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January 26, 2010

Want to reduce the deficit, Mr. Obama? Raise taxes

It's been said many times, but it bears repeating many times. The non-defense, non-discretionary parts of the U.S. budget are very small. President Obama's pledge to freeze domestic spending for the remainder of his presidency is a signal that he's concerned about the deficit, not an indication he plans to do much about it. As AP reports, the president plans to announce a freeze on $477 billion in domestic spending.

But the budget is $3.5 trillion. So the freeze, while it will put pressure on health care, education, transportation and law enforcement programs, will do almost nothing to reduce the deficit. It would save $10 or $15 billion a year, an official told AP -- like 1 percent of last year's deficit of $1.4 trillion. Obama can't cut defense very easily -- he just escalated the war in Afghanistan. What's left are entitlement programs such as Medicare that Americans -- including the tea partiers -- love.

The only way to attack the deficit is to do what responsible politicians such as Ronald Reagan, George H.W. Bush and Bill Clinton did: raise taxes. But Obama has two problems. He can't raise taxes now: We're still in a terrible economic slump. And he has pledged not to raise taxes on the middle class, which narrows his options considerably.


Posted by Jay Hancock at 8:58 AM | | Comments (27)
Categories: Government & Business
        

Comments

No thanks, how about instead

1. Pull all troops from the middle east and let them battle amongst themselves for a decade or two than we can just overpower who ever is left.

2. Don't give money to Haiti or any other countries ever under any circumstances

3. Stop giving money away to anyone who buys and house or a car

4. Kick every illegel non-tax paying Mexican out of the country give their jobs to tax-paying americans.

I think those are 4 good places to start

Typical left wing nut mentality!! Raise taxes, of course. How about cutting wasteful programs such as welfare, the epa, food stamps, and payoffs to his cronies?

Raise taxes? How about slowly phasing out the entitlement programs in this country that do nothing but grow poverty... Every time the budget comes up the entitlement programs are free from cuts, in fact the majority of time they take more funding. This system will fail when we have more recipients and not enough providers. Taxing the providers to pay for a tax snowball will do very little to prevent complete collapse of the system.

Raise the taxes on the rich!

1. Pull all troops from the Middle East and everywhere else (yes, even Haiti.) People have the right to self determination.

2. Don't give money to dictators such as those in Egypt and Jordan (to name a few) and stop giving money to the number two terrorist country in the world - Israel (USA is number one).

3. Stop giving money away to the banks is a good start. People with a car and a home aren't the problem.

4. Full citizenship to all the hard working Mexicans who are provide shit load of cheap labor to make this country rich. O, and even "illegals" pay taxes and when the last time you heard of an "illegal" file their taxes and get a tax return?

i think that is a good start to counter richard idiotic comment.

"All comments must be approved by the blog author."

...and the only comment is from some redneck calling himself "drunk richard".

This white trash's solution is to ignore the Haitian crises and blame the Mexican workers doing the jobs lazy Americans refuse to do?

Stay drunk, Richard. It's the only excuse for being so simple-minded as to think "Pull all troops from the middle east and let them battle amongst themselves for a decade or two than we can just overpower who ever is left" is even a possibility.

What a miserable, uneducated excuse for a human being. No wonder America is quickly slipping into a shadow of it's former self...filled with morons like this.

Tax individuals who make more than $250,000. Everyone I know who makes that much can afford to help the rest of us out!

Your blog states the obvious, but simple facts are discarded (see followup comments) for what is emotionally satisfying to believe. We have become a nation where political decisions are based on a political form of religious belief rather than on critical thinking. This certainly is a dangerous progression for this country.

The USA is not a terorist country...we do not plant bombs in hotels...we do not plant bombs in cars in market squares...we do not incarcerate people for what they say or believe...we do incarcerate people who take the law in their own hands...Dear Richard is an idiot..if Richard is an idiot...you are a MORONIC SLOB.

Raise taxes on the top 1% back to JFK levels.... Until the middle and working classes' wages start raising with productivity increases... retroactive until 1980.

Once that happens, lower the top 1% taxes to Clinton levels. That level seemed to have the best balance between low taxation and fiscal solvency.


