By ROBERT LASZEWSKI
I hear more and more of my progressive friends arguing, in the context of deficit reduction, that we should be raising taxes before getting aggressive about reducing the cost of Medicare and Medicaid — as well as Social Security.
To a point, I agree.
This country is in such a hole that it is senseless to deny that at least some new taxes will be needed to pay for all of the nation’s bailouts and accumulated debts.
For instance, progressives would like to end the $1 trillion cost over ten years of the Bush tax cuts for those making more than $250,000 a year.
I also believe that ending those tax cuts is necessary.
But if you’re looking to better understand the budget policy choices we face, I highly recommend the March 2011 Congressional Budget Office study, “Reducing the Deficit: Spending and Revenue Options.” The CBO prices out about all of the budget options.
Here’s a chart from that study:
It says that federal revenue, as a percentage of gross domestic product , has averaged 18 percent since the 1970s — a level that sustained both economic growth and a big government pretty well. At least, until entitlement costs, for which health care is one of the main drivers, started to skyrocket.
If you believe that it is appropriate to pay what we now pay for health care in this country, then yes, we will need lots more taxes. But, on the other hand, why would you raise taxes to pay for something everybody says has a cost that is unnecessarily sky-high? Wouldn’t the solution be to fix the cost problem?
Raising taxes is not going to solve the problem of out-of-control entitlement costs. Even huge tax increases on the rich won’t get the job done.
After the 1990s combination of the hot economy and President Bill Clinton’s tax increase, federal revenue as a percentage of GDP rose to about 21 percent — high by historic standards. Then the policies of President George W. Bush came along and dropped that share to about 16 percent — low by historic standards, and arguably either boosting the economy or helping to create the economic bubble and big deficits. The Great Recession then further pushed federal revenue to a modern-era low — about 15 percent.
According to the CBO, federal revenue will again rise to the Clinton-era level of about 21 percent of GDP — but that is when the two-year extension of the Bush tax cuts expires for everybody.
Looks to me like those who argue the Clinton-era taxes were too high are right. Looks to me like those who argue the Bush-era tax cuts are unsustainable are right. Looks to me like those who argue that our current deficit is partly driven by lower revenue because of the recession are right.
To keep federal revenue at the apparently reasonable historic level of about 18 percent of GDP, we probably do have to give back at least some of those Bush tax cuts — but it should not be necessary to end the Bush reductions that benefitted the middle class. And, we should also expect that some part of this revenue shortfall would be solved when the economy gets back on track.
If all of these steps were taken, it appears that we would be on the way to striking the right balance.
But, for those who think the deficit problem can be solved by just taxing the rich, let me point out another piece of startling information backed up by the CBO’s study of policy choices. Replacing the 10-year, $1 trillion Bush tax cut for those people making more than $250,000 a year with a combination of lower income and capital gains taxes would still be worth $1 trillion! As the CBO options paper points out, that works out to an average of about $100 billion a year during each of the next 10 years.
That is a lot of money — but not compared to the 2011 deficit that is estimated to be $1.6 trillion. Or the many $1 trillion deficits still to come.
Even if we were to raise the top rate to 45 precent for people making at least $1 million a year, and 49 percent on incomes of $1 billion, we would raise only $900 billion over the next decade, according to Citizens for Tax Justice — again only a small part of the projected deficits.
So, raising taxes on rich people, by itself, hardly makes a dent.
What is making a dent — really a fiscal train wreck — is the out-of-control cost of our entitlements, particularly the health care entitlements.
Here is another chart based upon CBO numbers (that appeared in the recent Ryan Budget proposal:
This chart shows the impact the entitlements — particularly Medicare — will have on the federal budget if federal revenue were to hold at the historic level of about 18 percent of GDP. Anything above the black line is a deficit.
Now, remember, this is just entitlement spending. The rest of the federal budget — interest on the debt, defense spending and every other department and agency would have to get loaded on top of this mountain!
Folks, we can’t tax our way out of this mess.
There aren’t enough rich people to do it.
This post first appeared at Kaiser Health News.
Robert Laszweski has been a fixture in Washington health policy circles for the better part of three decades. He currently serves as the president of Health Policy and Strategy Associates of Alexandria, Virginia. Before forming HPSA in 1992, Robert served as the COO, Group Markets, for the Liberty Mutual Insurance Company. You can read more of his thoughtful analysis of healthcare industry trends at The Health Policy and Marketplace Blog.
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Nate, you picked a video that stops analysis in 1991. Got some data from 1991 to 2010?
data goes back that far, some of it is current, we can’t tell when today’s poor will leave poverty, that takes time.
Look at the increase in wealth, he gace exact numbers, the rich made an extra 4K the poor makde 26K. The poor are getting much larger increases.
95% moved out of poverty, That leaves 5%. Welfare queens wouldn’t be poor of they are collecting multiple benefits and living for free would they? Isn’t the problem with welfare queens the fact they don’t need the benefits they are collecting?
Couple of questions:
Why is the data 35 to 20 years old?
A smaller piece of a bigger pie works equitably only if there are more people eating pie, not if someone gets most of the pie and those who had one crumb before, now have two crumbs.
Since when are the “wealthiest” defined as those making 50K?
Since according to this video most everybody is moving out of poverty, where are those professional bums and welfare queens that you are so opposed to helping out? Do they not exist?
Just one debunking of these quacks. Obama, Himmelstein, Harvard lets anyone in as long as you believe the dogma.
“Harvard professors David Himmelstein and Elizabeth Warren interviewed more than 1,700 families that were in bankruptcy courts across the country. About half of all families filing for bankruptcy did so in the aftermath of a serious medical problem, according to the findings, released in 2005.
But that figure was disputed by Millenson and Northwestern University professor David Dranove, who re-examined the study at the behest of the insurance industry. They said medical bills were a contributing factor in just 17 percent of the bankruptcies. And the Harvard researchers didn’t rule out other factors, such as job loss, college loans or housing costs, they found.
“Using their numbers is both factually inaccurate and politically unfortunate,” Millenson, an Obama supporter and volunteer, said in an interview Monday. “President Clinton and Hillary Clinton have a wonderful track record for trying to cover the uninsured. But when you go beyond the facts allowed, you give ammunition to those who are trying to minimize the problem of the uninsured.”
“The Office for United States Trustees (in the US Department of Justice), on the other hand, found that medical debt was not a major factor in the majority of bankruptcy cases filed in 2000.9 More than 50 percent of filers reported no medical debt at all, while only 11 percent had medical debt in excess of $5000. Further, only in 5 percent of the cases was medical debt one-half or more of total unsecured debt. On average, medical debt was only about 6 percent of all unsecured debt.”
“Harvard study published in Health Affairs cites health problems/costs:
BOSTON — Costly illnesses trigger about half of all personal bankruptcies,”
This study and the entire argument have been discredited so many times most liberals don’t even try playing it anymore. Complete junk science by a hack with a political agenda.
