Obama suggests value-added tax may be an option

[Polk]

There are a boat load of ideas for tax increases, but they are pretty much dumbfounded when it comes to the spending cuts.....I mean real and not fuzzy spending cuts.

That's because when you get down to it, there isn't really any political appetite for spending cuts. Republicans laughed when Obama proposed a three-year freeze in non-defense discretionary spending, saying it wouldn't have much impact on the deficit. They were right that it won't, but that's the same source they'll be looking at for spending cuts too.

Two posts in one night that we agree on... you are setting a trend here.

Immie

Well, we're agreeing on something that's about the same as saying water is wet.

 

[Polk]

When they do teh VAT, and more money comes in they will find new entitlements to spend it on, it won't go to paying what we owe.

Perhaps it is time to begin working towards a constitutional amendment to require a balanced budget. There are huge problems with this, but they may be ones we can overcome. I'm not getting indigestion from the notion of a Line Item veto power for the president, either.

I don't want to be disingenuous here. I supported Universal Health Care and I still do. But I'd have liked to see it paid for by cuts in government spending, like elimination of price supports to Big Agriculture, etc.

I'd like to see a line item veto for budget items. A balanced budget amendment is a terrible idea though.

 

[Polk]

Don't confuse them with the facts when they've already made up their minds.

One might ask themselves just where did the numbers come from? Also was the Doc fix included? There is where you might find some facts about being budget nuetral.

The CBO score is based on:

- 10 Years of tax increases
- 6 Years of benefit pay outs
- $500B of transfers of Medicare tax receipts from that program to ObamaCare (hastening the former's insolvency
- Plus transfers of SS and CLASS act taxes from to ObamaCare to the tune of $120B+

It excludes the Doc Fix - another $200B plus problem.

Budget neutrality is a fiction, as the former CBO director has discussed publicly.

The bill does not contain ten years of revenues to pay for six years of spending. That's a GOP talking point with no basis in text of the legislation. In fact, the bill's spending is more front-loaded than it's revenue provisions.

The "doc fix" would have passed no matter which party was in power. Trying to claim it's a part of the health care bill is fundamentally dishonest.

 

[SFC Ollie]

One might ask themselves just where did the numbers come from? Also was the Doc fix included? There is where you might find some facts about being budget nuetral.

The CBO score is based on:

- 10 Years of tax increases
- 6 Years of benefit pay outs
- $500B of transfers of Medicare tax receipts from that program to ObamaCare (hastening the former's insolvency
- Plus transfers of SS and CLASS act taxes from to ObamaCare to the tune of $120B+

It excludes the Doc Fix - another $200B plus problem.

Budget neutrality is a fiction, as the former CBO director has discussed publicly.

The bill does not contain ten years of revenues to pay for six years of spending. That's a GOP talking point with no basis in text of the legislation. In fact, the bill's spending is more front-loaded than it's revenue provisions.

The "doc fix" would have passed no matter which party was in power. Trying to claim it's a part of the health care bill is fundamentally dishonest.

Actually I'm wondering if they have passed the Doc Fix yet..........

 

[Madeline]

When they do teh VAT, and more money comes in they will find new entitlements to spend it on, it won't go to paying what we owe.

Perhaps it is time to begin working towards a constitutional amendment to require a balanced budget. There are huge problems with this, but they may be ones we can overcome. I'm not getting indigestion from the notion of a Line Item veto power for the president, either.

I don't want to be disingenuous here. I supported Universal Health Care and I still do. But I'd have liked to see it paid for by cuts in government spending, like elimination of price supports to Big Agriculture, etc.

I'd like to see a line item veto for budget items. A balanced budget amendment is a terrible idea though.

Polk, I'm curious as to why. Most folks oppose the line item veto power because it expands the power of the president. I agree we cannot reach a balanced budget in one year and possibly not in one decade....but what is wrong with the notion from your POV?

Did you support Paygo?

