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#1 Servant of the Lord   Crossbones+   -  Reputation: 21022

Posted 29 July 2011 - 06:02 PM

I have a couple questions about the debt crisis we're facing - not about the dumb politics going on, but about the numbers.
I was looking around online, but I couldn't be sure the data I was finding was accurate.

1) In 2010, the US Federal government took in roughly $2.15 trillion in revenue, is that correct?
2) In 2010, the US Federal government spent roughly $3.45 trillion, is that also about right? (I'm also seeing $2.78 trillion as the Federal spending - which is it?)
3) So our 2010 net loss was about $1.30 trillion, right?
4) So, roughly every year, assuming 2010 is standard (and I'm not saying that it is), we go about $1.30 trillion more in debt?

I'm trying to get an accurate picture of the numbers.

My other question is, these bills (the rival or the bipartisan ones) that the Senate and House are trying to get passed, when they throw around numbers like "$800 billion in government spending cuts by 2025!" (or whatever cut and year), are they talking about reducing the annual spending of the government by $800 billion a year (gradually more and more reductions, until in 2025 our annual savings will be $800 billion), or are they talking about the total value of the reductions from here to 2025 (gradually reduce the spending more and more, until by 2025 our total savings over the past 14 years will be $800 billion)?

If it's the latter, that'd really suck. Posted Image
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#2 Antheus   Members   -  Reputation: 2397

Posted 30 July 2011 - 08:20 AM

The way I see it.

#3 Katie   Members   -  Reputation: 1374

Posted 30 July 2011 - 09:44 AM

" So, roughly every year, assuming 2010 is standard (and I'm not saying that it is), we go about $1.30 trillion more in debt?"

Wouldn't seem beyond imagining given the size of the US economy. For comparison the UK's economy is about 1.5Tr pounds and the UK government is running 130Bn in deficit spending each year on top of 500bn in actual income being spent.


"are they talking about reducing the annual spending of the government by $800 billion a year or are they talking about the total value of the reductions from here to 2025"

I think this is one of the things they're arguing about.


I have a different question about the discussions -- several times people have mentioned a bill being "tabled"[1], with the implication that that means nothing's being done with it -- the bit I don't understand is the process for this. It seems like it happened without any discussion -- I'm wondering if the leader of the largest party gets some sort of veto over the house business in some way?




[1] I'm guessing from the usage that this is the opposite of here where a motion which is "tabled" is being discussed and voted on.

#4 Prefect   Members   -  Reputation: 373

Posted 01 August 2011 - 01:02 PM

3) So our 2010 net loss was about $1.30 trillion, right?
4) So, roughly every year, assuming 2010 is standard (and I'm not saying that it is), we go about $1.30 trillion more in debt?

Both of these are wrong - not because of the numbers involved, but because of what you seem to believe that those numbers mean.

See, when the federal government spends $1.30 trillion more than it takes in taxes, this net spending does not magically disappear. It means that dollar for dollar, the non-government sectors had $1.30 trillion more in income than they spent.

For example, this means that there are many people who privately are now richer (that is, own more money) than they were last year. Perhaps you are one of them and if so, why would you talk about your loss? Of course, there are also many people in the US who are in a bad situation right now because of mortgages and unemployment - clearly, there is a problem in that the riches are very unevenly distributed.

It is also true that the external sector had more income than outlays, and so overall, other countries now own more US$ than they did last year. But again, does this represent a loss for US citizens? Not necessarily: the reason that other countries now hold more US$ is that those countries have been sending ships full with useful real goods to the US, and the US as a whole has been able to enjoy these goods without working for them. I would not call that a loss, though of course you have to be aware that at some point in the future, the US may no longer be able to enjoy net imports to such a large extent as it does today.

Overall, I have to say that it is very weird to watch all this debt hysteria going around in the US and elsewhere, considering that there really is no debt crisis at all. It's all just a political trick to be able to savage the few social safety nets that still exist.

Note that there is a real economic crisis, but it is entirely unrelated. The real crisis is in the extremely high unemployment. The waste and inefficiency of letting all this productive capacity go idle and of letting skills atrophy (due to long-term unemployment) is terrible, yet somehow nobody seems to talk about it.

