Senate rejects Obama-backed deficit taskforce

[Sisyphus]

http://cbs2chicago.com/business/obama.deficit.task.2.1449286.html

 

Obama and moderate Democrats tried to get an amendment onto the recent bill expanding the U.S. government's borrowing limit that would establish a bipartisan taskforce to reduce the deficit by curbing spending and tax breaks. It failed. It got 53 votes (36 Democrats, 16 Republicans, and 1 independent), but needed 60. It was killed by AARP lobbyists (the fear being that social security and medicare would be reduced) and "anti-tax" (though apparently not anti-deficit) advocates.

 

This isn't really surprising, as the default instinct of both parties is to increase spending and cut taxes, and attempts to curb the deficit go against both instincts. But, um, we still need to do it.

 

Obama is expected to create a "weaker version" of the taskforce by presidential order, but what that actually means isn't clear yet.

 

So, is there any hope whatsoever that we can pay off our debts?

[npts2020]

The argument I like best is that reduced taxes lead to more revenue. Does that mean if we reduce taxes to zero we will have infinite revenue?

[bascule]

http://www.boston.com/news/nation/washington/articles/2010/01/27/senate_rejects_deficit_task_force/

 

But the measure won just 53 votes in the Senate, not enough to overcome a threatened filibuster. In rejecting the idea, Republicans opposed to tax increases joined Democrats fearful of being forced to cut social programs.

 

[...]

 

“These numbers are just staggering, and it appears that the sky is the limit for this tax-spend-and-borrow Democratic majority,’’ said Senator Judd Gregg, a Republican from New Hampshire and a cosponsor of the commission proposal with Kent Conrad, Democrat of North Dakota.

 

Republicans inherit a budget surplus. Republicans turn it into the worst budget deficit in the history of planet earth. Republicans threaten to filibuster Democratic attempts to address the problem. Then Republicans blame the Democrats for the problem.

 

[john5746]

The argument I like best is that reduced taxes lead to more revenue. Does that mean if we reduce taxes to zero we will have infinite revenue?

 

Yes, but only for wealthy people. They will take that money and put it to good use - like getting poor people to pour their drinks or get another face lift. Poor people will only spend it on food, which doesn't really fuel growth.

[bascule]

The argument I like best is that reduced taxes lead to more revenue. Does that mean if we reduce taxes to zero we will have infinite revenue?

 

This argument is called the Laffer curve, and implies a linear relationship between tax rate and tax revenue:

 

 

Unfortunately that's just not how it works in reality:

 

[Pangloss]

There will be a panel because the President will simply order one (see article below). The purpose of the request to the Senate was to get them on board with the plan so as to ensure an up-or-down vote on its recommendations by the end of the year.

 

Unfortunately the panel will consist of members of Congress, so its recommendation will be to raise taxes, not to curb spending. We don't have the kind of government that knows how to spend what it takes in. We have the kind of government that reacts to public suffering and complaints, increases spending to address those issues, and then discoverers that its checks are bouncing (and increases spending again).

 

http://www.boston.com/news/nation/washington/articles/2010/01/27/senate_rejects_deficit_task_force/

[padren]

Republicans inherit a budget surplus. Republicans turn it into the worst budget deficit in the history of planet earth. Republicans threaten to filibuster Democratic attempts to address the problem. Then Republicans blame the Democrats for the problem.

 

Maybe you can help me figure this out - but why is the threat of a Filibuster worth cringing from for the Democrats? Strom Thurmond holds the record at 24 hours and 37 minutes over the Civil Rights Act, so why can't Democrats just force the issue? If the Republicans want the bad press of breaking the nation's Filibuster Record over something as benign as a deficit taskforce they can have it.

 

As it stands, it's like the Democrats found a drowning baby, but won't pull it out of the water because "the Republicans are threatening to drown it if they do."

[bob000555]

This argument is called the Laffer curve, and implies a linear relationship between tax rate and tax revenue:

 

 

Unfortunately that's just not how it works in reality:

 

 

I’m not a big fan of the Laffer curve either but I have to say in the interests of intellectual honesty that your argument is less then perfect.

 

Proponents of the Laffer curve don’t argue that the same tax rate leads to optimal revenues for all counties, they simply state that there is an optimal tax rate and that taxing more then or less then this rate yields diminishing returns. They argue that if all other variable were kept the same then decreasing tax rates could increase revenues.

 

Pointing out that the Laffer curve doesn’t work when variables besides tax rate could be at play is a bit like “disproving” Boyle’s law by showing that volume and pressure are not inversely proportional but doing it by not keeping temperature constant.

[SH3RL0CK]

Maybe you can help me figure this out - but why is the threat of a Filibuster worth cringing from for the Democrats? Strom Thurmond holds the record at 24 hours and 37 minutes over the Civil Rights Act, so why can't Democrats just force the issue? If the Republicans want the bad press of breaking the nation's Filibuster Record over something as benign as a deficit taskforce they can have it.

 

As it stands, it's like the Democrats found a drowning baby, but won't pull it out of the water because "the Republicans are threatening to drown it if they do."

