Investors now see Australia as a better place to invest than the USA or Germany.

[Malcador]

By everyone are you proposing everyone with income or everyone that pays tax now ?

[Guard Dog]

@Gorgon & Morgoth: How do you figure? I said reasonable cuts, not total cuts. Runaway entitlement spending is the biggest share of our problem now.

 

@Malcador: Yes 15% on everyone who earns an income. 40-50% of Americans pay no federal taxes now. Typically they are the ones who benefit most from the "Social Programs" it is only fair they should help pay for it.

 

Just as an example there is a big controversy in Florida right now. Public school teachers are now being asked to pay part of their salary towards their retirement. Just 3% and the State pays the rest. They are stamping their feet and screaming like a bunch of spoiled six year olds about it too. God forbid they have to pay part of their retirement LIKE EVERYBODY ELSE IN FLORIDA. Our biggest problem is that so many people have been getting handouts now they never consider that the cost of those handouts is being borne by someone else. I think it's only fair that everyone pay.

Edited August 7, 2011 by Guard Dog

[Guard Dog]

I'm willing to concede the lassiez-faire, libertarian argument has been lost for good and all.

[Hurlshort]

@Gorgon & Morgoth: How do you figure? I said reasonable cuts, not total cuts. Runaway entitlement spending is the biggest share of our problem now.

 

@Malcador: Yes 15% on everyone who earns an income. 40-50% of Americans pay no federal taxes now. Typically they are the ones who benefit most from the "Social Programs" it is only fair they should help pay for it.

 

Just as an example there is a big controversy in Florida right now. Public school teachers are now being asked to pay part of their salary towards their retirement. Just 3% and the State pays the rest. They are stamping their feet and screaming like a bunch of spoiled six year olds about it too. God forbid they have to pay part of their retirement LIKE EVERYBODY ELSE IN FLORIDA. Our biggest problem is that so many people have been getting handouts now they never consider that the cost of those handouts is being borne by someone else. I think it's only fair that everyone pay. Evey dollar someone gets without working for, someone else worked for it but did not get. Government so to EARN money, they TAKE it.

 

Well, I have a good chunk of my salary (10%) withheld for retirement, so I'm not sure what the break down in Florida is. But one of the few benefits to teaching is the decent retirement package. Teaching is a career with with high education requirements and a high burnout rate. The salary is usually extremely low compared to similar degree-required jobs. So when you start slashing their benefits, you are really crippling the future of education in Florida. Teachers will likely leave the state in droves for better packages, and you will see a drop in University credentialing programs. There is already a shortage of teachers in the country, it's just been less noticeable because the budget cuts are forcing most schools to raise class sizes and cut programs rather than higher new teachers.

 

For example of how the salary issue works, my wife makes a few hundred dollars a month less than me, but she also gets free health care. It isn't really free, she just makes less than I do. So a teacher in Florida makes less than I do, but they don't put 10% of their salary into retirement. The money is being withheld off the top. I doubt the teacher would be complaining if promises were made to increase their salaries.

[Guard Dog]

@Gorgon & Morgoth: How do you figure? I said reasonable cuts, not total cuts. Runaway entitlement spending is the biggest share of our problem now.

 

@Malcador: Yes 15% on everyone who earns an income. 40-50% of Americans pay no federal taxes now. Typically they are the ones who benefit most from the "Social Programs" it is only fair they should help pay for it.

 

Just as an example there is a big controversy in Florida right now. Public school teachers are now being asked to pay part of their salary towards their retirement. Just 3% and the State pays the rest. They are stamping their feet and screaming like a bunch of spoiled six year olds about it too. God forbid they have to pay part of their retirement LIKE EVERYBODY ELSE IN FLORIDA. Our biggest problem is that so many people have been getting handouts now they never consider that the cost of those handouts is being borne by someone else. I think it's only fair that everyone pay. Evey dollar someone gets without working for, someone else worked for it but did not get. Government so to EARN money, they TAKE it.