In any case, if you want to read more about what all this debt stuff is (or isn't) really about, economist Bill Mitchell has commented again today on the situation in the US. For the larger picture, you may be interested in searching for Modern Monetary Theory if you are serious about wanting to understand things better.

when they throw around numbers like "$800 billion in government spending cuts by 2025!" (or whatever cut and year), are they talking about reducing the annual spending of the government by $800 billion a year (gradually more and more reductions, until in 2025 our annual savings will be $800 billion), or are they talking about the total value of the reductions from here to 2025 (gradually reduce the spending more and more, until by 2025 our total savings over the past 14 years will be $800 billion)?

They are talking about the latter. It is a silly game that politicians play in order to be able to throw around larger numbers.

It's even more silly because doing these kinds of projections for 14 years out is totally irresponsible. First of all, those future budgets will be decided on by politicians in the future, so any changes made right now could easily be reversed a few years down the line. Second, even if the politics of it isn't going to change for 14 years, forecasts at that timescale are simply too unreliable. Think about it: in 1990, who would have predicted the explosion of the web? The dot-com boom, then bubble, then burst? Who even in 2006 has predicted the global financial crisis?

It's all smoke and mirrors, and the journalists spreading this type of nonsense should really be held accountable.
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#5 Khaiy   Crossbones+   -  Reputation: 1342

Posted 02 August 2011 - 07:31 PM

An additional point, 2010 is not by any stretch of the imagination a standard year for national finances. The impact of the recession is lingering, which has devastated tax receipts. At the same time, the government is spending more than usual on things like unemployment insurance for the same reasons. These deficits are not especially usual, though we have been running uncommonly large deficits for the past decade or so (obviously, the frame of reference you use will determine what constitutes "normal").

Second, while national debt and annual deficits matter, they don't matter in the ways that people often think. The government does not operate as like a business, for example. They do not have "losses", like Prefect explained. The national debt is a part of America by design. The idea was to keep people invested in the success and stability of the US government.

Deficits are generally not ideal because they require future expenditure to pay off of the debt, and as they increase the debt the can affect the willingness of others to lend to the country to fuel those deficits. But that doesn't mean that deficits are inherently bad; rather, they are essentially an investment. The operative concern is the return you get. Right now, the US has no shortage of lenders willing to lend to us for 10 years at less than 3%. For two years, it's below 0.5%. It's not hard to get ahead at those rates, and since the US is dealing with liquidity issues, it would be easy to put that money to work in the hopes of spurring demand or accelerating individuals deleveraging. Compare that with the deficits that paid for (or properly, didn't really pay for) the wars in Iraq and Afghanistan (and now Libya), or the Bush tax cuts. Whether or not you agree with the policies, we aren't getting a good return on those deficits.

We are absolutely not in a debt crisis, because there is exactly zero chance of the debts coming due faster than we can get them covered, and as the economy recovers we will only be more able to reverse the trend of running deficits.

Finally, I would argue that looking at the deficit in terms of dollars is not the best way to think about it. First, the numbers are enough to dazzle just about everybody even if that dazzlement isn't totally justified. Yes, the numbers are big, but so is the US economy. Additionally, there's no particular reason that dollars-per-year is any more useful than, say, years' worth of GDP, even if evaluated at given percentages. The dollar figure itself is not incredibly meaningful, for the reasons that you described in the first post among others.

#6 way2lazy2care   Members   -  Reputation: 782

Posted 02 August 2011 - 09:14 PM

Overall, I have to say that it is very weird to watch all this debt hysteria going around in the US and elsewhere, considering that there really is no debt crisis at all. It's all just a political trick to be able to savage the few social safety nets that still exist.

Note that there is a real economic crisis, but it is entirely unrelated. The real crisis is in the extremely high unemployment. The waste and inefficiency of letting all this productive capacity go idle and of letting skills atrophy (due to long-term unemployment) is terrible, yet somehow nobody seems to talk about it.

I would be hysteric if I were a government employee. I am not though...

If anything this will just make the US as a whole more pissed at politicians in general, which I view as good. Hopefully we'll get a strong push to get some new congressmen/senators and a president who's looking to mix stuff up in the political machine.

Right now we need political reform more than anything, shortly followed by education and tax reform.