If you look at the amount of medical debt in BKs it was a small fraction of total liabilities. Couple thousand, its been discredited on here numberous times.
Mark –
As I’m sure you know, Dr. Himmelstein is a single payer zealot with an obvious agenda. It would be interesting to see the full list of liabilities including non-medical credit card debt and defaulted car and home mortgage loans, of people who file for personal bankruptcy and how much of the total was medical costs. For most people, a job and its salary provide the cash flow they need to pay for their living expenses. Lose that or a big part of it, and they would probably file for bankruptcy if they couldn’t replace all or most of the income in a reasonable timeframe even if they had health insurance with first dollar coverage. The severe recession and the resulting sharp increase in unemployment probably had a lot more to do with the rise in personal bankruptcies than medical debt whether the people involved had health insurance or not.
Harvard study published in Health Affairs cites health problems/costs:
BOSTON — Costly illnesses trigger about half of all personal bankruptcies, and most of those who go bankrupt because of medical problems have health insurance, according to findings from a Harvard University study to be released Wednesday.
“Unless you’re Bill Gates, you’re just one serious illness away from bankruptcy,” said Dr. David Himmelstein, the study’s lead author and an associate professor of medicine. “Most of the medically bankrupt were average Americans who happened to get sick.”
“The video blames poverty on immigrants”
Video doesn’t blame poverty on anyone, your making that up, it learly cites the number of immigrants who are poor.
“However, the greatest cause of bankruptcy is having a serious illness without health insurance.”
Also not true, the greatest cause of BK is losing work. Healthcare is now where close, uninsured or insured.
The video blames poverty on immigrants but as it points out, immigrants start out poor and tend to work their way out of poverty. However, the greatest cause of bankruptcy is having a serious illness without health insurance. One of the biggest reasons people are moving into poverty and they get sick and/or lose their job and health insurance and this is why we now have more people under the poverty line than ever before. The best thing we can do to prevent people moving into poverty is to provide universal health care.
“However, the video ignores the fact ”
No Mark it does not ignore the fact. It not only acknowledges it, it also said where they are comming from.
I did get the message. Some people who were poor are no longer poor (this is good). However, the video ignores the fact that there are now more poor people than ever due to the recession (this is bad).
Some facts that would help explain your poverty numbers;
“Of adult immigrants, 31 percent have not completed high school, compared to 8 percent of natives. Since 2000, immigration increased the number of workers without a high school diploma by 14 percent, and all other workers by 3 percent.”
Whats the expected income of millions of people who have never completed HS?
“34 percent of immigrants lack health insurance, compared to 13 percent of natives. Immigrants and their U.S.-born children account for 71 percent of the increase in the uninsured since 1989.”
On the positive note;
“The primary reason for the high rates of immigrant poverty, lack of health insurance, and welfare use is their low education levels, not their legal status or an unwillingness to work.”
Maybe if we were selective about who WE ALLOWED in, instead of allowing those comming in to decide we wouldn’t have half the poverty and uninsured problem we do. Ya open borders.
Mark watch it again. You seem to have missed the last half of it. 95% of poor people are no longer poor, this fact totaly destroys your poor getting poorer dogma. Poor people move up and are no longer poor, those poor are repalced by immigrants and young people who are just entering the workforce, they soon will also work their way out of poverty.
As population increases and our rank of illegals goes from 500,000 to 12 million wouldn’t you expect an increase in the poor?
” The share of immigrants below the poverty line (17.8 percent) is much higher than the share of natives that are poor (12.6 percent).”
Add in illegal immigrants and its even worse.
No slight of hand just facts you don’t like.
This video does an interesting sleight of hand with statistics. Some people who were poor got richer (this was mentioned), however, more people got poorer (not mentioned in the video).
The census tracks poverty:
Government figures released Thursday provided a new window on the deep pain inflicted by the recession, with the U.S. poverty rate rising to its highest level in 15 years in 2009 and a record 43.6 million Americans officially labeled poor.
The Census Bureau, in its annual report on income, poverty and health insurance, said the poverty rate hit 14.3 percent in 2009, the third consecutive annual increase and the highest percentage rate since 1994. The number means that one in seven Americans was classified as poor in 2009.
The 43.6 million Americans living in poverty in 2009, up from 39.8 million in 2008 and 37.2 million in 2007, was the most since the agency began compiling statistics a half-century ago. While the poverty levels spiked, median U.S. household income stayed constant at $49,777, statistically the same as the previous year.
Peter and Margalit let me know what you think of this;
http://www.youtube.com/watch?v=vDhcqua3_W8&feature=player_embedded
Medicare is a need and not luxury. It should be made available to all and not only rich people. I understand it could now be given for free but as the title suggest there aren’t enough rich people who are capable of paying up Medicare.
“For those currently under 55 – as they become Medicare-eligible – it creates a Medicare payment, initially averaging $11,000, to be used to purchase a Medicare certified plan. The payment is adjusted to reflect medical inflation, and pegged to income, with low-income individuals receiving greater support. The plan also provides risk adjustment, so those with greater medical needs receive a higher payment.”
Ok, fair enough Nate. Can you show me details?
” impose draconian policies on preexisting”
What is this exactly Peter? You mean telling people you can’t wait till your sick to buy insurance is draconian? When exactly did you meet with these insurers to find this out? Seeing as how pre-ex doesn’t exist in group for the most part and its illegal come 2014 I tend to think your making this up.
“cash strapped seniors on fixed income”
What percent of seniors is that exactly Peter, you rant about designing a system for 10% of the population, why not design something that works for the 90% then figure out how to give the rtemaining 10% some assistance, something already called for in the proposals.
What draconian age policies do you envision?
“to benefit this market segment, something they’ve not able to do now?”
Seeing as how there is no senior market now why would insurers have negotiated reduced rates for this segment?
But Nate, it is per unit pricing as well as over use. Seniors are having trouble because Medicare is paying less per unit pricing, while providers complain Medicare pays too little. Will seniors have to become doctors to assess what is too much or what is not appropriate care? When will the dropping of “unnecessary drugs” be replaced by the dropping of necessary ones? You may think that private insurance will manage fraud better, but it will also impose draconian policies on preexisting, age, co-pay/deductibles and exclusions, while waving a “cheap” policy in front of cash strapped seniors on fixed income with a flat voucher. Are you going to rely on insurance companies to negotiate reduced rates with providers to benefit this market segment, something they’ve not able to do now?
Peter your analysis would be applicable if our problem was per unit pricing, if an office visit cost to much seniors would struggle to get a fair price, but that is not the issue. We struggle with the amount and type of care and that seniors can control. A bogus doctor can’t bill a senior they never see. A senior isn’t going to pay for 20 of something when they are only given one. On top of that the 10%+ fraud rate would drop the first day of the program. Something that wasn’t factored into the estiamte that seniors would have horrific out of pocket cost with vouchers.
