Too bad our government totally ignored the Simpson-Bowles report.

[crazed_hoosier2]

I would say there are just as many saying the revenue side shouldn't be touched.

Both sides need to be on the table.

The problem is that there's only so much additional revenue we can realistically expect to raise....at least in any sustainable fashion.

Revenue generation has long just bounced between a range of ~14% - ~18%....and usually tracks with economic performance. Revenues naturally go down during weaker periods of growth and naturally go up during stronger.

Trying to squeeze the goose's body too hard will only result in impairing his ability to lay the golden eggs. And it's the golden eggs we need. Maximizing growth should always be a primary focus. And I don't mean the kind that comes briefly from Keynesian infusions of demand. The more our economy is growing, the less pressure it will require to repair our fiscal footing.

Spending is far more within policymakers' control than either growth or tax revenues. But (a) the biggest source of fiscal pain is the non-discretionary funds that nobody wants to touch, and (b) even talking about the discretionary funds makes many people shriek in absolute terror.

 

[GooglyMooglyWooglyBoogly]

All. Close unnecessary tax loop holes. Add incentives for them to hold ground on prices and employment. Increased dollars to consumers via higher wages and static prices will create a higher volume of sales. It's trickle down that actually trickles down.

Ah yes the old price controls, wage regulation, 1, 2 combo.

The saving grace of all debt ridden countries.

 

[mrhighlife]

No

Yes

 

[mrhighlife]

Ah yes the old price controls, wage regulation, 1, 2 combo.

The saving grace of all debt ridden countries.

Price controls are mandatory. This isnt mandatory.

 

[mcmurtry66]

The problem is that there's only so much additional revenue we can realistically expect to raise....at least in any sustainable fashion.

Revenue generation has long just bounced between a range of ~14% - ~18%....and usually tracks with economic performance. Revenues naturally go down during weaker periods of growth and naturally go up during stronger.

Trying to squeeze the goose's body too hard will only result in impairing his ability to lay the golden eggs. And it's the golden eggs we need. Maximizing growth should always be a primary focus. And I don't mean the kind that comes briefly from Keynesian infusions of demand. The more our economy is growing, the less pressure it will require to repair our fiscal footing.

Spending is far more within policymakers' control than either growth or tax revenues. But (a) the biggest source of fiscal pain is the non-discretionary funds that nobody wants to touch, and (b) even talking about the discretionary funds makes many people shriek in absolute terror.

The poster you’re responding to is preparing this

 

[mcmurtry66]

Yes

Increased sales at lower margins. No.

 

[mrhighlife]

Price controls are mandatory. This isnt mandatory.

The only mandatory thing I've stated is an increase in the minimum wage. Everything else would be voluntary.

 

[mrhighlife]

Increased sales at lower margins. No

What if the margins are too high? What were the margins back when America was great? We're trying to make it great again.

 

[Marvin the Martian]

It’s an uncivilized hell hole of a continent. It is by far the most violent, least investable one, and nothing has changed in 25 years. Let the Chinese or Russians (hasn’t worked out well) try and use influence to control it.

We certainly don’t need people like Ilhan Omar coming here on the basis of USAID. I’d much rather build stronger relationships with India and Latin America (we need socialism to be overthrown again).

I suggested we need to prioritize, if there is reason to prioritize India and Latin America I am fine.

Generally speaking, there is a range of things we have to look at. Strategic location, power, neighboring countries, and resources. So a country may be valuable only because it sits between two REALLY valuable countries and thus exerts some leverage on them. It may be valuable because it is strong, controls a key area, or is mineral-rich. Or, like Taiwan, produces a product we have to have and would like China not to have.

I mentioned in that rare earth thread how we appear to be pivoting to guarantee access to more of those metals.

All this means is that any analysis needs to look at which African countries have materials we need, or materials we would prefer not to fall into China's hands. Where they exist, we have a reason to apply soft power. And of course, Egypt, as we discovered with the ship ran aground. The Suez is exceedingly valuable to us.

And not part of this argument only because I know it will carry little weight in this context, I do favor strictly humanitarian aid for humanitarian reasons.

Whether a country is a hell-hole or not matters in some regards. But even hell-holes can be strategically important.

 

[Marvin the Martian]

All. Close unnecessary tax loop holes. Add incentives for them to hold ground on prices and employment. Increased dollars to consumers via higher wages and static prices will create a higher volume of sales. It's trickle down that actually trickles down.

When there were discussions here on lowering the corporate rate 10 years ago, it was always coupled with eliminating loopholes. The people who most promoted it were fans of closing loopholes. We lowered the rate, let money to come back here tax free, and didn't touch any loopholes. It should be part of extending the cuts, it won't be.

