Economic Shitstorm coming, but not for 5 years

Discussion in 'Economy' started by Wiseacre, May 30, 2011.

  1. Wiseacre
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    Wiseacre Retired USAF Chief Supporting Member

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    Interesting piece in the NYT, which ordinarily I detest but this one is worth reading IMHO. I've seen plenty of doomsday prophecies where the US and world economies will tank in 2011 or 2012, or 2013. And maybe so, but this pov is a little less imminent. I do think we should not raise taxes at all until the economy has significantly stengthened and unemployment is back down to reasonable levels, say 7%. Instead of raising rates, we should be looking at the most egregious tax breaks and loopholes and correcting them, for both income and corporation taxes.

    And I do think we should be cutting spending, but not as draconian as some have suggested. There was a report that came out a month or 2 back that talked about duplicate, obsolete, or ineffective programs that currently exist in the federal gov't. You know, like 10 different agencies all doing the same thing. Why the hell don't we go find and eliminate that stuff first? Maybe save as much as a couple hundred billion a year, maybe a trilllion and a half or 2 trill over 10 years.


    "
    The authors do not suggest that policy makers should hurry to raise taxes or cut spending right now. They acknowledge that the economic recovery is still fragile and propose that lawmakers wait to implement budget cuts currently under discussion until 2013 to 2015. Additional cuts would ideally go into effect in 2016.
    What needs to be done now is to design a long-term plan to reduce fiscal deficits in the future. The authors contend that such a program would “reassure the markets, keep interest rates low and instill greater confidence and certainty about future tax and spending policies, thereby encouraging businesses to commit their resources to job-creating investment projects.”
    "


    http://www.nytimes.com/2011/05/29/business/economy/29gret.html?_r=1&pagewanted=all
     
  2. boedicca
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    boedicca Uppity Water Nymph Supporting Member

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    Translation: It's going to get worse than that much more quickly.
     
  3. percysunshine
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    percysunshine Gold Member

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    The NYT is usually the last to cotton on to something.
     
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  4. Truthmatters
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    The tax rate on the top during the great depression recovery was an average of 88% from what I recall.


    Yes we can raise taxes on the very people who benifited from this crash.

    Its been proven that doesnt stop a recovery.

    History has already shown us that.
     
  5. Truthmatters
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    Truthmatters BANNED

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    Into the fray comes a thoughtful new paper by Joseph E. Gagnon, a senior fellow at the Peterson Institute for International Economics, which studies economic policy. Written with Marc Hinterschweiger, a research analyst there, the report states plainly: “That government debt will grow to dangerous and unsustainable levels in most advanced and many emerging economies over the next 25 years — if there are no changes in current tax rates or government benefit programs in retirement and health care — is virtually beyond dispute.”

    From your won article.

    If we dont raise the taxes we cant keep the programs.

    Easy one, we have historically low tax rates on the top levels right now
     
  6. boedicca
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    boedicca Uppity Water Nymph Supporting Member

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    High taxes and excessive regulation during the Great Depression prolonged it, you sad ninny.

    What about World War II? We need to understand that the near-full employment during the conflict was temporary. Ten million to 12 million soldiers overseas and another 10 million to 15 million people making tanks, bullets and war materiel do not a lasting recovery make. The country essentially traded temporary jobs for a skyrocketing national debt. Many of those jobs had little or no value after the war.

    No one knew this more than FDR himself. His key advisers were frantic at the possibility of the Great Depression's return when the war ended and the soldiers came home. The president believed a New Deal revival was the answer—and on Oct. 28, 1944, about six months before his death, he spelled out his vision for a postwar America. It included government-subsidized housing, federal involvement in health care, more TVA projects, and the "right to a useful and remunerative job" provided by the federal government if necessary.

    Roosevelt died before the war ended and before he could implement his New Deal revival. His successor, Harry Truman, in a 16,000 word message on Sept. 6, 1945, urged Congress to enact FDR's ideas as the best way to achieve full employment after the war.

