Teh Stupid Debt / Deficit debate

Did you know that Clinton never had a budget surplus?


It’s true. That confused the shit out of me, because at one point I had numbers that said otherwise, but it’s true. This article, while conservatively biased BIG TIME, explains why and I have since found National Debt Numbers from other sites that back that up. So, it’s right. We’ll just have to accept it.

Now… I told you that because I want to show [the following.] Basically? Republicans and specifically their supply-side econonsense still pretty much suck it fiscally, big time. Now… I’ve done pieces on the debt before, mostly making the same mistake (focusing only on PUBLICLY held debt) this is criticized in the above article. But I want to destroy one of the lies you are hearing from Tea Partiers, John Boehner, Harry Reid (yes, him too!), the Laffer Curve and Reaganomists. The idea that we can UNDER NO CIRCUMSATANCES raise taxes to fix the deficit. Laffer said that the markets will turn down and you’ll lose revenue. Reagan (and later Bush) insisted that the market would boom and the tax cuts would pay for themselves. And even HARRY REID’s current deficit reduction plan includes NO TAX INCREASES.

What. The. Fuck?!

So check this out – and if you want to skip the fancy explanation, just scroll down to the graph and keep reading. I got the followg debt numbers from THIS SITE. Now, based on his comments, I would interpret his ideology as fairly balanced, yet slightly right-leaning. He’s pretty fair with criticism and credit for both sides, acknowledging the realities facing Presidents of ALL parties, but there’s a little more poo-pooing of Democrats and a little more apologism for Republicans; at least it seems that way to me. In any case, I’m only pointing all of this out to show that my information and the data used here doesn’t come from some "Liberal Propaganda" site. It comes for two conservatives (one moderate, one hard) and the U.S. Treasury.

So, to test the theory that, as republican’s put it, we have a “spending problem” and not a “revenue problem,” I thought I do a fairly simple analysis: I’d plot each president’s deficit against their top-tier tax rate and see how they all faned out. (Yeah: I knew how it would look ahead of time, but play along OK? *wink*) For simplicity and legitimacy’s sake, I’m only looking at post WWII numbers – big wars, great depressions, etc… Are bound to have a greater impact on the budget AND the tax rate than anything else, and pretty much ANY partisan will acknowlegde that. (And uh... those ALL happen to work against Democrats, BTW!) Also, while deregulation and lesse-faire economics may have helped create the "roaring twenties," which would boost Republican numbers, all but the most brain-dead partisans realize that those practices were unsustainable.  And history bore that out in the 1930's. Also note – for some reason, these deficits are in 1983 dollars. I'm not sure why he did that, I would have preferred 2010 or 2011 dollars, but I think most of you know that while the absolute values might shift the TRENDS will always remain the same regardless of what year you decide to normalize to. So these are in 1983 dollars, and in Millions. (With no further conversion on my part.)

Federal Deficits in Millions of 1983 Dollars vs. Top Tier Tax Rate the same year:

Wow! Would you look at that! Deficits and top-tier tax rates, in fact, have a negative correlation!

And go figure: The more you take in, the more you can pay off! Wow! What a freaking concept!

And where are we now? Well: Do you see all those REALLY HUGE deficits? Yeah, those are all Bush’43’s and Obama’s. And you see that cluster around 30%? Between $200,000M and $400,000M? Yeah: Those are Reagan’s and Bush’41’s. (Incidentally, those LOW deficits, just below that cluster are all Clinton’s. So while he didn’t have a true SURPLUS, he still did MUCH better than any of the Republicans of the past 30 years!) And I think it's fair to call any top –tier rate under 40% “Reaganesque.” After all, those big deficits at 50%? Were all Reagan’s! So anything UNDER that? IS ABSOLUTLEY Reaganesque – including all current proposals being put forth but Harry Reid and Barack Obama. And it’s time to stop this nonsense. This country, and its Rich, were doing just fine with top tier rates of 50, 70 and even 90%. And the deficits were basically nil’ compared to ANYTHING that we’ve seen in the past 30 years of continuous Reaganomics.

So once again, I’m going to go back to my simple mantras:

Republican philosophy in eight words:

I’VE GOT MINE, SCREW THE REST OF YOU.

[What SHOULD BE] the Democratic philosophy in nine:

TAX THE RICH. TAX THE RICH. TAX THE RICH.

Now… Both of those are parodies, of course, but I find it rather telling that, even in satire, the Liberal position is a solution to the problem, while the Conservative position IS the problem!

