Does the Doheny-Hoffman economic plan add up?
Matt Doheny and Doug Hoffman basically agree that the nation’s economic policy going forward should look something like this:
The Bush tax cuts for people earning more than $250,000 should remain in place; indeed, both men want even deeper tax cuts, including a permanent end to the inheritance or “death” tax.
At the same time, both men insist that Medicare, Medicaid and Social Security — the basic building blocks of the post-WW2 social safety net — should remain in place in largely the same form as they exist today.
They also believe that the budget for the US military should remain untouched, especially at a time when we’re still entangled in Iraq and Afghanistan.
Those programs represents more than 60% of the Federal budget, and that percentage is certain to increase.
They also talk about boosting support for farmers, who already receive massive taxpayer subsidies.
Add in interest payments on the debt and other mandatory government payments, and you find that both men believe that roughly 80% of the Federal budget should be off-limits.
You can eliminate President Barack Obama’s controversial TARP money, zero out all earmarks, and cut out all “waste, fraud and abuse and that would all add up to only about 5%.
(And really, a significant amount of that money goes to things that aren’t wasteful, including broadband access programs, road and bridge construction, small business loans, etc.)
The problem with the Doheny-Hoffman plan, of course, is that when it comes to our dangerous level of national debt, tax cuts dig almost as big a hole as new spending.
And if you’re not willing to make deep and systemic cuts, it’s hard to see how we can cut taxes even further without bankrupting the country.
Here’s the punchline: We’re already spending roughly $1.2 trillion in borrowed money every year.
That means we’re already spending about a dollar and seventy-five cents for every dollar that we take in.
Yes, that will ease some as the recession ends and more people shift from using government programs to help make ends meet and begin paying taxes on their new paychecks.
And to be sure, tax cuts will stimulate some new economic activity.
But the vast majority of credible economists say that you can’t tax cut your way out of Federal deficits. Former Fed chairman Alan Greenspan told Bloomberg News that the 1980s Reagan-era approach has been discredited.
“They should follow the law and let [the Bush tax cuts] lapse,” Greenspan concluded.
The alternative, of course, is for Republicans to find deep and systemic cuts that first pay for all the red ink that we’re already running up, and then cut a whole lot more to pay for the additional tax cuts that the two Republican candidates propose.
But so far, Doheny and Hoffman haven’t offered a credible plan that accomplishes that.
America trusted the Republicans to get this right once before. From 1994 through 2006, the GOP controlled congress.
For half a decade, beginning in 2000, Republicans controlled all of Washington.
But they actually grew government at the fastest rate in decades, while also instituting major tax cuts. All of it — again, in the words of Greenspan — was done on “borrowed money.”
So this time, if Hoffman and Doheny are serious, they need to provide us with particulars, with details, with some sense of the sacrifices they will be asking us to make.
Are there more tax cuts in store?
Will we have to forgo programs that take care of the poor, the disabled and the elderly?
Will more of those programs be shifted to cash-strapped state and local governments?
Obviously, in this heady conservative-leaning election year, promises of tax cuts and more tax cuts make good politics.
But if one of these men wins in November, they’ll have to begin governing and legislating and passing budgets.
Unless they want to face the whiplash of disappointment and disillusionment the Democrats are facing now, this is the time for straight talk.
Tags: election10
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Do expect substance only grandiose platitudes. Specifics don’t win voters.
In the horse-race world of US politics sweeping statements are what gets votes. A few catch phrases like “fuzzy math” aimed at your opponent can easily disguise your own lack of a realistic plan.
So the ridiculously bloated and wasteful military budget is off limits? These guys are too much….Ignoring over a third of the governments annual expenditures when making cuts is financial lunacy. Odd that an accountant and self-professed expert on saving businesses from bankruptcy would not admit and at least acknowledge this fact. But then again we’re talking about two now want to be politicians pandering for votes. I so long for the day when a politician will be honest with the electorate and actually propose tough choices.
