers pay their bills for them.


All of the entitlement programs are unfunded. The "Trust Funds" are merely accounting gimmicks to convince stupid people that there is some sort of savings or investment backing up these programs, when in fact that "trust funds" have ALWAYS from the very first penny of "surplus" revenues for these programs been nothing more than IOUs from the government to the government, and the most dishonest part of all of it was to make them interest bearing to even further mask the true costs of these programs.


Wrong, Wrong, Wrong.

The only reason that SSI was on "pay-go" during the Reagan Administration was because even the imaginary "trust fund" didn't have enough IOUs in it to cover the cost of the program. The "trust fund" had already been depleted and even if you closed your eyes and pretended that the IOUs in the trust fund were real assets, there weren't enough of them to cover the annual costs of the program.

So, they had to "save" social security, and did it by raising the payroll tax high enough to make the "trust fund" sovlent on paper for about 50 years.

As for the using the surplus to "balance" the budget, it is simply an accounting measure that realizes the economic reality of the situation. Liberals may have convinced alot of really stupid people that there is something special and magical about the social security system and the taxes collected. But in the economic sense it is no different from any other taxes or spending. Hence the "UNIFIED BUDGET" which presents the REAL picture of the governments entire finances in any given year.

To do otherwise is to put an exclamation point on the utter dishonest fraud that is the "trust funds".

__________________
"It's a good feeling to shoot a bad guy. Something you democrats would never understand. Americans are homesteaders, we want a safe home, keep the money we make, and shoot bad guys!"

----Denny Crane

What a complete lack of understanding you demonstrate in this post. I don't know how to respond. It would be like explaining nuclear fission to a cat.

So I'll give you the simple version.

Reagan cut taxes, heavily favoring the wealthy.
The deficits were disastrous.
Reagan needed a way to raise taxes, but not on the wealthy, only on the middle class, and that's when the Social Security Trust Fund became more than just an accounting procedure to match collections to disbursements, it became a way to raise taxes without hurting the billionaires, they didn't even call it raising taxes, they called it raising social security premiums.

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“ The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.”

Adam Smith , The Wealth of Nations 1776

"We have always known that heedless self-interest was bad morals; we know now that it is bad economics"
FDR's second Inaugural Address

They ARE "the party for the little guy". They redistribute wealth from the BIG guys (those with motivation and williingness to work to try to get ahead) TO "the little guy" (the lazy bums and system rippers).

They don't understand that their idealistic, crazy-mans "ideas" will only finish the job of destroying our economy. An economy that is teetering on the edge right NOW.

Those Crazy-mans "ideas" have carried us from the depths of the Great Depression (a product of Free Market Capitalism) to where we are today.
And the Republicans have been pooh-poohing every one of those ideas since 1930.

__________________
“ The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.”

Adam Smith , The Wealth of Nations 1776

"We have always known that heedless self-interest was bad morals; we know now that it is bad economics"
FDR's second Inaugural Address

World War II pulled us out of the Great Depression, Comrade, it wasn't the Raw Deal. As a matter of fact, a lot of modern day economists suspect that the Raw Deal actually prolonged the Depression.

__________________
"Our enemies are innovative and resourceful, and so are we. They never stop thinking about new ways to harm our country and our people, and neither do we."

President George W. Bush, 8-5-2004

Carolina Politics Online

THIS IS REAL HOPE AND CHANGE!

Using the term "fudiciairy" in government accounting is never to accurately describe federal accounting practices. It has more to do with FASB, or Financial Acounting Standard Board, rulings and its amendments. Since the government owns both the taxes (assets) and the payments (expenditures), one uses the term "trust" very loosely in federal budget analysis. What is happening in federal budgets is a complicated accounting techniques similar to a intracompany loan, Americano.

Yes, I would like to hear what politicians have to say including the rider amendments, earmark bills, and other misc spending attachments that Congress routinely puts on any number of bills besides the authorization bills. But cows will fly without the use of computers before any politician gives a straight answer, Democrat or Republican.


Considering the debt is internal, primarily, it would have some negative impacts, primarily the "full faith and credit" clause. Other than that, Congress can forgive the debt much like Congress forgives debt to other nations. Congress could do it in piecemeal, but given todays political climate, it is not going to happen anytime soon. Like I said, I would not recommend such a solution, but it is a solution nonetheless.

This is the most irresponsible, ill advised post on federal taxation issues that I have seen. let us take this one by one, shall we:

The Revenue Act of 1962: The biggest thing that the Revenue Act did was increase the investment credit to 7% and require interest and dividends to be reported. According to this study by NBER, the revenue effect not only decreased marginal tax rates for most taxpayers, it also decreased, on average, the effective tax rates as well with a decrease in revenue generation from Individual taxpayers. But what you fail to understand is that income tax is a tax scheme based on preferences. Preferences change and have changed over a period of time. During WWII, tax breaks were given to producing war materials supplying rubber, nylon, and other necessities, but punished severely, namely through excise taxes, individuals to use too much of the much needed supplies.

