You’ve probably heard this argument: if hard-working Americans have to balance their checkbooks or else risk bankruptcy, then why should the federal government be allowed to put up trillion-dollar deficits every year without fear of financial ruin?
That’s more or less the logic underlying the idea of amending the Constitution to require the federal government to balance its budget, or ensure that, with few exceptions, Washington’s annual revenues equal its expenses.
The idea has been in vogue at various points since the Constitution itself was written, but in recent years, calls to take up the balanced budget amendment have grown louder: as the federal debt has grown to over $20 trillion — greater than the gross domestic product of the U.S. economy — conservative lawmakers say they believe Washington will never address its spending habits unless forced.
The GOP-held Congress, fresh from passing a sweeping tax cut bill projected to add over $1 trillion to the federal debt, is making its most serious push in years for a balanced budget amendment. Speaker Paul Ryan, under pressure from the most conservative members of his conference, is expected to put one on the House floor this month.
The vote is guaranteed to be a symbolic one: 20 years ago, a version of a balanced budget amendment passed the House with significant support from both parties. Today, nearly all Democrats slam the balanced budget amendment as a policy that could have disastrous consequences — in particular, the gutting of Social Security, Medicare, and Medicaid, which would face steep cuts under any balanced budget.
That’s a problem for the balanced budget amendment, because a lot of Democratic votes are needed to pass a change to the Constitution, which requires two-thirds majorities in Congress.
Republicans, then, may be taking up a doomed quest for other reasons: ahead of a crucial midterm election, the balanced budget amendment could be a useful way for Republicans to try to reassert their fiscal bona fides on the campaign trail, after a year in power that has called into question their credibility on fiscal responsibility in a big way.
‘We need to force some willpower’
The reemergence of the balanced budget amendment comes at an odd time for lawmakers who push an agenda of “fiscal responsibility:” despite GOP control of the White House and Congress, policymakers have moved to advance legislation that will add, not subtract, from the federal debt.
The so-called Tax Cuts and Jobs Act, signed into law by President Donald Trump in December, permanently slashes corporate tax rates and lowers taxes for the vast majority of taxpayers. Though its backers argued the bill would spur economic growth and boost federal revenue, the Congressional Budget Office found it would grow the federal debt by $1.4 trillion over 10 years. Other estimates put the deficit burden as high as an additional $2.2 trillion over a decade, even when accounting for economic growth.
This year, most Republicans joined with Democrats to approve a two-year budget deal that blew the spending caps put into place under the regime of austerity called the sequester, increasing military and social spending by hundreds of billions of dollars. The CBO found the deal would increase the deficit by as much as $500 billion over a decade.
That a Republican-led Washington added of trillions of dollars to the deficit in about two months is a remarkable turnabout, considering that Republicans spent the Barack Obama era calling for fiscal restraint, and sent dozens of congressmen to the capital who treated deficit hawkishness as a matter of faith.
Approving an amendment to balance the budget could be a way to show to conservative voters — and, importantly, wealthy donors who have rewarded deficit orthodoxy, like the Koch brothers — that attacking the deficit still remains important to the party.
To some Republicans, a constitutional imperative to force belt-tightening might be the only way, at this point, to rein in Washington. Second District Rep. Jason Lewis, who voted against the budget deal but for the tax cuts, said the balanced budget amendment is “a realization on the part of the institution that we need to force some willpower here… I believe the fundamental problem here is there’s not a political penalty for increasing spending, but there’s a severe political penalty for reducing spending.”
“Until we can get that paradigm shifted, we’re going to have to do something,” Lewis said. The freshman congressman said he’d enthusiastically support an amendment to require the government to balance its budget, if it were accompanied with language requiring reductions in spending, so that lawmakers could not get around spending cuts by instituting tax increases.
To critics, the balanced budget amendment is a cynical ploy to give Republicans some cover on the campaign trail as they try to save the GOP’s branding as the party of fiscal responsibility.
Jared Bernstein, a fellow at the left-leaning Center for Budget and Policy Priorities, wrote in the Daily Beast that a vote on the balanced budget amendment would be a “show vote.”
“It’s a signal to constituents that they truly do long to cease their fiscal recklessness, but simply can’t because those profligate [balanced budget amendment] opponents refuse to provide them with the only thing that will stop their endless deficit spending: the fiscal handcuffs of a BBA,” he said.
Lewis acknowledged there might be some political concerns behind the balanced budget push, but framed it as an important “start of the conversation.”
‘Not a simple matter’
The balanced budget amendment debate has underscored the paltry cachet the policy has outside conservative corners on Capitol Hill.
James Capretta, an expert at the right-leaning American Enterprise Institute, says there’s an intellectual case for the balanced budget amendment, but not much else beyond that.
