Dan Crawford | July 9, 2010 4:01 pm
While driving this morning I heard on the radio that the effect of the Bush tax cuts (total of 2001 and 2003 cuts, I assume) in the current (or perhaps previous) year as follows: the resulting tax reduction on the top 10% was greater than the total earnings of the bottom 90%.
I cannot verify this as fact or not, and haven’t been able to construct a google search that takes me to any relevant information.
Anybody gotta clue?
JzB, you might try here: http://www.taxfoundation.org/news/show/323.html
It’s a little hard to decipher, but I come up with 47% cut for the top 10% in 2004. I coule very well be wrong, so take a look and see what you come up with.
Thanks. Meanwhile I came up with this.
Table 1 at this link breaks out GAI, and taxes pd for various percentile cuts, but doesn’t go below 50th. This is based on all 2007 returns with positive AGI.
What I’ve been able to glean is that the 90/10 cut I thought I heard can’t possibly be right.
More likely, it’s in the range of bottom 10 to 25%. From a first look at the numbers, Bush tax breaks for the top 10% could easily be in the range of total income up to the Xth percentile, where X is somewhere between 10 and 25.
But without data cuts below 50%, and the magnitude of tax reduction for top 10% nailed down, I’m guessing here.
A very thoughtful piece. http://www.huffingtonpost.com/william-j-astore/hope-and-change-fade-but_b_640026.html He did miss the point about a few making a lot of money and other economic aspects but he is touching on the psychological issues. Why the US reverts to militarism……… “If you have a nuke and you spent spo much getting it. Then every issue gets nuked.” And exceptionalism!
Since 2001, a series of tax cuts has slashed federal revenues by more than $2.2 trillion over ten years ….
How come the talking heads are not discussing the fallacy of most of the data they used to debunk climate change now that it is documented?
How come no discussion of the hottest period on record in the northeast.
Is there a study or model of the consequenses if there had not been a bailout?
Another tidbit on who pays taxes at the fed level
So simple – in Canada, no health care costs for employers. Voila! One million jobs per month.
We really are that stupid, aren’t we?
Those commies also regulate their financial institutions.
ILSM said: “How come no discussion of the hottest period on record in the northeast.” Answer: because it’s just weather, not climate. It’s also setting records for cold in many places of the world. It’s still weather.
What are you talking about here: “How come the talking heads are not discussing the fallacy of most of the data they used to debunk climate change now that it is documented? “
ILSM, the reference to your HuffPo article on Climate Change gets the same answer. Its just weather!
What is different is that skeptics have noted that there were few references to climate change. That is a positive effect of Climate gate.
Are you saying Canada is creating 12 million jobs this year? There are only 33 million people in the entie country.
“no health care costs”
And the Easter Bunny pays the taxes to fund the health care system? No cost to employers?
The few examples used to debunk climate change were not in context and the context is what matters………….
If the US had the same rate of growth it would have made 1,090,000 US jobs is what I believe the million is meant to say.
The US being about 13 times larger.
Canada 1.1% GDP or 8% of federal spending on their war machine.
US 4.6% on war machine and war profiteers and another 6 or so percent on corporate welfare.
Canada no other discretionary lines, as in UK all the things US pays for from appropriations like aviatiion agency have been privatized and paid by user fees.
Canada’s government controls less than 2% of the productive economy, the rest is for payments to citizens, figure out what is wrong with the US government spending 14% of GDP for payments to corporations.
Then in Canada the worker and the employer are not ripped off by the health insurance cabal.
There are difference between the US and canada which boil down to……….
It is US, policy for the few exploiting the many, to move wealth up the food chain, whereas in Canada the policy is take care of the many rather than the few.
conversations I had on economists view:
“The US government buys things at the rate of nearly 12% of GDP. This squeezes resources for making goods and services in the private sector.”sasha:
So you believe in the “crowding out” objection to Keynesian stimulus, even at a time when production is far below capacity?