So WTF Barrack? WTF Harry?

TAX. THE. RICH!

This will:

1) Fix everything. Seriously.

2) Harm nothing. Seriously!

3) Render the Republicans and Tea-Baggers and RW Libertarians permanently irrelevant.

4) Put the final nail in the coffin of the myth of Supply-Side Economics and its urine-soaked, mentally retarded cousin, trickle-down Reaganomics, and put us back on the path of being a country of opportunity for ALL people and not just the top 2%.

And if that’s “class warfare?” Then SO FUCKING BE IT. The Right has been waging war on the Middle Class, The Working Class, the Unions and the Poor for THIRTY FUCKING YEARS NOW and it has resulted in fiscal disaster. We need jobs. And if the rich won’t provide them, then the Government should TAX THE SHIT OUT OF THEM and provide them. And you know what? After all the money is spent, it will end up right back in the hands of the rich! Because after all, they own the Companies and the Stores and the Services providers where all of that money will be spent! And that’s fine! That’s as it SHOULD BE! That’s why this will do NO HARM! That’s why “trickle down” is a MYTH and “percolate up,” as Obama put it on the ’08 campaign trail, is ECONOMIC REALITY! The only money that the wealthy WON’T get given right back to them? Interest payments on the National Debt – which should be an ever-shrinking number, if we’re running surpluses and paying down the debt! And whatever the Poor, Working and Middle Class manage to keep a hold of, in the form of savings and investments for themselves. And you know what? That will STILL end up going to the CHILDREN of the current-day rich, pretty much fort the same reason.

We need not cry for the Rich in America, folks. They will still be rich. They will still keep all their money. And that’s fine. I don’t want to take it away from them. I just want them to share it a little, since it will all end up going right back them anyway. But it can support a much more comfortable and secure lifestyle (and therefore a much more robust economy) if it passes through a few more hands before ending up back in their wallets.

But no, they’d rather take their toys and say, in the word’s Eric Cartman:

SCREW YOU GUYS, I’M GOING HOME!



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BTW… In case anyone was wondering, you CAN do the same analysis with all of the data going back to 1913, and the negative correlation between top-tier tax rate and deficits still holds:

So, bottom line?

John Boehner and company are full of shit, and Harry Reid and Barrack Obama should stop listening to them!

--- TAX THE RICH. TAX THE RICH. TAX THE RICH.  ---

The Party of Fiscal Responsibility?

I've done several pieces over the past year+ showing how absurd it is to consider the REPUBLICANS "fiscally responsible."  Whether it's showing what portion of our debt they're responsible for, or going year by year and showing the trends in deficit spending or even just recognizing the fact that they have been, in fact, actively trying to bankrupt the government in order to force an end to programs that they know they could never get away with, politically, cutting or eliminating.  And that last bit, while seemingly a bit paranoid, is on full display right now in the ongoing farce about trimming the deficit. And to understand just how big a farce this is, realize that you could take ALL of Obama's proposed cuts, ALL of the Republican's proposed cuts, and none of the Republican's propsed tax cuts (yeah - they're "serious" about the deficit, and yet they're STILL proposing tax cuts! That's liek getting "serious" about your credit card debt by working fewer hours!) and even wth all of that, you wouldn't even be HALFWAY to a balanced budget!
And what do we already see will be the result of all these cuts? Hospitals closing, schools closing, tens of thousands out of their jobs, no funduing for public broadcasting (the Right has to LOVE that one!) and the list goes on, and on, and on.

And on.

And for all that pain?  We're not even HALFWAY to a balanced budget?  You gotta be fucking kidding me!

And do you know what's not on the table? RAISING TAXES. Of course.  And there cannot be one person anywhere in the world with two brain cells to bounce together who thinks you can balance the budget on spending cuts alone.  But... this was the Republican's plan all along!  And Speaker Boehner can cry "We're broke!" all he wants, that doesn't make it true.  We're not broke.  That's a bald-faced lie.  We're in the RED, yes.  And that's not good, long-term.  (Although that being the case one has to wonder why the Republicans PUT US in the red every single one of the last 20 years in a row when they held the White House!)  But see... they don't want to raise taxes for two reasons and two reasons only, and neither of them has ANYTHING to do with harming the economy, or creating jobs - botho fwhich are pretty much bullshit.  In fact the same economic model that gives their tax-cut multipliers? (That would be KEYNES.)  Demonstrates that spending changes have a larger effect! (IOW: Those spending cuts will do more harm to the economy than the same level of tax increase. So says the model that gives them the tax-cut multiplier!) And I'm not going to debate that here, but it's a bullshit, nonsense point anyway.  If you want the details, email me or take a goddamned economics course.