The Tax Reform Act of 1986 was a lot of things and the act was not a lot of things. The beauty of TRA 86 was that it fundamentally shifted the preferences from the Revenue Act of 1954, the last major overhaul of the code, from post WWII preferences to owner investment preferences, simplier code, and lower marginal rates. Those that took advantage of the tax breaks saw their effective tax rates decline, as evidence by the decline in personal income taxes, but corporations saw a rise in their tax rates. S corps were created in 1986 for small businesses to take advantage of the lower personal rates instead of the corporate taxation rate.

As for the largest tax increase on middle americans, that dubious honor goes to FDR who introduced federal income tax withholding to middle class Americans by the Tax Withholding Act of 1942. This caused the tax based to be extremely broad since the higher income tax brackets could not support the financing of the war all by them lonesome.

What happened between 1986 and now has been an increase in the number of tax bills that tweak the Internal Revenue Code. Just last year, there were three major tax bills signed into law in 2006. By the time IRS has decided on how to interpret those tax law changes, Congress changes it again.

Finally, you cannot genuinely compare GDP growth rates between the 1950's, where the US faced no competition from abroad, and now, which the US now faces competition from Japan, China, Korea, EU, Mexico, Canada, and so forth. It stands to reason that our GDP will be lowered, especially if we are in an interdependent economy with other economies around the world.

Thus ends this lesson.

Actually, they are not the party of the little guy, just their guys. But of course, that can be said with any political party.

Besides making a mockery of "full faith and credit" , the effect of "Forgiving" the debt owed to Social Security is a task that could only be accomplished by a Congress dominated by a Party that wished to be removed from the American political scene.

Whichever Party reneges on Social Security can count itself out of the senior vote. Which would effectively prevent it from winning most electoral offices in the United States from that point on.

In other words, it is impossible, Congress will always pay full benefits to Social Security recipients, so long as a majority of Congress will be seeking re-election.

__________________
“ The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.”

Adam Smith , The Wealth of Nations 1776

"We have always known that heedless self-interest was bad morals; we know now that it is bad economics"
FDR's second Inaugural Address

You have a complete lack of understanding how tax law works, it will be hard for me to explain to you.

Goober, prior to 1954, the Social Security payments were part of the income tax. In 1954, it was separated from income taxes with the Federal Insurance Control Act of 1954, part of the Revenue Act of 1954. Social Security threshold has been increased ever since from $1000 to $3000 to $5000, and so forth. But it had to be done by an Act of Congress. TRA 86 gave automatic adjustments based on inflation, thus you have the increases occuring every year. However, taxes and benefits are not the same. Congress could eliminate the payroll taxes and put in place a GST, excise tax, VAT, or make it part of the income tax and your benefits will still be there unless Congress votes to eliminate the benefit. This is precisely what you do not understand.

The main reason to raise the revenues, besides Congress increasing the expenditures, was that there will be funds in the future for the baby boomers, you know, the ones that are retiring now and in the next 15 to 20 years. That is where those excess revenues were supposed to go to, but Congress had other plans.

Actually, no. I used the term "full faith and credit" accurately. And if you cared to understand the post, I only offered a suggestion on how Congress could get rid of the internal debt.

Social Security, by definition, is a defined benefit plan under the United States government and I understand why it was implemented in the first place. However, today there are numerous retirement plans available to most taxpayers, which include traditional IRA's, Roth IRA's, Simplified Employer Pension Plan, an HR 10, or Keogh plan, SIMPLE IRA's, 401k, 403b, 457, annuities, and so forth. Quited different today than in the 1930's, Goober. Tax schemes live and die by necessity, not by design. Social Security tax is no exception. And like I said, Benefits will still be there even if the tax scheme is different.

Color yourself bamboozled.

Taxes raise money for the government.
Social Security taxes are just taxes, despite the fancy footwork accounting, they pay for Social Security and the war in Iraq.
Social Security taxes fall heavily on the Middle Class, High Income people are virtually exempt from these taxes as they are capped.
Reagan raised these taxes to increase the tax burden on the Middle Class, so he could offset his tax cuts for the wealthy.
Forget the bullshit explanations and focus on the reality, Reagan lowered taxes on the wealthy a lot, and he lowered taxes on the Middle Class a little, then he raised taxes on the Middle Class, the net effect was a huge tax cut for the Wealthy and an increased share of the tax burden for the Middle Class.

Don't get lost in the fine print, follow the money, it's the only thing that matters.

That is why "Social Security Reform" is so freaking important to the master plan.
Under the current law, in 2016 when the Social Security Surplus dissappears, the system begins redeeming it's trust fund to make up for the deficit out of general revenues, which means tax increases which will affect the wealthy.
So it's an important part of the plan to "reform" Social Security so that "investment income shortfalls" can be blamed for lower payments, because no Congress will lower payments under the current system.

__________________
“ The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.”

Adam Smith , The Wealth of Nations 1776

"We have always known that heedless self-interest was bad morals; we know now that it is bad economics"
FDR's second Inaugural Address