No, I do not believe crowding can occur, in general, when the economy is below capacity.
However, exceptions exist, instances in monopsony that crowding occurs and it is harmful, even in situations below capacity.
G spending can be bad, inflationary and counter productive, especially warfare spending in good times like in 2004 and beyond.
In the case of the cold war G spending on war machines was a race to bankruptcy and structural deficits, the G sector leeching off the private sector.
The Soviets lost control of Russia and the US lost its soul, an addict to warfare, with a lot of private sector demand permanently satisfied off shore. My point is a special case, sorry if you expected argument on the general Keynesian stimulus.
I have observed that the military industrial complex has artificial (socialized) wage and commodity pricing and that it lays waste to entities competing for the manpower, and commodities at higher price driving them out.
In the tech sector the G spending portion is too high.
And military demand could go and the effects limited to the impacted localities.
It is the undue influence of these localities benefitting from the war machine that keeps it going.
ILSM, that answer did not clarify anything. Which data was used to debunk climate change? Do you at least have a reference? So far your comment is bizarre.
Here is the better story: http://letters.salon.com/opinion/conason/2010/07/08/climate/view/index.html
I was intrigued by this May 21 Huffington Post article by a Ms. Ellen Brown, who has her own ideas about how to handle the budgetary problems of US States.
Her thesis is that many supposedly big-deficit States in fact have pools of underutilised money which they can’t legally use to balance their budgets. On a careful reading of the article, the problem appears to be excessive use of hypothecation (earmarking) of revenue.
That many US States do hypothecate a lot of revenue does seem to be the case – see here for a report (note: .pdf. NCSL is National Conference of State Legislatures).
However I have been unable to find an independent estimate of “money pools” which might exist in State finances as a result of excessive earmarking.
Ms Brown also has a prescription for the problem. She recommends the creation of State Banks as depositaries for all the “money pools” created by earmarking. She suggests that such banks, with modest leverage, would then be able to finance State budgetary deficits with ease. While in principle I think this would work (once you prove that the money pools exist), I guess a more obvious solution would be just to stop earmarking so much. Maybe impractical.
So do these money pools really exist in State Govt. finances in the US? And would State Banks really work as a way to free up underutilised funds?
(Note and disclaimer: Ms Brown is an advocate of public banking. She has a website here. I am not affiliated with her in any way, but I have independently posted on the advantages of public banking on this blog and others in the past).
You are disrespecting the truth.
Total Federal Revenue was in decline when Bush took office and during the 2001 Recession it decreased sharply and reached it’s bottom in early 2004. It increased every year thereafter until the recession of December 2007, where it reached it’s peak.
There was no negative effect of the Bush Tax Cuts, you can claim that the Tax Cuts prevented the United States from acheiving the maximum amount of revenue that could have been possible, but you can not claim that the tax cut decreased revenue…It clearly did not…It clearly helped to regain growth.
Year GDP-US Total Revenue-fed 2000 9951.5 20.35 a2001 10286.2 19.36 a2002 10642.3 17.42 a2003 11142.1 16.00 a2004 11867.8 15.84 a2005 12638.4 17.04 a2006 13398.9 17.97 a2007 14077.6 18.24 a2008 14441.4 17.48 a2009 14258.2 14.76 a
You imply correlation, jimi?
What is the truth with figures? Do you remember the quip about figures lying?
I do not see correlation there, in fact what happened in the Bush II years is the fed tossed money around like crazy. You might run that series through .xls and run the regression coefficients????
There is a chart at OMB that shows that % of GDP for interest on the federal debt declined from about 3% in 2000 to less than 1.5% in 2005, while USG deficits skyrocketed.
Sure revenue rose marginally, Ben was tossing ink wet green backs around driving interest rates to near zero creating both a housing bubble and a boom in federal borrowing.
