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Bloggingheads 10-24-2008 11:46 AM

The Week in Blog: Republicans All Fall Down
 

Joel_Cairo 10-24-2008 12:31 PM

Re: The Week in Blog: Republicans All Fall Down
 
Bill-

When you file the police report about all the stuff that went missing during this diavlog, show them this dingalink.

glh17 10-24-2008 12:56 PM

Re: The Week in Blog: Republicans All Fall Down
 
Conn,
Where do you think funding for McCain's refundable health care tax credit comes from? This "tax" credit is available to folks who don't pay taxes, in the sense you defined, either. Moreover, there are several refundable credits available for businesses who don't pay any income taxes. Why is it that you only complain about this type of thing when a poor person is receiving the benefit. Having said that, I want to move on to your complaint about Obama wanting to expand the EITC.

The EITC is a conservative idea, similiar to Milton Friedman's Negative Income Tax. I doubt you are old enough to have read much real conservative economics in real time, but the concept of the NIT is described in Capitalism and Freedom and Free to Choose. The idea is to provide low income people with a min. standard of living while preserving an incentive to work. Unfortunately, many new conservatives don't give a damn about low income people. Read a little behind the history of the EITC and you might change your mind. You might disagree with Obama's expansion of the credit, but I don't see how someone can object to it in principle.

gwlaw99 10-24-2008 02:29 PM

Re: The Week in Blog: Republicans All Fall Down
 
You can either believe that there a separate social security trust fund exists or you can believe obama is giving a tax break to 95% of Americans, but you can't believe both.

Bill's observation that Obama is not a party line liberal is wrong. He is actually voted party line on almost every major issue (not that there is anything inherently wrong with doing so).

http://projects.washingtonpost.com/c...167/key-votes/

AemJeff 10-24-2008 02:34 PM

Re: The Week in Blog: Republicans All Fall Down
 
Quote:

Originally Posted by gwlaw99 (Post 95168)
You can either believe that there a separate social security trust fund exists or you can believe obama is giving a tax break to 95% of Americans, but you can't believe both.

The lack of a separate trust fund for Social Security has been a liberal talking point since Al Gore debated George W. Bush in 2000.

Gravy 10-24-2008 02:58 PM

Re: The Week in Blog: Republicans All Fall Down
 
Conn is right that Social Security taxes are entirely dedicated to Social Security. The current excess is invested in Treasury bills and that debt is held in the SS Trust Fund for later redemption. Bill is correct the effect is that dollars surrendered by workers for Social Security wind up shoring up the general budget - for the time being. The date when this stops shifts around, but I seem to remember something like 2018 or so as to when SS tax receipts go into balance and then into the red on an operational basis. After that general revenue funds, on a net basis, must be dedicated to the redemption of debt to fund benefits. That goes on until something like the late 2040s and then the T-bill debt is exhausted and either benefits are scaled back or taxes are raised or both.
It was the changes in the tax rates back in the 1980s forced Social Security to take in much more than it needed for a benefits that were forecast for many, many years. It is highly regressive and was supported by Tip O'Neill and the Democrats of the era, as well as Ronald Reagan and the Republicans. The plan to push the excess into the Treasury via T-bills was understood then. It is clear that in the 1980s both parties consented to fund a significant portion of the general budget, for many decades to come, from a highly regressive tax.
Since social security benefits are progressive with respect to lifetime contributions, it is a reasonable argument that the surplus social security taxes that find their way to the general budget are coming from the higher contributers. As the period of surpluses comes to a close, the source of the surplus is moving ever higher up the contribution tree in this view.
One proposal that got nowhere was to limit the collection of social security taxes to what was needed to keep benefits funded (by lowering the rate each year to the appropriate value) and then simply make an entry into accounts that the Treasury would owe Social Security the uncollected amount in the future. The idea was that by not collecting the money, the government would be forced to remain somewhat frugal and it would not embark on expensive programs that would seriously impede the ability of the budget to withstand the shift from tax surplus to debt repemption. Not surprisingly neither party really got behind this.

bkjazfan 10-24-2008 03:06 PM

Re: The Week in Blog: Republicans All Fall Down
 
President Obama is not going to have the money to even moderately fund the 175 programs he is proposing to do. I don't think people are using that as a reason to vote for him anyway since it's such a blatant canard.