 

[Polk]

Perhaps it is time to begin working towards a constitutional amendment to require a balanced budget. There are huge problems with this, but they may be ones we can overcome. I'm not getting indigestion from the notion of a Line Item veto power for the president, either.

I don't want to be disingenuous here. I supported Universal Health Care and I still do. But I'd have liked to see it paid for by cuts in government spending, like elimination of price supports to Big Agriculture, etc.

I'd like to see a line item veto for budget items. A balanced budget amendment is a terrible idea though.

Polk, I'm curious as to why. Most folks oppose the line item veto power because it expands the power of the president. I agree we cannot reach a balanced budget in one year and possibly not in one decade....but what is wrong with the notion from your POV?

Did you support Paygo?

I think there is good reason to fear the increased power possessed by the office of the President in recent decades, but the increased danger from a line item veto is much smaller than the benefits gained.

The reason a balanced budget amendment is a bad idea is that it encourages the worst of policy impulses. It does nothing to prevent increased spending during the good times (as the treasury will be flush with revenue to pay for it), while encouraging policies which cause the economy to contract (higher taxes/spending cuts) during downturns.

 

[Toro]

When they do teh VAT, and more money comes in they will find new entitlements to spend it on, it won't go to paying what we owe.

Perhaps it is time to begin working towards a constitutional amendment to require a balanced budget. There are huge problems with this, but they may be ones we can overcome. I'm not getting indigestion from the notion of a Line Item veto power for the president, either.

I don't want to be disingenuous here. I supported Universal Health Care and I still do. But I'd have liked to see it paid for by cuts in government spending, like elimination of price supports to Big Agriculture, etc.

I support balancing the budget over the cycle but a constitutional balanced budget amendment is a bad idea. That is counter-cyclical. The Great Recession would have been far, far worse if we had to have cut spending or raise taxes.

 

[Polk]

When they do teh VAT, and more money comes in they will find new entitlements to spend it on, it won't go to paying what we owe.

Perhaps it is time to begin working towards a constitutional amendment to require a balanced budget. There are huge problems with this, but they may be ones we can overcome. I'm not getting indigestion from the notion of a Line Item veto power for the president, either.

I don't want to be disingenuous here. I supported Universal Health Care and I still do. But I'd have liked to see it paid for by cuts in government spending, like elimination of price supports to Big Agriculture, etc.

I support balancing the budget over the cycle but a constitutional balanced budget amendment is a bad idea. That is counter-cyclical. The Great Recession would have been far, far worse if we had to have cut spending or raise taxes.

I agree. A cyclical balance isn't really the sort of thing you can codify though.

 

[Madeline]

Toro and Polk....a balanced budget is a constitutional requirement in Florida and, presumably, some other states. It has had bad effects but overall, it has constrained spending (although it's not an accident that Florida led the charge to sue tobacco companies for Billions of Dollars in damages).

Are you guys of the opinion that the same will not work on a federal level? I follow your reasoning, but I do wonder....

If not balanced budget then what? Something MUST reign in the expansion of the federal government/spending etc.

Would you support a Paygo amendment?

"The House’s PAYGO rule requires that legislation affecting direct spending or
revenues must not increase the deficit (or reduce the surplus) over a six-year period,
including the current year, the upcoming fiscal year, and the four following fiscal
years, as well as an 11-year period (the previously cited period and the ensuing five
fiscal years). The rule is enforced on the basis of estimates made by the House
Budget Committee relative to the baseline projections made by the Congressional
Budget Office under established procedures."

The Senate has has such a rule since 1993. Obviously, it needs strengthening.

http://www.majorityleader.gov/docUploads/CRSPAYGO.pdf

 

[Polk]

Personally, I think PAYGO is a pretty good rule of thumb (though you can't really hold the constraint during a recession). We could talk all day about constitutional amendments, but the reality is that those in power will find a workaround whatever is passed. Institutional design is important, but this is a problem it can't really solve, because any system strong enough to check legislators would also be so inflexible as to cause major problems in it's own right.

