Deeper in Debt
" You load 16 tons, and what do you get?
Another day older and deeper in debt."
"16 Tons" by Tennessee Ernie Ford (1955)
Do you earn more than $250,000 per year?
Do you believe that Barack Obama's tax plan will raise your taxes?
If you answered "yes" to both questions, you are right, and you almost certainly will vote for John McCain in November.
But if you answered "No" to the first question and "Yes" to the second, you have been taken in by McCain's misleading TV commercials. Actually, you and most Americans would receive a tax cut under his plan.
McCain's own tax plan really would cut taxes for all taxpayers; he even favors allowing taxpayers to figure their taxes two ways, and pick the cheaper one to use in filing their annual 1040. For those earning the top one percent of American annual income, McCain's tax cut would save about $100,000 per year. For middle-class taxpayers, the saving would be about $600, and for the working poor ( the bottom 20%), the saving would be about $65 per year . (1)
According to the Tax Policy Center, the McCain tax cuts would cost the federal government about $700 billion per year, or about $ 7 trillion over the next decade. The Arizona senator is against "earmarks" (pork-barrel spending "earmarked" by members of Congress for their states or districts) and will veto them; the trouble is that there is nowhere near that much pork in the federal budget!
Just to offset the tax-cuts (not to balance the budget, which is now about $400 billion in the red), McCain would have to cut deeply into major government programs such as Defense, Social Security, Medicare and Medicaid. Moreover, the big mortgage bail-outs now in process to prevent massive foreclosures and failures of Fannie Mae and Freddy Mac (2) will add many billions to federal spending in the next few years, making the proposed tax-cuts even more untenable.
But, wait-----won't tax cuts stimulate economic growth and bring in enough new tax money to pay for themselves? Did this not work in the past? Don't we believe in "supply side economics?
The last fiscal year the US had a budget surplus was FY 2001, when the national debt was about $5.7 trillion (3) and unemployment was just under 5%. Under the leadership of President George W Bush, taxes were slashed in 2001, about 7 years ago. If the "supply side fantasy" were true, the tax cuts would have long since paid for themselves. We would have both a reduced national debt and lower unemployment due to the economic growth stimulated by the tax cuts. The facts: the debt today is $9.6 trillion and unemployment is about 6.1% of the workforce.
What went wrong? No doubt the September 11 attacks hurt the US economically, and the costs of the Afghanistan War and the subsequent Iraq War increased government spending on Defense dramatically. (In the past, we have raised taxes to pay for wars, but not this time.) However, the Bush Administration's Medicare drug-benefit and No Child Left Behind education bill have also added to government spending. Maybe these were good ideas, but there can be no question that they have increased US outlays, and must be paid for by someone someday.
Another problem is that today investment by business does not necessarily increase jobs in the US; instead major manufacturers are building factories in China, Mexico, Vietnam, and other low-wage countries. In this era of a global economy, more money in the hands of business may mean more jobs, but those jobs might well be in Asia or Latin America, rather than here. Government also uses its money to create jobs----but nearly all government jobs are here in the US!(4)
Our federal deficit is funded by selling US treasury bills on the world market, and China is a major buyer. Older readers may recall the fears that China would bomb the US or invade our Asian allies; today China could hurt us even more by refusing to fund our debt! Our huge nuclear arsenal and powerful navy are useless against this threat. The only way we can avoid becoming more dependent upon Chinese and other foreign creditors is to balance our federal budget, and then start paying down our humungous national debt.
I would like to see even one candidate publish his proposed first year budget, broken-down by department and program, and what tax rates would be required to pay for all of it! Why not devote a tiny fraction of the campaign budget to hiring a few accountants to whip this up? Maybe this is the "straight talk" that neither nominee would like to share with the voters!
Although Barack Obama would impose higher taxes on the wealthy (those with incomes over a quarter of million dollars per year), his tax and spending plans would still increase the national debt by about $ 4.25 trillion over the next decade. (1). The problem with the Obama plan is not that he wants to raise taxes on average Americans----actually most people would pay less after a $1,000 per family credit-----but that he has not proposed any tax plan that would pay for his proposed expenditures!
If McCain would just us this truth about Obama's fiscal plans, the effect would be even more devastating than the lie that the Democrartic nominee wants to raise taxes on average earners. But he cannot do that without admitting that his own tax plan would put us even deeper in the debt-hole, and thus even more dependent upon foreign investment in our treasury bills.
--------------------------------------------------------------------------------------
(1) "More Radical Than Bush" by Jonathan Cohn in the New Republic, September 24, 2008, page 23.
(2) FNMA ("Fannie May") stands for Federal National Mortgage Association) and FHLMC ("Freddy Mac") stands for Federal Home Loan Mortgage Corporation.
(3) "Bailout may follow historical precedents" by Tom Raum, Associated Press, Sept. 21, 2008.
(4) The US Government buys some foreign goods, such as Israeli Uzis and Arab oil, which pay for some jobs in foreign countries. This is in addition to foreign military and economic aid, which also creates jobs overseas.
Another day older and deeper in debt."