 

Well, I have a good chunk of my salary (10%) withheld for retirement, so I'm not sure what the break down in Florida is. But one of the few benefits to teaching is the decent retirement package. Teaching is a career with with high education requirements and a high burnout rate. The salary is usually extremely low compared to similar degree-required jobs. So when you start slashing their benefits, you are really crippling the future of education in Florida. Teachers will likely leave the state in droves for better packages, and you will see a drop in University credentialing programs. There is already a shortage of teachers in the country, it's just been less noticeable because the budget cuts are forcing most schools to raise class sizes and cut programs rather than higher new teachers.

 

For example of how the salary issue works, my wife makes a few hundred dollars a month less than me, but she also gets free health care. It isn't really free, she just makes less than I do. So a teacher in Florida makes less than I do, but they don't put 10% of their salary into retirement. The money is being withheld off the top. I doubt the teacher would be complaining if promises were made to increase their salaries.

IIRC It was a trade off. They could either accept work force reductions (meaning larger classes) pay cuts, or start contributing to their retirement. It was the least onerous of the three but before that the state had paid for it 100%. IMO 10% is fair. I have to pay 100% of my retirement. There are very few private sector jobs that have pensions. If you're lucky you'll have a 401k. The truth is, Florida like most other states was suffering from buget shortfalls. The housing bubble burst causing the value of property to plummet. Florida taxes propery based on it's value and with that decreasing the tax income did as well. Raising propery tax only hurts the real estate market because it disincetivises renters to buy, and makes home more difficult to sell. Plus business were already leaving the state, that only spurrs the exodus which drives up unemployement.

[Meshugger]

It is still sad to see how the media treats these rating agencies as serious entities when they have proven that they can't rate for **** to begin with. Manipulating financial bubbles are more their kind of territory.

 

I am not saying that the US government should treat their budget problems any less lightly, but they should not be treated as the only source for financial stability.

 

Um, ratings downgrades mean higher borrowing costs - which is something that will have a tangible impact on all Americans. This isn't some non-issue the media is hyping up (OK, so they probably ARE hyping it up).

 

Those are only effective if the markets pay heed to the rating itself. Which they shouldn't do, since the decision to cut the rating was solely a political one. S&P said so themselves.

[Wrath of Dagon]

I used to be for a flat tax, but the way we're spending I don't think 15% will raise enough money. Also it's 15% in addition to 7% (really 15%) Social Security collects, too high a burden on the low income. I would say eliminate all deductions and apply 15% and 25% brackets to all income, no exceptions, except exempt the first 20,000 or so for a family of 4, which gives a nice element of progressivity at the low end. Of course you'd still have the Social Security/ Medicare tax in addition, because we just can't afford to do away with it, in fact Medicare tax should be applied to all income as well, not just earned income. A flat tax is actually very powerful, the 15% Social Security tax on the first $100000 per individual accounts for almost half the government revenue.

[Zoraptor]

The problem with flat taxes and other such 'fair' ideas such as universal Sales Tax/ GST/ VAT is that the costs of living are definitively not flat. Someone on a very low wage has to pay far more of their wage proportionately for essentials and indeed will spend almost all their money every week.

 

Most democratic governments are depressingly short sighted economically. Pay down debt- most expensive first- in the good times so you don't have to sweat the deficits in the bad times. It's hardly rocket science that running deficits in the good times and the bad times is going to lead to problems.

 

Um, ratings downgrades mean higher borrowing costs - which is something that will have a tangible impact on all Americans. This isn't some non-issue the media is hyping up (OK, so they probably ARE hyping it up).

It doesn't always mean higher rates- Ireland's and Iceland's actually dropped after getting a downgrade, according to the beeb- though I pretty much agree that it will ultimately in this case despite the other two agencies not downgrading. It seems to really depends on whether it has been expected and factored in previously.

[Calax]

The question to me is what exactly is the political statement being made? The use of the debt ceiling as a political weapon by the GOP to get what they wanted? Or the fact that the agreement was reached without any suggestions for getting more revenue for the government? Or all of the above?

[Guard Dog]

The question to me is what exactly is the political statement being made? The use of the debt ceiling as a political weapon by the GOP to get what they wanted? Or the fact that the agreement was reached without any suggestions for getting more revenue for the government? Or all of the above?