    Congress—both chambers with Democratic majorities—responded by just saying "no." No to the whole New Deal revival: no federal program for health care, no full-employment act, only limited federal housing, and no increase in minimum wage or Social Security benefits.

    Instead, Congress reduced taxes. Income tax rates were cut across the board. FDR's top marginal rate, 94% on all income over $200,000, was cut to 86.45%. The lowest rate was cut to 19% from 23%, and with a change in the amount of income exempt from taxation an estimated 12 million Americans were eliminated from the tax rolls entirely.

    Corporate tax rates were trimmed and FDR's "excess profits" tax was repealed, which meant that top marginal corporate tax rates effectively went to 38% from 90% after 1945. ...


    Burt Folsom: Did FDR End the Depression? - WSJ.com


    And as usual, TMN complete neglects the concept of inflation. That $200,000 in 1940 is the equivalent of $3.2M today. And yet, families with $250,000 of income are the targets for punitive taxation in Obamanomics.
     
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  7. sparky
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    sparky VIP Member

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    instead of the usual tax/benifit economic myoptism which will in all likelyhood amount to the usual flung factiod demise , because not even a team of NY lawyers can sort it out, why can't the more obvious economic results be forwarded?

    for instance, we have a growing disparity , inequity, all serving as indicators to prove a decline , one that , despite minorities who rode the waves of past bubbles to success, have affected the majority now for a generation

    in short, our policies of the past aren't working out in the long run here. and that would be an all inclusive umbrella view, inclusive of foriegn policy , immigration , trade, unions, the SEC, IRS, HS, EPA, OSHA, SCOTUS (et all gov oversight) who seem to no longer have a vested interest in America
     
  8. waltky
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    waltky Wise ol' monkey Supporting Member

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    Gonna take some time, stay the course, a thousand points of light at the end of the tunnel...
    :eusa_eh:
    28 Months Later, Obama Says: Recovery’s ‘Going to Take Time’
    Sunday, June 12, 2011 - Twenty-eight months ago—on Feb. 13, 2009--Congress passed a $787-billion economic stimulus law and sent it to President Barack Obama who signed it while declaring it would create or save 3.5 million jobs.
     
  9. FiscalSanity
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    Monkeying around with the tax rates might make good political theatre, but as long as you have a tax code that's longer then most novels (and not nearly as interesting) do any of you honestly think it's going to make much a of a difference to what is actually collected? It's so complicated that tax accountants have to specialize in specific areas, and the code is the perfect example of there being an exception for every rule.

    What we really need is a politician with balls to stand up and propose that we totally throw out the existing tax code, and replace it with something that is simple enough that anyone can understand it. No exemtions. No loopholes. No credits for mortgage interest, kids, etc. We can use a progressive scale income tax if we really want, though I'm starting to come to the conclusion that a 10-15% Value added tax on all non food sales would be fairer.

    We also need to fix the whole concept of the capital gains tax. Income earned off of investments is income, pure and simple, and there is no logical reason to tax is at a lower rate as if it were somehow special. If we're going to have some form of income tax then the money managers should be paying the full rate on their investment profits, not the 20-25% less they get today.
     
  10. Wiseacre
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    Wiseacre Retired USAF Chief Supporting Member

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    I do not see how our economy can flourish without a significant degree of certainty over such things as taxes, energy, regulations, and all the other factors that go into the decision making for starting or expanding a business. Whatever is decided has to be bi-partisan, we can't be having one party left out and as a result hell-bent to repeal the other side's programs when they get back into power. If businessmen and consumers do not see stability coming out of Washington then stability does not really exist. Things will marginally get better and the economy will improve, but to a lesser extent than might otherwise be the case if we continue to witness the lack of proper governance that has prevailed for some time now.

    In short, we can do better, but we're not going to until forced to. Unfortunately, I think that means a very bad time for everybody (depression) is the only catalyst that is strong enough. Hope I'm wrong.
     
    Last edited: Jun 13, 2011

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