Even if you could show a correltation, you need a cause effect story and Helicopter Ben takes the Laffer curve argument and trashes it.
Warning sea story.
No $@^& there I was!…………….
In the Bush (GHW) I years, I worked an air traffic control system system development/acquisition between two USG departments (DoD and DoT/FAA share responsibilities in the US). Yes, ilsm and Dave’s bodacious adventures in bureaucracy!(ilsm and Dave are non du guerre’s).
The taxpayer was direct funding the DoD side in the DoD appropriations. The FAA was accessing the air transport trust fund to pay for the stuff installed at commercial airports.
FAA money was tighter than DoD money because the trust fund payments were accounted as expenditures despite the fact the source of the funds was airline ticket surcharges collected over a period of years. The FAA was told to hold expenditures down to make the deficit look lower that year……………………
So ends another ilsm sea story………………………….
The fed side wanted to hold the trust money aside (like the deficit hawks welching on SS with pet food for grandpa) to make the annual deficit appear better. That was the 80’s a time of economic comfort compared to the recent years.
I am not aware of the motive to hold back cash in accounts to make a deficit look worse, maybe the state money is legally tied elsewhere.
ILSM, ahh thank you. Climatgate. Some think the reviews were nothing more than white washes. Dunno for sure, but the last, Muir Russell Report, was described as:
“It is no surprise the final report is a complete whitewash. As McIntyre notes, “They adopted a unique inquiry process in which they interviewed only one side – CRU. As a result, the report is heavily weighted towards CRU apologia – a not unexpected result given that the writing team came from Geoffrey Boulton’s Royal Society of Edinburgh.” There’s that Royal Society connection again. The report exploits lack of knowledge or understanding of climate science just like the CRU and IPCC. They couldn’t allow involvement of experts who knew the science and how it was manipulated.”
From here: http://canadafreepress.com/index.php/article/25124
Gordon, many states do have dedicated revenue flows for specific items. Transportation and education are two of the big ones. Dipping into those pools will not actually balance the budget, as they are already “on budget” in most states.
The impression you are giving is you/the writer think that money is not spent. I dunno about that.
Thanks for the story. I guess Federal earmarking and “money pools” would be another chapter to the story, but I was interested in the States aspect because that was the burden of Ms. Brown’s article and US States seem to be in so much budgetary trouble. Not that the Federal Govt. isn’t, either, but at least they can print their own money.
I just noticed that my link to Ms. Brown’s Huffington Post article isn’t working. This is the link:
Thanks. I don’t know enough about how US States do budgeting to know what “on budget” means. Is it a stocks and flows thing? If receipts are less than expenditure in the accounting period, that would show a deficit even if there were large reserves (stock) stashed away somewhere?
Here in Australia we call these stashes (trust funds or whatever) “hollow logs”. The Treasury conducts irregular witch-hunts for them, to get the money back into consolidated revenue. It generally happens when the budget is looking bad!
Gordon, most US states have constituional requirements to balance the budget each year. In good times and bad all annual reveue is spent. When there is a legal option for a “Rainy Day Fund” it is ususally quite small. Dunno how they invest them.
Anyway dedicated revenue streams get spent each year..
Well jimi, you are overstepping with the rhetoric. I supply two links to a Brookings Institute series and you say I am disrespecting the truth.
Argue with their figures…fine…but you overstep severely when you accuse me of disrespect for the truth. It suggests you did not bother to even glance at the report. And then you offer a bromide in retort as well.
Pull the claws back quickly. Election mode only will get you so far.
Well jimi, you are overstepping with the rhetoric. I supply two links to a Brookings Institute series and you say I am disrespecting the truth. Argue with their figures…fine…but you overstep severely when you accuse me of disrespect for the truth. It suggests you did not bother to even glance at the report. And then you offer a bromide in retort as well. Pull the claws back quickly. Election mode only will get you so far.