#7 Jacob Jingle   Members   -  Reputation: 223

Posted 03 August 2011 - 12:13 AM

I would be hysteric if I were a government employee. I am not though...

If anything this will just make the US as a whole more pissed at politicians in general, which I view as good. Hopefully we'll get a strong push to get some new congressmen/senators and a president who's looking to mix stuff up in the political machine.

Right now we need political reform more than anything, shortly followed by education and tax reform.

Never going to happen. The debt is going to double, triple, etc and there is nothing anyone is going to do about it. They try and they will get voted out on their asses, have their name dragged through the mud and destroyed and the like. And even if we confiscated all the money from those "evil" rich American parasites, the money would be gone in a month. The system is doomed. Doomed.

This is what happens when you have a police state world cop government that treats everyone like a child and tells them they can have everything for free.

The only thing anyone can do is sit back and prepare for the crash and reboot...Its going to be a hoot! (We all know progressives never let a good crisis go to waste(weimar trap))

#8 Prefect   Members   -  Reputation: 373

Posted 03 August 2011 - 09:25 AM

The only thing anyone can do is sit back and prepare for the crash and reboot...Its going to be a hoot! (We all know progressives never let a good crisis go to waste(weimar trap))


That is a very weird thing to write. First of all, it does seem like progressives are letting the crisis go to waste. The policies that are being implemented in response to the crisis are incredible anti-progressive.

Second, the current situation has nothing to do with Weimar. Hyperinflations are mostly a political phenomenon, not an economic one:

http://pragcap.com/h...tary-phenomenon
Posted Image


You simply won't find examples of hyperinflation outside failed states or states that are not monetarily sovereign.

(Note that some of the causes listed in the quote could be debated. For example, in the case of Weimar which I have looked at more closely, I would not say that regime change played a role. Weimar was relatively stable, pre-economic-troubles, and I would say that the hyperinflation was caused by a combination of foreign denominated debt and a collapse of supply capacity due to the military occupation of the Rhine-Ruhr region. In any case, it's clear that also in this case, hyperinflation is a political phenomenon.)
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#9 A Brain in a Vat   Members   -  Reputation: 313

Posted 03 August 2011 - 10:36 AM

Never going to happen. The debt is going to double, triple, etc and there is nothing anyone is going to do about it. They try and they will get voted out on their asses, have their name dragged through the mud and destroyed and the like. And even if we confiscated all the money from those "evil" rich American parasites, the money would be gone in a month. The system is doomed. Doomed.

This is what happens when you have a police state world cop government that treats everyone like a child and tells them they can have everything for free.

The only thing anyone can do is sit back and prepare for the crash and reboot...Its going to be a hoot! (We all know progressives never let a good crisis go to waste(weimar trap))


Why the hyperbole? That's part of the problem right now -- there's so much hysteria going around, on all sides of the issue. We don't live in a police state. You know you're not in a police state when you're not terrified to describe your government as a police state in a public forum.

#10 Jacob Jingle   Members   -  Reputation: 223

Posted 03 August 2011 - 11:38 AM

Why the hyperbole? That's part of the problem right now -- there's so much hysteria going around, on all sides of the issue. We don't live in a police state.

My country has less than 5 percent of the world's population. But it has almost a quarter of the world's prisoners. That's not a police state?

My government can track me(gps), tap my phones, read my email. etc, all without a warrants and on a whim. It can destroy my good name on a whim. It can shutdown my business on a whim. My government can take my property on a whim. It can molest my wife and kids at the airport on a whim. Hell, it could shot me dead in a drone attack on a whim. There isn't one area where my rights mean anything anymore. Life, Liberty and the pursuit of Happiness don't exist for anyone but the connected.

Hyperbole? When my government acts like my warden/master....I got to call it like I see it.

You know you're not in a police state when you're not terrified to describe your government as a police state in a public forum.

I know I'm living in a police state when my government can do whatever it wants by simply labeling me a potential terrorist, potential drug dealer, etc. Guilty before proven innocent.
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#11 A Brain in a Vat   Members   -  Reputation: 313

Posted 03 August 2011 - 12:02 PM

I'd agree with the fact that our rights are being eroded, but to call the United States (assuming that's the country you're talking about) a police state is really an exaggeration.

