Much attention has been paid of late to whether the United States is trending toward socialism. Alleviating socioeconomic differences through the federal government’s active intervention in the economy is a common aim of all socialist movements. Nonetheless, most champions of the less privileged have never made a practical effort to mitigate the social differences caused by the inequitable distribution of what, nowadays, is a factor with an enormous socioeconomic impact: beauty.
Bush left office with a budget deficit of $482 billion, the largest ever in nominal dollars (although not the largest as a percentage of GDP).
Bush was roundly criticized (deservedly so) for increasing the budge deficit. How often did you hear during the campaign that Bush “turned a budget surplus into a budget deficit”?
So what will the Obama administration do? Tighten some belts, scrimp and save? Reverse the policies that led to the deficit in the first place?
Hahahaha….no.
The Congressional Budget Office’s projected deficit for the 2009 fiscal year ending on Sept. 30 would amount to 13.1 percent of expected gross domestic product—a level not seen since World War Two. In January, the budget office had forecast a $1.2 trillion deficit for fiscal 2009.
As a reminder, here’s what $1 trillion looks like:
Each of the individual cubes represents a pallet of $100 million dollars, enough to buy 4000 brand new Toyota Prius.
And they’re not done spending yet. The Obama administration has pledged
$12.8 Trillion for the financial bailout, almost equal to the entire GDP of the United States:
The U.S. government and the Federal Reserve have spent, lent or committed $12.8 trillion, an amount that approaches the value of everything produced in the country last year, to stem the longest recession since the 1930s.
The CBO estimates that the Obama administration will double the national debt over the next decade, from $4.4 trillion to $9.3 trillion.
Remember this Moveon.org ad?
It appears that the Obama administration interpreted it not as a cautionary tale, but as a blueprint for action.
Unfortunately, I don’t think we’ll see much true change until we change the institutional incentives that result in bad government. (Remember that McCain suspended his campaign to push for the first $750 billion bailout.)
Until then, prepare for heavy taxes, inflation, and social unrest.
Splitting hairs about the meaning of the word “voluntary” makes Reid look like an idiot. Does he think that people watching this don’t see through his equivocation?
The thing is, Reid could’ve made a rational argument for why the income tax is voluntary in the common meaning of the term. He could’ve said that the U.S. was like a giant home owners association. Whether you choose to join or stay with an HOA is up to you, a voluntary choice. But as long as you stay in the HOA, you’re obligated to pay HOA fees.
Likewise, you can always give up your U.S. citizenship and move to another country. But as long as you stay here, you’re subject to U.S. taxes.
Of course, there are problems with the argument too. (For example, even if you give up your U.S. citizenship, the U.S. used to require requires you to pay income tax for 10 years after you leave.) But at least it doesn’t make you look like an evasive ninny.
Via Wall Street Journal article: You can’t soak the rich. by David Ranson, May 20, 2008.
“…Mr. Hauser uncovered the means to answer these questions definitively. On this page in 1993, he stated that “No matter what the tax rates have been, in postwar America tax revenues have remained at about 19.5% of GDP.” What a pity that his discovery has not been more widely disseminated.
The chart [above], updating the evidence to 2007, confirms Hauser’s Law. The federal tax “yield” (revenues divided by GDP) has remained close to 19.5%, even as the top tax bracket was brought down from 91% to the present 35%. This is what scientists call an “independence theorem,” and it cuts the Gordian Knot of tax policy debate.
The data show that the tax yield has been independent of marginal tax rates over this period, but tax revenue is directly proportional to GDP. So if we want to increase tax revenue, we need to increase GDP.
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What happens if we instead raise tax rates? Economists of all persuasions accept that a tax rate hike will reduce GDP, in which case Hauser’s Law says it will also lower tax revenue.
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What makes Hauser’s Law work? For supply-siders there is no mystery. As Mr. Hauser said: “Raising taxes encourages taxpayers to shift, hide and underreport income. . . . Higher taxes reduce the incentives to work, produce, invest and save, thereby dampening overall economic activity and job creation.”
Putting it a different way, capital migrates away from regimes in which it is treated harshly, and toward regimes in which it is free to be invested profitably and safely. In this regard, the capital controlled by our richest citizens is especially tax-intolerant.”