 

[crazed_hoosier2]

The poster your responding to is preparing this

I know. But it drives me crazy that people think Congress can just raise however much tax revenue they want or need to. But a lot of people believe that -- even some smart people believe that. It's just a matter of mustering the will.

Wasn't it Peter Orszag during the Obama years who wanted to pursue a tax policy that would target 19% GDP in revs? I think it was.

Again, one year...out of 74 years. With all the various tax regimes we had. Congresses of each party. Presidents of each party. Wars. Recessions. Booms. Busts. 90+% marginal tax rates. One year did we hit 19%. And that was because of an asset bubble the subsequently burst.

FTR, I'm not vehemently opposed to changes in tax policy. But anybody who thinks we're going to fix this by generating a bunch of new tax revenue on a regular basis is fooling themselves.

 

[crazed_hoosier2]

When there were discussions here on lowering the corporate rate 10 years ago, it was always coupled with eliminating loopholes. The people who most promoted it were fans of closing loopholes. We lowered the rate, let money to come back here tax free, and didn't touch any loopholes. It should be part of extending the cuts, it won't be.

Maybe.

But bear in mind that the corporate rate won't be part of the extension debate. It's already permanent.

 

[mcmurtry66]

What if the margins are too high? What were the margins back when America was great? We're trying to make it great again.

It’s impossible not to generalize but most business is small business. Profits again depend on industry but according to some studies I’ve read avg about 10 percent net profits. This is a Dem staple and I don’t think they realize how little most businesses make. There are people on this board who think having an ownership interest in five companies has to be a fiction. It doesn’t mean shit. Flipping houses during the right time would generated more profit than all five combined

 

[mcmurtry66]

I know. But it drives me crazy that people think Congress can just raise however much tax revenue they want or need to. But a lot of people believe that -- even some smart people believe that. It's just a matter of mustering the will.

Wasn't it Peter Orszag during the Obama years who wanted to pursue a tax policy that would target 19% GDP in revs? I think it was.

Again, one year...out of 74 years. With all the various tax regimes we had. Congresses of each party. Presidents of each party. Wars. Recessions. Booms. Busts. 90+% marginal tax rates. One year did we hit 19%. And that was because of an asset bubble the subsequently burst.

FTR, I'm not vehemently opposed to changes in tax policy. But anybody who thinks we're going to fix this by generating a bunch of new tax revenue on a regular basis is fooling themselves.

People are too crafty as well. So many loopholes to reduce liability without even the extreme of Corp inversion etc

 

[crazed_hoosier2]

The only mandatory thing I've stated is an increase in the minimum wage. Everything else would be voluntary.

Wouldn't you say that wage growth at the lower end has done pretty well without hiking the federal minimum wage?

I don't think a federal minimum wage is even a good idea. Different areas have very different labor markets. Doing it at the state level is better than at the federal level. And doing it at the local level is better than either one.

 

[crazed_hoosier2]

What if the margins are too high? What were the margins back when America was great? We're trying to make it great again.

I wish somebody could tell me how we can control our margins such that somebody else might think they were "too high" (whatever "too high" is).

I remember having a conversation along these lines with a former union business manager about this. And his response was "Well, just raise your rates." It was then that I realized that a lot of people who may know things about X, Y, and Z really have no idea how running a business works. But everybody thinks they do.

Ironically, that guy retired and now owns a business (unrelated to the building trades). When I see him, I sometimes ask him how it's worked out for him to just raise his prices to make ends meet. He gets it now.

 

[Aloha Hoosier]

Wouldn't you say that wage growth at the lower end has done pretty well without hiking the federal minimum wage?

I don't think a federal minimum wage is even a good idea. Different areas have very different labor markets. Doing it at the state level is better than at the federal level. And doing it at the local level is better than either one.

I concur. My grad school economics professor said the best minimum wage is no minimum wage.

 

[crazed_hoosier2]

The other two ways to address it are tax increases and extraordinary economic growth.

Well, the latter is pretty much entirely outside of our control. It happens when it happens -- although it's certainly true that public policy can have impacts on that. We should absolutely have a public policy that does as much as it can to encourage growth and as little as it can to discourage it.

As for the former, I will once again repeat: for the past 74 years (including a number of years with marginal income tax rates reaching above 90%, and many more years with them at 70%), we have had precisely 1 year where federal tax revenues reached 19%. That was tax year 2000...which was the tail end of the dot-com boom. Right before it burst.

One. Out of 74. Here they all are again....

If you're of the belief that we can raise the tax revenues to pay for the government we have, I will just politely but firmly tell you that you are mistaken.

Uh-oh. @snarlcakes just liked this post.

