We received the following post from a friend who is a contributor to this site. The youtube video is an attempt to explain the budget problem we are facing in this country. Obviously it simplifies the problem, however, it makes sense.
What do you think?
Conservative Tom
What do you think?
Conservative Tom
If you watch nothing else today....please watch this short illustration lesson. This is a NONPARTISAN video produced by an accountant, Hal Mason, retired after 27 years with IBM. He looks at the budget, its revenues and expenses, and very simply illustrates the problem. Amazingly, we get all the media talking heads blathering and shouting for hours and never get clarity. This guy provides all the clarity you need in just a of couple minutes.
http://www.youtube-nocookie.com/embed/EW5IdwltaAc?rel=0
http://www.youtube-nocookie.com/embed/EW5IdwltaAc?rel=0
This guy states the obvious. Everybody understands that we can't balance the budget in one year with spending cuts. The question should be, "What would it take to get it balanced in 10 years rather than 30 year?"
ReplyDeleteSecond point: Notice that his "solution" doesn't admit that we need to raise taxes. If you just let all the Bush tax cuts expire and cut spending on military and cut the costs of health care (via ACA), you get close to a balanced budget in about 10 years.
And please let's not talk about "sharing the pain" or "fair tax codes" so long as the Wall Street bankers and hedge fund managers are enjoying their preferential tax breaks on capital gains, stock dividends, carried interest, etc., etc. These tax expenditures for billionaires cost trillions over the next decade.
The solution is simple: get spending DOWN to 20% of GDP and get revenue UP to 20% of GDP. This balances the budget AND distributes the "pain" equally on both sides of the ledger.
-- David (OWS)
David, it is obvious that you did not see the entire video. You missed the big issue--the mandatory payments of social security, medicare etc take up ALL of the income to the country. We cannot even fund the military (even with cuts,) pay salaries or fund agencies without going into debt.
DeleteWe could take all of the income from the 1%, take all their wealth and we could not handle the problem. In fact, if you study history you will find that tax breaks increase the money into the treasury.
Thank you for sharing my video. If our nation fixes this problem, it will be because of those like you who helped others understand....Hal Mason
ReplyDeletethanks, we will keep talking until they make blogging an illegal activity. (It is coming.)
ReplyDeleteYou wrote, "You missed the big issue--the mandatory payments of social security, medicare etc take up ALL of the income to the country. We cannot even fund the military (even with cuts,) pay salaries or fund agencies without going into debt."
ReplyDeleteI don't know why you think I missed it, inasmuch as my first sentence was: "This guy states the obvious. Everybody understands that we can't balance the budget in one year with spending cuts." To repeat, the operative question should be "How to balance it in 10 years?" There are ways to do it, but not the way Obama or Ryan propose in their budgets. They would run deficits out to 2040!
>We could take all of the income from the 1%, take all their wealth and we could not handle the problem. In fact, if you study history you will find that tax breaks increase the money into the treasury.
Nobody suggests that raising the marginal rate to 39% on the 1% will eliminate the deficit. It "only" generates about $1 trillion over 10 years. What I said was end all the Bush tax cuts, cut military, plus the $716 billion in savings from ACA and you are very close to a balanced budget in 10 years. If you want to see the history of what massive tax cuts do to the national debt, all you need to do is go to Table 7.1 in his video to see that the national debt was increasing very slowly from the end of WW II to 1980. That is when Reagan did tax cuts, followed by G.W. Bush, and now Obama. Tax cuts -- especially those targeted to the 1% -- reduce revenue. Even Laffer himself admits that tax cuts at the current level on the Laffer curve (lowest percentage of GDP since 1950s) do not "pay for themselves." That is the belief of virtually every macroeconomist in the country, and the data over the last 30 years proves it. Unfortunately, there are those in Congress who will remain in denial seemingly forever.
--David
You can cut taxes on the 1% to help the 1%, but let's not lie about it by claiming that is is done to reduce the deficit. It happened when Reagan did it. It happened when Bush did. And it will happen the next time it is tried. The "tax cuts pay for themselves" is one of the myths that is preventing Congress from passing a budget that will actually reduce the deficit.
ReplyDeleteThis article, written by Bruce Bartlett (a former economic advisor to Ronald Reagan) states the statistical conclusions of economists who have seriously studied the question. They all agree that tax cuts substantially decrease revenue.
http://www.thefiscaltimes.com/Columns/2011/06/17/No-Gov-Pawlenty-Tax-Cuts-Dont-Pay-for-Themselves.aspx#page1
--David (OWS)