Read the above comments and wanted to say that if you were putting forth a policy that required shared sacrifice and wide spread support (Medicaid/Medicare) to conquer impeding doom, why would you then exempt the wealthiest of Americans from their share of the sacrifice in the same proposal? Telling all seniors, not just the richer ones, that the voucher will have to do, and after that, regardless of income and health status, you’ll have to pay the rest, only limits expenditures, it does not control costs, unless you think cash strapped seniors will be able to negotiate, against the 25% tax rate crowd, lower charges for medical care. Seniors are now having a problem getting Medicare accepted for care, not to mention the already income/asset limited Medicaid program, why then do you think giving them even less market cash and access to care in an overly costly system would incentivize the private health care sector to reduce costs to serve that market? The “rich” can’t pay for it all by themselves, but they can help bring the country together to solve a financial crisis by saying, I’ll pay more until we’re out of this crisis. Certainly the rich benefited from taxpayers (through debt) paying more when the financial sector was near collapse and didn’t mind bigger debt then. Nor did they mind a trillion dollar unfunded, unnecessary war.
I still say the wealthy have realized we’re on a sinking financial ship, and want to get as many assets into their life boats while they can, as the rest of us are told to tread the icy water for the sake of the country.
“Single payer national healthcare is the only feasible option.”
In every country it has been done its not been sustainable. Via ratioing they have been able to stretch it out but the public is becoming disatisifed with the rationing. You could take the same ratioing you do under single payor and do it with multi payor and come out with better results.
” Everybody pays 7% of their income to cover Medicare/Medicaid/social security, whether you make $12,000or $20 million annual salary. ”
7% won’t even get you close to breaking even. That would only raise $407 billion. We spend 2 trillion on healthcare alone meaning you need to bump your 7% to 35%
Too many health benefits are paid out in medicaid to cover people who do not need it. How many wealthy families transfer assets to family members at the right time so they can be eligible for medicaid for long term care. It’s a financial planner/lawyer specialty. Single payer national healthcare is the only feasible option. Everybody pays 7% of their income to cover Medicare/Medicaid/social security, whether you make $12,000or $20 million annual salary. Even so called investment income which doesn’t count as income but capital gains needs to pay into the system. The wealthiest nation in the world surely can take care of their own citizens. It makes no sense to do otherwise and is disgraceful
And I’m sure if looked into, you will find some very wealthy families benefiting from government healthcare and cry you can’t tax the wealthy so much.
To buy the health insurance policy I want
Carry a weapon for protection in numerous states and locals
to keep the fruits of my labor
Buy affordable functioning incondecent light bulbs
Build a new sugar shack in the back yard
few for starters, would also add the absord licenses you need to conduct some businesses, they act more to limit the entry to the profession then insure quality
Liverpool Care Pathyway doesn’t exist? Its just some made up boogeyman the right uses to scare people? The problem is the LEft’s history of saying they are passing one thing then really passing an entirly different bill. What happened to that catostrophic plan for seniors so Grandma won’t lose her shirt we were promised?
Death Panels brought about by unclear regualtion implemented without a vote, exactly how LCP came about, is a legit concern with the left rights generic bills and leaves everything up to the regualtion writers, the problem is weak minded liberals can’t stomach the debate or support the reason why they can’t clearly write the laws so they attack it as a lie.
I also seem to remember a promise that Medicare would reimburse physicians at a fair price, what ever happened to that?
I see a difference here (I know you likely wouldn’t) – republicans really wanted to defund planned parenthood offering these services. Obama made some meek attempts with regards to separating beneficial from nonbveneficial care paid for by tax dollars, and to increase end of life care advanced planning.
The democratic rhethoric is hyperbole (that I personally dislike), the death panel smear is a clear populist lie.
its an ironic conversation to have when we just passed a bill that mandated 100% coverage of a long list of preventive services and implemented an appeal procedure that makes it economically impossible to deny care no matter how wasteful it is as long as it cost under 200-500.
While everyone seems to agree we need to stop paying for this stuff we get a bill that mandates it……
“2) there is one political side that rises populistic deception to a level that your (our) suggestion of using QALY metrics will be equated with “death panels”.”
Really, just one side?
Debbie Wasserman Schultz, the new chairwoman of the Democratic National Committee , said Thursday the budget plan put out by Republicans is a “death trap” for senior citizens.
When asked if she really intended to say the plan would kill senior citizens, Wasserman Schultz “doubled down,” according to an article at The Hill.
“That’s exactly what I’m suggesting,” she said during an appearance on CNN.
Rep. Louise Slaughter, (D-N.Y.), is quite sure that Republicans who want to cut the federal budget deficit are hell bent on killing women.
Majority Leader Harry Reid rose up on the floor of the Senate and took the war on women theme and ran with it. He accused Republicans of not wanting women to get cancer screenings, even bringing his own wife and daughters into the mix.
Eleanor Holmes Norton, the non-voting House delegate from Washington, D.C., said that a government shutdown was the equivalent to bombing innocent civilians.
Thanks Barry,
the 2 fold was a typo, I meant to type 20 fold (and it does not matter that much whether it’s in fact 20 or 40).
I was unaware of most of the facts in your 1st paragraph, interesting, thank you. Re the 2nd paragraph, however, I’d rather suggest looking at it from a different, more intuitive angle: regardless of who overpays whom, overpaid people and up with more power and ressources than desirable for a functional society. There is only so much land, raw materials and skilled and unskilled manpower on earth, and access to all these ressources happens largely (almost exclusively) by money. A system attributing a disproportionate share to a selected few (I am not only talking about CEO compensation) is a social problem, not just a problem of shareholders. It is an interesting question whether the US can be “successful” (in terms of GDP and international influence) with a superwealthy elite, a thinned out middle class and a huge pool of disadvantaged people who may have TV/AC/car but little else … all living in an uneven (at best) infrastructure. I think that central Europe (and maybe parts of Asia) will demonstrate to have a more functional, sustainable arrangement, but even if the US can remain “successful” by that definition, it may not be an enjoyable and ethical country to live in.
“Even when it is identified, we don’t eliminate it because of a combination of patient expectations, the litigation environment and the incentives inherent in the fee for service payment model. This is why I think the best way to attack this problem is for payers, led by Medicare, to stop paying for services, tests, procedures and drugs that either don’t work or cost more than they’re worth based on QALY metrics or some other appropriate standard.”
Very well said, but it does not negate my points, namely that it is 1) doable to save money without reducing benficial care and that 2) there is one political side that rises populistic deception to a level that your (our) suggestion of using QALY metrics will be equated with “death panels”.
What freedoms have you lost?
Show me someone who doesn’t pay any taxes.
The way we deliver these programs could also be improved. Welfare WIC and all the is just handed out, here is barely enough money to gety by, stay home, don’t do anything productive, and be sure to vote for us. You couldn’t design a more counter productive system if you tried.