Note the comment was no health care costs for employeers. Rather it is paid by the public, without hidding the fact as in the US. (Health care benefits reduce total wages in the US). This means that in Canada the health insurance cost of an employee is not an issue for a potential employer. The cost of health care is born in Canada directly by the public, while in the US it is born indirectly thru consumers. Ultimatly consumers pay.
No one can predict that. If you have been reading AB for a few years you will quickly understand that the science of economics, even with 100% hindsight, cannot answer that question.
I suggest tea leaves or an astrologer to answer your question.
Islam will change
I think I can answer your inquiry this way;
Without the liquidity measures taken by Paulson/Bush/Pelosi the financial system would have crashed. Where that would have put us today is anyones guess. Those measures essentially amounted to this;The market was saying that most of the fancy mortgage backed and other consumer loan backed financial products were worthless. Everyone wanted to dump them and chaos was about to ensue because virtually every financial firm held a significant exposure to these things. The Fed stepped in and said “Hold on everyone, we’ll buy them and we’ll pay X” which kept the sellers happy for a while. Now this is exaclty how Fed Reserve banks were designed to fct. as buyers or lenders of last resort which staved off runs.
Without the measures taken with GM, numerous pretty well paid (and thusly pretty consistent consumers of other peoples shit) folks would have been far less able to consume and pay down debt.
Without the extension of unemployment benefits many people would have gone from 30,000$/yr to ZERO, relying only on a mass firesales of their previously purchased stuff to survive.
So I cannt give a dollars and cents answer but I can tell you it would have been suicides (bankers and wall st guys from the 10th floor), mass layoffs and a fall in living standards beyond what we’ve seen.
Of course there are those on this board who would cite the above consequences as “good” and “just what they deserved”, I can only hope that I’m wrong about hell in that case and that a special place is being reserved for them.
i am disposed to agree with you, but don’t you suppose the details could have been tweaked a little to avoid rewarding the criminals (sorry) and to try to stop it from happening again?
a book you might be interested in “Eating the Sun” by Oliver Morton. I think on the whole you will like his conclusions better than i do. and you will find support for your “skepticism.” But there is a chance you will learn enough to begin to respect the science.
I don’t know anything at all about Climategate and the review, but I would hope you could tell why the rhetoric in your comment is not likely to convince anyone who doesn’t share your bias.
shhh. America is run on the fantasy that you can get someone else to pay. This is the ardent belief of both the right and the left. They just have different fairy tales for how it all works out.
The right is pretty sure that once the public understands that it is they who are paying for “socialized medicine” they will refuse to go along with it. They don’t understand that without “socialized medicine” they are gong to end up paying for it anyway… probably at a higher price and with a lot less security.
While the left is pretty sure they can arrange for “the rich” to pay for what is “after all” a human right.
Somehow the idea of a nation-scale insurance plan, which we all pay for, and which benefits from government oversight (we are in theory “the government), does not appeal to either camp.
Thanks for the reply. I was just curious over the fact that there were 600/t, in paper while the GDP of the planet was 60/t. Couldn’t see how losing non existent money would affect the economies.
“don’t you suppose the details could have been tweaked a little to avoid rewarding the criminals (sorry) and to try to stop it from happening again?”
Without a doubt.
The nature of our system was that the criminals planted the bomb and then were the only ones who knew the guy that could defuse the bomb.
This gets to a frequent point of many of the economists who argue from the MMT paradigm, (Mosler, Marshall Auerback, Bill Mitchell, Randall wray and our own Rebecca Wilder) that financial markets and banks are supposed to be (and purport to be) supporters OF the real economy, instead they have become supported BY the real economy. “Making” money in markets, in and of itself is not a productive activity, it is simply bringing together two people who want to perform a transaction. Time and distance make it impossible in this world for people to do this well without a middle man, but the financial markets have become over the last 25-30 yrs an all consuming ever growing part of our societies and they are requiring more and more and more of our resources. As they continue to justify their existence we have seen a rise in the financialization of more and more things. Literally everything now has a price and can be traded, including peoples lives. This is what happens when the financial markets become so prevalent, EVERYTHING becomes a commodity to trade and profit from. Many people have stopped listening to the human tolls of the downturn and ONLY look for ways they can profit from someone elses misery. Greeces loss is someone elses gain!Why should any of us fret someone elses losses, look at them as an opportunity to benefit! That is the message that the sociopaths on CNBC and Fox Business are peddling.