Ah yes, look at the URL on "Posted by: Richard is an idiot". www.socialistworker.org.

This firms my resolve against people like you even further. Here is a new flash for you sir, the rich actually create wealth and jobs. The government is but a liability we are all stuck paying for. Before you start pointing the fingers at the "rich" try looking at all of the multi-millioniare politicans. How exactly does a politican that makes $200k a year come out of politics with $10-30 million. You want to talk about waste, lets talk about the 21 million that was spent to create 3,000 jobs that lasted 6 weeks all thanks to the stimulus. DO THE MATH, the government has done far more harm than any Bernie Madoff could ever hope to achieve. The sad thing is people are sheep and large debt is means for more government control in their eyes...

Very sad little world these people live in.

However, don't worry, one way or another we will take back this country, and finally put an end to the failures of FDR's experiment on America. Our founding fathers would be proud of Americans like me, because I am not loyal to a person or any government. I am loyal to the founding principles that made this country great.

Reagan's historic Tax Reform Act of 1986 imposed the largest corporate tax increase in history–an act utterly unimaginable for any conservative to support today. Just two years after declaring, "there is no justification" for taxing corporate income, Reagan raised corporate taxes by $120 billion over five years and closed corporate tax loopholes worth about $300 billion over that same period.

Here's a sober idea. No spending freeze and no higher taxes. How about we reduce the size of the white elephant known as the federal government and the ever increasing socalist state the US is becoming? The biggest of the pork barrell spending projects known as 'the war on terror'? Where else do they consider making us safer by knocking down ''the wall'' between the CIA and FBI yet making the room their in so big they need more money for a transportation system just to get to the other side?

The spending freeze is really a joke considering the Health Care Reform equals a tax increase anyway. They will find a way to rope-a-dope it and nickle and dime us without calling it a ''Tax'' despite this spending freeze.


They can't raise taxes, they can't cut them. Let's face it a spending freeze is a face saver because they don't want to do what they really should -- cut programs and departments.

guns to the left of me, butter to the right
here I am... stuck in the middle with you

Tax individuals who make more than $250,000. Everyone I know who makes that much can afford to help the rest of us out!

Posted by: marie | January 26, 2010 9:52 AM

-----

Since when do you decide who's labor is distributed? Do you think these "fat cats" just sit around and roll in money all day? The majority of them started with very little and grew their investments through hard work and long hours. Hard work, determination and sometimes failure are what make this country the greatest. Face the facts.. there will also be a class system; rich, middle-class and poor. Once you understand this you can move on with your life and try to climb the ladder. Entitlements are what destroy societies, and we are deep in the welfare state mentality these days.

We need to raise social security payments! I worked for 30 years and contributed a whopping 2% of my taxes towards social security and medicare and I demand higher payments, even though people now pay roughly 15% with personal and employer payments factored in. I paid in 15,000 in total and I only collect 17,000 per year! I want more!

As an AARP member, I will do my best to demand higher payments even though I didn't pay in much.

I really don't give a crap that I will bankrupt this country. I didn't save other money for retirement so I demand that politicians raise my entitlements!

The AARP will do whatever possible to elect politicians that bend to our will! Tax the rich, tax everyone, and appeal to the bleeding heart populists.

Let's keep talking about 100 billion dollars a year when we take 1.5 trillion out of the system. Confuse the issue and make us old people look like bumbling idiots that are incapable of contributing to the economy.

I've got to golf and watch Oprah.

This will be my last time reading your blog. Calling for tax increases during a recession shows you know nothing about economics. Where exactly were you educated in finance? Wikipedia? An online university?

Instead of raising taxes, how about cutting the spending?

1) Reform welfare
2) Bring the troops home from Iraq
3) Audit defense spending
4) Audit the Federal Reserve

The above blogs prove my assertion that Americans profess emotionally held beliefs as if they are rational arguments. Perhaps we have lost our capability to analyze, weight options and come to a consensus about what is best for the country. How can we possibly compete in this interconnected world?

It's good that the the person to be president is not plucked at random from a telephone book.