Why not tie payments to contributions? You want welfare then show up 5 days a week to help here or clean there. If you want food stamps report to the community garden and help grow food. Think of all the things we are told can’t be done because it is to expensive then think of all the money we pay people not to do anything.
rbar –
First, regarding CEO compensation, in the 1960’s and 1970’s, the typical CEO of a Fortune 500 company made about 40 times, not two times what the average worker in that company made, and most of his compensation was cash, not stock. In recent years, CEO compensation is closer to 400 times what the typical worker in the company makes and the vast majority of it is in the form of stock options and restricted stock awards, not cash. A lot of people don’t know that the value of restricted stock awards are taxed at ordinary income tax rates, not the much lower capital gains rate. Also, when stock options are exercised, the difference between the strike price and the current market price is also taxed at ordinary income tax rates.
That all said, I’ve noted before that current CEO compensation is far higher than it needs to be. Many people view it as excessive and unfair and I would agree with that. However, as I previously noted, it doesn’t affect my life and customers don’t even pay for it when they buy the company’s products. Shareholders pay for it in the form of earnings per share dilution when the stock awards are paid out. Moreover, no one company or Board could change the current paradigm even if it wanted to. They all have to pay their senior people at a level that’s market competitive.
As for medical overtreatment, while I agree that there is plenty of it, it’s not so easy to identify it at the individual patient level before services are rendered. Even when it is identified, we don’t eliminate it because of a combination of patient expectations, the litigation environment and the incentives inherent in the fee for service payment model. This is why I think the best way to attack this problem is for payers, led by Medicare, to stop paying for services, tests, procedures and drugs that either don’t work or cost more than they’re worth based on QALY metrics or some other appropriate standard. Hopefully, more doctors working on a salaried basis in the future could reduce excessive treatment, especially if the organization they work for is paid, at least in part, on a risk adjusted capitation basis.
if your going to also answer your own questions then why waste everyone’s reading time asking them? That was a conversation you would have carried on with yourself.
” Did it ever occur to you that 21st century civilization is a good worth protecting”
Yes that is why it is so sad to see people like you destroy it. Fall of communism, freedom in Iraw. Potential freedom in Syria and Libya. Hopefully Iran falls soon. Whats sad is seeing so many millions get a fresh start and freedom and better lives while we go the opposite direction.
But that would be to complex of a discussion for you so I’ll save it for someone that doesn’t talk to themselves.
Sounds racist rbaer, use to be rbar?, sorry just trying the liberal game on for size. Actually I know their company and worked with them in the past. See them at the conferences all the time as well. Nothing to be scared of, thanks for the heads up though.
cheating huh? What does that even mean? Damn this cryptic spam filter.cheating huh? What does that even mean? Damn this cryptic spam filter.
It’s never as good the second time but here it goes;
“Nowhere else did people have the freedoms, the rights, the protections and the opportunities they had here.”
Don’t you find it at all odd that we are now told we must give up those same things? We don’t have nearly the freedom we once had. Our protections and opportunities are far from equal. Everything that made us great is being cast aside so we can be more like OECD, the very thing we ran from 300 years ago.
We are becoming a corrupt and dying nation state just like those we strived to replace. That is sad, sad that we squandered such a great opportunity to be different and do things right.
“Can we not grow and adapt anymore?”
If you copy Greece or Spain or France what do you think the end result of this growing and adapting will be, PIGS no? Who looks at such failure and duplicates the blue print?
@Mike,
What is your problem? I think you would be best served living in a country that is set up differently than the United States.
You seem to have a problem with those people who make money or more money than you think is reasonable. Why don’t you advocate for those who make less money to acquire skills to make more money?
Dear Mike-
Thank you for the clarification. It is necessary to state plainly your meaning in that rather curious juxtaposition of words.
I, too, agree that it is not worth debating with you. Your rhetoric is distasteful and you have yet to prove a valid point regarding justification for your ‘I want to pay more taxes to support failing entitlement programs’ ideology. In fact you undermine it by referencing Bill Gates and other rich people who pledge to give at least half of their wealth to charitable organizations throughout their life. Such terrible, selfish rich folks who only care about themselves. Perhaps a belabored subject, but let’s review Ted Kennedy’s tax returns? How about Biden? Why is it that the people who want to spend other peoples money seem to have a very difficult time departing with their own? . . .C. Rangel, T. Daschle, T. Gaithner . . .etc.
Lets be clear, I do not have a problem funding effective and efficient programs for persons unable to provide for themselves. Most persons can. I do have a problem with inefficient, bureaucracies mismanaging monies of hard working individuals. Our system is not accountable as is, why throw more money at it??
Right statement should be that there ain’t enough money with rich to pay for all of Medicare & Medicaid cost increase. But hey this is after long time rich have been asked to pawn up little more. They can offer just a Trillion Dollar more, but that will do.
Contrast this to- there isn’t much that poor & destitute woman, infant and children can give up to help more. They already gave up $500 million in recent WIC trimming or 5 billion over decade.
Cutting Medicare & medicaid is right thing to do as long as it can be assured that care standard can be maintained. If it cannot be then the social compact changes. It wil be ugly scenario, but discussions on the new social order can begin from here. Unless the problem is resolved tha scenario will happen nilly willy.
Mike says: “I want involuntary, mandatory, universally, progressively and fairly applied taxation. ”
KG “Can you clarify? Are you suggesting a flat/ percentage based tax? ”
Can I clarify? I wish I thought you were kidding, but I think you mean it. Progressive taxation means that tax percentages increase with income. It is the very opposite of a regressive tax rate… and of course by definition not a “flat tax”.
The other stuff…. I don’t think I even care if I persuade you. I know a good debater should care, but after awhile the stupid just burns and you just have to go take a shower.
I can’t think of anything fairer than taxing those whom our economic system has enabled to be productive. It’s a split deal – they get a slice and the public gets a slice. Justice lies in finding the right balance.
On the charities argument, it’s too long to get into here. My original statements stand on their own.
Back to the original article.
“What is making a dent — really a fiscal train wreck — is the out-of-control cost of our entitlements, particularly the health care entitlements.”
No, that’s the wrong framing. The cost of entitlements is is partly a function of the cost of health care delivery itself, which can be lowered, say by a sensible payment scheme known as single payer national insurance.
As for the other arguments, yes, taxing the rich won’t be enough. We also need to scale back the imperial war machine and the number of wars we are involved in. We also need to (progressively) tax the middle and upper middle classes, sometimes taxing the working to pay for the retired for example. In short, we need to operate a normal European model social democracy. Denmark, France, Germany and Britain all provide reasonable examples. To those who say we can’t get there and “we’re different” I say “we’re just as good as them… we can get there and go further… we can do it better than they do.”
Mike says: “I want involuntary, mandatory, universally, progressively and fairly applied taxation. ”
Can you clarify? Are you suggesting a flat/ percentage based tax? Can you be more specific. Current tax laws heavily punish persons who may been born wealthy and it also punishes those who work very hard to be successful. Why is it that that is fair? I think if we consider the most basic of social sciences we agree that persons punished for certain activities may cease to do those activities.
