Why has no one (but me) mentioned Romney’s erroneous claim that the federal budget can’t be balanced if we raise taxes? C’mon, folks; the Clinton administration ended only 12 years ago.*
A really striking feature of the Romney campaign is the candidate’s penchant for stating policy positions as though each one exists in a vacuum. To wit: His 20% across-the-board tax-rate reduction, which, this successful businessman made clear at the debate last week, he didn’t trouble himself to figure out the likely result of it on the actual federal budget.
Which lead to his saying: Hah? A $5 million loss of revenue? No, sir! That won’t happen, because I won’t let it happen, because if it looks like it’s going to happen, I won’t let the plan take effect.
And that huge additionaltax cut for the wealthy that people keep claiming I want to put in place? Huh? No, sir! I figured out five weeks before the election—and eight months after I starting saying, repeatedly and explicitly, that I would lower taxes by 20% on the wealthy (they’re jobs creators, you know!)—that that really would raise the budget deficit a bunch. So no way, no how, am I gonna lower taxes on the wealthy! (And no way, no how, did I ever say I would. You folks who thought I did just don’t understand the English language!)
Another hallmark of his campaign, of course, is his statements of blatantly false undisputed facts, including about things of the sort that you’d think a successful businessman—especially one who was so active in business during the 1980s and ‘90s—would know. (Especially a successful businessman who says he should be president because he was a successful businessman.) Such things as that, well, yes, you can certainly help* balance the federal budget via a tax increase, and in fact that’s what occurred during the 1990s, after George H.W. Bush famously agreed to have Congress raise income tax rates and then Bill Clinton, also famously, fought hard and successfully in 1993 for another tax-rate increase. And that Ronald Reagan, early in his second term, agreed to raise the tax rate on capital gains, interest and dividends to equal the rate on work income, and that he did this in order to narrow the budget deficit. And that it worked! It narrowed the budget deficit! But Romney said at the debate that it can’t be done; you can’t eliminate or reduce the budget deficit if you raise taxes. Do we want a president who suffers from amnesia?
Or maybe a president who just thinks we do. I was shocked when Obama didn’t point that out at the debate. But I’m even more surprised that he hasn’t pointed it out sincethen. Especially since this particular lie isn’t one in which he claim that there’s a study that says otherwise, or something; it doesn’t allow him to change his representation of his own policy position, because this fact is not a fact about what already occurred and cannot be revamped, and is not about something that something said and that can be altered by word games. And since pointing out such a clear, bald lie on this particular fact would illustrate on its own that Romney is a conniving snake who’s trying to con the public.
But it also hands Obama another important argument: that Romney’s business career either failed to prepare him for reading and understanding even basic, clear budget and tax facts, or it did prepare him to lie.
As they say in Latin, caveat emptor. Let the buyer beware. Say it, Mr. Obama. Say it.
Again and again and again. And again.
*In response to a comment by reader Arne, I’ve inserted the words “certainly help”. Arne notes that the stock market bubble during the latter Clinton years helped balance the budget. But it was only the part of that sentence that said that the increase in the tax rates alone fully balanced the budget by 2000. Although it’s not my area of expertise, and I don’t know the specifics, I think that in earlier eras, tax rate increases, or at least very high top-bracket rates, largely balanced the budgets. Isn’t that what happened during the postwar era?
In any event, Romney’s statement—that tax increases make it impossible, or at least harder, to balance the budget is false; it is, verifiably, pure Mad Hatter stuff. Taxes were raised, the stock market soared, and the budget was balanced , in the 1990s.
think you are right about this.
though O did refer to Clinton success vs R failed policies, he didn’t do it in a way that anyone would actually know or remember what he was saying.
one thing about R is that he believes… believes more than he believes in God… that the business of business is to make money… no matter what. no inhibitions about morality or civic responsibility. that’s bad enough, but he believes that government… far from providing those inhibitions… exists to facilitate business making money.. without regard to morality or even the future welfare of the very businesses it protects.. because as R has shown, you can always take the money out of the business and put it offshore until the next “business opportunity” presents itself.
but really, this is too hard to explain to the American people, so I am not surprised that O was struck dumb by the audacity of lies.
