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A Reasonable Budget

Posted by PAUL SILVER in At TMV.
Mar 14th, 2008 | Comments

Congress endorses post-Bush tax hikes

Both houses of Congress endorsed the idea of tax increases for millions of Americans Thursday as Democrats pressed ahead with budget plans that would allow some or all of President Bush’s reductions to die after he leaves office.

Essentially the Democrats are saying that we need to raise revenues to balance the budget without reducing essential services. And that the poor and middle class do not have the resources to have the cost pressed on them.

The GOP believes that the best way to balance the budget is by reducing services. But I just don’t see how it is realistic or honorable to reduce medical care and other services to the disadvantaged or to veterans. The Republicans risk being perceived as arguing in favor of promoting suffering so that significantly better off individuals can remain significantly better off. I imagine a majority of voters will see it this way as well.

But there are other reasonable ideas for refining our budget: Increasing Medicare co-payments and Social Security tax caps, lowering earmarks, reduced waste in our public expenditures (subsidies) and unjustified favors in our tax system.

It may be that the addition of a few Centrist legislators might be the tipping point to achieve a more realistic budget. So please consider supporting congressional candidates who give some indication that they have more allegiance to pragmatic government than their party’s pursuit of power.

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superdestroyer

An inability to propose a single budget cut means that everything the government is going now if more important that the next policy proposal. Since no one believes this is true, there is room to cut the budget.

The failure to propose any specific budget cuts means that there is zero leadership in DC. As ong as anything that any politician can justify needs to be funded, there will be no limits on spending.

I also guess that the Democrats have abandon Keynesian economic when they propose tax increase during a recession. Every tax increase during a recession make the budget deficits larger in the long run due to the ratchet effect.

GeorgeSorwell

The GOP only says it believes in reducing services. They never cut any spending.

superdestroyer

George,

And that is one of the reasons that the GOP has quickly become irrelevant. If people want a politicians that never say no and will deliver an unlimited level of goodies, they will vote Democratic and belive the promise that someone else will be stuck with the bill. . The GOP's inability to act as fiscal conservatives is why their fund raising is down, their support is down, and they cannot recruit candidates. Also, since most Republican leaders fail to understand that a conservative party actually need to act conservative on most of the issues.

cfpete

Let us be entirely clear on this. The budget raises taxes by 3% on individuals earning as little as $31,850 and married couples earning $63,700. Exactly when did earning $31,850 exclude someone from the middle class? Please explain to me Paul how this does not raise taxes on the middle class.

Dave_Schuler

Paul, could you flesh this out a little for me:

But there are other reasonable ideas for refining our budget: Increasing Medicare co-payments and Social Security tax caps, lowering earmarks, reduced waste in our public expenditures (subsidies) and unjustified favors in our tax system.

I understand how increasing Medicare co-payments can reduce the budget deficit. I disagree with the idea since I prefer means testing to increased co-payments but I understand the mechanism.

When you say “Social Security tax caps” do you mean raising FICA max? I agree with that, too. Indeed, I'd prefer raising FICA max (to at least $315,000) over repealing the “Bush tax cuts”. FICA is our flat tax system and it would be just if it included all income. As it is it's just unjust in my view.

I think what's being missed by everyone in the discussion of fiscal responsibility is that nobody, not even the federal government, can afford our present health care system at the current rate of increase.

Dave_Schuler

cfpete, judging by the conversations at my place and Outside the Beltway on the subject of what it means to be rich, there are people out there who believe that a couple earning $63,700 is rich. That what seems to be meant by a “soak the rich” strategy.

PaulSilver

Dave
I agree with means testing for medicare co-payments.
I do mean the FICA max.
I believe that the overall health care cost to the government and to individuals would be less with a single payer system to eliminated excessive profits, administration, marketing, duplication of services, workers compensation. Means testing of deductibles would also help manage growth.

cfpete, I anticipate that the Democrats would reduce the taxes on folks below the middle class. And there would be an effective tax reduction if there is health care reform and Tuition assistance.

Dave_Schuler

I believe that the overall health care cost to the government and to individuals would be less with a single payer system to eliminated excessive profits, administration, marketing, duplication of services, workers compensation. Means testing of deductibles would also help manage growth.

I agree that costs would be reduced by going to a single payer system. That's the reason I've advocated one for the last 30 years. That would be a one-shot fix and the savings realized would be eaten up in three years at the present rate of growth. I doubt that means testing will wring any costs out of the system. While I do believe that it will reduce the government's costs, for it to wring more (assuming a single payer system) would mean that health care providers willingly take a pay cut. That's the case since health care is a cartel in this country.

What's the middle class? Empirically, households making between $20,000 and $97,000 are the middle three quintiles of the income distribution. I see no way that people in the fourth quintile (those making between $60,000 and $97,000) can be excluded from increases and still come up with enough jack to pay for the programs you've mentioned in the preceding comment.

DLS

If the FICA cap is raised without raising benefits for those affected, you advocate theft.

If the FICA cap is raised, with or without raising benefits for those affected Social Security's onset of deficits will only be delayed by a few years.

I'll ignore misuse of "refine" (as with "nuanced" in the past), "essential" (at least we aren't hearing bleating about "human needs"), "subsidies," and the common misuse of such words as "reasonable."

The following, about taxes, is deliberately provocative and thoroughly entertaining as well as illustrating a more correct attitude toward taxes and government.

You left out "courageous," Paul.

http://www.mises.org/econsense/ch60.asp

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