I think the root of the problem is the government is spending at a faster rate than revenue can keep up. I read earlier today that the US borrows 40% of every dollar it spends. And the rate of spending has doubled in the last two years. It's reached a point that they can not increase taxes enough to cover the deficit without utterly ruining the economy. Spending reductions MUST be taken and the largest part of spending is entitlements. Taxes will probably have to go up as well but it cannot be so great as to cripple any growth potential. My two ideas are to lift all moritoriums on domestic energy production and have at least a three year suspension of capital gains taxes coupled with a modest increase in income tax. Couple all of that with cuts in defense, foreign aid, discretionary and entitlement spending and it should be enough to equaize the debt to income issue in a few years.

[Gorth]

My two ideas are to lift all moritoriums on domestic energy production and have at least a three year suspension of capital gains taxes coupled with a modest increase in income tax.

My English skills are failing me, not understanding 'moritoriums' in that context

 

Would suspending capital gains taxes really be such a hot idea? It was reckless speculation that to some degree brought about the mess in the first place. I seem to remember once upon a time in the old country, they had different tax rules depending on how long you held onto your shares/stocks/whatever to encourage investment (long term commitment) and discourage speculation/manipulation of short term buying and selling.

 

Couple all of that with cuts in defense, foreign aid, discretionary and entitlement spending and it should be enough to equaize the debt to income issue in a few years.

I seem to remember the discretionary spending being a not unsubstantial sum of money (yeah, followed the debate a bit on the news during that weekend before the deadline), but what exactly does it mean? Money that isn't "ear marked" for a specific purpose?

[Enoch]

What's with all this panick-y reaction anyways? Other rating agencies (from China) have downgraded the US a long time ago, and guess what, were just ignored.

 

It seems only US RA's are being taken seriously. This alone is proof enough that they're just unrealiable financial tools.

The US credit raters are important because a lot of mutual funds and other investment vehicles have built-in rules incorporating their ratings. For example, many low-risk bond funds will automatically divest themselves of any asset rated less than AAA by 2 of the 3 major ratings agencies (S&P, Moody's, Fitch).

 

My two ideas are to lift all moritoriums on domestic energy production and have at least a three year suspension of capital gains taxes coupled with a modest increase in income tax.

My English skills are failing me, not understanding 'moritoriums' in that context

 

Would suspending capital gains taxes really be such a hot idea? It was reckless speculation that to some degree brought about the mess in the first place. I seem to remember once upon a time in the old country, they had different tax rules depending on how long you held onto your shares/stocks/whatever to encourage investment (long term commitment) and discourage speculation/manipulation of short term buying and selling.

 

Couple all of that with cuts in defense, foreign aid, discretionary and entitlement spending and it should be enough to equaize the debt to income issue in a few years.

I seem to remember the discretionary spending being a not unsubstantial sum of money (yeah, followed the debate a bit on the news during that weekend before the deadline), but what exactly does it mean? Money that isn't "ear marked" for a specific purpose?

"Discretionary spending" in the U.S. federal budget context refers to spending that is controlled by annual appropriations acts. This generally means everything that isn't automatically paid in accordance with past statutory promises (i.e., entitlements like social security and medicare, and interest on the existing debt). In common practice, it is often divided into Defense and Non-Defense categories. Fun fact: for 2011, expected federal revenues are not projected to even be enough to pay for the non-discretionary part of the budget. This is largely due to a temporary payroll tax cut in effect for this year only.

 

In terms of lost revenue versus stimulative effect on the economy, a capital gains cut is among the worst policy options. First off, with the declines in the real estate and equities markets, very few people actually have gains to cash in. (And even if they do, many are still benefitting by losses carried forward from previous tax years, which in some situations can wipe out the tax on current gains.) And the stimulative effect would be minimal-- the people benefitting most would be the bankers and hedge fund managers who got us into this mess, and the gain they would get from the tax break would be more likely to end up invested outside the United States than spent or invested domestically in a way that would stimulate the U.S. economy. Great for Brazil and Malaysia; not so great for America.