Brian:
“So this time, if Hoffman and Doheny are serious, they need to provide us with particulars”
Too bad you didn’t hold Obama to this standard.
JDM: Way to dodge the issue. Bravo!
We all know Hoffman wasn’t serious, despite his CPA credentials. When asked about proposed state prison closures in the region (why a federal candidate was asked about a state issue is unclear to me) some time ago, his ‘answer’ was that yes prisons should be closed, just not in his backyard. He perfectly exemplifies Tea Party hypocrisy. They support “smaller government” so long as the biggest programs (military and entitlements) are off limits and so long as it doesn’t affect their region. Smaller govt for others, not for them.
This tax cut rhetoric is the worst Red Herring! This is the rich wanting to get even richer. The’03 tax cuts have been in place for 7 years and we have shed MILLIONS of jobs. There is absolutely no defensible corollary that continuing the ’03 tax cuts will create jobs. The private sector is sitting on about 2 trillion dollars in liquid assets. What’s the argument, that when it hits 3 trillion that they will start creating jobs? I would put forth the argument that letting the tax cuts expire will actually create more industrial expansion because reinvestment will be the only way to shelter income from taxes. As it stands right now, if the fed starts raising interest rates, why wouldn’t business take their liquidity and head for the Blackjack tables in lower Manhattan to jack up their unearned income instead of business expansion. The hard cold truth here is that nobody is buying anything because these rich-get-richer policies of the past 30 years have destroyed the middle class in this country. There will be no economic recovery that doesn’t include the middle class, (except for big banks, insurance companies and investment houses, of course).
A couple questions and observations-
1- Who in their right mind listens to Alan Greenspan anymore? This is the man that was all for continuing the practices of the 80’s, 90’s and early part of this century, that borrowing was just dandy. He was wrong then, he’s wrong now.
2- What makes you think the recession is ending?
John, if the Bush tax cuts are allowed to expire the middle and lower classes will be affected. The current $1,000.00 per child tax credit will be cut in half for example. Taxes on small business will increase, jobs will be lost. Further, I can see no corollary between the Bush tax cuts and job losses. The housing bubble bursting had nothing to do with the Bush tax cuts for instance.
I can’t speak for all hate filled, bigoted, Tea Party types, but I’m perfectly willing to see military spending reduced, prisons closed, subsidies reduced or eliminated, etc. I’d prefer to see it occur over a period of years rather than over night, but it has to be done eventually.
Not everyone in the middle class has children and its debatable whether they even deserve it. If you can’t afford kids don’t have them. I know that I don’t like paying for powdered chewing gum.
Bret,
Thanks for the Greenspan comment. Agree wholeheartedly. Wish the guy would have treated Ayn Rand as a novelist and not as an economic philosopher, though I guess he gets points for figuring out, too late, that he was wrong.
Brian Mann,
You, unwittingly I think, show how pervasive and successful conservative media tactics are when you say “inheritance or ‘death’ tax.”
“Death tax” is a propaganda term pushed by GOP pollster Frank Luntz to put a negative spin on what’s actually known as the “estate tax”–a means of taxation on income that wasn’t actually earned, but gotten by virtue of being in the lucky sperm club.
Liberals propagandists have tried to push back with the term “Paris Hilton tax,” to paint a picture of who’s spending that money that could be used to pay down the federal deficit. But for some reason, you don’t hear the term much in the liberal media.
Anyway, if you really want to be fair about it, might be best to either use a more neutral term like estate or inheritance tax, and stop there, or in the interest of equal time, say something like “the inheritance tax, which conservatives call the ‘death tax,’ and which liberals have dubbed the ‘Paris Hilton tax.'”
One last thing, semi-related to this discussion: How’s all that concern about debt working out for Greece right now? http://www.spiegel.de/international/europe/0,1518,712511,00.html
Tax cuts benefit those who pay taxes. (I’m tempted to add duhhh..)
Because we have excluded the bottom 47% of wage earners from paying taxes, the phrase “rich will get richer” has lost its meaning and its punch.