John

Liberty1776 10-24-2008 04:13 PM

Re: The Week in Blog: Republicans All Fall Down
 
Yay! Scher wants to (effectively) eliminate or at least reduce the payroll tax. Sure beats forced investment in Social Security and is even better than Bush's S.S. plan. It'd be better than having the money go into the governments hands. Conservatives couldn't make a better argument than Scher has just made for them.

conncarroll 10-24-2008 04:21 PM

Re: The Week in Blog: Republicans All Fall Down
 
I don't want to break up what is already a a good discussion of social security, fica taxes, and tax credits here but I did want to mention this growing debate on the econ blogs about whether the credit crisis is real. Bill and I had it slated for discussion but simply run out of time:
http://www.marginalrevolution.com/ma...is-the-cr.html
http://www.economist.com/blogs/freee...0/analysis.cfm
http://economistsview.typepad.com/ec...f-the-con.html
http://www.marginalrevolution.com/ma...yths-of-t.html
http://economistsview.typepad.com/ec...yths.html#more

http://gregmankiw.blogspot.com/2008/...ing-times.html
http://econlog.econlib.org/archives/...ot_in_a_l.html

http://econlog.econlib.org/archives/...knowledge.html

conncarroll 10-24-2008 04:33 PM

Re: The Week in Blog: Republicans All Fall Down
 
glh17 writes:

Quote:

The EITC is a conservative idea, similiar to Milton Friedman's Negative Income Tax. I doubt you are old enough to have read much real conservative economics in real time, but the concept of the NIT is described in Capitalism and Freedom and Free to Choose. The idea is to provide low income people with a min. standard of living while preserving an incentive to work. Unfortunately, many new conservatives don't give a damn about low income people. Read a little behind the history of the EITC and you might change your mind. You might disagree with Obama's expansion of the credit, but I don't see how someone can object to it in principle.
I am well aware of the conservative/libertarian origins of the EITC and its ideological relationship to the negative income tax. I still think its a great idea and we should move towards it. But Obama's tax plans are a complete perversion of Friedman's idea. Friedman never envisioned a NIT/EITC being chopped up into a million smaller targeted initiatives so that all social and economic policy would be administered by the IRS. As I said in the diavolg, conservatives introduced this policy to win votes and help low-income people. But now, with all these targeted tax cuts (many of which I readily admit were pushed by Republicans) it has gotten way out of control. They make the tax code way to opaque. And Obama only wants to make the tax code even more complicated.

The only way a real conservative/lib would sign on to a real NIT is if it was free from all though government micromanaging that are at the core of Obama's tax proposals. There is nothing conservative or libertarian about Obama's tax plan. It is simply 1940s style central planning administered through the tax code.

Foobs 10-24-2008 05:13 PM

Taxes and Spending
 
I guess it is nice that conservatives care about government spending again. There are two problems with the "If too few people pay income taxes, then too few people will care about limiting government spending?" line.

1) Just because you don't pay income taxes doesn't mean you don't pay other explicit and implicit taxes. You still have some money in the game. However, the problem is bigger than that. If I want a program that gives free back massages (of a non-sexual variety, though I'll allow that for phase 2 ) to people with a bad back, the benefit will be much greater for me than the cost, nearly regardless of my income level. That costs are dispersed and benefits are concentrated makes the taxation question almost irrelevant.

2) The GOP has made its living divorcing taxation from spending. This allows them to talk about taxes as "punishment" not costs. It has also allowed them to give the American people the government they want (a lot) at the price they want (a lot less). This is the irony of the charge of "tax and spend liberal". In truth, the only alternative they offer is "borrow and spend conservative". So if conservatives want to dance to the tune of the relationship between taxes and spending, I can only say that they already destroyed the jukebox.

Kandigol 10-24-2008 06:40 PM

Re: The Week in Blog: Republicans All Fall Down
 
Ouf, this was painful.
Conn is utterly miserable and bored with this election by now, and Bill just happily trots along.
These two guys like each other too much for Bill to put the knife in and twist it where it hurts.
Let's put Conn out of his misery, and give him next Friday off. There must be some conservatives left to fill in.