Balancing the Federal budget in any one year is iffy. It is complicated. You can’t just say that you will balance the budget or reduce the deficit. I suppose that it is possible to guarantee that you will increase the deficit, though.
It is quite possible that increasing tax rates can cause a downturn, which will increase spending on automatic stabilizers and at the same time decrease income, which will end up decreasing revenues, despite the increased tax rates. Conditions are different from the Clinton years. We are in a depression, right?
The difference between now and what happened in the 90s is that under Clinton federal spending fell from 21% of GDP to 18% of GDP; an unlikely occurence under Obama. And Economic growth was growing at a healthy pace during the Clinton administration generating an increasing amount of tax revenue; also, an unlikely occurence under Obama.
“Why has no one (but me) mentioned Romney’s erroneous claim that the federal budget can’t be balanced if we raise taxes?”
Oh for goodness sake, is this what economics descends to in election time?
Look, proof that x budget deficit in the past, or y deficit, was closed by raising taxes does not show that it is possible to solve z budget deficit by hte same means.
Just as stating that b budget deficit was closed by lowering spending (say, 1920) or c deficit (say, 1946) proves that z could be closed by lowering spending.
Yes, I know, it’s election season over there and I’m a fool for even expecting anything other than the most vile partisanship.
But I did think this blog was better than that.
Closing a 10% of GDP (is it still up there? Not really taking notice of the numbers) is going to require a little more thought than hey, why don’t we do what Clinton did?
Actually Romney had it right–the only way that you close the deficit is by growing the economy–that is why the government took a smaller percentage of GDP during the Clinton years–the economy was growing faster than the population. When Romney said that, Obama should have agreed with him and noted that the fundamental difference is how you grow the economy. Romney and the GOP suggest it is by taxing rich people less. Most Dems think rightly that the key is to put more money in the hands of poor and middle class families whether through handouts or government jobs so they can spend it and cause the “job creators” to have a reason to increase production. Whether Obama gets this or believes it is doubtful. Certainly, he has surrounded himself with economic advisors who either do not get it or would be concerned about the effect of such a policy on the moneyed class. Obama has been much like Carter only less substantively competent and more politically astute. With Carter we ended up with 12 years of Reagan’s voodoo economics, a systematic attack on labor, the middle class and people of color. If Romney pulls this off, I expect he will finish the job.I also expect that if Romney becomes president, deficits will not matter again which may actually help put some people back to work and shrink the deficit.
OK, look, Tim. There’s no question but that we can’t balance the budget unless we both raise tax rates and lower expenditures. But what Romney was doing was trying to excuse his raising his hand at that primary debate last year to indicate, in answer to that infamous question to all the candidates at once, that he would not accept $1 in tax increases in exchange for $10 of spending cuts. Romney was saying in that debate line that I’m referencing that raising taxes necessarily precludes balancing the budget because doing so slows economic growth. The Clinton years proved that false, but the Reagan years and Bush I years also proved the outright falsity of the claim that raising taxes decreases the ability to narrow or eliminated the budge deficit.
The problem here, Tim, is that Romney and Ryan conflate ideology with fact. Ideology is not fact.
And as for the GDP argument, isn’t that a circular thing? I mean, during the Clinton years, GDP rose in the years AFTER the tax increase. Ditto for the years following the Reagan tax increases.
The bottom line is that you and I agree. The problem is that you misunderstood my post, because you didn’t recall the specific Romney quote and its context.
So, if we tax everyone 100%, they will have the money? for how long?
Yes! Just as we did during Reagan’s second term, G.H.W. Bush’s term, and Clinton’s two terms!
The issue is the effect of raising taxes. Grow up.
Beverly writes, “The Clinton years proved that false, but the Reagan years and Bush I years also proved the outright falsity of the claim that raising taxes decreases the ability to narrow or eliminated the budge deficit.”
Well, actually I don’t see how you can possibly make this claim. Reagan raised taxes in 1983 and the budget deficit barely budged at all. It increased slightly and decreased slightly in the years that followed and it was far from eliminated. So, how did Reagan prove false the claim that you can’t balance the budget deficit by raising taxes?
Nor do I see how you can site George Bush I as proving false this claim. Bush I raised taxes in 1990 and the budget deficit increased from 221B in 1990 to 269B in 1991 to 290B in 1992. Hardly a demonstration of taxation balancing the budget.