Take your assertion that the government can track you with GPS. There's a case, as you may know, currently under consideration by the US Supreme Court, that questions whether warrantless use of a tracking device violates the Fourth Amendment to the Constitution.

This case is in the Supreme Court because the Obama Administration is seeking to overturn a thrown-out conviction. A US Court of Appeals threw out the conviction of some drug dealer because it found the police violated is fourth amendment rights. Would this ever have happened in a police state?

Seriously consider the question. In a police state, would someone the executive branch wanted to put in prison be able to have his conviction overturned because his rights were violated?

The case is an example of the executive branch of the government petitioning the legislative branch to change its decision. In a police state the executive branch doesn't petition anyone. It does whatever it wants.

Like I said, I'm with you on the erosion of our rights, but it doesn't help your cause when you use hyperbole. Not even Ron Paul thinks we currently live in a police state. He thinks we're heading toward being one, but that's different.

Edit: Anyway, this is off topic. PM me if you want to discuss it more.

#12 Alpha_ProgDes   Crossbones+   -  Reputation: 4692

Posted 03 August 2011 - 01:23 PM

my question is this: will closing the Bush AND Obama tax cuts (I benefit but don't agree with in principle) really have the job-draining effect both parties claim it will?

my second question is this: can you really have SS, Medicare, and Medicaid reform without first preventing the gov't from borrow from/against those programs? (which in fact adds to the debt and eroded those programs quicker).
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#13 Khaiy   Crossbones+   -  Reputation: 1342

Posted 03 August 2011 - 06:06 PM

my question is this: will closing the Bush AND Obama tax cuts (I benefit but don't agree with in principle) really have the job-draining effect both parties claim it will?

my second question is this: can you really have SS, Medicare, and Medicaid reform without first preventing the gov't from borrow from/against those programs? (which in fact adds to the debt and eroded those programs quicker).


1: It depends on what you mean by the claims of each party. For the Republican side, almost certainly not.

The idea behind tax cuts as economic stimulus is twofold: that people will spend the extra money, increasing consumption and generating jobs and related economic growth. This is not especially helpful right now because people are generally indebted or afraid of decreased earning power in the future. In the first case, they use the extra money to de-leverage. That's good for them in several ways, but it doesn't help the economy because it doesn't buy anything-- it just pays for production and consumption that already happened. In the second case, people tend to hold their money and keep it liquid, in savings accounts and so on. That's also money that isn't spent or invested, and in addition it generates little to no growth for the saver, current interest rates being what they are.

The second fold is the idea that for wealthier people the preference will be to invest a lot of the extra money, which generates capitol for businesses and also creates jobs, as well as fostering innovation. It's a nice idea, except that it often doesn't work that way. Investments can be made in bonds or commodities, and even worse (macroeconomically) rampant speculation. Even if the investments really did go to businesses, businesses aren't creating jobs because (among other reasons) there's anemic consumer demand to produce revenue that will produce a return. Worse still, businesses are using money to pay investors bigger dividends (to keep stocks attractive despite often lackluster performance), ramp up executive pay (greed), and fund operations in different countries (jobs, but no real help to the US in the immediate term).

Democrats haven't been talking about tax increases costing jobs (not that I recall, at least), but they have said that it will make it more difficult for people to get by (or if you want to be cynical, consume). For a lot of people that's not an inaccurate analysis. But a feeble economy makes it awfully hard for people to get by as well.

The jobs issues in the US are complex, but taxes are far from being the pivotal reason. For all but the highest tech manufacturing, for example, it will always be more cost effective to do so in another country, where you can hire workers for a fraction of the price of a US worker. No amount of pleading is going to get a factory set up here under those conditions, and providing an incentive to do so would require imitating the low pay, low safety, no benefit sort of labor labor pool other countries can provide. That doesn't really mesh with the American standard of living.

2: Yes. But I don't think it's likely to happen. Creative accounting is a basic skill in government, and trying to safeguard funds for programs will probably not outmatch the skill of those who don't care about doing so. But that isn't so critically important, because the government has no shortage of options for borrowing. Programs like those are easy to pillage, but they're only replacing cash in an account or a budget that Congress itself sets (the programs don't all work the same way) with debt held by the public, redeemable for cash at a fixed point in the future. The only way to deal with such a pattern is to fix the underlying issue, which is that politicians (of all stripes) tend to be intellectually dishonest in pursuing their goals. But what's being discussed now in Congress isn't even reform in any meaningful sense. It's just slashing expenditures.