Toro stated support (and I agree with him on it) for balancing the budget over the course of the business cycle. The problem is that no trick or gimmick will do it. It requires political leaders to have the will to do so. That's part of the reason Keynes has been pulled through the mud. The right claims he called for higher and higher government spending, but that's not really his main argument. He argued that increased spending is good during a down economy, but that austerity measures should be taken to balance the budget once the economy is moving again.

 

[Madeline]

Personally, I think PAYGO is a pretty good rule of thumb (though you can't really hold the constraint during a recession). We could talk all day about constitutional amendments, but the reality is that those in power will find a workaround whatever is passed. Institutional design is important, but this is a problem it can't really solve, because any system strong enough to check legislators would also be so inflexible as to cause major problems in it's own right.

Toro stated support (and I agree with him on it) for balancing the budget over the course of the business cycle. The problem is that no trick or gimmick will do it. It requires political leaders to have the will to do so. That's part of the reason Keynes has been pulled through the mud. The right claims he called for higher and higher government spending, but that's not really his main argument. He argued that increased spending is good during a down economy, but that austerity measures should be taken to balance the budget once the economy is moving again.

Polk, I think I follow. A constitutional restraint on spending severe enough to actually have an effect would be detrimental because it would limit spending during down times and aggravate recessions, etc.

Do you see no equal or counterbalancing detriment to rising levels of government spending during up times? That is, do you see the bad effects of both but feel the constrained spending is the greater of two evils?

Do you believe that a need for this flexibility is impossible to draft for? That no written document (amendment, law, etc.) could make adequate provision for these times?

 

[Polk]

Yeah, I'd argue both are bad, but that the inability to deal with recession is far worse than overeagerness during the good times. And no, I don't think a law or amendment can be crafted which can provide the flexibility. Consider the following conditions: override with majority vote or override with a three-fifths vote. The former wouldn't be a change over the current system, while the latter could result in the inability to address a crisis situation due to a stubborn minority.

 

[Madeline]

Yeah, I'd argue both are bad, but that the inability to deal with recession is far worse than overeagerness during the good times. And no, I don't think a law or amendment can be crafted which can provide the flexibility. Consider the following conditions: override with majority vote or override with a three-fifths vote. The former wouldn't be a change over the current system, while the latter could result in the inability to address a crisis situation due to a stubborn minority.

Is there no economic indicator reliable enough to serve as a legal trigger for extra spending powers?

 

[Toro]

Toro and Polk....a balanced budget is a constitutional requirement in Florida and, presumably, some other states. It has had bad effects but overall, it has constrained spending (although it's not an accident that Florida led the charge to sue tobacco companies for Billions of Dollars in damages).

Are you guys of the opinion that the same will not work on a federal level? I follow your reasoning, but I do wonder....

If not balanced budget then what? Something MUST reign in the expansion of the federal government/spending etc.

Would you support a Paygo amendment?

"The House’s PAYGO rule requires that legislation affecting direct spending or
revenues must not increase the deficit (or reduce the surplus) over a six-year period,
including the current year, the upcoming fiscal year, and the four following fiscal
years, as well as an 11-year period (the previously cited period and the ensuing five
fiscal years). The rule is enforced on the basis of estimates made by the House
Budget Committee relative to the baseline projections made by the Congressional
Budget Office under established procedures."

The Senate has has such a rule since 1993. Obviously, it needs strengthening.

http://www.majorityleader.gov/docUploads/CRSPAYGO.pdf

Its a bad idea. It is bad economics. States cutting spending means that Washington is transferring money through the stimulus program to the states to meet their requirements. Cutting spending and/or raising taxes during a recession is an extraordinarily dumb idea.

 

[Immanuel]

You know how you avoid getting addicted to cigarettes? Don't start in the first place.

That is all well and good for those of us who never did.

Unfortunately, you can't say that to people who lived and began smoking when the nation addicted so many people to tobacco. When I was a kid, I remember just about every other TV commercial was an ad for a tobacco product. Smoking was not the taboo it is today.