Wonderment 10-24-2008 07:15 PM

Election's over. Hooray. Keep the Honeymoon short
 
Quote:

Let's put Conn out of his misery, and give him next Friday off. There must be some conservatives left to fill in.
Don't start feeling too sorry for Conn yet. He will be back out here the day after McCain's loss and the day after Obama's inauguration to work on the conservative opposition agenda.

The election is nobody's funeral and everybody's fresh start.

Bill makes the right point -- that now is the time to shift gears and start organizing to hold Obama and his Congress accountable for their promises to the progressive base of the Dem. Party.

The Pelosi-Reid '06 Congress has been a craven disappointment, using Bush executive branch power and the impending presidential elections as excuses for doing nothing. The excuses are gone.

The 08 Congress and Obama deserve only the shortest of honeymoons.

bkjazfan 10-24-2008 07:58 PM

Re: Election's over. Hooray. Keep the Honeymoon short
 
We need more than just a change in the presidency. A massive amount of the Congress was either paid off or asleep at the switch to let this Wall Street party go bust take place. What gets me about it is I'll help pay for it's cleanup and didn't receive an invitation to attend. Oh well that's not the only extravaganza I missed. Like Conn I go to bed too early.

John

P.S. (No, I'm not Mickey Kaus/Kausfiles) I recently learned that OFHEO is an oversight group created by Congress in 1992 whose sole job is to oversee Fannie and Freddie. Their annual budget is 65 million a year and has 200 employees. Another questionable bureauocracy.

glh17 10-24-2008 09:13 PM

Re: The Week in Blog: Republicans All Fall Down
 
Conn,
The point I was trying to make is that the principle behind EITC is the same as that of the NIT. The refundable tax credit is a preferable approach to poverty than either the traditional welfare system or the minimum wage. The EITC incentivizes work over welfare and doesnít generate the negative employment effect of the minimum wage. Conservatives/libertarians used to support this idea. What I hear coming out the Republican party today is that the EITC is just another form of welfare.
Now, you may be right about the micro details of Obamaís tax credits and that Friedman would not support them. [Iím not sure about this because in addition to the NIT he supported tax credits (or vouchers, their first cousins) for education and maybe even housing vouchers for low income housing (not sure about the latter). His preference was to use the IRS rather than other bureaucracies for income redistribution.] But, I think the GOPís change in thinking about certain types of tax credits (apparently McCain's health care, R & D, and others are exceptions.) is simply an attempt to refute Obamaís claim of cutting taxes by redefining a tax cut to not include a refundable portion of the tax credit for those whose taxable income falls below the minimum necessary to pay taxes. Obamaís plan might be a corruption of the Friedman idea, but the GOPís approach seems to throw the baby out with the bath water.

Thanks for the response.

graz 10-24-2008 09:31 PM

Re: Election's over. Hooray. Keep the Honeymoon short
 
Zinn on potential

bkjazfan 10-24-2008 10:46 PM

Re: Election's over. Hooray. Keep the Honeymoon short
 
80% of American workers pay more in their mandatory FICA withdrawals then they do in federal income taxes. Maybe we need some relief in the former as well as the latter.

John

bjkeefe 10-25-2008 02:43 AM

Re: The Week in Blog: Republicans All Fall Down
 
Conn:

I am quite sympathetic to this:

Quote:

Friedman never envisioned a NIT/EITC being chopped up into a million smaller targeted initiatives ...
and other things you went on to say about complications and opacity in the tax code. However, I think this [emph. added]

Quote:

... so that all social and economic policy would be administered by the IRS.
is a phrase you would do well to abandon. I'm sure it plays well with the people for whom "limited government" and "cut taxes for those who create jobs" are cherished mantras, but it sounds dishonest to other ears. The IRS does not administer policy. They are accountants and cops, basically. They carry out orders, nothing more.

Now, granted, the approach of fiddling with a million knobs in the tax code is an attempt to implement policy objectives, and we can agree that there is a lot to criticize about that. But it's not the IRS who is fiddling with these knobs; it's Congress and the President. What you're doing here, it seems to me, is trying to latch onto an image (ZOMG!!! Teh Taxman!!!) that already has strong negative connotations, trying to build your case by invoking a bogeyman that really has nothing to do with the main point you're trying to win.