“It’s predicated on the notion that there’s a tendency in the current electorate to favor consumption today over planning and investment for the future,” he told MinnPost. “Therefore, it wouldn’t be unreasonable to consider ways to get today’s political decisions to be attentive to what the effects would be many years down the road.”
Capretta argued that enforcing a balanced budget would be close to unworkable. “Assume you had a balanced budget amendment that went to effect every two to three years… About one-fourth the size of all total spending is now deficit spending. Do you just have to cut spending 25 percent across the board? Would you raise taxes? On who? It’s not a simple matter.”
Others are unsparing in their criticism. Richard Kogan, also at the Center for Budget and Policy Priorities, wrote in a paper that the balanced budget amendment is an “unusual and economically dangerous” way to address the U.S. debt problem.
Kogan argues that the balanced budget amendment would handicap the government from making worthy long-term investments, harm programs people rely on, and deprive the government of the ability to run deficits during economic downturns, to soften the economic blow on people and businesses.
Attacking the stump-speech logic of the amendment, Kogan wrote that “If required to operate under the same restrictions as the proposed balanced budget amendments, not only would a family be prohibited from taking out a mortgage to buy a house, it would be prohibited from using years of savings to accumulate enough cash to buy a house.”
Sam Berger, an expert with the liberal Center for American Progress, says what the GOP is doing is clear. “There’s a massive tax cut that got passed, and they want to pay for it by cutting people’s Social Security, Medicare, and Medicaid.”
“That’s not popular,” he said. “So, instead, they’re trying to find other ways to move that forward.”
Many attempts, no success
Republicans have yet to specify exactly what their balanced budget amendment might look like, but the history of the idea offers a few paths they could take.
The purest version is one that prohibits the federal government from spending any more than what it raises in revenues each year. Thomas Jefferson was perhaps the earliest proponent of that idea, writing in 1798 that he favored “an additional article taking from the federal government the power of borrowing,” even in cases of war.
Most balanced budget amendment purists have advocated for providing Congress the authority to grant exceptions, such as in times of war, when Washington would need to run deficits. In 1936, Rep. Harold Knutson, a Minnesota Republican, proposed a per capita limit on federal debt in times of peace, the first such debt-limiting proposal to appear before Congress.
In 1982, Republicans in Congress held the first-ever vote on a balanced budget amendment: a proposal from longtime conservative Sen. Strom Thurmond of South Carolina, which would have required a three-fifths majority from Congress to approve any extension of federal borrowing authority, also known as the debt ceiling.
Constitutional amendments require two-thirds majorities to pass the House and Senate, and then require ratification by three-quarters of the states within seven years. Thurmond’s legislation failed to pass the House by a sufficient margin.
In 1995, the year the GOP resoundingly took control of Congress on the strength of Newt Gingrich’s “Republican Revolution,” balanced budget amendment advocates fell short again, with the Senate failing to pass a similar resolution — requiring a three-fifths majority to lift the debt ceiling and to authorize expenditures to outweigh revenue — by one vote.
These proposals included exceptions so the federal government would be free to run deficits in times of war. Democrats frequently pushed for concrete provisions exempting Social Security from the balanced budget requirement, too, but they never got one. In the 1995 push, the House passed a resolution stating its “intent” to exempt Social Security from deficit reduction, and Republicans in the chamber defeated a Democratic resolution taking Social Security off the table and requiring Congress to detail where spending cuts would come from.
Democrats abandon the idea
These past efforts to approve a balanced budget amendment got plenty of bipartisan buy-in: 72 Democrats joined Republicans in the House to approve the 1995 version. But those efforts fell short of the high thresholds for passing a constitutional amendment, anyway.
But gone are the days when many Democrats enthusiastically embraced passing a constitutional mechanism to limit federal spending.
The last time the House voted on the balanced budget amendment was in 2011, after tea party-aligned conservatives stormed into the majority in the 2010 midterms. It got 261 votes in favor — not enough to reach the two-thirds threshold — and only 25 of those yes votes came from Democrats. (Rep. Collin Peterson of the 7th District was one of them.)
Seven years later, many of those budget-hawk Democrats are no longer around. A Democratic aide estimated that perhaps a dozen Democrats could vote yes on the balanced budget amendment, while a handful of moderate Republicans would vote no — meaning it’s effectively dead on arrival in the House. The situation is the same in the Senate, where Republicans hold a narrow, two-seat majority.
Fourth District Rep. Betty McCollum summed up her party’s side, calling the amendment “the worst of election year politics from a Republican Congress that is too busy covering up for President Trump to have a meaningful legislative agenda.”
McCollum said the amendment would force cuts to Medicare and Medicaid. “After exploding annual deficits by giving trillions in tax breaks to big corporations and billionaires, it’s galling that House Republicans are now preaching about fiscal responsibility.”