However, none of this changes the fact that the first thing the President did upon entering the office is to raise taxes on families earning less than $250k. He simply chose the politically correct victims of the day to raise them on.

Immie

Cigarettes are families now. I guess things have changed.

Get back to me when you care to have a legitimate discussion and have taken your head out of your ass.

Immie

 

[Madeline]

That is all well and good for those of us who never did.

Unfortunately, you can't say that to people who lived and began smoking when the nation addicted so many people to tobacco. When I was a kid, I remember just about every other TV commercial was an ad for a tobacco product. Smoking was not the taboo it is today.

However, none of this changes the fact that the first thing the President did upon entering the office is to raise taxes on families earning less than $250k. He simply chose the politically correct victims of the day to raise them on.

Immie

Cigarettes are families now. I guess things have changed.

Get back to me when you care to have a legitimate discussion and have taken your head out of your ass.

Immie

A tax is regressive if a poor person must dedicate more of his income, by percent, to pay it than a wealthy person must.

If both pay the same PERCENT of income in tax, it is proportionate.

If the wealthy person pays a higher PERCENT of income in tax, it is progressive.

ALL sin taxes, sales taxes, excise taxes and the like are REGRESSIVE. No responsible tax pundit I know believes regressive taxation is socially just or desirable -- but sin taxes are a quick, easy way to raise revenues. This is why states with bad economies (and which one is good?) have been passing laws permitting casinos, so that more residents will gamble and the proceeds from gambling can be taxed.

 

[rdean]

How many jobs will be lost by eliminating the market for luxury goods?

Probably none. Because taxing it doesn't eliminate it.

Will someone paying $11,300 for a pair of Earnest Sewn and Van Cleef & Arpels Alhambra jeans find that paying $12,000 is "too much"?

History proves you wrong. 30,000 jobs were lost in the marine industry in the early 1990s. One of the families in our middle class neighborhood had to sell their home because the father's business (boat dealer) tanked.

The cognitive dissonance which you Big Government types display about taxes would be amusing if it weren't so destructive. Tobacco and Alcohol are taxed on the pretext that the government needs to get us to not use them (by making the products too expensive for many to afford).

And yet, taxing luxury goods is supposed to result in a net tax receipt gain? Dream on. Even rich people have their "taxed enough already" point. Tacking on a 20% VAT to luxury items will result in lower sales and loss of working and middle class jobs - the people who make, distribute, sell, and service the items.

Yea, because so many "middle class" jobs revolve around "caviar" and "Rolex" watches.

 

[Missourian]

I would agree to a VAT tax...under the following conditions-

1) It would have to be a Constitutional amendment, not a law that congress could change on a whim

2) The VAT tax could only be used to pay the deficit.

3) The VAT tax would sunset when the deficit was paid off.

4) The Constitutional amendment MUST also stipulate the Federal BALANCED BUDGET.
​

Pay what we owe and never borrow again...we either live within our means OR we reduce our spending...there should be no third option.

 

[boedicca]

Those do not prevent the problem of the Byzantine system of selling indulgences (VAT exemptions) and punishing the infidels (More VAT for you) that would doubtlessly follow adoption of a VAT.

 

[Zona]

President Barack Obama suggested Wednesday that a new value-added tax on Americans is still on the table, seeming to show more openness to the idea than his aides have expressed in recent days.

Before deciding what revenue options are best for dealing with the deficit and the economy, Obama said in an interview with CNBC, "I want to get a better picture of what our options are."

After Obama adviser Paul Volcker recently raised the prospect of a value-added tax, or VAT, the Senate voted 85-13 last week for a nonbinding "sense of the Senate" resolution that calls the such a tax "a massive tax increase that will cripple families on fixed income and only further push back America's economic recovery."

For days, White House spokesmen have said the president has not proposed and is not considering a VAT

Obama suggests value-added tax may be an option

"On Thursday his press secretary Robert Gibbs tossed cold water on the idea. "Just to be clear, no VAT tax," he told reporters traveling on Air Force One to hear the president give a speech in New York City on financial regulation."


But continue.