Size Of Government - What Do We Really Want?

[MasterBlaster]

Actual total spending (all levels of government) through 2011, 2011-2016 are projections.

The two spikes are the world Wars I and II.

Where's the big dip ?

And notice the trend.

[Hamlet]

You're pointing out that spending has gone up as a share of GDP.

I've pointed out the revenues have gone down as a share of GDP.

We have spending at post-WWII highs, and revenues at the lowest point since 1959.

Doesn't it seem like a combination of spending cuts and tax increases are in order to resolve this situation?

Quote:

Originally Posted by MasterBlaster Actual total spending (all levels of government) through 2011, 2011-2016 are projections. The two spikes are the world Wars I and II. Where's the big dip ? And notice the trend.

[Purron]

Quote:

Originally Posted by Hamlet You're pointing out that spending has gone up as a share of GDP. I've pointed out the revenues have gone down as a share of GDP. We have spending at post-WWII highs, and revenues at the lowest point since 1959. Doesn't it seem like a combination of spending cuts and tax increases are in order to resolve this situation?

There is a reasonable balance here somewhere. Unfortunately, our politicians appear incapable of reaching a compromise.

[jebmke]

Quote:

Originally Posted by jdw_fire but but but, we are talking about the FEDERAL deficit/debt sooooooo it seems that talking about FIT is appropriate. o and btw if you "fix" SS by lowering benefits and writing off the SS trust fund what we and the federal government will be doing is conceding that FICA was used to pay for other federal programs and not SS (i.e. totally misrepresenting that "tax"). i think that should (and may even) be illegal.

don't know whether the revenue "transfers" are legal or not but the Supreme Court certainly settled the question of whether benefits are guaranteed (they are not).

[Texas Proud]

Quote:

Originally Posted by Hamlet You're pointing out that spending has gone up as a share of GDP. I've pointed out the revenues have gone down as a share of GDP. We have spending at post-WWII highs, and revenues at the lowest point since 1959. Doesn't it seem like a combination of spending cuts and tax increases are in order to resolve this situation?

I think it begs the question of WHY revenues have gone down... the current problem is there is high unemployment and underemployment... if we get a lot of people working the revenues as a % of GDP will increase... more than likely back to the normal 18%... tax increases by increasing rates or cutting deductions are not the way to go...

Spending (Federal only) has been going up and is projected to be 25% for the future... it should be closer to 20% or even less... getting the economy working will not fix this problem...


That said, I do think that a dollar given out as a farm subsidy is the same as a dollar tax credit or a dollars worth of deductions... I do not have a problem with getting rid of some of the special deductions/credits....

[GregLee]

Quote:

Originally Posted by Purron Unfortunately, our politicians appear incapable of reaching a compromise.

I gather from listening to CNN commentary on this issue that the main problem is that many Republicans were elected on the strength of their promise to voters not to raise taxes. If they now refuse to raise taxes, I tend to attribute this to their integrity. They can't compromise, because their constituents told them not to. Our current problem is not due to our honest politicians, but to the stupid voters who elected them.

[MasterBlaster]

Just take a look at that chart. Look at the trend and then say we have a tax problem ! Keep in mind the explosion in additional spending we expect as the boomers retire.

[samclem]

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Originally Posted by GregLee I gather from listening to CNN commentary on this issue that the main problem is that many Republicans were elected on the strength of their promise to voters not to raise taxes. If they now refuse to raise taxes, I tend to attribute this to their integrity. They can't compromise, because their constituents told them not to. Our current problem is not due to our honest politicians, but to the stupid voters who elected them.

And there's a problem on the left as well, regarding the ability to cut entitlement spending. It appears that, especially on the Republican side but also on the Democrat side, the leadership is more "flexible" than their membership, and believe that if they choose to compromise they won't be able to deliver the votes.

History has many examples of wars between nations that resulted from a string of events that was pretty much unstoppable once they began. Neither side would have chosen the war that resulted, but they had a war anyway. We may be seeing a similar dynamic on a political level.