Even Republicans are throwing some cold water on the amendment. Sen. Bob Corker, a Tennessee Republican, tweeted a reminder that his party controls Congress and the White House. “If we were serious about balancing the budget, we would do it. But instead of doing the real work, some will push this symbolic measure so they can feel good when they go home to face voters,” he said.
Corker’s point gets at the possibility that the GOP push to appear fiscally responsible may fall flat, given what’s taken place in Trump’s Washington.
CAP’s Berger said it’s “laughable to say you want to balance the budget after you’ve done everything in your power to unbalance the budget. I don’t think it’s going to work.”
Some wouldn’t mind if the balanced budget amendment idea fizzled, or gave way to other ideas for tackling the federal debt.
“A more sensible amendment might be the ‘Minimize long-term liability to the federal government amendment,’” AEI’s Capretta said. “If we’d enacted sensible reforms in the mid-1990s to try to moderate the pressures of entitlement spending in 2020, we’d have been in much better shape.”
The balanced budget amendment, Capretta said, is a “weak play.” “Why are they bringing it up now?” he asked. “It can’t be for any particularly good reason.”
Phrasing it mildly
“…CAP’s Berger said it’s ‘laughable to say you want to balance the budget after you’ve done everything in your power to unbalance the budget. I don’t think it’s going to work.‘”
Mr. Berger is quite correct, and I hope he’s equally correct about the outcome.
Mr. Ryan is simply the latest in a long line of fiscally (and socially) irresponsible members of Congress for whom the only party label that comes close to being accurate is “Hypocrite.”
“Hypocrite”
Pretty much nails it! Perhaps a few other choice words like “dishonest”, “corrupt” “disgusting”, “immoral”, etc. can add flavor to the “R’s”evil brew. They robbed the average American to benefit their wealthy benefactors “Oligarchs” lied about it, and now say, the average American is getting to much, we need to tighten our belt. It reminds me of Thoreau’s quote: “as they rarely make any moral distinctions, they are as likely to serve the Devil, without intending it to be God”. So what new round of lies and dishonesty can we expect to demonstrate how the librarian that got $1.50 a week is the lucky one, and needs to belt tighten, in this equation, and Berkshire Hathaway’s $26 Billion tax windfall is the loser?
Repubs prove over and over that they don’t care about deficits
Todays repubs are pushing a balanced budget amendment after their latest tax cut wealth give away to their wealthy financial benefactors. They’ve proven over and over again that deficits are not an issue for them as we saw nothing but record deficits from their last 3 repub presidents and now with trump and that inane tax cut, it’s skyrocketing. And…let’s not ignore the deficits and slow growth under a whole slew of repub govs.
This balance budget amendment is nothing more than a ploy to undermine any and all programs that help the poor and needy. They have also indicated they want to undermine two programs that helped seniors survived their reckless financial behavior during the bush/repub years, that economic collapse called the Great Recession.
Repubs love to shout from the rooftops of their Christian values while they do the complete opposite of what Christ asked of us…to help the poor and needy.
We really need to kick them out of power until they understand that a govt that works for all…not just their wealthy benefactors…is what their goals should be.
I agree 100%
Americans need to take off their rose-colored glasses, and also stop making excuses for these despicable, diabolic elected officials, who have clearly sold their souls to the devil and stopped representing the needs of ‘the people’.
Every last one of them needs to be replaced in the coming elections. And those elections need to be paper ballots that are carefully safeguarded, to ensure no foreign or other nefarious types interfere with their accurate counts.
The levels of corruption, duplicity, dishonesty and fraud have reached epic proportions in DC. It is time to clean house and give ourselves a clean slate. No more ‘bought and paid for’ allegiances. No more whack jobs or nut cases. Just smart, educated, qualified candidates willing to be exemplary public servants who SERVE the PEOPLE need apply!
The GOP is so inept
They could never be organized enough to pull this off. Rather, it’s a bit of stagecraft to draw the attention of the critics in their own party away from the humongous deficit spending that results from tax cuts as a matter of ideology rather than as a rational approach to funding the government – say, in a time of high unemployment or recession – neither of which we have (yet).
Missing The Point
Previous commenters are missing the point. Many years ago new Gingrich was asked how he could campaign as a family values guy after having been married more times than Osama Bin Laden. Newt explained that it didn’t matter what he did, it only mattered what he said. While progressives find this both galling and maddening, it’s why (white) evangelicals in Alabama could vote for Roy Moore, and well continue to do so as long as he runs.
Like Don Trump’s tweets, this is aimed at the right of center voter who is only mildly engaged in politics at the nightly news level. They know little and care less of DC insider jargon about “sequestration” and “budget caps”. Just cut the waste and pay the bills like we have too!