Even with Clinton the budget wasn’t balanced until his second term after he cut taxes in 1997.
The R’s might be mean-minded and completely lacking in generosity but they aren’t dumb. They saw a long time ago that all that matters in politics is winning. Actually running the govt, is not important except as a means to a source of income after leaving Congress, the Senate, or the Presidency. The poor dumb Dems like to win, too, but think governing has to be done well. So, they surround themselves with smart people of all kinds to advise them on how to do it better. They get all sorts of wonky theories few of which actually work in practice. But, boy, do they generate income for various “liberal” think tanks and institutions.
However, within the past 30 or so years, the Dems have become much more successful in attracting contributions from Wall Street executives and others in the financial industry. In the process they have become a lot more like the R’s. They are so much like R’s, in fact, that their base has a hard time maintaining their enthusiasm for Dem candidates.
Meanwhile, the R’s are always whining about the budget deficit and/or national debt. The Dems just hate it when the R’s do that, and promptly subject everyone working in the government to budget and staff restrictions. This causes anyone receiving services from affected agencies to experience service delays or reductions in benefits. Meanwhile, in some other part of the government, money flows like water benefiting contractors supplying the military with weapons systems or airplanes that fall out of the sky with regularity.
After one or two terms of a Democratic Presidency, everyone is ready for a change. So, they elect a Republican to the Presidency and the spending begins all over again. It never fails. The Dems are undone by their stubborn insistence on virtuous austerity while the Republicans spend money like drunken sailors, being sure of course the right people profit mightily by their excesses. Nothing like a war or two to crank out the bucks like they’re going out of style. And, you know, down in lower 95% they are. NancyO
caveat emptor is apropos, beverly…we have to watch what word coffins we buy from those advocating budget bargains, lest they bury us in them…
like “government debt” and “borrowing from china”, the concept of “balancing the budget” is just another case where the forces of darkness have captured the dialog by their clever use of language…we are ingrained with the thinking that “debt” and “borrowing” are somehow bad, but “balance” is something we should strive for, as if it were a virtue…
Anonymous, Reagan lowered taxes—significantly—in the first (I believe) year of his term). He then raised them slightly in, I guess, 1983 because the budget deficit was skyrocketing. Then, in 1987, when he saw that something more was needed to get the deficit under control, he agreed to have the rate on capital gains, interest and dividends raised to the level of work income.
As for G.H.W. Bush, the rate increase was part of a budget deal with the Dems in, I believe, the fall of 1990. The rates were effective beginning in 1991,and the taxes weren’t paid until 1992. And there was a war—the Gulf War—in early 1991.
Excuse me Bev:
My BS detector just went off and Anonmynous is reading the latest thrash on the Internet by Cato, Heritage, The American Thinker, etc. As Mike Kimel points out as well as Spencer, timing is of the essence as to when those bills were signed and when they were enacted. The neocons loved to tout the 1997 tax cut as stimulating more growth. The bill was signed in August 1997 and not the beginning of 1997 which is used by the neocon sources as the start of growth from the tax cuts. Those 8 months till reside as a part of the Clinton Tax Hike stimulating the economy (if you all wish to believe this is the reason why)ideology. The same and in a different fashion holds true for the Clinton Tax hikes which the same sources like to decrease Clinton’s percentage of economic growth afterwards. The tax hike bill was signed into law the 3rd quarter of 1993 and not at the beginning of the year as used by Heritage.
Heritage and obviously Anonymous claims, the tax hikes only produced growth at 3.3% while the tax cuts produced growth at 4.4% If we correct for timing, tax hikes were responsible for economic growth at 3.9% versus tax cuts producing growth declining to 3.7%. It still remains,greater growth occurred after the tax hikes. Job creation also gew more during the tax hike era also. http://www.americanprogress.org/issues/economy/report/2011/09/22/10250/fact-versus-fiction-in-latest-supply-side-debate/
Thanks, run. This certainly isn’t my area of expertise. But that statement of Romney’s was flat-out false and was a classic example of Romney/Ryan’s incessant pretending that ideology = fact.