You can also take from those stats that no serious budget balancing discussion is intellectually honest without discussing defense spending and entitlement cuts.

For entitlements we are facing a demographics pyramid of a narrowing base of contributors and an expanding top of recipients. Hilarious sarcasm by the AARP poster that is so funny because it is so spot on.

For defense, the US spends about 10 times the #2 defense spender, about twice the combined total of the #2-11 spenders, and almost as much as the entire world combined.

There's a laundry list of other ideas but combined they won't close the deficit if entitlements and defense remain sacred cows.

The real interesting question is what's going to happen to the deficit and what kind of policies will be pursued in the coming years given that the average maturity of the debt is 3 years and over 50% of the debt's maturity is <1 year. functionally it's a giant adjustable rate mortgage.

If taxes are raised in a progressive manner, that is, a greater portion of the increase falls on upper bracket taxpayers, the tax increase can actually have a stimulative economic effect.

In order to produce economic stimulus, the goal is to increase aggregate demand. Higher bracket taxpayers tend to save more of their money, thus counteracting any stimulative effect. This is one reason that the first Obama stimulus was blunted: Too much of the stimulus came in the form of tax cuts.

Conversely, cutting basic federal services will reduce demand, meaning that the effect of the economic stimulus put into place last February will be diminished.

I agree that a cut-back in services is not a good economic move given the 10% unemployment rate that we currently have.

Go for the whole package - raise taxes AND cut programs. The sooner we expunge our deficit, the better off we'll all be, and that's the best way to accomplish it. Too bad our political "leaders" are too gutless to do it (witness today's Senate vote on creation of a deficit commission - conservatives voted against it because a commission might recommend a tax increase, and liberals voted against it because the commission might advocate cuts to social programs). I repeat: GUTLESS!

Go for the whole package - raise taxes AND cut programs. The sooner we expunge our deficit, the better off we'll all be, and that's the best way to accomplish it. Too bad our political "leaders" are too gutless to do it (witness today's Senate vote on creation of a deficit commission - conservatives voted against it because a commission might recommend a tax increase, and liberals voted against it because the commission might advocate cuts to social programs). I repeat: GUTLESS!

Jay, remember that health care plan that was actually going to cost us less over time? Part of the plan was to cut billions of fraud that permeates the thing. Well, the plan may die a slow death but that does not mean we can't get the fraud out with a savings of billions. You know, I read in an AARP magazine that some state down south was going to receive $300 million to expand a WWII museum. Do you think a pork expense like that is really justified. Raise taxes, my *ss, stop this ungodly spending, spending and spending.

Absent the ability of the vast majority of the population to work and care for his own needs no amount of taxation will improve society's standard of living.

Jay,

I think you already know that the Bush Tax Cuts are set to expire next year - so taxes are already going up.

Next year 1.5 baby boomers will turn 65 and will start tapping SS and Medicare. If you think we have a problem now, it only gets worse from here.

Politicians cannot make the tough decisions to reduce spending and raise taxes to rein this in. Soon, the party will be over for all of us - the liberals and conservatives among us. All I can say is pray.

The Center for Media Research has released a study by Vertical Response that shows just where many of these ‘Main Street’ players are going with their online dollars. The big winners: e-mail and social media. With only 3.8% of small business folks NOT planning on using e-mail marketing and with social media carrying the perception of being free (which they so rudely discover it is far from free) this should make some in the banner and search crowd a little wary.

www.onlineuniversalwork.com

Typical left wing nut mentality!! Raise taxes, of course. How about cutting wasteful programs such as welfare, the epa, food stamps, and payoffs to his cronies?

Posted by: GauisCaesar
----------------------------------------
Hey idiot, as his post states, Georgie Sr. and Republicans favorite Ronald Reagan "Raised Taxes"... Doesn't sound Left Wing to me.

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About Jay Hancock
Jay Hancock has been a financial columnist for The Baltimore Sun since 2001. He has also been The Baltimore Sun's diplomatic correspondent in Washington and its chief economics writer. Before moving to Baltimore in 1994 he worked for The Virginian-Pilot of Norfolk and The Daily Press of Newport News.

His columns appear Tuesdays and Sundays.
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