Take off your progressive lenses and view this like a high school educated white working class voter who sees his taxes going to support minorities and immigrants and this makes perfect sense.
And please, don’t suggest this is a sop to Dave & Charlie Koch, they may have been born at night but it wasn’t last night.
Head, Meet Nail
Frank got it right.
The Republicans are being hypocrites about the budget. They complain endlessly about Obama running up the deficit, even though it was due to the Bush recession and running a deficit was exactly the right thing to do.
Then when the Republicans get into office, they muck up the economy to please their wealthy donors and hope the money keeps rolling in.
Just like jerks don’t care that they’re being jerks, hypocrites don’t care that they’re hypocrites.
BBA = Bad Idea
This being the very partisan Minnpost, only one party is blamed for the massive annual deficits and gargantuan national debt. Both major parties always give the public what it wants at the same time: tax cuts along with no reductions in total spending or even big increases in spending. Paul Krugman and Dick Cheney and their respective ideological soulmates would agree: politically deficits don’t matter. Debt is a long-term problem to be solved after the current generation of feckless politicians is long gone.
A federal balanced budget amendment is completely unworkable, a pure political gimmick, as all but the most ideological conservatives know. How would it be enforced? Ultimately, the U.S. Supreme Court would somehow have to intervene. Whatever definition of balanced budget is used, if the budget is, say, $500 billion in the red – how is it balanced? Does SCOTUS mandate tax increases, spending cuts, or whatever? Do we want 5+ Justices to decree what the budgets for the Pentagon, the FBI, Medicare, Education, and every other function of the federal government are? Conservatives rightly criticize the desire of most of the modern Left for judicial supremacy, whereby liberal judges would mandate the entire liberal agenda by judicial decree. In its effects, there is nothing conservative about a balanced budget amendment.
Moreover, few large private sector businesses have exactly balanced budgets every year, where total expenses match total revenues. Businesses often incur long-term debt for major capital improvements, e.g. building a new facility or improving the existing one. It’s fiscally responsible for government to also issue longer-term debt – if the spending is for longer-term projects like highways, mass transit, building schools, etc., or during temporary economic downturns. Fiscal irresponsibility occurs when a government or business continually borrows to meet immediate, short-term expenses. An analogy from personal finance: it’s sensible to borrow to buy a house, finance an income producing education, or to buy a vehicle that will last for many years; it’s reckless to constantly borrow money to pay for groceries, utility bills, rent, etc.
Alas, only a day of fiscal reckoning well into the future will inspire politicians to be responsible. They’re giving the majority of voters exactly what they want: all gain, no pain.
Wait, What???
Only one party is blamed for massive debt because only one party is responsible. Reagan, Bush II, and now Don Trump have all blown a hole in the budget. Gee, who was the last POTUS to have a budget surplus? And don’t give us this Obama ran up the debt garbage. He inherited the Bush Recession.
You say both parties give voters what they want, tax cuts. So are you saying that Democrats are not the tax & spend party?
There’s only one party that spends like drunken sailors.
tax and spend…in MN
I oppose the spending in the recent bill passed by the U.S. congress. I also appose the huge increase in spending in the State of MN. I think this deserves equal scrutiny.
“The year Gov. Mark Dayton took office, the state budget was $15.3 billion. The year he leaves, it is projected to be $23 billion — a 50 percent increase.” 6/17
Of course we never hear about the huge increase in spending and taxes under Dayton.
Is the Dayton Legacy “tax and spend?”
The Dayton legacy…
The Dayton legacy is recovering from unending TPAW deficits and budget tricks to shuffle every problem on to his successor so that he looked bright and shiny to Republican Presidential primary voters.
Thank you Governor Dayton for being the adult in the room needed to restore our fiscal reputation through record state revenues brought on by a rebounding economy.
Do you
Agree like it or not at least Dayton had the cajones to pay for what he was asking for and keep some in reserve for a rainy day? The bottom line, supposedly that “was” the “R” foundation, fiscal conservatives. Dayton will leave the budget and the state far better than he found it,The previous governors legacy is quite the opposite. You may not like everything he spent the $ on, but the bottom line is black, not red.
and yet….
We’ve had surpluses under Dayton….but had massive debt accrued and a lot of robbing Peter to pay Paul, under Pawlenty.
The same generally plays out in DC, too.
REP presidents run up the nation’s debt.
DEM presidents ‘fix’ things (again) and leave surpluses.
Over and over and over. At least in my fairly long life.
It is the spending….
If a could tax the way the DFL taxes – I could balance any budget. “It’s the spending s….”
I am against a balance budget amendment – how about a”cut spending amendment under the rate of inflation?”