[Hamlet]

Your chart shows nothing about taxes. Taxes have been going down at the same time spending has been going up

The gap is twice as hard to close when one side has ruled out revenue increases entirely.

Quote:

Originally Posted by MasterBlaster Just take a look at that chart. Look at the trend and then say we have a tax problem ! Keep in mind the explosion in additional spending we expect as the boomers retire.

[Hamlet]

Revenues are lower because of the recession, but they are also lower because we've cut taxes at every opportunity in the last 10 years.

The economy was good, so Bush and the Republicans said we could afford tax cuts. (2001)
The economy got bad, so Bush and the Republicans said we needed tax cuts to improve the economy. (2003)
The economy got really bad, so Obama and the Republicans passed a stimulus package with yet more tax cuts
The economy stayed bad, so Obama and the Republicans decided we needed to extend the existing tax cuts and pass -- wait for it -- more tax cuts.

We've been cutting taxes for ten years straight. That may have a little to to with why we have a revenue problem.

Quote:

Originally Posted by Texas Proud I think it begs the question of WHY revenues have gone down... the current problem is there is high unemployment and underemployment... if we get a lot of people working the revenues as a % of GDP will increase... more than likely back to the normal 18%... tax increases by increasing rates or cutting deductions are not the way to go... Spending (Federal only) has been going up and is projected to be 25% for the future... it should be closer to 20% or even less... getting the economy working will not fix this problem... That said, I do think that a dollar given out as a farm subsidy is the same as a dollar tax credit or a dollars worth of deductions... I do not have a problem with getting rid of some of the special deductions/credits....

[MasterBlaster]

Quote:

Originally Posted by Hamlet Your chart shows nothing about taxes. Taxes have been going down at the same time spending has been going up The gap is twice as hard to close when one side has ruled out revenue increases entirely.

Well Exactly when do we have enough government ? At 60 % of GDP at 90% ? When does it all collapse ?

We are headed in that direction.

[Hamlet]

My point is that taxes have been decoupled from the size of government for 30+ years. We've been growing government while cutting taxes.

We need to both raise taxes and cut the size of government.

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Originally Posted by MasterBlaster Well Exactly when do we have enough government ? At 60 % of GDP at 90% ? When does it all collapse ? We are headed in that direction.

[Gatordoc50]

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Originally Posted by MasterBlaster Well Exactly when do we have enough government ? At 60 % of GDP at 90% ? When does it all collapse ? We are headed in that direction.

We have enough government when sitting at home watching Oprah is as financially rewarding as going to medical school. This recession is over when a million dollars is a lot of money and the risk of obtaining an education or starting a business is rewarded. It's not over until we reach that point. Debt and deficits and unemployment are only symptoms of the destruction of the risk/ reward paradigm.

[FinanceDude]

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Originally Posted by GregLee I gather from listening to CNN commentary on this issue that the main problem is that many Republicans were elected on the strength of their promise to voters not to raise taxes. If they now refuse to raise taxes, I tend to attribute this to their integrity. They can't compromise, because their constituents told them not to. Our current problem is not due to our honest politicians, but to the stupid voters who elected them.

You are expecting politicians not to flip-flop. While admirable, it is not reality. However, this seems to be a new reality. A lot of Republican freshmen in the House are going to need new jobs after the 2012 elections if they let Boehner cave in on the budget battle..........

[Texas Proud]

Quote:

Originally Posted by Hamlet Revenues are lower because of the recession, but they are also lower because we've cut taxes at every opportunity in the last 10 years. The economy was good, so Bush and the Republicans said we could afford tax cuts. (2001) The economy got bad, so Bush and the Republicans said we needed tax cuts to improve the economy. (2003) The economy got really bad, so Obama and the Republicans passed a stimulus package with yet more tax cuts The economy stayed bad, so Obama and the Republicans decided we needed to extend the existing tax cuts and pass -- wait for it -- more tax cuts. We've been cutting taxes for ten years straight. That may have a little to to with why we have a revenue problem.