What if we, instead, rewarded success? What if we supported success and achievement early on, such as with young children? Perhaps reinforcing strengths and encouraging success among school aged children would yield a highly motivated, largely successful nation that need not rely upon the welfare state. But wait, we subject our children to the over funded, under achieving, one size-fits-all system of (compulsory) public education. I am attacking a federal program which produces more uneducated persons than educated. What, then, if we apply these principles to healthcare?
Mike says: “The goal of taxation . . .
How am I free if I am FORCED to pay for others’ repeated bad decisions? Most (not all, but most) people are free to be healthy. Most people who die prematurely die of what? Preventable diseases . . .CAD, DM, HTN. Why? Because they are free to not be healthy as well.
Additionally, do you truly and whole-heartedly trust persons who are so subject to the influence of powerful interests with your hard earned income? These same persons who have degrees in liberal arts and law, not business or health science are charged with making pivotal decisions with our nation’s economy and health policy. I really do want all persons to have access to affordable care, but taxing the heck out of some very productive members of this country hardly seems reasonable or fair.
A final thought- when donating to a charitable organization, the benefactors have the option to choose. Those that have an excellent track record with minimal overhead/ admin cost (Shriners are a great example) provider donors a sense of confidence. Their proven results allow for donors to determine if they are a worthwhile cause. What evidence does our gov’t provide us? I suppose of we buy into the notion that the highest charity is relinquishing all authority of out money. I strongly disagree. It is the fact that organizations must answer to a consumer that they are held accountable. We may be the consumer in the sense of a constituency; however, the ruling elite rule themselves into exceptions to accountability.
“Our state started and grew incredibly well without social security, medicare, and all the other state spending we have now,….”
Nate, allow me a bit of biblical wisdom here. Remember Noah and the ark?
Noah was spared and survived along with his family because he was judged to be a “righteous man, blameless in his generation”.
Qualitative judgements are never absolute. They change with the times and with the generations.
During the times this country was born and then grew into the the greatest country on earth, this was a very progressive state by the standards of that generation. Nowhere else did people have the freedoms, the rights, the protections and the opportunities they had here. The US was the most innovative human rights experiment on the planet, and after they removed the last vestiges of inequality, the US became the undisputed leader of the world.
Should we just give up now, because the times are changing? Can we not advance with the times as we have done for hundreds of years? Can we not grow and adapt anymore? Must we always look back instead of looking forward?
I think those great folks that created this country would be bitterly disappointed with our generation which is squandering the efforts and sacrifices of all those who came before us. How sad…
Boehner, from his own website.
““Economists across America agree spending cuts are necessary to help create a better environment for job creation in America, noting that excessive government spending is crowding out private investment, spreading uncertainty, and eroding confidence in the nation’s economy. ”
http://johnboehner.house.gov/News/DocumentSingle.aspx?DocumentID=230835
It is fairly commonly talked about by right of center economists, though not all believe in the concept.
“If you rack up 14 trillion in debt doesn’t that sorta imply you needed it? Why did we go 14 trillion in debt instead of increasing revenue?”
Depends on who is in charge. The GOP has embraced the starving the beast philosophy. If you look at table 15 from the OMB numbers in the link below, you can se that our debt has been run up when our revenues have run below average since 1980. We ran surpluses when revenues collected were above average while spending was a bit below average. The current spike in debt is largely from the recession and the drop in revenue. This makes the why pretty clear, I think. The supply side economics which has dominated our policy making has limited the ability to raise taxes.
If we abandon the attachment to beliefs about supply side, there is no real reason why taxes cannot again go over 20%, especially if they are used to reduce debt.
http://www.whitehouse.gov/omb/budget/Historicals/
Steve
Barry,
“As for healthcare costs, if we knew how to bring them down to a sustainable level, we would have done so a long time ago”. I think consensus is forming among the people who know the HC system AND have no conflict of interest – there is a lot of overtreatment (treatment that is not at all or barely beneficial and/or unwarranted) and waste, but right wing populists have suffocated any meek initiatives to move in the right direction (“death panels”), supported by the ignorance of the majority of the voters.
“The problem is that too many people, especially middle class people, want more from government than they’re willing to pay for. Even if the rich can somehow pay most of the bills for the poor, at the end of the day, the broad middle class will have to pay for the broad middle class.”
I don’t necessarily disagree, but “rich” and “poor” are based on a complex set of arrangements within our society. If CEO income currently is, what was it now, a hundredfold of what low income workers in the same company make (up from, I believe 2 fold in the 60s), one could claim that it is fair that the CEO pays only one percent in taxes since he still pays the networth of taxes of many middle class tax payers combined (not mentioning low wage earners). But is that pay justified by workload, by productivity, or is it sign of a flawed, dysfunctional system that could be corrected by taxation, charity or uprising?
I don’t give a damn about the wealthy claiming a hands off policy . Like smoking pot, Hitting LSD, and doing Crack. These self absorbed mischeif making lot of Wealthy Drug addicts believe that Health Care should fail because they do not need it .
There is an answer but no one in power is goning to speak up! We have today a ever increasing number of people who believe seperate but equal.
In other words the wealthy has chosen to discontinue their contributions from America and those Communities. Business communities have bought votes that exclude them from taxes while applying a greater share on middle class Americans. Today it is the Middle Class that needs to enter the back door and drink from the fountains called “Middle Class” . Restrooms marked”Middle Class need not enter’.
Disgusting Propaganda designed to kill ‘CHANGE”!!!!
Nate, all in all, your comments speak for themselves and there is not much to add. But given your insistence on inviting affluent people who suggest higher taxes to simply pay more taxes (this bit may already have GOP talking point status), have you ever heard of the tragedy of the commons? Did it ever occur to you that 21st century civilization is a good worth protecting (and BTW, we are talking about a complex and technicized civilization that is not that similar to the good old days you are referring to, years during which the US thrived while there were, among other things, slavery and marked gender inequality). No? I thought so.
As Bob noted in his post, there aren’t enough rich people to pay for government even if their taxes are raised considerably. The problem is that too many people, especially middle class people, want more from government than they’re willing to pay for. Even if the rich can somehow pay most of the bills for the poor, at the end of the day, the broad middle class will have to pay for the broad middle class.
As for healthcare costs, if we knew how to bring them down to a sustainable level, we would have done so a long time ago. The combination of an aging population and the steady introduction of new treatments and technologies drive healthcare costs ever upward because they enable us to treat people, often at high cost, that would have died before the new treatments and technologies came along. Maybe ACO’s or new payment models will bend the healthcare cost growth curve. We’ll see.
Nate, even though we don’t agree on most issues, let me warn and urge you NOT to wire money to any bank in Nigeria, even if the greates of opportunities seems just around the corner, as promised in said emails.
Forgot, who cares about your regressive system claims, Lets look at actual payments instead of %, now the rich are over paying. Its the same failed logic that wants to look at medica admin expense as a %, rent isn’t paid % of income nore is food or anything else. Its a meaningless measure dreamed up by poeple trying to make it look like the poor suffer.
welfare can hurt people more then it helps them, see housing projects, and welfare states are not sustainable. As more people shift from productive contributing members to welfare receipants the system will eventually buckle under its weight. Welfare states also create to much potential for corruption.
in those 5 states where is the regression?