#14 Jacob Jingle   Members   -  Reputation: 223

Posted 03 August 2011 - 11:01 PM

That is a very weird thing to write. First of all, it does seem like progressives are letting the crisis go to waste. The policies that are being implemented in response to the crisis are incredible anti-progressive.

The progressive movement has nothing to do with progress(whatever that means), just like five wars Obama has nothing to do with Hope and Change(whatever that means).

The only thing the progressive movement is about is more government control...So an elite few can become even richer and more powerful.

Create a crisis = Progressives helping the poor to progress through poverty by giving them loans they can't pay back.
Exploit = Things predictably go south and only politically connected people get the bailouts and make a profit from the mess. New regulations are passed to protect these people and end competition. More too big to fail companies. What caused the problem isn't fixed, rinse and repeat.

And this is just one example.

Second, the current situation has nothing to do with Weimar

Food prices are spiking, energy prices are spiking, etc. So far 16 states have considered having their own currency due to what this government is doing to our dollar.

Hyperinflations are mostly a political phenomenon, not an economic one

This government isn't going to cut it's spending, the Fed isn't going to stop printing money and jobs are going to continue to move overseas. The writing is on the wall. (Just sit back and enjoy the ride)

#15 Khaiy   Crossbones+   -  Reputation: 1342

Posted 04 August 2011 - 07:08 PM

The progressive movement has nothing to do with progress(whatever that means), just like five wars Obama has nothing to do with Hope and Change(whatever that means).

The only thing the progressive movement is about is more government control...So an elite few can become even richer and more powerful.

Create a crisis = Progressives helping the poor to progress through poverty by giving them loans they can't pay back.
Exploit = Things predictably go south and only politically connected people get the bailouts and make a profit from the mess. New regulations are passed to protect these people and end competition. More too big to fail companies. What caused the problem isn't fixed, rinse and repeat.

And this is just one example.


And it's a preposterous one. I'll be the first to agree that "progressive" is a term amorphous enough to be mostly useless, and that applying standards used when the term first became popular leaves a lot of politicians short of the mark. For the record, the term originally came from reformers in the Industrial Revolution seeking progress like child labor laws and safe working conditions. They favored government regulation to achieve this for a variety of reasons, including their adroit observation that private industry was perfectly happy to hire children to work 14 hour days around dangerous machinery with no safety measures. But anyways, the idea that anyone who claims (or has applied to them) the description "progressive" is some sort of monstrous, Orwellian autocrat by default is absurd. I'm all for cynicism, but the narrow-view paranoia tinge is too much.

Fannie and Freddie did free up a lot of capital for banks by buying (though not originating, it should be noted) mortgages. It's undeniable that this was a factor in the bubble and bust of residential real estate. But is it really your position that the express intent of such action was to inflate and burst a bubble? That they somehow forced (or perhaps colluded with) private lending and investment firms to issue subprime mortgages to borrowers that couldn't possibly pay them off? With the end goal of increased government control? That the hyperconsolidation of large firms who flouted regulations at every opportunity were following in line with a progressive agenda? And that it was progressives that were the masterminds, or at leas at the helm, meaning that the scheme was theirs through and through?

It's a bold claim, to say the least. There's plenty to dislike about the bailout. There's also plenty to dislike about the toothless regulations. There's plenty to dislike about the conditions that preceded the recession, whether they contributed directly or indirectly. But to go from that crappy-ness to a cabal of Big Brothers in the making is an extraordinary leap. There is without question a body of wealthy, powerful, and influential people who are working constantly to make themselves moreso in each regard, even at the expense of most others (by the way, that can be described as "rational self-interest" if you want a libertarian-esque line). But the idea that it's only people with the progressive mantle, or even that the progressives are the driving force of all of these efforts doesn't hold water.


Food prices are spiking, energy prices are spiking, etc. So far 16 states have considered having their own currency due to what this government is doing to our dollar.


Prices are increasing in many areas. Are you saying that this is because of inflation/devaluation of the dollar, at least moreso than other factors, such as speculation in commodities? Aside from a relatively modest bump in real prices (below what the Fed would might have resisted with a rate hike 20 years ago), I haven't seen a huge surge in inflation. Perhaps you're saying that the curve accelerates so sharply under current conditions that this relatively low increase is cause for concern?