The fact is, that tax cuts can’t affect the poorest Americas because they don’t pay taxes. (I’m tempted to add duhhh…)
Everyone needs to participate in the tax paying. Everyone.
A flat tax is the best way.
If you make $1.00, you pay 10 cents. If you make $1,000,000 you pay $100,000. (I’m using 10% as my model. Most flat tax supporters are somewhat higher).
Flat taxes are, IMO, a terrible idea, for reasons that I’ll pontificate about another time.
But I do absolutely agree that all Americans should pay taxes. Everyone who earns a salary should pay something, beyond social security and beyond unemployment insurance.
That’s part of being in a society where we all contribute — for our military, for our roads, etc.
The rate should be graduated, but it should never, ever reach zero, so long as someone has gainful employment.
Brian, NCPR
I could agree with Brian Mann above but suggest all except standard dependent deductions should be eliminated. This would pave the way for a very simplified tax form, one where by no one would need a tax preparer to do their taxes.
On a related note. This week, Time mag leads with a story questioning the sacred cow of home ownership. I won’t go into details but will point out how the story lists the advantages and disadvantages of home ownership. Owning a home can be a ball and chain that prevents people from moving to or from an area in search of a job.
Brian:
I could be influenced to be agreeable to a graduated tax as opposed to a straight flat tax, with the same caveat, a working person should pay a non-zero amount.
At this point I don’t care if it is flat or graduated, as long as it is simplified.
We all know in our hearts that you cannot run a campaign on promising to make significant cuts to the federal budget and raise taxes. You just will not get elected.
Poor people don’t pay taxes? That’s the conservative bumper sticker line. If you earn wages you pay taxes. I’m tempted to add duhhh.
Flat tax doesn’t mean the poor would pay taxes. Most flat tax proposals have a minimum income based on family size that would not be taxed. Kind of makes sense. Why would you tax someone that is making a poverty level wage?
i’d go pnelba one further and just say duhhhh, of course everyone pays taxes. it is true that, last i saw, 47% of all filers had no federal income tax liability for 2009. but there are lots of other taxes! as pnelba notes, all wage earners pay social security taxes. and then there are state and local taxes. does anyone anywhere think it’s possible to avoid paying sales tax?
PNElba:
Why would you not tax someone who works for their money? They use services like the rest of us. It’s the amount that can be argued.
My point about the 47% untaxed is that under that system, the first person being taxed is, by definition, up at the 47%th level (which is what? about $46,000)
That is where the “rich get richer” bumper sticker comes from. Well, $46,000 ain’t rich, even though there 47% of people making less.
Why should someone making $43,000 not pay anything, and his “richer” counterpart making $46,000 pay something? Not at all fair.
As Brian Mann suggests, graduate the tax on the lower end, but have every worker pay something.
As far as sales tax, that’s where the flat tax comes in. Do away with income tax and make a consumption tax. Everyone pays the same (or graduated amount, I guess)
I am so bored with people whining about their taxes. Today I had a guy who owns a “camp” on Lake George whining about how high his property taxes are. Boo-hoo. Being very wealthy apparently isn’t good enough for him he wants me to pay a higher share of taxes so that he can have lower taxes on his lakefront.
Sometimes I think that we are a nation founded on complaining.
The tax system has been set-up by and for the benefit of the wealthy. The wealthy have the most to lose in this society so they should pay a proportional amount for the benefit they receive of having a political, social, and police/military system that maintains their wealth.
Jdm, I concurr, get rid of income tax. Now, what things do you want sales tax on and what of property tax?
If I am reading this correctly, some think low income people do not pay income tax.
Who says? I make less than $46,000 and pay income taxes. I have paid income taxes for over 40 years and paid taxes back when I made less than $10,000 and have paid income tax every year since I started working when the minimum wage was 50 cents an hour.
Pete Klein:
It could be that you’ve actually “paid” taxes, but at less than $10,000 I doubt you did more than lend the government an interest-free load for 12 months and gotten it back at tax time.
interest-free loan, that is.
