Greenspan Says Bush-Era Tax Cuts Should Lapse, Warns on Budget Deficit | Hacker News Reader

Greenspan Says Bush-Era Tax Cuts Should Lapse, Warns on Budget Deficit

pbs.org

3 pointstkahn63 comments

Our deficits have exploded, and that's because nobody has an interest in reducing spending. Reagan, bush, Clinton and bush all grew their deficits by trillions, and now Obama is adding a trillion a year.

Meanwhile, taxes have not grown like that, nor has the economy, so how is it financed? Via inflation. Via the Tinting press, via federal reserve auctions of treasuries.

All of which are the same thing, and all of which are the drug Alan greenspan spent years pushing in our economy. Note also that the ability to finance this way is dependent on there being enough people to buy the debt. Lately, the fed has been printing money to buy it under the table to keep the treasury auctions going, not that they will admit it. This means that the ability to find financiers for the debt is decreasing, and without them, crash.

If we raised taxes to produce a balanced budget, it would be a death spiral, because e deficit is astronomical. If we cut taxes we at least stimulate economic growth. It won't be enough to cover the deficit, though.

So the real question is, how much of the country needs to be destroyed before the government will get spending under control?

I agree, our defect might be insurmountable. However, reducing spending, while important, is comparatively ineffective to increasing revenue. In the later part of this decade, because of changes in Social Security, you're likely to see less traction from spending reductions than you might think. Therefore, we must increase revenue sooner than later. Furthermore, most of this should come from the middle class. We cannot sustain our deficit with the current middle class tax rate.

That said, our short-term deficit issue could be address immediately. If we cancel the entirety of the Bush tax cuts, we could stabilize our deficit without major expenditure decreases or revenue increases.

From a stimulatory perspective, It's true that a lower income tax rate is better than a higher tax rate, but the benefit is marginal. I'd look up the forecast, but hilariously, the C.B.O. website is unavailable. I think the cost benefit is two years of full-time employment per million dollars of total-budget. Interestingly, changes in the income tax rate get most of the press, but it's largely ineffective in comparison to other stimulatory options (e.g. decreasing payroll taxes and extending unemployment benefits being the two most beneficial).

You repeatedly use the words "inneffective" and "marginal" and things like that to claim that the policy I propose will not be as effective as a policy that you propose, even though you admit that the policy is a damaging one.

I believe you are doing this because you've been sold a lot of nonsense from people who want to raise taxes.

The error in your position is illustrated by a simple illustration. There are far more poor people than rich people. The bush tax cuts dropped the rates in the poorer brackets much more dramatically than in the middle class and wealthy brackets, further this effect has been magnified by the significant inflation in the intervening years.

Furhter, a dollar cut in spending is FAR MORE beneficial to the economy and to the deficit than a dollar increase in taxes. That dollar increase in taxes will destroy $10 in GDP the first year, $23 in GDP the second, etc...and so on. Because that dollar prevents economics expansion AND goes to fund government expansion, which will require ever more funds each year. IF that dollar had been left in the economy, it would have created a job at a rate of ten private sector jobs to a single public sector job, and those jobs, every year, would produce dividends with a postive rate of return, magnifying the effect of that tax year over year.

Our GDP is $1T lower now than it would be due to just the taxes collected between 1970 and 1980.

Every year you collect a tax, you destroy jobs that will never come into existence, and you increase a future burden of even more taxes, which will destroy even more jobs down the road.

I know those who are absolutely incapable of being irresponsible have spread an everest sized mountain of rationalizations, lies, and "reports" to show all kinds of projections. But at the end of the day, you're a fool to believe them... since every year they produce more, and every year they ignore the past 20+ years that they did so and it turned out to be lies.

Just going back a year, our unemployment rate is significantly larger than Obama threatened it would be if we didn't pass his so called "stimulus" bill.

He doesn't give a damn about how many lives are destroyed.

If you do, you'd be a fool to believe the bullshit these people are peddling.

Reply on news.ycombinator.com