And I'm not impressed that 16 states have "considered" minting their own currency. Some states also considered unilaterally nullifying the ACA and/or seceding, and various other stupid and broadly illegal things. It's not going to happen.

This government isn't going to cut it's spending, the Fed isn't going to stop printing money and jobs are going to continue to move overseas. The writing is on the wall. (Just sit back and enjoy the ride)


I guess I'm still not seeing the crux of your issue. I'm sorry, I'm sure that you're tired of typing out explanations of this, but could you lay out for me why the government running deficits right now is so horrible (under the presumption that they will be paid down, as in the 90's) compared with slashing public expenditure? Is it that you're certain the US isn't going to recover productivity, or that you think runaway inflation will occur first, or that the loss of jobs cannot be corrected?

#16 BenThereDoneThat   Members   -  Reputation: 181

Posted 04 August 2011 - 10:22 PM

So many of these discussions break down into facts versus nonsense.

Seriously:
Hyperinflation is not a threat. Look at actual inflation, compared to historic rates.
Government spending didn't cause this downturn, or today's market crash.
Higher taxes would bring more revenue, we're on the left side of the Laffer Curve.
If you look at Treasury yields, they're falling. Investors don't think default is a risk, as long as the government is allowed to borrow.
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#17 Jacob Jingle   Members   -  Reputation: 223

Posted 05 August 2011 - 01:14 AM

And it's a preposterous one

Well if you say so then it must be so. :P

I'll be the first to agree that "progressive" is a term amorphous enough to be mostly useless, and that applying standards used when the term first became popular leaves a lot of politicians short of the mark

I wasn't questioning the term progressive. I was questioning what their idea of progress is. (In the past it has been a horrible nightmare)

(US specific, I don't know or care about other countries): A progressive is someone that seeks to use an all powerful purified government to progress America past all its ills(Constitution and natural rights be damned). Which means coercively sterilizing some 60,000 Americans because they're not that periods version of the master race and are supposedly a drag on humanity. I think if most progressives really knew their history, knew what the progressive movement had been responsible for, they would call themselves liberals. (Oh wait, they do...Which is why the word no longer means what it used to :lol:)

For the record, the term originally came from reformers in the Industrial Revolution seeking progress like child labor laws and safe working conditions

And led to forced sterilization, forced human experimentation, segregation, Japanese internment camps, prohibition, our current drug war, etc.

I'm bored with the rest of the discussion and I'm going to drop it. (If you're one of those people who needs to declare victory in discussions like this, you win. :D)

#18 way2lazy2care   Members   -  Reputation: 782

Posted 05 August 2011 - 06:25 AM

Higher taxes would bring more revenue, we're on the left side of the Laffer Curve.


So would removing tax loopholes without increasing the actual rates. I would much prefer that we clean the tax code to increase revenue than to leave it in the state it's in and just charge more. Rich people and corporations will just keep using the loopholes/incentives as long as they are there regardless of their tax rate.

Or we could just legalize and tax marijuana...

#19 BenThereDoneThat   Members   -  Reputation: 181

Posted 05 August 2011 - 06:52 AM


Higher taxes would bring more revenue, we're on the left side of the Laffer Curve.


So would removing tax loopholes without increasing the actual rates. I would much prefer that we clean the tax code to increase revenue than to leave it in the state it's in and just charge more. Rich people and corporations will just keep using the loopholes/incentives as long as they are there regardless of their tax rate.


Agreed.
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#20 Alpha_ProgDes   Crossbones+   -  Reputation: 4692

Posted 05 August 2011 - 07:15 AM


Higher taxes would bring more revenue, we're on the left side of the Laffer Curve.


So would removing tax loopholes without increasing the actual rates. I would much prefer that we clean the tax code to increase revenue than to leave it in the state it's in and just charge more. Rich people and corporations will just keep using the loopholes/incentives as long as they are there regardless of their tax rate.

Or we could just legalize and tax marijuana...

I think everyone would agree to a leaner, cleaner tax code, but that would take some time. As of right now, the tax loopholes need to be closed. Bush and Obama.
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