Let’s go one step further and make anyone on public assistance (also paying no taxes) take a piss test.
I take one , my employees, take one and we all pay plent of taxes so why not?
And knucklehead I also have a place on LG and yes the taxes are high as the locals gouge the lake people who have no say on who is elected or how the money is spent. Maybe it should be a little more equal as the lake folks pay the most but receive the least as far as services. You really are a believer in redistribution on wealth aren’t you. You want something but want someone else to pay for it. sheeez.
Roady, if you don’t like the taxes sell your camp. The greatest value of property is on the lake therefore the most tax money comes from property on the lake.
I didn’t say anything about redistribution of wealth, don’t try to change the subject. Nor did I say I wanted anything except for you to shut up about your high taxes. I have been saying for years, decades, that property tax is an unfair way to pay for schools and local governments, but if I suggest you should pay more in income tax instead you’re going to complain about that.
I don’t want to hear it.
As most know I am very opposed to any income tax at any level, property tax, fine, provided if the taxing entity taxes the parcel at a certain value than the entity must buy it if the owner wants to sell it. I believe most people would not sell their property for the “true” assessed value.
Oh, one more thing, regarding property tax, no exceptions from full tax value.
While we’re on Taxes, Why is it that a single person with no kids takes home a smaller paycheck than their coworkers every week, and then come tax season gets hit again by a much smaller return if any ??
Why do I owe you and your kids money ? I don’t mind paying school taxes, because we need good ones, and I don’t mind paying land taxes either, but why do I have to pay more income tax than the people who are the ones who use the public services the most ??
Knuck said “The tax system has been set-up by and for the benefit of the wealthy. The wealthy have the most to lose in this society so they should pay a proportional amount for the benefit they receive of having a political, social, and police/military system that maintains their wealth.”
Sorry friend, but this makes little sense. The tax system has been set up for the benefit of politicians. The property tax system is not a good system as currently established, on that we can agree. And I’d agree with Betty on the income tax. What I don’t see is people recognizing that we SPEND too much. It is my belief that in most cases the wants of the agency or institution are outlined and the tax rate adjusted to fit the cost. I would prefer to see the various agencies, institutions, municipalities, etc. work within the ability of the residents in the tax base to pay.
A few people in the past couple days have said, “If you don’t want to pay property taxes then sell your land”. Think about that. Some of the people saying that are the same folks screaming about the “wealthy” and “big oil” and “Wall St”. So if Joe Sixpack can’t swing his taxes on the home and lands he put a lot of work and money into improving…who buys it? Who pays the taxes on it? If it’s in the Park the State might buy it and then the tax rate has to go up to pay the taxes. Talk about a idiotic idea! Or maybe someone else buy s the land, of course that means a reassessment and the chance all other similar properties will see an increased value. And then there’s the question of just where does Joe and his family go to live? What if Joe made his living off the land? Where is his livelihood coming from now? There are only so many jobs at Walmart available.
We have to stop raising taxes at every turn. We have to start showing some forethought and discipline. There is no logical, ethical or common sense reason I can think of that gov’t should be run any different than any other household or business. But we’ve let them do it for decades. It simply has to stop. Even in the periods we’re flush, that’s no excuse for spending like a drunken sailor and creating entitlements that we won’t be able to pay for.
To me this is just simple economics and logic.
Good point, Brett. And as you said we’ve let government spend beyond its means for decades. It’s directly related to the two politicians at the heart of this thread. As I stated in my earlier post, how can we ignore the military budget if we’re to be honest about cutting spending and getting our house in order? It’s absolutely dishonest, and frankly, insulting, to ignore the well over trillion dollars a year we spend on “Defense” (if you include the non-Pentagon money in the overall budget). And so here we go again. We’re allowing these two to lie and ignore the fiscal facts. They’re doing the same thing with Medicare and Social Security. Ignoring the looming bankruptcy in those programs as well.
There is not looming bankruptcy in Social Security. If they do nothing, at all, it’s sound until 2037.