The two reasons they don't want to raise taxes is:

1) The American public has grown so stupid and so greedy and so so shortsighted and lacks so much perspective that we're probably to the point where the fools WOULD actually lose their jobs if they did it.  Not that I care about the Republicans losing their jobs, but the bulk of America has grown so spoiled that they just have no clue. No clue at all.  I'll get to what I'd do with taxes in a moment, but the Right has dumbed down America so much, that it probably IS the political reality that raisign taxes is political suicide.  Even though it's needed.  Kind of like... REAL LEADERHSIP.

2) (And this is the important one) Raising taxes would LITERALLY FIX EVERYTHING.  Seriously.  And... they don't want that!  They've been trying to kill these progams for DECADES and they have finally CREATED an environment where they can claim that we have to! (In some cases, IN ORDER TO SAVE THEM!  Figure THAT ONE out!)  But finally, after 30+ years of crippling our governments finances, they finally have enough people fooled into believing that these things have to go. (Persoanlly, I'd say these idiotic Republicans are the ones that have to go, but the people have spoken.) The LAST thing they want at this point is a solvent federal government!

Think about it: How many times have your heard one of these fools, Democrat or Republican, claim, "We just can't afford it anymore?"  I hear it almost every day.  And while they're right, from a certain point of view, it's utterly shocking why no one ever asked about raising taxes back to the levels they were at when the country and its finances were doing just fine!  It's not like we've had these tax rates etched in stone since time immemoriam!  GEORGE W. BUSH created the current tax table, less than a decade ago! And, at least for the past two years, Obama's lowered taxes EVEN MORE!  It's hardly like were tapped here, folks!  It's like we're dying of thirst sitting in our kitchen, and yet refuse to turn on the tap!  It's psychotic!  And if they wanted to lower taxes repsonsibly, all these many long years, they'd have cut the spending FIRST thus keeping the taxes6 cuts deficit neutral.  But since the American people would never go for that, they had to plunge us into debt, creating this artificial crisis in order to confuse the public and get them on board! (And despite being 30 years in the making, with 20 of those years under Reagan, Bush and Bush, somehow this is all OBAMA'S fault!)

Now, I would like to take a look at some of the tax tables of recent past administrations, just to show you how "painful" (hah!) this would be.  As two examples, I'm going to use a household that makes $500,000 per year and my own (approximate) household income.  I'm not going to STATE my income, but I will be honest about what it would cost or save me if we were taxed at some of these older rates.  If you can calculate my income from that information? Congratulations. You pass basic Algebra.  And I'm also assuming that I don't have to explain to any of you how a MARGINAL SYSTEM OF TAXATION works.  So if you don't know where I'm getting my figures, try wikipedia.  One last thing, you can check my tax bracket info aginst the info available at the U.S. Tax Foundation, and my inflation calculatuions HERE.  One last thing: It's worth noting that, starting in 1984, the tax brackets were adjusted each year for inflation automatically.  I happen think this is a good thing, and would automatically adjust ALL fixed numbers in the tax code - including all maximums and minimums - the same way.  So for simplicity's sake, I'm using the last year that the given rates were in effect.

The current tax table is a legacy of the Bush'43 administration:
(Sorry, these run over.  If they were any smaller, you wouldn't be able to read them!)

This is the tax table that resulted in eight years of record deficits (record at elast when compared to any that came before him) under Bush, and another under Obama, and likely another one next year.  Now you hear a lot about eliminating the Bush tax cuts for the wealthy, but I'm on record many times as saying that we should eliminate them accross the board!  Clinton had two budget surplues at the end of his term.  And this was the tax table that created those:

If we adjust for inflation, and move the brackets into 2011 dollars, we get:

So what would all this bed-wetting about the Bush tax cuts cost the rich? Well, that family who's pulling in $500,000 would onlyhave to kick in an extra $12,33.64 a year.  That sounds like a lot, to be sure, but think about it: $500,000 a year!  Think about what you make, what you live on, and ask yourself how hard it would be to find an extra grand or so per month in your budget if you made that many times more than you make now!  You know what I say? Boo-fucking-hoo for the rich.  What would this cost ME?  An extra $1755 a year.  Now that would affect my lifestyle and spendign decisions far more that the $12-large would affect that other familiy's, but I'll be honest with you: $147 less a month?  I could afford it.  Actually? It wouldn't change by budget at all, nor would it impact my retirement savings. I'd still even have some decent cash going into my short-termsavings account. So it really wouldn't change much of anything.  (I guess it must just be good to be me!)  But whatever.  If that's all it cost to REALLY eliminate the defict and KEEP most of our social safety nets? FUCKING DO IT ALREADY!

