Thinking about the 'super committee'

[editec]

History shows that when tax rate increases are enacted now in return for the promise of future spending cuts, we get the taxes but never the spending cuts. That's not surprising. No Congress can legally hold future Congresses to a promise of spending cuts.

How about we try the reverse? Spending cuts NOW with a promise to raise tax rates after said cuts take are enacted?

The super-committee failed.

ACross the board spending cuts are now planned, per the agreement before the SC was constituted.

 

[Mr. Shaman]

Without the super committee, the spending cuts start automatically in January of 2013.

When the Bush tax cuts expire in December of 2012, Obama won't allow them to be renewed.

Spending cuts + a return to the old tax rates = deficit reduction.

Congress has been taken out of the equation. No treasonous Tea Party/Republicans to mess things up.

An absolutely brilliant move by Obama.

....Aided by those whiney, little bitches on the....

....other side o' the aisle.

 

[Foxfyre]

We could save so much time on these threads if we would just all check off on the predictable rhetoric and get it out of way:

1. Nothing worthwhile ever accomplished under a Democratic administration could have happened without help from Republicans.

2. Everything worthwhile ever accomplished under a Republican administration would have happened anyway and therefore the Republicans don't deserve any credit for it.

3. All Democrats are leftwing, fanatical, statist, Marxist, Communist, Socialist loonies.

4. All Republicans are hateful, greedy, rich white people who hate kids, old people, want all the needy to die, and want dirty soil, air, water, and destruction of all wildlife and anything beautiful on the planet.

5. Everything bad is the fault of the Democrats.

6. Everything bad is the fault of the Republicans.

There, that should pretty well cover most of it.

Now then for that Super Committee, there is a LOT of meat in this Michael Barone essay to provide a lot of food for thought:

Excerpt:

Supercommittee Democrats argue that income inequality has been increasing and can be at least partially reversed by higher tax rates on high earners. They refused to agree on any deal that didn't include such tax increases.

Supercommittee Republicans offered a plan to eliminate tax preferences and reduce tax rates, as in the 1986 bipartisan tax reform. They argued that high tax rates would squelch economic growth.

They didn't make the case that their proposals would also address income inequality. But House Budget Committee Chairman Paul Ryan, in a 17-page paper based largely on a Congressional Budget Office analysis of income trends between 1979 and 2007, has done so.

Ryan, a Republican from Wisconsin, makes the point that the government redistributes income not only through taxes but also through transfer payments, including Social Security, Medicare, food stamps and unemployment benefits. The CBO study helpfully measures income, adjusted for inflation, after taxes and after such transfer payments.

Many may find the results of the CBO study surprising. It turns out, Ryan reports, that federal income taxes (including the refundable Earned Income Tax Credit) actually decreased income inequality slightly between 1979 and 2007, while the federal payroll taxes that supposedly fund Social Security and Medicare slightly increased income inequality. That's despite the fact that income tax rates are lower than in 1979 and payroll taxes higher.

Perhaps even more surprising, federal transfer payments have done much more to increase income inequality than federal taxes. That's because, in Ryan's words, "the distribution of government transfers has moved away from households in the lower part of the income scale. For instance, in 1979, households in the lowest income quintile received 54 percent of all transfer payments. In 2007, those households received just 36 percent of transfers."

In effect, Social Security and Medicare have been transferring money from low-earning young people (who don't pay income but are hit by the payroll tax) to increasingly affluent old people.

The Democrats, perhaps following the polls and focus groups, have been protecting these entitlement programs that have done more to increase income inequality than the Reagan and Bush tax cuts put together.

Ryan makes three more points that may strike many as counterintuitive.

First, reductions in some transfer payments haven't hurt the living standards of most low-earners. The prime example is the welfare reform act of 1996, which reduced transfers to single mothers but induced many of them to find jobs that left them better off economically and, probably, psychologically.

Second, Americans aren't trapped in one segment of the income distribution. A Tax Journal analysis of individual income tax returns found that 58 percent of those in the lowest income quintile in 1996 had moved to a higher income segment by 2005. This comports with common experience. We move up and down the income scale in the course of a lifetime.

Finally, the inflation adjustment used in the CBO analysis was the Consumer Price Index. But that tends to overstate inflation (as any indexes tends to do, since it measures the cost of a static market basket of goods and services). A study by Chicago economist Christian Broda found that prices for goods purchased by low-earners have been rapidly decreasing, while prices for goods of high-earners have increased. Kids' school clothes may be cheaper at Walmart than they were years ago, while prices at Neiman Marcus keep increasing.

More Here:
Entitlement, Not Tax Cuts, Widen the Wealth Gap - Rasmussen Reports™