I don’t know why you’d find it sad that we can’t exist (in a form that maintains social justice) without a welfare state. I see a well functioning welfare state as a beautiful machine that, like computers and airplanes and power grids, makes our modern high energy society possible in a form that in many ways exceeds anything that has ever existed on this planet.
But my experience with conservatives is that their pathological hatred of “the state”, whether it is displaced anger at their father’s or blind conformance to their party ideology or whatever may be it’s sources, ultimately revolves around a core irrationality that they can no more explain to themselves than they can to others. You might call it “religion” and leave it at that.
I want to spread freedom by redistributing a percentage of the gains that flow to some from a well functioning society to those who have benefited less. I also want to gain voluntary consent from the majority for that scheme, but do not mind if some minority objects to it. If you want to call that “confiscating labor”, go for it, although that’s surprisingly Marxist of you. Please don’t tell me a good right winger like you is into the labor theory of value? (No never mind, I’m not interested.)
I call it mandatory taxation, and I don’t lose much sleep about it, and neither should you.
Congratulations, you’ve identified the five states in the US with no sales tax, leaving… let me see if I can do this math… 45 states with a sales tax. You’re really making this too easy for me Nate.
I’m sure you won’t contest, in any case, the generally regressive nature of the US and state tax systems…. http://www.itepnet.org/state_reports/whopays.php
” ideological effort to defund the state and destroy our civilization.”
Our state started and grew incredibly well without social security, medicare, and all the other state spending we have now, undoing any part of this will destroy civilization? Quit the stretch and sorta sad to think we can’t exist without our welfare state.
You want to spread freedom by confiscating more labor, and you see a way to make those ends meet?
When civilaztions fail is when people feel entitled to the labor of others.
The poor in Alaska, Delaware, Montana, New Hampshire, and Oregon pay regressive sales tax?
Nate, Just not that interested in you as a person. On the other hand your ideas are a good representation of a disease I hate.
Yes, we probably actually do agree that everyone should pay taxes, as a statement of ownership. That way the right wing wouldn’t be able to refer to “tax payers” when they meant to covertly distinguish between citizens they care about and those they don’t. But in actual fact the poor do pay highly regressive sales taxes, so the intended right wing insult is usually misguided anyway. But the issue isn’t just who pays, but how we structure and politically maintain a just level of progressivity.
Your problem Nate Ogden is that you lack a sense of “our goals”, as a community, as determined by a democratic political process. I don’t care about my goals, or your goals in particular. I care about having a society that has goals, and has the tax revenues needed to realize those goals, and has the democratic process and controls needed to ensure that those goals reflect the general preferences of the majority. Charitable giving can’t get you there.
As for your use of the word “evolving” I hope you don’t mean that in the Social Darwinist sense, and trust that you don’t mean that in a biological sense… well frankly I have no idea what you could mean.
So, since you’re being abjectly unclear, let me be clear. The goal of social spending should be to maximize human freedom and well-being. Ensuring health is the absolute core of ensuring that people have the ability to be free. Taking people’s money from them, particularly if done in a progressive manner that reflects wealth and income, is a reasonable approach to ensuring the kind of freedom that health and social welfare enable.
The author of the article above asserts that there aren’t enough rich people, as if only the rich should be taxed, or as if all of the US governments current expenses, such as 2.5 wars and a vast imperial war machine far exceeding any other on Earth, are givens that cannot be changed. Balderdash. That kind of talk is just part of the larger ideological effort to defund the state and destroy our civilization. I predict that it will succeed.
“I assume that Nate is as real as Mike and that you like me are anonymous, or if you prefer pseudonymous. ”
Then your an ass, congrats on that. Facebook, myspace, linkin, are you that lasy or to stupid to cut and paste?
“fairly applied taxation.”
Defined by whom, the 51% that don’t pay taxes and instead put the entire burden on the 49%? As long as you get to define what is fair I am sure you would love a fair tax code.
“and I want everyone else to pay too, as a matter of simple justice.”
Great we agree, we do away with tax credits and the poor start contributing.
Advocating for higher taxes on others so their money can be spent on your goals is not higher charity nor charity at all.
I will agree that there should not be such things as tax exempt organization, that includes charities, churches, and politicians, I think they should all be taxed just lioke everyone else.
“how we maintain a state strong enough to resist the natural tendency toward the concentration of wealth.”
You don’t create welfare states where 20+% of the population isn’t evolving. When you enslave large portions of your popualtion what do you expect to happen?
Well, you know more about him than I did. I never doubted that he was “legit” (rather than just a “troll”). But I have no patience for commenters who barge in calling other names like “idiot,” “democrap,” “socialist” etc (which, again, in fairness, he’s not done much of lately)..
I think we need to clearify and enforce equal protection. Businesses shouldn’t be allowed to shake down cities and states for tax breaks or they will leave. All similar business and people should be treated the same in regards to taxes and regualtion.
untraceable? Really, explain this email I got Friday;
Nate,
I was looking around the internet and came across The Health Care Blog and saw a few posts from what seems to be you. I read some of the recent ones and had some ideas on how we may be able to help increase your profits as well as bring in new business. We should schedule a day and time to talk soon.
I get 1-2 of these a month
I have to correct this Bobby. We know his name, his occupation, his state of residence, his family history and he even shared his email once when I needed some help, which regretfully, I never acted on… He may be way over the rightest of edges, but he is legit.
I assume that Nate is as real as Mike and that you like me are anonymous, or if you prefer pseudonymous. You quibble, dude. Aim higher.
But you are also too predictable. Charity instead of taxes? Really?! Is that the best you’ve got.
I don’t want voluntary “taxation.” That’s not even taxation – it’s charity. I want involuntary, mandatory, universally, progressively and fairly applied taxation.
Why? For when thing I don’t want to be a sucker, and nobody else does either. I want to pay, and I want everyone else to pay too, as a matter of simple justice.
I don’t want to decide unilaterally where my personal money goes because I care about the community and I care about political community.
Involuntary taxation is a higher form of charity because the giver gives up not only the money, but the direct control over its use. Direct charitable giving is a lower form of charity because the user’s ego remains wrapped up in the uses of the money. The community belongs in the charitable equation, and that’s what taxing and spending in a democracy is all about.
I want democratically elected representatives to consider the well being of the community as a whole and allocate resources on that basis. The idea that everyone should just decide on their favorite charity and give money to whatever seems like a good idea to them personally is absurd. Right wingers promote that absurdity as the height of rationality. Bill Gates certainly thinks it’s a swell idea. Most rich people do.
Our corrupt tax code and the entire nonprofit sector is built around the tax codes legalized evasion of taxes through charitable giving. It’s a corruption that is built into the American law. Instead of collecting taxes and democratically determining their distribution, we exempt people from taxes if they give charitably. It’s a sick system that undermines the state, and in a larger sense it is part of the American polity’s unwillingness to wrestle with the question of how we maintain a state strong enough to resist the natural tendency toward the concentration of wealth.