You say it is flat-out false, but fail to provide any historical evidence that the federal budget can be balanced through tax increases as you claimed above citing Clinton, Bush I, and Reagan. You seem unsure as to even the dates of major tax legislation and their effects. For example, the 1983 tax increase was not due to sky rocketing budget deficits, but was a payroll tax increase to fund social security.
You (as well as those other groups you name above) are making absurd claims that tax hikes were responsible for all the economic growth from 1993 through 1997 (whatever quarter you pick to start) and the tax cuts were responsible for all the economic growth from 1997 through 2001. And that the tax increases created more growth than the tax cuts. All of which are absurd claims for sure.
I am NOT saying that the federal budget can be balanced solely through tax increases. I’m saying that Romney said that the federal budget cannot be balanced if taxes are raised—that raising taxes makes it impossible, or at least less likely, to have a balanced budget—and that THAT is flatly false. The three tax increases I have in mind that illustrated that Romney is representing ideology as fact, and is making a clearly false representation of fact, are: The 197 Reagan tax increase, the G.H.W. Bush tax increase in 1990, and the Clinton tax increase in 1993. The budget deficit DECREASED in the wake of each of those, and was erased by the late 1990s.
Reagan’s 1987 tax increase was $9 billion. This is the historical evidence you are providing as a cause of a balanced budget in the late 1990s.
The Bush deficits increased in the wake of the 1990 tax increase. You say they didn’t take effect until 1992. When did Clinton’s 1993 tax increase tax effect? 1995!
The reason for the balanced budget was that spending fell during the Clinton Admin from 21% of GDP to 18% of GDP, which happens to be the post WW2 historical average of tax revenues, 18% of GDP.
I am discussing with a shadow who offers nothing but an opinion as stacked against authority superior to his own. You have offered nothing to disprove what I have said. Mike Kimel has offered enough evidence in previous posts of his own setting aside your baseless ascertions even more so.
Clinton’s tax increase went into affect as I said the same stands for the tax decreases. Spare us the unsuported nonsense you spoutand do not weary us with it as it has no merit.
I till back Beverly. your logic at the beginning of your comment was correct. by the end of it you ran off the rails, accusing beverly of claims she did not make. go back and read the text carefully.
i wouldn’t have bothered with this reply,but your claims to “logic” are insufferable.
Anonymous is not worth answering. he lives in a universe where he can make up any connection between “facts” that justifies his fantasies about taxes bad, government bad.
This one sounds like one of the trolls. I would walk away as it does not know what it is talking about.
You have tried your best, but have failed to justify your statements above. Best take the advice of your friends and walk away from those you cannot come up with a coherent answer to. I admire your valiant attempt and the courteous manner in which you tried. Best regards.
Well, here are some facts.
Post WW II, every Dem Pres before Obama governed over an increase in Revenues/GDP. In Clinton’s case, this involved tax increases. And in every Republican admin, revs/GDP went down.
So looking at raising revenues might actually have some merit. Certainly it can’t be dismissed out of hand simply because it’s now budget cycle z, rather than x or y.
In short – what I’ve said here over and over – policy matters.
Now with taxes and revenues at historical lows, I have to wonder why Mr. Worstall considers pointing this out to be “vile partisanship.” Most particularly in the context of what you hear about the foreign-born Commie Nazi anti-American white-person-hating Muslim who somehow stole his way into the White House.
Perhaps from his foreign perspective, he’s missed the entire Republican lie, cheat and buy strategy. Or perhaps he believes that, by comparison, those things are insufficiently vile. Who knows.
Thinking about the math reveals that there is a lot of opportunity to use tax hikes to close the deficit gap.
It is OK to think about the math, I hope.
“I’m saying that Romney said that the federal budget cannot be balanced if taxes are raised—that raising taxes makes it impossible, or at least less likely, to have a balanced budget—and that THAT is flatly false.”
So what you’re really complaining about is a politician lying at election time?
That’s sure one way to make certain you never run out of things to write about.
I thought it was generally understood among us adults that all of them lie?
No, Tim, what I’m complaining about is your comment.
And now you have raised the specter of false equivalence.
Yes all politicians lie, to some extent. But there is a difference between slipping in the occasional exaggeration or truth-stretching and a strategy of flat-assed lying and shape shifting in which a candidate has no definable position on any issue, and – on a national stage – repudiates his own platform to eke out a few more votes. See my latest post.