[Wrath of Dagon]

They could suspend inflation indexing for 10 years to gradually raise taxes for everyone, but the best thing for the economy is tax reform along the lines the Deficit Reduction Commission proposed.

[Wrath of Dagon]

Your government at work: http://www.politico.com/politico44/perm/08...923ea3919e.html

 

Why do we need the Department of Agriculture again? For food stamps?

[Calax]

Your government at work: http://www.politico.com/politico44/perm/08...923ea3919e.html

 

Why do we need the Department of Agriculture again? For food stamps?

Governmental enforcement against DDT and other pesticides from being over used. And if they actually had any government Umph put behind them they'd also work to reign in groups like Monsanto who basically ruin small farmers.

[Wrath of Dagon]

Doesn't EPA do that? Edit: And FDA, as far as pesticides in food.

Edited August 19, 2011 by Wrath of Dagon

[Calax]

No, the EPA deals with the actual pollution and cleanup. The Department of Ag is the ones who deal with the substance itself IIRC.

 

Also USDA isn't just some fancy acronym hung on everything under the sun having to do with beef and foods... it's the United States Department of Agriculture.

[Wrath of Dagon]

An interesting article on American constitutional issues some of which we discussed here before : http://blogs.the-american-interest.com/wrm...ndment-of-doom/

 

On his last day in office, President James Madison vetoed what today we would call an infrastructure bill. He thought the bill was a good idea, that the country needed the infrastructure and that the federal government was the right agency to provide it, but believed that the Constitution he had helped write provided no authority for Congress to act in this way. If Congress wanted to support infrastructure in the various states, the right way to proceed was to get an infrastructure amendment into the Constitution. Barring that, nothing could be done.

Madison would know, since he pretty much wrote the Constitution.

[Calax]

*reads the article* well... that gives so little information on the thing that mr madison veto'd that it could be "we want a federal transit system that runs from inside a slaves rear to mount vernon!"

[Walsingham]

Again, you're talking like Madison was some kind of prophet of the faith. His concept of the right system of government for then and the right one now might even have changed if you had the capability to ask the man now.

[Wrath of Dagon]

Fine, if things need to change (and the article states that Madison saw the need for the law he vetoed), then amend the Constitution, that's what that procedure is there for. It's a question of the rule of law vs tyranny of the judiciary.

[Calax]

Fine, if things need to change (and the article states that Madison saw the need for the law he vetoed), then amend the Constitution, that's what that procedure is there for. It's a question of the rule of law vs tyranny of the judiciary.

That's rather.... bipolar of you. As it is the Feds did put in a federal infrastructure and have supported various infrastructures under all sorts of government administrations. Times have changed what worked or was needed in the colonial times is sometimes no longer needed. Electoral college is a perfect example.

 

But due to the nature of how hard it is to change the constitution on something that is controversial from the beginning you will rarely ever see it changed in general, it's why they allowed for the passing of laws rather than forcing everything to go through the amendment process.

[Enoch]

I'd say it's more a case of deliberate ambiguity. Madison may have had a particular idea about what was meant by "to provide for the ... general welfare of the United States" and "to regulate commerce ... among the several states" (powers of Congress in Article I, sec. , but there wasn't enough of a consensus among the other 37 dudes at the Constitutional Convention to agree on more specific language. So, as with many things written by committee, they settled on language that each of them could reasonably interpret as supportive of their view. Which amounts to punting the issue for future generations to figure out.

 

Also, @WoD, wouldn't a "tyrannical" judiciary be one that struck down acts of the elected branches of government, rather than one that let the people's representatives in Congress and the White House carry out the will of their constitutents?

Edited August 30, 2011 by Enoch

[Wrath of Dagon]

It's tyrannical whenever it purposely misnterprets the laws to suit its political agenda instead of honestly trying to get to the meaning, no matter on which side it comes out as a result. There's no ambiguity in the example you cite, taxation is allowed only for general welfare, not for someone's particular welfare, but whatever the congress does is still limited to the enumerated powers. This is a very blatant example of purposeful misinterpretation of the original meaning.

[Calax]

Uh, one would think that fostering infrastructure along certain lines would be covered by "Regulating commerce" in a sense.