sunset from behind the wire

sunset from behind the wire

Thursday, December 6, 2012

Paying for Government

Americans want big government when it comes to not taking responsibility for things and delegating those decisions to --- big government. The problem comes when you need to pay for it.

Bowles-Simpson comes out of the Debt Reduction bi-partisan committee and it generates revenue through big tax increases and cutting spending. Bowles-Simpson get their $2.6 trillion in new revenues by first assuming the Bush tax cuts for the rich expire, adding $800 billion to their baseline. After that they broaden the base. Bowles-Simpson would turn the mortgage interest and charitable giving deductions into 12% nonrefundable credits, phase out the employer healthcare exclusion by 2038, tax municipal bonds, cap tax-preferred retirement contributions to $20,000 or 20 percent of income and eliminate all other tax expenditures. They would tax capital gains and dividends as ordinary income. Even with a top marginal rate of 28 percent, that's a lot more money coming into the IRS -- especially compared to President Obama's plan.

The Obama plan calls for smaller cuts - and smaller revenue, coupled with significant stimulus spending, not indicated on this graph.

The Republicans reject Bowles-Simpson, and think that's a mistake, but nobody asked me. They talk about making big sacrifices to reduce the deficit but there remains the question of details that they haven't provided (on Fox News Sunday last week) regarding deductions, that the Democrats call 'tax loopholes'.

Bowles-Simpson is serious medicine for a serious problem. The other plans are window dressing, puffed by political posturing and in my opinion both the Obama and Republican plan are inadequate and will prolong America's financial pain - with recessions and depressions for the next decade.

Graphs h/t The Atlantic

8 comments:

  1. A bi-partisan committee did something right? Knock me over with a feather!

    ReplyDelete
    Replies
    1. They had the best interest of the country at heart, but alas, politics.

      Delete
  2. The Democrats want to close the property ownership "loophole" because it encourages an activity that is not endorsed by those communists in that party.

    ReplyDelete
    Replies
    1. I feel that the democrats are all pseudo-communists...many of them in denial.

      Delete
  3. "A billion here, a billion there, pretty soon you're talking about real money."

    ReplyDelete
    Replies
    1. A billion isn't real money in American Government. A trillion used to be.

      Delete
  4. Boles-Simpson is the ONLY thing that is going to get us out of the ditch...

    ReplyDelete
    Replies
    1. The Republicans have their heads in the sand because they want to stand firm on "no tax increases" but that won't work - any more than the Obama plan will work.

      Delete

It's virtual - it's a mirage - it's life