Plus – at least when I was a kid – there weren’t many actual adults who would except, “But Barry does it, too!” as any kind of valid justification for inappropriate behavior.
that last was petty pathetic.
if all politicians lie is true
it is also valid to point out that they lie.
obama’s big “fault” in the debate was not being able to say “you are lying.”
i have had some experience with the psychology of that. i imagine it is even harder for a president to call a liar a liar in public.
but obama has a more serious problem… he doesn’t seem to be able to tell when his advisors are lying. maybe its the harvard education.
If you are going to accuse someone of lying, start with the quote. It is “You’ll never balance the budget by raising taxes”.
That being said, yes, it is an obvious lie. I can refute it with one word – Germany. Or Sweden or France or Denmark or Italy or Hungary. Or any of twenty or so nations that bring in > 37% of GDP in taxes, which is about what we spend across all levels of government.
Chad Brick! From Slate’s comments boards! Welcome, guy!
And, terrific spot-on post. Just like your comments on Slate.
Just wondering, how did you happen upon our blog (if you don’t mind my asking)?
Coberly: but obama has a more serious problem… he doesn’t seem to be able to tell when his advisors are lying.
I never thought of it this way. But, it certainly could be part of the problem if we are to believe he truly does get it as JackD was expressing in my post.
In your fourth paragraph you have confounded tax increases with balanced budgets almost as badly as Romney did in the first place.
The evidence is clear that raising rates raises revenue, but it is not clear that we have ever raised them high enough to sustainably balance the budget. Clinton’s final budget would not have been balanced without the stock market bubble. (Dean Baker wrote about this last month.)
It is clear to you and me that we could raise taxes high enough to balance the budget, but even the small overreach leaves room for Rs to insist that the facts are disputed.
From the 2011 Financial Report of the United States Government:
“In order to provide a more complete estimate of the long-run unfunded obligations of the programs [Social Security and Medicare], estimates can be extended to the infinite horizon. The open-group infinite horizon net obligation is the present value of all expected future program outlays less the present value of all expected future program tax and premium revenues….The total resources needed for all the programs sums to $59.3 trillion in present value terms. This need can be satisfied only through increased borrowing, higher taxes, reduced program spending, or some combination.”
Given that we have a $59.3 trillion present value unfunded liability. Who here believes that the budget can be balanced by raising taxes? If you say yes, you are a liar. The total GDP of the USA is only around $15 trillion. If you think you can raise $59.3 trillion present value in taxes, then you are a liar. If you go around saying that the budget can be balanced through tax increases, then you are a liar. If you going around calling people liars who say it can’t be done, then you are lying. No feasible amount of tax increases will ever be enough to satisfy the amount of revenue needed to pay for the unfunded obligations and balance our long term budget deficit.
Problem is that we don’t want to balance the budget right now by draining money from the economy through tax increases and/or budget cuts. We need lower taxes and higher spending to move us forward.
You’re right, Arne, that the sentence in my fourth paragraph that you object to should have said: “Such things as that, well, yes, you CAN certainly HELP balance the federal budget via a tax increase, and in fact that’s what occurred during the 1990s, after George H.W. Bush famously agreed to have Congress raise income tax rates and then Bill Clinton, also famously, fought hard and successfully in 1993 for another tax-rate increase.” I’ve just corrected that sentence, with a notation indicating that I’ve done so.
But, it’s only the part about what occurred during the 1990s that was inaccurate in the sentence—that is, that the increase in the tax rates alone fully balanced the budget by 2000. And although it’s not my area of expertise, and I don’t know the specifics, I think that in earlier eras, tax rate increases, or at least very high top-bracket rates, largely balanced the budgets. Isn’t that what happened during the postwar era?
In any event, Romney’s statement—that tax increases make it impossible, or at least harder, to balance the budget is false; it is, verifiably, pure Mad Hatter stuff. Taxes were raised, the stock market soared, and the budget was balanced , in the 1990s.