"16 Tons" by Tennessee Ernie Ford (1955)
Do you earn more than $250,000 per year?
Do you believe that Barack Obama's tax plan will raise your taxes?
If you answered "yes" to both questions, you are right, and you almost certainly will vote for John McCain in November.
But if you answered "No" to the first question and "Yes" to the second, you have been taken in by McCain's misleading TV commercials. Actually, you and most Americans would receive a tax cut under his plan.
McCain's own tax plan really would cut taxes for all taxpayers; he even favors allowing taxpayers to figure their taxes two ways, and pick the cheaper one to use in filing their annual 1040. For those earning the top one percent of American annual income, McCain's tax cut would save about $100,000 per year. For middle-class taxpayers, the saving would be about $600, and for the working poor ( the bottom 20%), the saving would be about $65 per year . (1)
According to the Tax Policy Center, the McCain tax cuts would cost the federal government about $700 billion per year, or about $ 7 trillion over the next decade. The Arizona senator is against "earmarks" (pork-barrel spending "earmarked" by members of Congress for their states or districts) and will veto them; the trouble is that there is nowhere near that much pork in the federal budget!
Just to offset the tax-cuts (not to balance the budget, which is now about $400 billion in the red), McCain would have to cut deeply into major government programs such as Defense, Social Security, Medicare and Medicaid. Moreover, the big mortgage bail-outs now in process to prevent massive foreclosures and failures of Fannie Mae and Freddy Mac (2) will add many billions to federal spending in the next few years, making the proposed tax-cuts even more untenable.
But, wait-----won't tax cuts stimulate economic growth and bring in enough new tax money to pay for themselves? Did this not work in the past? Don't we believe in "supply side economics?
The last fiscal year the US had a budget surplus was FY 2001, when the national debt was about $5.7 trillion (3) and unemployment was just under 5%. Under the leadership of President George W Bush, taxes were slashed in 2001, about 7 years ago. If the "supply side fantasy" were true, the tax cuts would have long since paid for themselves. We would have both a reduced national debt and lower unemployment due to the economic growth stimulated by the tax cuts. The facts: the debt today is $9.6 trillion and unemployment is about 6.1% of the workforce.
What went wrong? No doubt the September 11 attacks hurt the US economically, and the costs of the Afghanistan War and the subsequent Iraq War increased government spending on Defense dramatically. (In the past, we have raised taxes to pay for wars, but not this time.) However, the Bush Administration's Medicare drug-benefit and No Child Left Behind education bill have also added to government spending. Maybe these were good ideas, but there can be no question that they have increased US outlays, and must be paid for by someone someday.
Another problem is that today investment by business does not necessarily increase jobs in the US; instead major manufacturers are building factories in China, Mexico, Vietnam, and other low-wage countries. In this era of a global economy, more money in the hands of business may mean more jobs, but those jobs might well be in Asia or Latin America, rather than here. Government also uses its money to create jobs----but nearly all government jobs are here in the US!(4)
Our federal deficit is funded by selling US treasury bills on the world market, and China is a major buyer. Older readers may recall the fears that China would bomb the US or invade our Asian allies; today China could hurt us even more by refusing to fund our debt! Our huge nuclear arsenal and powerful navy are useless against this threat. The only way we can avoid becoming more dependent upon Chinese and other foreign creditors is to balance our federal budget, and then start paying down our humungous national debt.
I would like to see even one candidate publish his proposed first year budget, broken-down by department and program, and what tax rates would be required to pay for all of it! Why not devote a tiny fraction of the campaign budget to hiring a few accountants to whip this up? Maybe this is the "straight talk" that neither nominee would like to share with the voters!
Although Barack Obama would impose higher taxes on the wealthy (those with incomes over a quarter of million dollars per year), his tax and spending plans would still increase the national debt by about $ 4.25 trillion over the next decade. (1). The problem with the Obama plan is not that he wants to raise taxes on average Americans----actually most people would pay less after a $1,000 per family credit-----but that he has not proposed any tax plan that would pay for his proposed expenditures!
If McCain would just us this truth about Obama's fiscal plans, the effect would be even more devastating than the lie that the Democrartic nominee wants to raise taxes on average earners. But he cannot do that without admitting that his own tax plan would put us even deeper in the debt-hole, and thus even more dependent upon foreign investment in our treasury bills.
--------------------------------------------------------------------------------------
(1) "More Radical Than Bush" by Jonathan Cohn in the New Republic, September 24, 2008, page 23.
(2) FNMA ("Fannie May") stands for Federal National Mortgage Association) and FHLMC ("Freddy Mac") stands for Federal Home Loan Mortgage Corporation.
(3) "Bailout may follow historical precedents" by Tom Raum, Associated Press, Sept. 21, 2008.
(4) The US Government buys some foreign goods, such as Israeli Uzis and Arab oil, which pay for some jobs in foreign countries. This is in addition to foreign military and economic aid, which also creates jobs overseas.
Labels: deficit. debt, McCain, taxes
posted by Gerald S Glazer at 10:31 AM
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