Skip to comments.Say Yes to the Mess
Posted on 01/01/2013 10:45:19 AM PST by indianrightwinger
Say Yes to the Mess 12:15 PM, JAN 1, 2013 BY WILLIAM KRISTOL
The fiscal cliff deal that the Senate passed early this morning is ridiculous in too many ways to count. There seem to be no figures from the Congressional Budget Office and only "very preliminary" figures from the Joint Tax Committee about the real spending and revenue implications. The two month delay of the sequester will make actual governance even more difficult (how is the Pentagon supposed to plan for the rest of the year?). The sequester delay is funded by a gimmick with retirement savings tax rules that is a caricature of what has become of Washington legislation and policy making. Working Americans making less than $400,000 will be shocked when they find that, contrary to promises from both parties, their taxes are in fact going up (the payroll tax). And we will face another cliff when we hit the debt ceiling and the sequester again in two months.
The deal is a sad commentary on our politics today.
On the other hand, the deal is substantively better than going over the cliff and having all income and investment taxes go up, and having the defense sequester hit right away. And politically, Republicans are escaping with a better outcome than they might have expected, and President Obama has gotten relatively little at his moment of greatest strength.
(Excerpt) Read more at weeklystandard.com ...
Bill Kristol is part of the problem. No testicles.
“The payroll tax is a fixed percentage of an employees pay. Allowing the tax cut to expire will increase taxes on wages and salaries by 2 percent for every American worker. Up to $110,100 a year in pay is subject to the tax.
Because of the expiration of the payroll-tax cut, a worker earning $50,000, for instance, would pay $1,000 more in taxes next year.”
Quotes from link below: End of payroll-tax break will end era of tax cuts...
No brains either, just a massive ego that needs to be stroked by liberals.
The “deal” has nothing to do with anything except Obama keeping his promise to his base that he will make the rich pay more (fair share as he calls it).
The T.S.A. disclosed the Airport Screening Results
November 2012 Statistics On Airport Screening From The Department Of Homeland Security:
Terrorists Discovered 0
Hemorrhoid Cases 3,172
Enlarged Prostates 8,249
Breast Implants 59,350
Natural Blondes 3
It was also discovered that 535 members of Congress had no balls.
Let’s just call em Republicaves.
They damn sure aren’t conservatives.
Bill Kristol. The shrewd, esteemed pundit who ably predicted that the Democracy Movement would be a smashing success, and that Conservatives were simply paranoid about the Muslim Brotherhood in Egypt. We should really listen to him more...
I'm still not buying your dreck.
Until and unless Social Security is dramatically reformed, we are better to pay the extra 2 percentage points. If the government had any sense, they wouldn't have cut payroll taxes in the first place.
All this tax cut did was to put Social Security in an even more precarious position. It was touted as a way to spur economic growth but it couldn't and didn't.
Only cuts to capital gains taxes and income tax marginal rates can spur the economy.
Your points are well taken. Unfortunately, with the weak economy, any decreases in disposable income will hurt the economy by reducing consumption. And, the political reality is that there is no SS trust fund and there is no trust that our government would use the new taxes to improve the precarious position of SS. The money will be squandered as it usually is.
Consumption does not drive the economy. That is a fallacy that has been rammed down our throats since the Great Depression. Investment creates economic growth -- not consumption.
Humans are born consumers. There will never be a shortage of consumption as long as people are able to work to earn the means to consume. Our problem now is not one of consumption -- it is one of production.
The labor force has decreased by millions. Those millions are spending less. Provide them with the opportunity to work and their consumption will increase.
But to do that, it is production that must be encouraged. Production is not encouraged by a lousy 2 percentage point drop in the employee's contribution to Social Security. The entrepreneur doesn't give a crap about that.
More consumption does not encourage more investment in production when the government is threatening to tax and regulate the hell out of business. The 19th century British economist, John Stuart Mill put it this way:
What supports and employs productive labor, is the capital expended in setting it to work, and not the demand of purchasers for the produce of the labour when completed. Demand for commodities is not demand for labour.
Mill was explaining that the decision to consume and the decision to invest are two separate processes. As I said, humans will always consume all they can. Entrepreneurs, however, will not invest in expanding production if all they can see is a government hell-bent on taxing the crap out of the profits which would result.
It's for this reason that I think the Social Security tax cut was economic foolishness.
There was no “payroll tax cut”. There was a temporary suspension of 2% of the payroll tax, as a form of stimulus payment.
That tax cut was unsustainable. We are already not collecting enough SS tax to pay for the SS benefits, and stealing 2% of the SS tax money just made things worse.
The resumption of the full SS payroll tax should be one thing all conservative can agree on — if there is going to be a social security, and we aren’t able to get rid of it, it should be paid for. And the SS tax is one of the few taxes in our country that is actually evenly applied to everybody.
We need everybody paying taxes. We don’t need to play games with the payroll taxes.
I don’t see why the House cannot just amend the Senate bill, kick it over to Reid and McConnell, and say “Let’s form a conference committee, and come up with something.”
Hell, that is how it used to be done.
Actually, even if you did believe consumption drives the economy, the SS tax cut was worthless.
If you want people to spend extra money, you have to convince them that they have “free money”. For example, you send them a refund check — it is their money, but they think it is a gift. Or, you give them a big stimulus check.
The SS tax cut was like $4 or $8 a week, that appeared in a paycheck that they may not have even known the value of down to the dollar. They put that check in their checking account, and it was lost. That $4 was in the noise — less than the variations in the interest that they pay on their credit cards, and which itself gives more “consumption power”.
We are already not collecting enough SS tax to pay for the SS benefits, and stealing 2% of the SS tax money just made things worse.
You have more faith in Washington than I about how the SS tax monies will be used. Congress has been stealing SS tax money for decades. Give them more, they will spend more.
"The labor force has decreased by millions. Those millions are spending less. Provide them with the opportunity to work and their consumption will increase."
You seem to be countering your own argument. You're saying work generates income leading to consumption, but taxes on that work decrease income which decreases one's ability to consume.
You completely missed my point. Probably my crappy writing. My simple point is that, contrary to current economic fads, consumption does not drive the economy. Production does.
Claiming to spur economic growth with a paltry 2% drop in payroll taxes is economic sophistry.
P.S.: I will miss the 2% payroll tax break. That said, the economic facts still stand.