Most of this “reform” and “crisis” talk about SS is a scam to let the malefactors of great wealth get hold of a last untapped source of money to raid.
I’d prefer to vote on all budgets directly(Instead of just school budgets).
OA, If I recall correctly the Social CSecurity funds started getting raided under LBJ and have been since then. There is no “untapped” fund available.
When we look at taxes we have to look at the whole picture. The federal income tax is only one part of the tax picture for most Americans.
For example he Social Security tax is something paid by all Americans regardless of income. In fact it is a regressive tax in that those who make high incomes have a marginal tax rate of Zero with this tax.
Property taxes and sales taxes are also not means tested, if you own property you pay, if you buy things you pay, once again this from a rate perspective would hurt the low income more as they spend more of their income on things that they consume.
But no these economic plans of these two once again make no sense.
You have to cut defense, social security, Medicare and Medicaid before you are serious about cutting spending.
In fact in my mind the items not included in that 70% of federal spending above, roads, bridges, public transportation, food stamps, TANF is things that the government does that are actually productive.
JDM, please provide us with the name and address of your accountants. We need to know immediately how someone who makes $46,000 a year gets a 100% refund on their income taxes. I make less than that and I do not get a 100% refund. So please, help us all out here.
As best I can determine, a single person who makes a taxable income of $8375 in 2010, pays 10% in Federal income taxes.
PNElba:
Can you say, “standard deduction”?
Mervel, you missed an important part in your last post. Only WORKING Americans being paid above the table pay SS taxes. With actual unemployment figures being some place between 18 and 28% (depends on who you want to believe) that’s not all Americans by any stretch.
I agree the cap on SS makes little sense. And means testing might be necessary. The down side to that is who determines the threshold?
I stand corrected yes only working Americans pay Social Security.
But don’t you think Bret that for any real progress on the debt we HAVE to talk about cutting the big three, defense, social security, medicare-medicaid?
Defense, yes. That can be done, but cutting defense will add tot he unemployment numbers. Medicare/Medicaid, oh yeah, that has to be done. I’d like to see it done smartly, not just with a bomb but with a scalpel. A lot of the costs are reported to be no more than fraud or doctors covering their backsides. A good portion is people taking advantage of “free healthcare”. We need to establish some rules that discourage that type of thing.
Social Security- the answer there is increased employment, means testing, probably a raised age limit and and end to the gov’t using the funds for other things. We also need to get rid of the idea (and this does exist, lets be honest) that people can retire of Social Security. I personally see no issue with an individual investing 3-5% of their SS funds in the market- as long as they accept the responsibility.
The larger problem is overspending. Yeah, we can cut the big 3 but we have to do more. I’m coming to the conclusion we may have to establish some protectionist policies. I hate the idea but we’ve bent over so far the opposite way that we’ve hamstrung ourselves. We simply HAVE to encourage business to stay here. If that means cutting taxes for business- do it. If it means moderating union demands for higher wages/benefits…I hate to say it but we may have t look at that. We’re cutting our own throats every single day. Now somethings we can’t get out of, we’ve made agreements we have to live up too. You can’t pull Social Security and Medicare out from under the elderly, that’s simply cruel. You can’t just simply establish “free health care” for everyone either. And you can’t just add taxes to the people paying all the taxes now. You can’t get blood from a stone.
Locally I think it’s time the non-paying crowd started paying. The time for a land use permit for public lands is here. Trappers, Fishermen, hunters, power boaters, snowmobilers and ATVers pay, it’s time rafters, canoeists, kayakers, hikers etc contributed. The idea of tax exempt property has come to and end. Think of the additional revenue St Lawrence County would get if our colleges, universities, religious organizations and public authorities (OBPA) started paying their fair share.
There have to be other ideas out there too.
Hey knucklehead you just dont get it do ya?
Tell me property taxes aren’t redistribution of wealth? I use no more services than those off the lake a whole lot less services. Why do I pay more and have no say?