And that means he's about to tell me that I forgot about the most obvious (and likely!) way for Congress to fill this gap.

 

[crazed_hoosier2]

I concur. My grad school economics professor said the best minimum wage is no minimum wage.

I agree with that as well. But people will freak out about that -- because they think the MW (whether federal or otherwise) is the reason we don't have sweatshops anymore. The notion of having no minimum wage at all is unthinkable to them.

And I get that. As such, I don't have any problem with state or local governments doing them. Economically, a minimum wage (like any other form of price control) is meaningless so long as the floor is set below market prevailing prices. The problem happens when/if the market prevails lower. That's why they cause demand to fall -- and just end up counter productive.

That's why I've always thought it was well said that "the actual minimum wage is *always* zero." Because the existence of a job is never a given -- it will always be subject to the demand curve.

 

[GooglyMooglyWooglyBoogly]

I agree with that as well. But people will freak out about that -- because they think the MW (whether federal or otherwise) is the reason we don't have sweatshops anymore. The notion of having no minimum wage at all is unthinkable to them.

And I get that. As such, I don't have any problem with state or local governments doing them. Economically, a minimum wage (like any other form of price control) is meaningless so long as the floor is set below market prevailing prices. The problem happens when/if the market prevails lower. That's why they cause demand to fall -- and just end up counter productive.

That's why I've always thought it was well said that "the actual minimum wage is *always* zero." Because the existence of a job is never a given -- it will always be subject to the demand curve.

Best metaphor I’ve heard is that proponents like to think of the minimum wage as a floor. In reality it acts as a hurdle to the lowest skilled workers.

1% of Americans earn minimum wage. Of that 1%, 90% will earn a raise within a year.

 

[crazed_hoosier2]

Best metaphor I’ve heard is that proponents like to think of the minimum wage as a floor. In reality it acts as a hurdle to the lowest skilled workers.

1% of Americans earn minimum wage. Of that 1%, 90% will earn a raise within a year.

Yeah, it's like 80,000 people or something like that. One look at the chart on real wages shows that we really don't need to count on raising the FMW to generate wage growth.

 

[snarlcakes]

Uh-oh. @snarlcakes just liked this post.

And that means he's about to tell me that I forgot about the most obvious (and likely!) way for Congress to fill this gap.

 

[mrhighlife]

Wouldn't you say that wage growth at the lower end has done pretty well without hiking the federal minimum wage?

I don't think a federal minimum wage is even a good idea. Different areas have very different labor markets. Doing it at the state level is better than at the federal level. And doing it at the local level is better than either one.

Does a minimum wage hurt? I can't find and you are more knowledgeable. I seem to recall though reading that never in the history of minimum wage has an increase to it coincided with an economic downturn of any sort. Some research suggests minor job losses might happen but it's never actually happened.

 

[crazed_hoosier2]

Does a minimum wage hurt? I can't find and you are more knowledgeable. I seem to recall though reading that never in the history of minimum wage has an increase to it coincided with an economic downturn of any sort. Some research suggests minor job losses might happen but it's never actually happened.

The concern is weakness in unskilled entry-level labor demand, not a wholesale economic contraction.

Whether or not a hike hurts it’s just going to depend on where prevailing wages are relative to where the MW is set.

And keep in mind that, say, San Francisco is a very different kind of labor market than Appalachia. That’s why MWs are better left to state/local governments.

 

[crazed_hoosier2]

View embedded media

As if you’re you’re ever going to stop tapping the sign no matter what anybody says!

 

[BradStevens]

You would have to raise taxes 30-40% to close the deficit and pay for what we currently have. If they did that the economy would quickly plunged into a recession as discretionary spendings would be the first place people cut, which would lead to job cuts.
Next up would be defaults on car loans and mortgage loans. Then the banks would implode. Then you get a depression.

Now it wouldn’t ever get that far because they would print whatever it takes to keep the system going. However, we would end up with a higher debt to GDP when all said and done.

There are two feasible ways out.

Option 1: Small increases in taxes and larger cuts to government. And probably 10-20 years of slow growth and pain.

Option 2: Higher inflation, higher growth (requires low taxes and fewer regulations) and monetize the debt.

Look, we have already spent the money and the path we’re on leads to destruction at some point. There is going to be pain for all the terrible decisions that were made. The question is, which path is politically feasible. Since, they can print the money, it’s option 2 in my opinion.

Option 3: Confiscate 50% of the wealth of all Boomers.

 

[Baller23Boogie]

Option 3: Confiscate 50% of the wealth of all Boomers.

 

[crazed_hoosier2]

Option 3: Confiscate 50% of the wealth of all Boomers.

Don’t give them any ideas, Brad.