You
Do know that government spending does spur the economy? Appears from your vantage point, that if our elected officials give billions to billionaires in tax dodges, that is not spending, but giving a medicaid paid vaccination to a poor kid is? Not collecting a fair tax is the same as spending that UN-collected Tax as a subsidy for the well to do!
So…?
So you are in favor of the State budget doubling every 7 years?
I am
in favor of smart spending/investment: If the budget goes up 25% but we as a society gain 50% that’s not a bad deal. It all depends on your perspective. It also depends on where you are starting from. Some of us looked at TPAW as the guy that stripped the state naked and was proud to show case it as a 3rd world look alike. Sorry, I may be a fiscal conservative, but from this perspective that is ignorance, not fiscal conservatism. What did we get for what we spent?
What did we get?
Bigger trickle down government to keep the unions, bureaucrats, government employees, and the education monopoly happy – – – and MNLARS.
Well
Since I don’t have the bill or the numbers in my hand its hard to “opine” exactly what we got. However, we do have: Top 10 state for business, top ten state for quality of life, Top 15 for education, best Government run state. Top 10 healthiest state. So I guess it appears what we believe, and or what we want to believe, or are looking for, will shade or opinion if we are in good shape or bad. We can all find fault with every decision. But, it appears when comparing (putting metrics/not opinions) against the other 49, we aren’t doing so bad, at least in categories that some of us folks would consider important. Some of us don’t hold a grudge against public servants, after all, the streets get plowed, the laws get enforced, kids get educated, water comes out of the tap, garbage gets picked up, poo goes down the toilet, some one is trying to make the water air and land cleaner, parks open, freeways under control, help take care of the poor and destitute etc. etc.
Step 1–cut taxes–because they pay for themselves
Step 2–cut spending–because step 1 didn’t work
Step 3–see step 1
After 4 decades what’s so hard to figure out about the pattern ?
It’s the midterm train wreck approaching
The Republicans have gone from George W. Bush, who nearly sank the world economy, to Trump, a one-man wannabe dictator, to an acquiescing Republican congress. They talk really big and say they have all the answers when they aren’t in office but are an absolute disaster when in office. The can’t even figure out what the word United means in The United States of America. Paul Ryan and Mitch McConnell are essentially MIAs when it comes to governing. I think they are afraid the President will give them one of his snappy little demeaning names if they were to get in his way. The Republicans effortlessly added $1,400,000,00,000, according to the CBO, to our national debt. Remember the Republicans are the rabid deficit hawks when the Democrats are in control. The ACA wasn’t a good idea according to the Republicans, they took control of the House, Senate, and the White House and couldn’t deliver the repeal they promised. The midterm elections are approaching so Ryan is emerging from his hiding place and proposes a balanced budget amendment to the federal budget. He knows it is going nowhere but it looks really good to his base. It will just be something else he can’t deliver to his base. He can say he proposed something and tried to work across the aisle, but the Democrats shot it down, wipe his hands of it and move on to his next failure. In McConnell’s never commit to anything lexicon he says he can’t tell how the midterms will go. Mitch, see the light at the end of the tunnel? It’s the midterm train wreck coming right at your team. Watch for a high level of oratory, misleading claims, and a President, Speaker of the House, and Majority Leader who get their jobs redefined for them. See Jason Lewis there are consequences for deficit spending.
Backfire?
A balanced budget amendment could be a lot like the MN constitutional amendment to have an outside committee to set legislator pay. People mistakenly thought that they were keeping legislators from giving themselves big pay raises when the legislator was avoiding those pay raises because they are accountable to voters.
A BBA could logically end up causing the largest federal tax increase in history to cover the spending that has been codified in law and the debt already created. People passing a BBA would not be doing it to give themselves a massive tax increase but that could be the end result.
On What Basis?
Other than conjuncture, what basis do you have for telling us the the people of MN mistakenly believed that the constitutional amendment to establish a commission to set legislative pay would keep legislators’ pay low? Since the pay already was low, why fix something that (you don’t think) is broken?
I can tell you that I voted for it specifically so the pay would go up. Other than the wealthy and retirees, it had become difficult for legislators to pay the normal bills that come with raising a family.
History has shown that both parties contributed to the mess we are leaving our children. And yes the GOP talking balanced budgets after passing the recent tax cut and spending bill is about as hypocritical as one can get.
I never understand how our current voting adults are okay with OUR free loading and passing OUR bills to our kids via a ballooning National debt. I find that to be terrible and definitely not a measure of responsibility or success.
And yet the folks on the Left keep voting for people who promise protection, regulation, free services, free money, etc (ie spending other peoples money). And the folks on the Right keep voting for people who promise different regulations and tax cuts. (ie shorting revenues)
I hope our kids, grand kids and great grand kids forgive our generations for our
selfishness.