Mcwop, raising taxes on the wealthy will not depress the economy further. What WILL depress the economy further is cutting the federal budget for such things as assistance to state and local governments to help them avoid further layoffs of teachers.
btw, the Grand Bargain that dan just posted about is what i was warning about in my earlier comment…by even discussing “balancing the budget”, you’re buying into the agenda set by pete peterson and the other deficit hawks…caveat emptor…
No, I’m refuting a false statement of fact by Romney.
Beverly the point is we need large tax cuts for the 99%. If getting it passed for the 99% requires the 1% to get one, then so be it. Lowering it for the rich certainly won’t harm the economy right now, and can be raised when times are better. We do need deficits to be higher, I am now totally convinced of that.
Problem is that our politicians are raising taxes at the local level for the 99%, and government spending at the federal and state level is declining. Further federal taxes for the 99% are slated to go up soon. All huge drags on the economy. Then even democrats are talking about reducing the deficit, which is scary as well.
Clinton surpluses are completely irrelevant right now.
it’s not just a false statement by romney, it’s a false premise…both romney and obama have bought into the deficit cutting agenda…if you want to challenge romney, it should be on the basis that attempting to balance the budget would put us into a depression…as ive previously pointed out:
reducing the debt even effects us adversely domestically; Dr Randy Wray has shown that in each of the 6 times in US history where we had a depression, it was preceded by substantial budget surpluses and significant reduction of the debt; this was a concern of the Fed & bush administration economists early last decade; it became clear that if clinton surpluses continued & our debt was paid down, the financial system would soon experience a dearth of safe assets & would begin to lock up; so the bush tax cuts were initiated in order to keep levels of AAA assets high enough for the markets to operate..but now, the same bush chief economist who was the architect those tax cuts, greg mankiw, is now nefariously suggesting that US debt under obama makes the US similar to greece or zimbabwe…we really need a new word to describe government note, bill, & bond issuance, because the nature of a government issue is closer to creating needed money than it is to what the public & the airheaded congresscritters think of as “debt”…obviously, obama suffers from the same delusion, saying that the government is like a household and should also tighten its belt when times are tough…& the mistake they’re all making is what’s costing us this prolonged & deep recession…
The 99% do not need tax cuts. What they need are good paying jobs.
Context is everything, and the context here is the capture of virtually every penny of economic growth and productivity increase by the already very wealthy.
Fifty years of tax cuts have made a huge contribution to this problem.
Jazz – they need both! I disagree that tax cuts are the problem, especially right now.
The problem is that money is being drained out of the economy while people cannot pay down debt, nor create demand for stuff.
See what RJS writes above, which is the exact problem with the entire discussion on both sides of the aisle right now.
Mcwop, the point of my post is that Romney made a baldly false statement of fact. Period.
essentially what your 59.3 Trillion present value leaves out is the present value of the economy over all that time.
there are very busy liars preparing official statements designed to make the defict look unsolvable. i can’t keep up with all of them. i can tell you that the 20,5 Trillion attributed to SS over the infinite horizon turns out to be a 4% increase in the payroll tax while incomes are rising over 100%.
these people are making fools of you because you can’t think about numbers. you see a big one and completely lose your mind.
Do you think you are the smartest person in the room everywhere you go? Obama thought that when he got on stage with Romney. Look here genius, the present value of the economy is $15 trillion. Don’t you understand that? It is not some fantasy number you might have in your head. Read the excerpt from the government report. The $59.3 trillion obligation is after the present value of “all expected future program tax and premium revenues” has been accounted for. In other words, to pay for all of the promises that the government has made it would need $59.3 trillion today. Sorry Charlie that cannot be done by increasing taxes. So keep worrying about big bird and let the grown ups solve the real problems.
anon, wtf is that $59.3 trillion figure coming from? one of those 75 year CBO projections?
long term numbers are all nonsense…who could have predicted today’s revenues & outlays even 10 years ago?
Hi Beverely. Yes, it is the same Chad Brick.
I have checked this place for at least a year and a half, don’t remember how I found it. I post here once in a while but I think I was using an alias. There are so many ways to log in nowadays I get confused.
Anyway, there is always interesting stuff around here.