Private charity is fine and good, but it should never be a substitute for tax payment. People who believe in democracy, should want the investment activities and charitable activities of a society to reflect the community’s ethics, priorities, and values, as decided through democratic processes.
We elect representatives to reflect those values and express them in laws and policies. All of this is political morality 101, but considered deeply heretical in some circles.
Yeah. And he really meant “untraceable,” not anonymous. It’s easy to just go off rudely on everyone (which, in fairness, you’ve done less of lately) when there’s no link to your true identity.
None of the peripheral nits you chose to address, Nate, refutes the simple fact that, in essence, Mike is right.
It is certain that in order to get out of this nation’s current deficit despair revenue must increase and spending must decrease. That is simple enough. Let’s discuss real options that yield these results.
Medicaid and Medicare spending (particularly Medicare) must be addressed. The Ryan bill suggests a rather convoluted means of ‘privatizing’ Medicare. Filtering monies through the administrative bureaucracies then back to already inefficient insurance carriers seems likely to increase spending. What about reducing Medicare to a more catastrophic and cancer model of coverage? What if all of the ‘perks’ of comprehensive care were incrementally reduced. Why do we feel compelled to provided such comprehensive care to all? Perhaps factoring out the, once again, inefficient insurance companies out of the equation care may become more affordable. Simply the equation: Patient and Provider, in most cases.
Next . .. taxes. So, imposing greater taxes will increase revenue. What effect does it have on the rest of the economy? Does it allow for business expansion or are we reducing venture capitol? I am not wealthy, so the Bush tax cuts do not directly affect my 1040. I am concerned about imposing heavy taxation on those who invest, expand, grow and employ. Next concern- what about the large corporations who legally launder American (not international) profits, hire IRS accounting teams, then collect greater than billions in refunds? GE looks to receive $3.2 bil in tax benefits this year. Why? Because they are still licking their 30 billion dollar wound from our collapsed economy. Sorry GE, if you collects a profit generated in the US (and they do), it is your turn to pay your dues. Perhaps this appears to contradict above statements of venture capitol and whatnot, but I disagree. Holding corporations and individuals accountable for their share, meaning a reasonable, determined tax rate, will assure a fairly consistent revenue. Besides, why should some industries receive gov’t favoritism and perks? I feel compelled to rant about the dairy and beef associations or the oil industry, but I won’t. What I am getting at is allowing a free market to occur, no favoritism, no excessive taxes to occur because someone takes the initiative to invest and sees great return (thereby growing our economy). Holding a steady and reasonable rate of taxes = consistent revenue.
“they’ve even got some anonymous clerk named “Nate Ogden”. ”
Do you know what anonymous means, apparently not as you just misused it. Who’s Mike, not even a last name while you rail on others anonymity?
“Will someone please, please raise my taxes?”
I love hearing liberals get on their soap box and preach, why don’t you raise your own taxes? You can pay extra, the IRS will accept the money, you could even direct it to your favorite cause. Why do you need someone to take the extra money from you, why can’t you give it?
“The think tanks of the left are few and timid,”
Ya not like George Soros is a real person or anything. How do you type stuff so blantly dishonest and not think twice?
Will someone please, please raise my taxes?
What kind of pathetic nation would let an ordinary taxpayer like me with an income of $75,000 / annum pay the relatively low taxes that I paid this year? And while we are at it, let’s talk about the people making $100 K and $250 K. And then let’s have a little conversation about publicly chartered corporations, whose very existence is not some natural right, but is a function of this democracy’s grant of a license to operate under terms of limited liability and other legal conditions, for the privilege of which they should be taxed at a level that fully sustains necessary, democratically decided upon, government services.
Not enough money? The hell there isn’t.
Taxes are the price of civilization, said Holmes, and rightly so. We are undoubtedly a civilization in decline, unwilling to tax at a level to sustain the services that are the sine qua non of a robust civil society.
All civilizations tend toward Pharonic concentrations of power. Unless resisted, power and wealth accumulates relentlessly toward the upper reaches of society, and then toward a single pole of power, and ultimately toward a Pharoh, Czar, Dictator, or absolute Monarch.
We live in an age when democracy is still relatively new, just a few hundred years old. Mass media is even newer. The forces of Pharonic wealth concentration were temporarily thrown for a loop by America’s yeomen farmers in the 18th and early 19th centuries… and then again by the devastation of the Great Depression. But they’re back now!
They’ve got Citizens United, they’ve got the Koch brothers, hell, they’ve even got some anonymous clerk named “Nate Ogden”. They’ve got an increasingly self-conscious interconnected upper class that is waging war for its interests against the lower classes.
It’s kind of fun to watch. They’re good at what they do! The left, the common people, us $75 K folks, to say nothing of the $40 K / annum folks are just busy getting on with our lives. Most of us don’t see the big picture. The think tanks of the left are few and timid, while the think tanks of the right are many and growing. It’s hard to see how the interests of the many will be protected against the vicious attacks of the few.
One thing I can tell you is that my taxes aren’t high enough (particularly if we are to wage multiple foreign wars simultaneously), and if my taxes aren’t high enough, the taxes of those above me on the income scale are even more inadequate.
Civilization is slipping away because we are not organizing to pay its price, and to make sure those who have benefited most from it are paying a progressively appropriate price for the benefits they enjoy.
We live in a time of war, and the wealthy and the far right fully understand this, but ordinary middle class and lower class folks think the only wars are those going on overseas. They don’t even know that the real war is happening right here, and it is a class war, and they and their interests are considered the real enemy.
Fun times.
During the WWs? During the great depression, if you could collect 40% more in taxes with no ill effect wouldn’t that open the door to mass welfare in a bad economy? Any sign of slowing economy just hot the rich for another 30% and spend it to boost GDP.
If you rack up 14 trillion in debt doesn’t that sorta imply you needed it? Why did we go 14 trillion in debt instead of increasing revenue? Maybe we couldn’t increase revenue becuase you can’t collect more then 20%?
Where is an example of some right wing economist saying government spending crowds out private investment? I would like to see how your link is using it.
If you look up how wikipedia defines crowding out it doesn’t exist, governemnt borrowing obviously doesn’t drive up interest rates as the last three years has shown, when government sets the interest rates there is no market force at play. They are what washington says they are. I’m sure there is some break point where the bubble will burst.
The classic Christina Romer paper, the one that showed that taxes can slow down GDP growth, also showed that tax increases passed with the purpose of reducing the debt do not slow down GDP growth. Makes the bond market happy.
Steve
At rates of 70% it may actually make a difference. At the rates we are now talking about, I see no evidence that it matters.
http://www.angrybearblog.com/2011/04/oh-yeah-crowding-out-has-been-huge.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+blogspot%2FHzoh+%28Angry+Bear%29
We have never needed to collect much more than about 20% of GDP in revenue because we did not need it. Facing debt, we may need more, or we can vote to discontinue the entitlements they fund. Or, we could try to find some way to cut health care costs.