It’s obvious who the freeloaders are.
The Freeloaders are the wealthy and the Corporations. I remember a time when a person was advised to spend no more than 1/4 of their income on housing. Today it’s gone up quite a bit…for far too many it’s closer to 3/4’s to 4/5’s of their income unless they want to live in the streets. This includes people on Social Security which Ryan has made his priority to demolish. This includes ‘senior living’ communities and ‘retirement’ communities. For those on Social Security, it’s getting worse yearly. Rents go up but the COLA doesn’t. If and when it does, it doesn’t match the true cost of living and has no real chance of catching up. Certainly not with Conservatives in office. That’s a surety. A guarantee in spades. This current bunch is particularly crass, uninformed, unread, uncaring and wealthy.
Do you agree with this concept then
“To me it seems very simple – the greater the inequality in our country the more progressive the tax code should be. Right now I think the rich should be paying more, that the tax code is not progressive enough. I would put the top bracket at 50%”
If so, what would you do about the spending side of the equation? Remember the problem we have is. Spending – Revenues > $0 = Deficit
Since I have spent my life learning, working, saving, investing, etc… I am not that concerned about the COLA on SS… However I am not too excited paying higher taxes when I retire to help pay the rent for those who did not squirrel enough nuts away for winter.
I don’t know the answer, however we have to work both sides of the equation.
Entitlements
This a chart that shows how fast entitlement grew since the 1960s. They were 5% of the GDP and now they are 17% of the GDP. And set to grow more.
https://www.usgovernmentspending.com/spending_chart_1900_2020USp_XXs2li011mcn_00t10t40t_Entitlement_Spending_as_Pct_GDP
The unfortunate reality is that people back then/now were/are not paying a high enough payroll tax percentage to fund the trust funds adequately to meet their desired level of benefits. That is why those trust fund balances will go to $0 in ~2033. And the incoming payroll taxes will be only ~75% of what is needed.
Which then us gives us another big choice… Do we make our children pay even higher rates to make up for people under paying for decades. Or do we reduce the benefit levels of those generations who under paid?
More Data
The Effective Tax Rates by Income table at the following site explains our progressive taxes pretty well.
The only problem with the graph is that the >$10 million people should be paying about 33%, so their rate is some what more than the income level below them.
https://www.fool.com/retirement/2016/10/31/heres-what-the-average-american-pays-in-taxes.aspx
Exactly how Progressive do you want the tax code to be?
Personally I have 4 descriptions of what “fair” can be defined as. Personally I like number 3 and think we are pretty close to it. I assume fair to you means #4. Thoughts?
1.Fair would be if we took the total cost of government, divided it by the number of adult able bodied citizens. And each adult then paid their fair share of the bill. (ie Dues concept)
2.Fair would be if total cost of government was divided by the total income of every adult able bodied citizen. And each citizen paid their fair share of the bill. (ie Percent of Winnings to the House Concept)
3.Fair would be if total cost of government was divided by the total income – some base living cost (~$25,000?) of every adult able bodied citizen. And each citizen paid their fair share of the bill for every $ they make above the base living. (ie Percent of Winnings above Base Cost to the House Concept)
4.Fair would be if taxes and credits/programs were set to reduce the net income and wealth gap between the adult able bodied citizens. This means high income and wealthy people pay significantly higher rates than other citizens in attempt to attain a fair society.(ie Equalization concept)”
Interesting Piece
I have been trying to find a good piece regarding what it would take to reduce the National Debt as a percentage of the nations GDP… This one is okay.
https://www.thebalance.com/will-the-u-s-debt-ever-be-paid-off-3970473
Does anyone have a better source?
It looks like we need to:
– grow the GDP faster
– tax wisely (ie taxes that do not stymie growth)
– spend wisely (ie investments that pay back)
Otherwise we just keep borrowing on our children’s credit card. 🙁
Let’s talk about history…
In 2001, Alan Greenspan’s worry after the Clinton administration was that the federal debt would be paid off in a decade or so…
http://content.time.com/time/nation/article/0,8599,96747,00.html
But hey, Bush (Republican) managed to bring a couple of wars, a couple of tax cuts, and an economic collapse to end that worry.
Thanks Bush ! Thanks Greenspan ! Debt is here to stay !
Today
Well thank you for the history lesson. 🙂 And please remember that no one was complaining about those tax cuts back then. In fact Obama and crew made them permanent for most of us citizens in ~2012. And they chose to increase spending (ie ACA) rather than increase revenues in 2009.
Now if we are done revisiting the past, what should we do today?
I think we need to cut spending and increase taxes on all of us.
Now who votes for that?