I think the chart below shows that the trend in taxes was the same as spending....

And you can see that the projections forward to 2015 increase the percentage back closer to 20% without any changes to the current tax code...

It looks like 2000 was the highest total as the states have also been increasing is size... having them cut back is also a plus...

[ziggy29]

Bottom line is that we can't keep cutting taxes and increasing spending. I think when tax rates are too high, tax cuts can actually increase revenue by encouraging more economic activity which more than offsets the lower rates. I'm just no longer convinced we are on the "taxes too high" side of the Laffer Curve. I thought we were for the Reagan tax cuts (as we were for the JFK tax cuts). But not now.

I don't think we can realistically balance budgets without both tax hikes *and* spending cuts. Unfortunately it seems like each side is keeping too many things that have to happen "off the table" and thus no deal can get done.

[As an aside: It's simply mind-boggling and an economic atrocity that spending and deficits were rising so rapidly during significant economic expansions. That is the time to retire the debt you incurred in the last recession, not assume more of it.]

[explanade]

Quote:

Originally Posted by Hamlet Revenues are lower because of the recession, but they are also lower because we've cut taxes at every opportunity in the last 10 years. The economy was good, so Bush and the Republicans said we could afford tax cuts. (2001) The economy got bad, so Bush and the Republicans said we needed tax cuts to improve the economy. (2003) The economy got really bad, so Obama and the Republicans passed a stimulus package with yet more tax cuts The economy stayed bad, so Obama and the Republicans decided we needed to extend the existing tax cuts and pass -- wait for it -- more tax cuts. We've been cutting taxes for ten years straight. That may have a little to to with why we have a revenue problem.

And how has job growth been during this period?

What's that you say, it's been subpar despite all these tax cuts for "job creators?"

That can't be!

[MasterBlaster]

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Originally Posted by explanade And how has job growth been during this period? What's that you say, it's been subpar despite all these tax cuts for "job creators?" That can't be!

Perhaps we can tax our way to prosperity then.

[ziggy29]

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Originally Posted by MasterBlaster Perhaps we can tax our way to prosperity then.

Wall Street, corporate earnings and the GDP change in the last couple years suggest that the problem isn't just that the economy isn't growing. It's just as much that Joe/Josie Sixpack's paychecks are shrinking in real terms even as many companies are posting record profits (and giving out record executive bonuses while the "rank and file" haven't seen a raise in years).

I consider myself mostly a good capitalist and I'm no fan of high taxes and big government. But I do think we are reaching the breaking point with respect to how much Middle America can bend over for Corporate America.

The phrase "what's good for GM is good for America" was largely true 50 years ago, because a considerable portion of GM's good fortune trickled down to the middle class in the form of more jobs, secure benefits and wages that matched or beat inflation. It's not true any more. What's good for huge corporations is good for their executives and shareholders -- not so much for the rest of us. And as long as that's the status quo, I think the case for "trickle down" is increasingly dubious in terms of translating into middle class prosperity.

[MasterBlaster]

Quote:

Originally Posted by ziggy29 Wall Street, corporate earnings and the GDP change in the last couple years suggest that the problem isn't just that the economy isn't growing. It's just as much that Joe/Josie Sixpack's paychecks are shrinking in real terms even as many companies are posting record profits (and giving out record executive bonuses while the "rank and file" haven't seen a raise in years). I consider myself mostly a good capitalist and I'm no fan of high taxes and big government. But I do think we are reaching the breaking point with respect to how much Middle America can bend over for Corporate America. The phrase "what's good for GM is good for America" was largely true 50 years ago, because a considerable portion of GM's good fortune trickled down to the middle class in the form of more jobs, secure benefits and wages that matched or beat inflation. It's not true any more. What's good for huge corporations is good for their executives and shareholders -- not so much for the rest of us. And as long as that's the status quo, I think the case for "trickle down" is increasingly dubious in terms of translating into middle class prosperity.

You have it all figured out then, Eat the rich and prosperity will suddenly show up.

Those rich need their comeuppance anyway.