My post was not an applause of the bailouts, simply an attempt to show that much was spared with the efforts. I dont for a minute however think that most who conducted the bailout operation were considering things in the way I presented them. They were just covering their asses.
I have come to believe though, in a 180 degree turn, that Central Banks are necessary and mostly agents of positive. Mainly because, given the true political and social nature of money, when panics arise (which are inevitable) having someone who says I got this and will stop the slide, it is good. Yes it benefit the well heeled more but so does life. Having a body that can guarantee settlement of accounts is a good and necessary thing in our system. Many reams have been written on the Fed and its nefarious beginnings usually by gold bugs who long for the day when real money can return and promise prosperity for all. I used to buy into some of the criticisms (not the love of gold however) but now I understand them to be simple conspiracy theories mostly and often reflect an understanding of what modern money IS and how it can be used to enhance civilization.
My last sentence should have read “….and often reflect a MISunderstanding of what modern money IS….”
“(ilsm and Dave are non du guerre’s).” ilsm
You guys are draft dodgers?
To call this money nonexistent is true in a sense but wrong in another sense. When a companies balance sheet says “5 billon in assets and 500 billion in liabilities”, thats a real gap. And it has real consequences. Decisions are made on how the numbers relate and when the minuses get too much bigger than the pluses there is trouble.
Now, these numbers dont HAVE to affect real production of goods and this is why balance sheet recessions are puzzling. Things reach a point one day where the “numbers” dont jive so we feel worse than the day before when the numbers were better. So we do things like lay off people and cut production and VOILA….. our numbers get WORSE because now we really are producing less. This is especially true at an aggregate level which is what the govt measures. When too many businesses do the layoff/closure thing, the govt numbers look really bad. Then the ratio of debt/GDP skyrockets because the denominator has been cut in half and all the debt terrorists start saying that the ratio is too high and killing the economy, when in fact its the depressed economy that killed the ratio.
Your comment does reflect a notion that our money is all created out of thin air as promises to pay and since so many things like illness, hurricanes, oil spills, layoffs and just plain old cheating, get in the way of people meeting those promises, we are pretty much destined to this kind of crap until we start realizing that its NOT money that is the point but simply real goods and services and who should/shouldnt get them. Money simply papers over this crap (and does a poor job often) and we need to reform it.
The hottest period in the Northeast has no more to do with long term climate trends than when the so-called skeptics pointed fingers at the blizzards this past winter. It’s all about the long term trends in the high and low temperatures, though those increases just might contribute to a variety of extreme events.
Note that there is an exception to this that the right objects to medicare. Neither side wants to admit that in the end we pay the man one way or we pay him the other. There is no such thing as afree lunch as Heinlein put it TINSTAFL. (moon is a harsh mistress).The big arguement at its base is” is it everyman for himself or are we all in this together”Many have said that if they could blow up the existing health care system and start over they would have gone for single payer, but the crisis is not yet that acute. (It would take people dieing in the streets and being left to be picked up like animals to get that far)
it seems to me that we could reach a point where we just declared all debts cancelled. then we could start over from the beginning. i don’t think it would make an important difference.
don’t think that would do it. we’ve been there before.
the ineresting thing to me is that the rich don’t even want to let the poor make their OWN sytem for paying for their OWN health care. maybe they don’t understand how it would work. but my guess is they figure they’ve got a better deal making the poor pay them to provide health care if they can’t find a way to deny the claim.