First–after the continual witch-hunt of the Clinton administration, it is not surprising that you or many others knew that the debt as in line to be paid off, but the opportunity was squandered by the Bush administrations.
And there really were a lot of people saying that a “guns and butter” policy would turn out badly. And there were even more people who saw the borrowing of money to fight unnecessary and unwinnable wars was a huge mistake. And there were many people who saw the easy money/low-regulation finance industry as leading to a melt-down. And then you jump to the Obama administration in the depths of the collapse with millions in trouble, and yes. losing their health-care as an unaffordable luxury.
But for you, it’s “Obama”.
But the fine Republican party is determined to cut taxes and increase military spending to ??? Another couple of unfunded wars ?? Another era of easy money/low regulation, except this time there is no cushion left after the great recession.
Good luck.with that.
Well
I must be miscommunicating, since I blame the citizens of the USA for our current problems.
One tribe votes for people who will give them money and/or services.
One tribe votes for those who will lower the taxes…
And neither tribe seems terribly concerned about cutting spending or paying more taxes in order to live within our means.
And please remember that Bill Clinton had some help from the GOP in the 1990’s.
https://en.wikipedia.org/wiki/Political_power_in_the_United_States_over_time
Tribes
There is considerable overlap between the two tribes you have identified. Members of the tax-cutting tribe are convinced that the money or services they want are reasonable expenditures, if not actually vital to the functioning of the Republic.
Agreed, I think… The Tax Cutting tribe does prioritize the role of the Feds differently.
They see it’s primary role as national defense and helping the States work together. And they believe the States should care of their citizens.
The Gift Giving tribe wants the Feds do the above and to collect lots of money that can be redistributed across the citizens and the States per some National rules.
Personally I think States should care for their own citizens as the members of the State deem best. The exceptions being SS and Medicare since they are very long term in nature, therefore the Feds doing this makes sense.
Sort Of
I see a lot of self-proclaimed members of the tax cutting tribe who have no problem with either federal or state money being funneled their way. They just don’t want to have to pay for it themselves, at either level.
Way back in ’78 (yes, I go back that far), a friend and I were chatting with a mutual acquaintance from California. He brought up Proposition 13, the tax-cutting ballot measure that was the hot topic of the day. He (20-something years old, as I recall) said that he had voted for it because he paid $X dollars in property taxes that year, but the city he lived in would not install a new streetlight in front of his house. His entire argument was I, me, my. If the City of Vista del Taco (or whatever it was) had just had the foresight to make sure that this guy’s street was illuminated to his satisfaction, he would not have cast a vote that hobbled and confused government budgeting in California for the next four decades.
I never did find out if he ever got his streetlight.
Entitlement
I agree whole heartedly that entitlement is a BIG PROBLEM.
In this case entitlement to me means… “I paid taxes, therefore I deserve something back.” It seems to be a human condition that one feels owed something back whether they pay $100 or $10,000,000 per year in taxes.
Then again why would a person pay extra taxes, say no to approved benefits, etc in our system?
That is the core of the “stealing from our kids” problem… They have no lobbyists working for them… And most voters think they pay too much and/or get too little… So they demand angrily that someone else should pay more taxes and they should get more benefits. 🙁
As RB said
…and! Well, historically lowering taxes means ignoring the poor and the infrastructure. As a supposedly Christian Nation one particular tribe wants nothing more than to ignore the poor…while loudly proclaiming their Christianity. Climb into that Mercedes and all thoughts of the meaning of Christianity melt away.
I agree John that the tax on the wealthy should be 50%, once it was 90% and our country built the freeways that connect all of us. During that time saw the beginning of the growth of the middle class. We can and should also put back the tax rate on companies. They will just pocket the money or invest it in automation that will slowly remove jobs not increase them.
You talk about ‘the poor’ and or those that don’t have the savings that you do as if it’s a fault. There are many reasons for that and some of those reasons are faultless by those who lose their savings. Then there are those wives who’s husbands retired decades ago and find their share of Social Security either goes for rent or food so they ‘have’ to turn to the state to help them out. There are the disabled also. The undereducated also figure in. Do we simply drop them from the roles of humanity? Blaming them for things they couldn’t prevent? That is and should be beyond the pale! You should agree with that.
Charity
I personally am a big fan of charity, thus the name Give2Attain. I am all for private and public programs that help people improve their lives, and help the truly disabled live reasonable lives. However I am not for just taking money from one group of citizens to enable the dysfunctions of another group of citizens.
My pet peeves as you are likely aware are single parent households, dependency and irresponsible parenting, because these are some things that drive children into limiting beliefs, poor educations, and continued poverty. If our society wants to give hundreds of billions of dollars out in the form of support each year, what are we going to expect from the healthy recipients in return? What improvements, learning, behaviors, etc?
