[expand title=”Transcript of cartoon”]This cartoon has four panels. Each of the panels depicts two characters, a woman in casual clothing (striped pants, sleeveless shirt) and a balding man wearing a collared shirt and necktie.
Panel 1
WOMAN: So why can’t we address the unemployment crisis?
MAN: Because FIRST we HAVE to do something about government DEBT!
Panel 2
WOMAN: But why cant we–
MAN (Jumping up and down): DEBT! DEBT! DEBT!
Panel 3
The man’s head has grown to three times ordinary size, as he yells, waving his arms in the air, his tongue sticking out of his mouth. The woman is bowled over by his intensity.
MAN: DEBT! DEBT! DEBT! DEBT! DEBT! DEBT!
Panel 4
WOMAN: OKAY! Let’s lower the debt. We can raise taxes on the rich…
MAN: Hey, HEY! Let’s not get EXTREME![/expand]
Nailed it
Yup. We can raise taxes on the rich. But will that cover the debt and solve the problem?
I did some reading on it. John Stossel in Forbes says that raising the taxes on the right won’t raise enough money and we have to cut spending. Paul Buchheit in Nation of Change says they do. In reading through the two I see that there’s a fundamental difference in how they approach this. Stossel focuses on raising revenue through increasing income taxes. Buchheit includes that plus various taxes on corporations – in other words, raising taxes on corporations = raising taxes on the rich.
I think that Buchheit’s analysis is flawed. I don’t think that equivalency is correct. Tens of millions if not over 100 million Americans have at least part of their retirement dependent on corporate stocks and bonds, whether in a 401(k) plan or in other kinds of investments. If corporations become less profitable because of higher taxes, it won’t be just the rich that will be impacted, it will be what I suggest is the majority of Americans working in the private sector.
Which, if true, means that increasing taxes on the rich (which is not an idea I discard out of hand) just won’t solve the problem – we have to cut spending as well. According to The Center on Budget and Public Priorites, Federal spending breaks down like this:
22% Social Security
21% Medicare, Medicaid and CHIP
19% Defense and international security
12% Safety Net Programs
7% Retiree benefits for Federal employees and Veterans
6% Interest on Federal debt
3% Transportation infrastructure
2% Medical and scientific research
2% Education
1% Non-security international
5% Everything else
Where can you cut? What can you cut? The majority of the Federal budget goes to social aid payments of one kind or another. I don’t see how the budget can be balanced unless those take some kind of hit.
Ron, was your second link intended to be to this article?
@Ron: Perhaps raising taxes on the rich won’t solve the debt problem by itself. But it is probably a necessary component of any actual solution, and the fact that the same people who are insisting that debt is the major problem are unwilling to consider a prerequisite for addressing it implies that they are not actually serious about addressing debt, but are using it as a way to legitimise what would be their preferred policy platform regardless of debt levels (e.g. lowering government spending).
Ron,
You ignored a huge number of the sources of revenue in Buccheit, and the Stossel piece sets a very high cutoff point for increased taxes (and the idea that taxing people all of their income above $1 million would cause them to stop working is silly. If you stop working, you drop from having an income of only $1 million to having an income of 0, which is a tiny bit of a difference, and a tiny bit of an incentive to continue working and remain part of the 0.2%).
Of course, in addition to Buccheit’s suggestions (which actually don’t include any increases in tax rates, so leave Stossel’s $500 million on the table), we should probably also undo the Bush tax cuts entirely and raise taxes on you and me.
And that leaves aside that we should actually still be engaged in massive deficit spending in order to get us out of the New Depression, we should just be running a massive deficit and raising taxes (because low taxes on people in the top quintile has a pretty small multiplier compared to things we could be borrowing to do).
Of course, we should also be running higher inflation levels to force rich people and corporations to stop sitting on cash (or treasuries)– which would reduce the debt to GDP ratio, or possibly imposing a wealth tax– which would raise revenue while punishing people and corporations from sitting on their wealth.
Of course, the Tea Party Republicans would never support any of these options (only further tax cuts and spending cuts on programs for the poor), and the Democrats support both mild tax increases and spending cuts, so it looks like you should be a mainstream Democrat, and I should be pushing for more Progressive Democrats.
Amp: Yep. Thanks!
Hugh:
That may be. But then there is a rather large group of people who take the opposite view – that there is no need to reduce spending, and that in fact spending should be increased, and that the only necessary solution is to raise taxes. An equally valid cartoon could be made of that, and their motives are suspect as well.
Charles – yes, I did leave out some of Buccheit’s suggestions in the interest of brevity, but the main point holds – he sees no reason to lower spending, and in fact here you are proposing that we raise it. I don’t think he proposes that people who see all their income over $1 million will stop working – but it’s quite likely that they’ll stop working past the point that they’ve made that $1 million, with a concomitant loss in both productivity and in revenue to the government.
That’s a lot of “of course”‘s, and they are debatable (beyond the time I have at the moment, unfortunately). But it’s a novelty to me that there is any sizable cohort of Democrats who are proposing a net cut in spending. Can you point me to a link?
Ron,
I wrote you a nasty rant on how you can possibly not know what President Obama has been proposing for deficit reduction for the past 3 years, but I’ll spare myself getting struck through by Amp. Please google “Obama spending cuts next ten years”, go read up on a central feature of the political landscape you have somehow managed to miss for years and then tell me what you think President Obama proposes for deficit reduction.
What’s been going on with the deficit:
What Americans believe has been going on with the deficit:
And how the GOP uses the deficit (cartoon by Joel Pett:):
None of those graphs show in my browser.
That’s because I had uploaded them on the previous server. Oops! Fixed now, thanks for pointing that out.