Steve
depends which taxes you increased. A tax that reduced imports and redirected spending to domestic goods would be a boon for the economy. For example if we taxed foreign oil some prohibitive amount with enough notice to ramp up domestic production we would solve our debt problem over night. And our unemployement as well.
Where does productivity come from? Investment, where does investment come from? Investors, are investors more or less likly to invest if their returns are taxed 15% or 50%? Taxes are a major calcualtion in any investment, soemone isn’t going to risk billions to make a million then lose 50% of it to taxes. When calcualting ROI taxes come right off the top with all other expenses. The lower the taxes the higher the ROI the more attractive the investment. is 15% to 20% going to change someone’s mind? Probably not, if you taxed gains as income would that, without a doubt.
“So, we should not think of this as an economic law, but rather a consequence of our politics.”
Our politics have swung back and forth a dozen times over the years but the cap is still there, if not the politics then what prevents it from going higher?
Mark, its not an idea its 70 years of historical fact, what part of that don’t you get? Most other developed countries are just that OTHER countries. They have different values, morals, expectations, and tolerances then us.
“(and their economies are doing just fine).”
According to you PIGS is doing just fine, care to explain why everyone else, including those countries disagree with you?
Great article!
I agree that you cannot keep taxing the rich in order to make up the debt accumulated by Medicare and Medicaid. The other tax alternative is to raise everyone’s taxes equally, which will hurt the economy just as much as the “rich” tax increase. I think the only solution is to cut spending on these two health care programs at the federal level, and let the states take the role of provider of health care if they want. If not, there will be a private company that comes up to fill the void. It is what needs to happen in order to permanently solve our public debt problem.
Mark Cohen
markdanielcohen.wordpress.com
mark.cohen580@gmail.com
Hi Nate,
I see you’re still peddling the lame idea that people won’t work if the total taxes are more than 18% as if this was some kind of “natural law”. As I have pointed out before, most other developed countries have tax rates of 40% or so and people haven’t stopped working (and their economies are doing just fine).
GDP growth is more closely linked to population growth and productivity. There is not much evidence that it is linked to tax rates. It is more likely that tax rates keep getting pulled back to the 18%-20% range because our spending in the past has never required much more. If the economy boomed and we generated a surplus or the deficit got small, tax cuts were proposed. Tax cuts are great electoral politics. Hauser’s Law also ignores the large change in the composition of our taxes. The burden has gradually been shifted off of corporate taxes and onto payroll and income taxes, especially payroll. So, we should not think of this as an economic law, but rather a consequence of our politics.
As to the larger issue, tax cuts on the wealthy are not enough. The Bush tax cuts for everyone should be repealed. We need a broader base of revenue. More than anything else, we need to cut health care costs. Our future debt is mostly health care, mostly Medicare and is mostly driven by costs, not demographics.
Steve
It is true that there are not enough rich people to pay for Medicare/Medicaid. But unfortunately, it is also true that there are not enough rich people to vote against taxing rich people.
If we don’t figure out a way to provide some basic level of health care security to seniors and the poor in an affordable way, our taxes will inevitably go up. A 2030 voter without health care will not hesitate to tax someone else at 99% rate.
And why should Federal revenue hold steady at about 18%?
18% was not targeted over the past 70 years, that is where is falls historically after ying and yang get done with it. Raise taxes, people make less and you end up with 18%. Tax less people earn more and you end up with 18%. Its a natural balance in which things work. Could you forceably blow it up and say tax the rich at 100%, you could and for one year you would go up to 40%. The following year there would be no rich and you would fall to 5%.
This is the same with all human actions. They accept so much input then react. Will you give up your seat on the plane for $150 or would it take $400. The historical average isn’t what dictates this number its human nature, if you average human nature over the years you get an average but the average was never the target
Interesting how this assertion is gaining traction in YouTube tea party videos and even serious folks like Bob.
Yes, we need to spend less (not necessarily for just the items in that graph), and no, the rich don’t have enough money to pay for everything, and corporations don’t have enough money to pay for everything, and the impoverished middle class doesn’t have enough money to pay for it all, and I certainly don’t have enough money to cover all costs. So does that mean that I shouldn’t be taxed? And why should Federal revenue hold steady at about 18%? Is that a magic number? Or it’s just a historical average that brought us to this unfortunate junction?
I know you’ll be aghast to find me sympathetic. Kessler:
“Starting in 2014, subsidies will be available to families with incomes between 134% and 400% of the federal poverty line. (Families earning less than 134% of poverty are eligible for Medicaid.) For example, a family of four headed by a 55-year-old earning $31,389 in 2014 dollars (134% of the federal poverty line) in a high-cost area will get a subsidy of $22,740. This will cover 96% of an insurance policy that the Kaiser Family Foundation predicts will cost $23,700. A similar family earning $93,699 (400% of poverty) gets a subsidy of $14,799. But a family earning $1 more—$93,700—gets no subsidy.”
___
Regarding which I wrote on one of my blogs back during the Obamacare debate:
“A couple of observations:
“This look distressingly like “corporate welfare,” in that the government will be expected to make up the difference between the “market price” of insurance coverage and your “affordable contribution” (just as is the case with the Federal Employees Benefit Plan) should you not be otherwise covered through your employer (or via your own wealth enabling you to purchase coverage and/or services at retail). Perhaps this explains why “Harry and Louise” are now on board ad nauseum of late touting reform. Forcibly bring in 40+ million new “policyholders,” without having to charge them anywhere near full retail, while still making bank via the U.S. Treasury? What’s not to love?”
“It also looks distressingly like — well — “welfare,” overtly (begging yet again the question of health care as a fundamental “right” like national defense). We will need another numbing federal bureaucracy within which to vet “affordability eligibility” ongoing for millions. And, while some people are inveterate wards of the state, many others move repeatedly up and down in the socioeconomic strata. Eligibility will have to be re-determined at least annually. Take a number. Now serving number 342 at window 8. Provide two photo IDs and your last IRS 1040. No, I’m sorry, we do not recognize Power of Attorney, your mother must come here in person. Yes, I understand that she’s bedridden in a nursing home. Sorry. She must appear in person. Two photo IDs, and last Form 1040. No, your place in the queue expires at 5 pm today.”
“This country is in such a hole that it is senseless to deny that at least some new taxes will be needed to pay for all of the nation’s bailouts and accumulated debts.”
I say we start with a 50% tax increase on everyone that says we need a tax increase.
Read this piece this morning in the Wall Street Journal, by Daniel Kessler, hope the link below works, and just had to be hypocritical in making a comment just to hope the usual suspects who defend and apologize for any possible consequences of Obamination Care show their incompetence and lack of sincerity in replying to the link’s allegations. Read it and weep, fair and reasonable readers.
http://online.wsj.com/article/SB10001424052748704628404576265692304582936.html
By the way, I feel it relates to the above author’s post.