Now, I will admit that Boehner & Co. may have a point when it comes to tax hikes.  After all, check out the table that got George "Read My Lips" Bush voted out of office in 1992:

adjusted for inflation:

Oh, my fucking god!  His top-rate is still less than his son's!  And he got kicked out of office for that!  Apparently we've been spoiled little cry-babies about taxes longer than I thought, the Clinton years not withstanding!

Now this will illustrate why the whole flat tax thing (and the arguments about top-tier rates) are utter bullshit.  This tax table? Would cost me another $1089 over the Clinton table. (and $2845 over the current table.) That's right: Bill Clinton LOWERED my taxes! (Hint: It was those extra brackets!)  Meanwhile, in all his generosity, Bush'41would give a $13,583 CUT to that family making $500K per year as compared to the Clinton table. (And $1250 less than than what his son's table taxes them at!) Talk about "rob from the poor and give to the rich!"

But how bad was that, anyway?  Why'd he get voted out over that? Well... it was replacing this absurd tax table from Reagan's second term:

Look at that!  A top-tier rate that's actually LESS than what he's taxing the middle class at! Can you believe it!  This is the Right's great hero, folks: Rob from the poor and give to the rich, and don't even try to hide it! Adjusted for inflation, it would look like this:

OK. Under this monstrosity, I'd be paying $3004 more than I'm paying now.  (And $1249 more than the Clinton table!)  Wait... I though Reagan was this great tax-cutter?!  Well... he was, if you were rich enough to afford him:  That family of $500K? Pays $4,872 less than they do now, and $17,205 less that they would owe under Clinton!  The middle class gets soaked for 3-large, so that some making $500K can have an extra 17-GRAND?!  What. the. fuck?  I'm liking Geroge W. Buch better all the time!  At least with him there was SOMETHING in it for me!  As far as I'm concerned Reagan and Bush were a bunch of working-class-people-hating cock-munchers!

There is one thing, however, about Reagan that his current cult-following will not tell you about.  In his first term, he actually signed a top tier tax rate of 50% into law.  It was a CUT at the time but still, let me say that again: Ronald Reagn signed a 50% tax rate into law!  And it was in place until 1986.  Here's what it looked like:

Adjust for inflation and you get...

Looks complicated, no?  Well... complicated can be GOOD sometimes.  Under this table I would owe $2566 more than I owe today, and just $810 more than I would under Clinton.  And those rich folks at $500K?  Would owe $64,798 more than the do now. Wow. And that's under a RONALD WILSON REAGAN CONSTRUCTED Tax Table!  Fuck Clinton! For an extra $810 a year?  I say: let's bring back the first REAGAN tax table!  Let's bring back that $64K tax hike that this great socialist would ask of the rich!

I mentioned that this was actually a reduction, and I've gone so far recently as to call for pre-REAGAN tax rates.  This was the last table under Carter:

Adjusted for inflation:

Do you notice how that top tier rate doesn't even kick in until well after $500K? Remember that the next time someone's making fun of that 70% tax rate.  Now... I'll admit that I could be pursuaded that 70% is too high.  We can argue it.  I'd be perfectly happy with a top tier rate of 50% - with that 1982-86 Reagan Table.

But just for shits and giggles, under Carter, I'd owe $4355 more than I'd owe today.  ($2600 more than with the Clinton table, and $1789 more than with the earlier Reagan table.) That's... a bit much, actually.  I could still swing it, without changing my budget, or my retirement investments, but... there wouldn't be ANYTHIGN left for short-term savings or emergencies. Nothing. Nada. Zilch.  So... yeah, bvioulsy that would eventually impact my budget.  And thus I might just have to back off from my calls of Carter-levels of taxation, even if it would squeeze an extra $117,708 out of those rich bastards down the street, over what they'd owe now. (LOL!) As much as I'd love to seem them pay that... We're getting into T.E.A. territory for me with with what I'd owe.  So, yeah, I'll admit this is excessive.

I'll bet you never thought you'd here me say this: BRING BACK THE REAGAN TAX TABLES!

(Just remember: I mean the 1982-1986 tables, not the 1987-1989 tables!)