Btw, one of you should do an article based on the following. Take SS revenues per GDP and plot them vs the SS statuatory rate. You get about the straightest darned line you have ever seen in economics. Then plot delta(SS tax rate) vs (delta) GDP, with any reasonable time lag, and observe teh shot-gun blasts. I’ve self-generated no more convincing data for myself that there is simply no meaningful effect of tax rates on the economy. It is a wonderful test, as the changes to SS tax rates were generally planned years in advance and had nothing to do with the state of the economy. Most other tax changes make it difficult to discern if the economy caused the tax changes, or the reverse.
the present value of the economy over the infinite horizon is considerably larger than 15 Trillion.
i am pretty sure you have never had to worry about being the smartest person in the room. even when you are the only one there.
the present value of the GDP over the infinite horizon is on the order of one thousand trillion dollars.
it is a meaningless number.
i’d be glad to see someone smarter than me “derive” this, or any reasonable, estimate.
it would be too much to hope that “anonymous” will realize how completely ignorant he is and go back to playing… er… by himself.
me, i’ve got work to do.
The number the government provides is not a present value but a net present value calculation. That means the obligations of $59.3 trillion obligation is after those future taxes have been paid from those future GDPs. You would like to double count and ignore that the obligation is a NET present value calculation. But, hey, those people in finance who came up with net present value calculations must be a bunch of idiots. Why just ask Coberly.
i understood about the “net present value.” I don’t see where you get the idea that i didn’t.
unless you are concluding that the 59.3 Trillion is the debt in excess of the one thousand trillion dollar (present value) of GDP over the same infinite horizon.
it would be a bizarre thing to think, but i am learning that in your delusional world you can connect “facts” any way you want to.
coberly, even the Fed, with all the resources they have, cant get their forecasts right on GDP growth, unemployment and inflation for 2 quarters forward…
and someone pretends to have an accurate debt number on an infinite horizon with 3 significant digits?
my point exactly, about the GDP. but anonymous has a 50.9 Trillion dollar, present value, for some “debt” he fails to specify. i would guess even that is somewhat dubious, but not necessarily as meaningless as the GDP number i offered.(meaningless, but not too far out of the ballpark of “colorable.”)
anonymous’ problem is that he has no idea what he is talking about. appears to be reading either “official reports” he does not understand, or the usual lies and distortions from the Peterson camp.
the problem is not that the estimate is bogus as such. the problem is that it is presented in a form designed to scare the rubes…. including Congressmen and Presidents apparently.
The fiscal projection for the US Government is not a forecast or a prediction of what will happen. What the fiscal projection does is look at current law and extrapolate what will happen to the expenditures and receipts of entitlement programs if current policy does not change. What the fiscal projection is telling is that under current law the entitlement programs are unsustainable to the tune of 59.3 trillion in today’s dollars. The author’s of the report, the United States Treasury, are not predicting that there will be no change in the law, but it is showing the magnitude of the difference between what has been promised under current law and the ability to meet those promises.
anon, if we raise the minimum wage to $10 an hour next year, as many as 20% of us will be paid more, receipts of those programs will increase accordingly, & that extrapolation is out the window…
my point was that even the Fed cant forecast unemployment to half a percent accuracy 6 months out, so there is no way to accurately exprapolate revenues for those programs on an infinite time horizon…
more likely than not, the Treasury just puts out that bullshit report because of a mandate to do so passed by an ignorant congress..
Now you get it. You are recommending a policy change to current law to bridge the $59.3 trillion gap. There are only 3.8 million workers earning at or below the minimum wage. This represents only 3% of all workers not 20%. How many will be laid off due to an increase in the Federal minimum from $7.25 to $10.00 is debatable. You only need to raise $59.3 trillion in taxes today to fully fund the entitlement programs. How much revenue due you estimate will be raised by this policy change? Subtract that number from $59.3 trillion to find out how much more you have to go.
Chad, if YOU wrote an article on that, I’m sure Dan would publish it.
Just email it to him.
Good points! But Romney has no sense of history–and apparently zero interest in actually balancing the budget.
Oh, but FYI … you should change that “$5 million” in your post to “$5 trillion”.
There’s no “millions” in the Romney tax cut. It loses $360 billion each year–totalling $5 trillion in 10 years (those who still like Romney’s “pie-in-the-sky” fantasies should see Brookings Institute’s non-partisan Tax Policy Center analysis.)