This reminds me, in spirit, of the debate you were having with Bill about great swaths of people not paying income tax. Again, there is something here that is fundamentally true if stated precisely (income tax is not the same thing as payroll tax, for example), but it all too often gets blurred, usually to create a catchier slogan or a more hard-hitting opinion piece. And again, as with " policy would be administered by the IRS," what it does is resonate strongly with some people at the expense of alienating a lot of others, because it comes off as dishonest, even if it can always be apologized for and "clarified" once challenged.

As Bill said, it gets awfully fatiguing having to argue over things that ought to have been established once and for all at the beginning of every debate. The longer these slippery slogans remain standard, the longer it's going to be true that many people simply won't bother engaging. We'll just say, "Same old crap from the Heritage Foundation," and walk away. Maybe you don't care about that outcome, but I'm betting, from the honesty you showed at the beginning of the diavlog, that you're aware that "conservative fiscal views," whatever that might mean, is not something the majority is ready to blindly accept at this time.

I would suggest that the people on your side would have better luck trying to get those who don't already agree with you all to listen more carefully if you all would avoid these ways of speaking about the issues. Maybe you'll pass this along when you all get together in your secret hideout to thrash out what will be the new directions of the conservative movement. I hope so, anyway.

bjkeefe 10-25-2008 02:48 AM

Re: The Week in Blog: Republicans All Fall Down
 
Quote:

Originally Posted by gwlaw99 (Post 95168)
You can either believe that there a separate social security trust fund exists ...

Yes, to amplify AemJeff: who, exactly, believes that there is a separate social security trust fund? Sounds like a straw man to me.

a Duoist 10-25-2008 02:50 AM

Re: The Week in Blog: Republicans All Fall Down
 
Just how do big-government conservatives think they are going to have any credibility with libertarians, that some kind of future political alliance between the two will somehow resusitate the GOP? As for a future libertarian/liberal alliance, what esteem do Jeffersonian Democrats enjoy in the urban Democratic Party that such an alliance is anything more than dreaming at the moon?

The GOP is headed for a two-generation trip to the woodshed. The resusitation of the GOP will not likely occur until voters not yet born have no memory of the betrayal by the GOP and K Street Republicans of small-government principles. If anyone in today's GOP hopes to rebuild their party based upon a common belief in small government with libertarians, they have zero credibility.

Perhaps Governors Palin and Jindhal are the future of the ideology of conservatism. If so, that means evangelicism will continue to dominate our political right. Arguably, the American public is fed up with religious issues playing a dominating role in one of our major political parties.

But libertarianism, unlike conservatism or liberalism, is a philosophy, not an ideology, which helps explain why libertarians perform so abysmally during elections. Libertarians are not interested in helping either ideology succeed politically: what they ARE interested in is an open full hearing for their ideas about individual human freedom and its attendant responsibilities.

fedorovingtonboop 10-25-2008 08:57 PM

Re: The Week in Blog: Republicans All Fall Down
 
ha! no one in politics could possibly have less credibility than a libertarian.
i think their lack of success may have more to do with this:
http://www.youtube.com/watch?v=YwpnH_OTZio
(fforward to 1:15)
....the death knell of libertarianism. I grinned a big grin...
I do appreciate his honesty, though, it's not often you can get someone to admit that their personal philosophy is wrong (especially an old person.) I guess it takes a worldwide financial catastrophe to get people to change.
my prediction is that most libertarians won't change one bit and also won't apologize or admit to any inconsistencies in their religion at all.

nkirby 10-25-2008 09:33 PM

Re: The Week in Blog: Republicans All Fall Down
 
Go Tartans!

timba 10-26-2008 07:49 PM

Welcome Back Conn!!
 
What a relief after last week.

That said ... this "payroll vs income tax" argument seems like a shell game. In the field of software, I go back and forth between being an employee and an independent contractor. When I'm an employee, I tell them I have "zero dependents" and my check gets a ton of taxes taken out, and then in April, I don't have to pay anything extra, or I get a small refund. So I "don't pay any income taxes", according to you.

When I'm an independent contractor, I get 100% of all my checks and then in April I have to pay a ton of money and then each 3 months I have to pay "quarterlies" in anticipation of future earnings.

It's 6 of one and half a dozen of the other. The bottom line is that if you make less than 250K a year, regardless of how you make it, you're WORSE OFF UNDER McCAIN and yet the lying scumbag robocallers are convincing the great unwashed <$250k/yr masses that Obama will increase their taxes.


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