As for the short comings of SS and Medicare, the government has warned us from the beginning that you would need more than SS to live on. What should our society do with the people who did not save adequately or work long enough?
This going to be a big issue in the coming years given how little many people have saved.
A Flaw in the logic?
” However I am not for just taking money from one group of citizens to enable the dysfunctions of another group of citizens.”
What some might perceive as the flaw: The tax system is already corrupt, favoring the wealthy, can this not be considered “taking money from one group of citizens” the not so well off, and “enable the dysfunctions of another group of citizens.” Many of us would consider folks that want billions and billions of unfair profits tax deductions etc. and then try to sway governemnt to give them more billions, at the detriment of the average American to be dysfunctional! We don’t have an agreed upon fair meter neutral setting, thus the pendulum can swing both ways.
Personal Property
Hiram and I often disagree about who owns the wealth in America. I believe that we the individual citizens own our personal wealth. Where as the other view is that the wealth of America is somehow owned by the society.
Now we know that for the most part the US tax system is progressive, maybe not as progressive as some would wish. (see my 4 fairness definitions above) The reality is that the wealthy make a lot of money, but they also pay most of our bills for better or worse. So I do not understand the concept of government wealth transfer from poor to rich?
We consumers freely give our money to people who offer us the best personal value. Be it for a car, a home, a mortgage, at Walmart, software, etc… And if that company or person uses that freely given money wisely and continues to satisfy their customers, they get and stay wealthy. In essence we consumers demand results and improvements or we spend the money elsewhere.
Now if you think it is acceptable that parents have more children than they can raise responsibly, I will have to disagree with you. I think children are entitled to qualified competent and responsible parents. And I think it is society’s responsible to ensure they have them. Not to just send checks from some one else’s wallet.
The logic failure
“I believe that we the individual citizens own our personal wealth” This assumes that all that wealth was gained through let’s call it fair and equitable circumstance. We know that our personal wealth is determined by many factors. Do we consider it fair and equitable, that blood and sweat income is taxed higher than $ made on $. Not sure where the wealth of America is owned by society, comes from?
As noted earlier of course the wealthy make a lot of $, the point is they make a lot more because of a corrupt tax system. The point you continue to dodge is the tax code is neither fair or equitable, it isn’t 70,000 pages long for folks making less than $50,000 a year on a W2 form, its that long to create loop holes, and creative tax dodges for corporations and the wealthy.
Well feel free to make sure that “children are entitled to qualified competent and responsible parents. And I think it is society’s responsible to ensure they have them.” Folks would be real interested in how we are going to execute that initiative, and what do the “regulations” around “qualified competent and responsible parents” look like?
Answers
I am happy to simplify the tax code, most people seem against doing so. These are some interesting reminder about Capital Gains and AMT. Did you know the Capital Gains rate starts at 0%… Now that is a progressive tax.
https://www.fool.com/taxes/2017/12/22/your-guide-to-capital-gains-taxes-in-2018.aspx
https://www.thebalance.com/alternative-minimum-tax-amt-who-has-to-pay-3305784
Here is what I proposed, unfortunately neither Liberals or Conservatives seem to approve. They both care more about the adults. (ie public employees and/or parents)
http://give2attain.blogspot.com/2017/01/how-to-win-war-on-poverty.html
You should have heard my Conservative friends howl when I recommended allowing Teachers to grade Parents on simple things like attendance, homework completion, child clean / fed, attendance at Teacher conferences, etc. And then tying that grade to taxes or welfare payments…
Gee John
What about dealing with the world as it really is?
Wages pay: 6.2% and 7.65% on $1 up to ~ $118 +/- (This is a fact) and this is before we even go to income tax, federal and state.
No a 0% rate is not progressive: IT says no capital gains tax. “0” nada, nothing.
IRS: The capital gains tax rate usually depends on your income. The maximum net capital gain tax rate is 20 percent. However, for most taxpayers a zero or 15 percent rate will apply.
So you propose something on a blog site and millions of folks to rally to support you idea, what is that suppose to mean? Firs part suggested re-write all the laws on collective bargaining, sounds pretty fascist to me, Set the targets? Don’t you think that is what all the argument is about now, make all the kids (regardless of their situation) Einstein and do it for $5/per kid per year, Take away peoples right to reproduce, that also sounds quite fascist, forced abortion and adoption, kind of looks like the putting kids in orphan ages, didn’t work well in the past, not even sure how the evangelicals are going to react to “Government financed and supported abortions” And now all this “State must do this for baby makers etc. and where are those $ coming from?
One more note
I do not want to pay off the debt. I just want to get it back to a historical norm.
A lot of people like to use US Bonds to stabilize their personal situations.