 

In this case it is because neither the Democrats nor Republicans want to curb spending. They are both addicted to it. The Democrats, however, can't openly oppose their President. The Republicans can openly oppose a Democratic President. So the Democrats will let the Republicans threaten a filibuster then say "oh, well we can't stop them so I guess we just have to not have a panel limiting our spending. The Republicans gave us no choice "

[Pangloss]

You know, raising taxes to balance the budget without doing something about profligate spending makes exactly as much sense as offering an amnesty program without securing the border.

[The Bear's Key]

You know, raising taxes to balance the budget without doing something about profligate spending makes exactly as much sense as offering an amnesty program without securing the border.

Isn't the purpose of balancing one's budget to reduce profligate spending?

 

Other things around us don't make sense. For example, When people have leaky roofs or some other house problem, they let it go, until the repair bill ends up far higher than it would've had the problem been addressed way earlier -- for what often results is a dominoes effect of problems, beginning from the source which ends up damaging other unrelated areas.

 

The same with cars/vehicles. Not fixing the brakes when they first squeak is way more expensive down the line. Not giving a vehicle basic maintenace will likely cost you lots more. Ignoring the need for repair does harm to other parts.

 

Sometimes it takes money to actually save in the long run.

 

The "don't spend" people remind me of those (neglectful) house owners, and likely part of the reason we're in our current mess. Years of putting off repairs and maintenance to the system/infrastructure.

Edited January 30, 2010 by The Bear's Key
spelling error

[bascule]

You know, raising taxes to balance the budget without doing something about profligate spending makes exactly as much sense as offering an amnesty program without securing the border.

 

What about letting the Bush tax cuts expire? They were one of the things that lead to soaring deficits in the first place.

---

Merged post follows:

Consecutive posts merged

I’m not a big fan of the Laffer curve either but I have to say in the interests of intellectual honesty that your argument is less then perfect.

 

All I'm really arguing is that the relationship between tax rate and tax revenue is not demonstrably linear.

[Sisyphus]

You know, raising taxes to balance the budget without doing something about profligate spending

 

Whose plan is that?

[Pangloss]

You know' date=' raising taxes to balance the budget without doing something about profligate spending[/quote']

 

Whose plan is that?

 

That appears to be the plan of the current government, Sisyphus. It does not balance the budget. It increases spending.

 

 

Isn't the purpose of balancing one's budget to reduce profligate spending?

 

One would think so.

 

Other things around us don't make sense. For example, When people have leaky roofs or some other house problem, they let it go, until the repair bill ends up far higher than it would've had the problem been addressed way earlier -- for what often results is a dominoes effect of problems, beginning from the source which ends up damaging other unrelated areas.

 

The same with cars/vehicles. Not fixing the brakes when they first squeak is way more expensive down the line. Not giving a vehicle basic maintenace will likely cost you lots more. Ignoring the need for repair does harm to other parts.

 

Sometimes it takes money to actually save in the long run.

 

The "don't spend" people remind me of those (neglectful) house owners, and likely part of the reason we're in our current mess. Years of putting off repairs and maintenance to the system/infrastructure.

 

An excellent metaphor and I agree. Of course I don't think you're suggesting that exorbitant/unnecessary amounts be spent, just enough to get the job done, right? By the same token, not everyone who disagrees with you about cutting spending is a "don't spend" person. Most of us in the middle just want to see a little more sanity and a lot less special interest influence involved in the process.

 

I'm all for spending money on infrastructure, education, and managing the economy. I'm no contract-law-only libertarian, that's for sure. But spending hundreds of billions of dollars on questionable-value "employment" programs that favor labor unions and other special interests is not wise budget-balancing action. It's politics as usual. And I'd raise the same complaint if it were Republicans favoring religious groups and their special interests.

 

IMO, the days of the notion that one ideological orientation (or political party) is going to save us from the excesses of their opponents need to end.

 

 

What about letting the Bush tax cuts expire? They were one of the things that lead to soaring deficits in the first place.

 

I'd vote for that if it were combined with a corresponding spending decrease. I'd roll back defense, seek legislation to revamp entitlement spending (massively decreasing it and ending, for example, the prescription drug benefit), and limit massive emergency expenditures to a percentage of GDP and require them to be accompanied by a financial plan. I would also pass a law saying that no president can send more than 500 troops (cumulative) onto foreign soil without a declaration of war from Congress, and I would require the government to seek approval from the entire people via referendum at each subsequent national election if any foreign war continues for that long. Lose the referendum, poof, war ends.

 

And I'd probably veto most other legislation that came across my desk. And of course I'd be impeached in a week.

[bascule]

Rumor has it Obama intends to push through this task force via executive order... and the Republicans jeer, shortly after whining about the deficit and run away government spending

 

http://www.reuters.com/article/idUSTRE60J5RU20100120

 

"It's a nothing-burger," said Republican Senator Judd Gregg, even though he has proposed a similar measure.

 

Keep it classy, Republicans