I saw that conversation at Econ View. My take on crowding out is this. The only thing govt can crowd out form the private sector is real resources, not money. If production or supply of raw goods is not adequate to keep the govt and private sector satiated then the govt should back off some, in most circumstances.I could see a need for the private sector to have to defer to the govt in certain times but the optimum is for the govt to simply consume whatever resources the private sector cant find a use for in my view.
Your indictment of the MIC is spot on. The wants and priorities of the MIC are getting out of control and as you say they now have much of the private sector dependent on their appetite.
no, the government does not need to “consume whatever resources..”
we need to find a way for capitalism… as free enterprise and free choice… to work without consuming all the resources, including the life energy of the people.
Ayn Rand made a big point of money being life. she had it exactly backwards.
Well, back in early 2009 when this was all going on, Paul Krugman was arguing that we should nationalize the shakiest banks, audit their books, turn those that were solvent or had a realistic hope of solvency loose, and take the rest through a bankruptcy and a government funded recapitalization (what the US and Canda did with GM). That is to say — rescue the banks. Don’t rescue the bankers.
Sounded like a good idea to me then. Still sounds like a good idea because I don’t believe that B of A, Citigroup, et.al. are all that much more solvent today than they were eighteen months ago. And as for AIG …
***The cost of health care is born in Canada directly by the public***
But let’s be clear that ‘by the public’ does not mean ‘by ripping off the taxpayers’. It means paid for by the consumers of healthcare — i.e. the public.
Agree that nationalization was a better option but the mechanics of nationalization would have been the same as far as the role the central bank took. It still would have been buyer of last resort and lender of last resort. Where nationalization would have been different likely, is the price that was paid for the toxic assets, although that wouldnt be a necessary condition for nationalization. I think nationalization would have only been a better option for down the road, the initial stabilization of the financial system would have been the same. The markets simply needed someone to say I’ll buy this so the panic selling wouldnt ensue. Nationalization would have eliminated the pure looting that bankers have done the last two years by continuing outrageous bonuses and this would have lessened the anger of many citizens.
I should have said ” consume whatever output the private sector cant”. This is not to say that govt just needs to look for things to consume……….but when the private sector is operating well below capacity, the public sector can AND should (I think) take up the slack. If not there will be unemployment.
unemployment should mean “time off from work” not “desperate fear of starving.” you see the difference.
as long as “capitalism” means work the horses as hard and fast as you can. and when there is no work don’t feed em. then capitalism is evil. the trouble with communism of course, is that it says exactly the same thing. only the capitalist is a commisar.
In the category: “It’s ALL About the Weather!”. The US was book ended with heat and cold records. Days after the Right coast experienced record heat, the left coast experienced record cold. Regardless, if you are a CAGW believer, it was all caused by the increased CO2 in the atmosphere. Stop breathing for heavens sake!!!!!!
you destroy your credibility with remarks like this. read the book i recommended.
it wouldn’t surprise me that there are people saying it’s all about CO2. there are idiots on both sides of every question. but the actual science is a little more careful than that.
Dale, your inability to read sarcasm is an amazement.
“unemployment should mean “time off from work” not “desperate fear of starving.” you see the difference. as long as “capitalism” means work the horses as hard and fast as you can. and when there is no work don’t feed em. then capitalism is evil. the trouble with communism of course, is that it says exactly the same thing. only the capitalist is a commisar.”
Well said and I agree. I’m not sure what “ism” Im channeling with my comments but I know that as long as there is money in our society, as long this money is necessary to pay taxes and buy goods, as long as this money is created/endorsed by our govt and our govt only then it falls upon the responsibility of the govt to be sure EVERYONE has access to the money. Anyone living where the US$ is legal tender must have access to it. If private businesses cant satisfy the demand for jobs the govt must make up the slack.
No one should be forced to work but work (paid work) should be available for all who want it.