What do my libral readers think?  Time to revisit Reagan's great tax policy?

How the mortgage crisis SHOULD have been handled

OK... We all know how the mortgage crisis came about.  Banks knowlingly lent money to high-risk borrowers with little to no equity in their homes.  Properties were over valued by complicit apprasiers, as were the resulting securities sold by the banks to get those loans the hell of their books and into someone else's hands.  But the way we've gone about dealing with the resulting foreclosure crisis leaves much to be desired.

Now... A lttlie background.  I've got a 15 year balloon mortgage at 6.125%.  That was an OK deal at the time (we were coming of a 5-year balloon about a year before all the shit really hit the fan, so we were actually pretty lucky timing-wise!) Right now rates on a 30-year fixed are about 4.1 to 4.5%.  So I could save about $200 a month or so if I could refy.  Now, I've never missed a payment, and can comfortably continue to pay I'm doing now.  I also have excellent credit.  So on a personal level I'm a very low risk borrower.  But like many people I'm underwater.  So while I could pay back the loan, obviously with even less risk that I represent at my current, higher rate, the bank won't even talk to me.

Which is bullshit. 

Now... if I were 90 days BEHIND on my mortgage?  Then the gov't would (try to) force them to deal with me.  How's that for a backwards incentive?  What's more, the banks are so well protected by this loop hole that it's still far more likely that I'd be forced into forclosure than get the loan modification.  So while I'm not one of those guys saying "Where's MY bailout?" - I recognize that I AM benefiting from my neighbor being bailed out - I AM getting frustrated at a system that rewards, indeed encorages, every kind of bad behavior - borrowing too much, high risk lending, NOT PAYING YOUR BILLS - and punnishes me for (1) acting responsibly and (2) for market forces which are completely outside of my control.  And I'm not even looking for a reduction of  PRINCIPAL - that's just BULLSHIT, and I'll get to that in a moment - I just want to take advatgae of the lower market interests rates.  But I can't... BECAUSE OF THE MARKET!

Now, one of the big problems with the old system was the inherent conflict of interest involved in having the mortgage brokers hire (and pay) the appraisers.  It USED to be that they could just make a phone call, and get an apraisal.  That may have been problematic in some markets, but get this: NOW, not only do I pay for appraisal - $300-$500, whether or not I end up getting the loan - but if the rate falls again after I get the appraisal, I can’t get that better rate with the same bank that the appraisal was done for, and I can’t transfer that appraisal to new bank! So I'd have to shell out AGAIN!  Why is that?  Govenrment regulations, I'm told.  Nice going, morans!


Now, I think there was a much simpler way to stem the bleeding here.  And, as usual with MY proposals, and as is so often NOT the case with Gov't, it puts the responsible CUSTOMER first.  There is a wide perception that a lot of these people "just borrowed too much."  To be sure, that's true of some, but by and large, the bigger problem was that so many people were faced with unforseen rate changes or ballons that expired (meaning that the now owe the entire balance) that they would notrmally just have re-finance at the new market rates, but CAN'T because there's no equity, or they're underwater, so the bank won't approve the new loan.  So they lose the house, despite the fact that they could have made payments at the current, 30 year fixed, market interest rate.  And their foreclosure hurts the market and puts that many more people under water and it's a viscious cycle.  So THOSE are the people who I'd help first.  And I'd do it thusly: For a predefined, finite amount of time - say, two years - anyone who had made their last [6?, 12? some number] mortgage payments on time, and can continue to do so, based on thier current income, AUTOMATICALLY QUALIFIES for a re-fi, at their current principle, plus closing costs, at the current market interest rate.  That alone would have made this "crisis" basically manageble.  And no one gets "punnished." Banks continue to do business with their best customers, stabalizing their own income and the value of their assets, while the GOOD customers benefit from the favorable market conditions and get to keep their house.  (And obviously this would not extend to anyone buying a new house or a second home, etc...  Just thier primary residence.)

Now... if someone TRULY borrowed too much?  And there's just no way they can afford the 30-year fixed market rate? (Or even a slightly lower rate?)  I'm inclined to say, "Sucks to be you." If you lose your job and you're unemployed for a few years?  Guess what? It's likely that ANYONE would have to sell / foreclose / go into bankrupcy.  For better or worse, THAT'S HOW THINGS WORK IN THIS COUNTRY.  By reducing the PRINCIPLE of the loan, you're giving free money to the least deserving customers.  OK - I'm alright with punninshing the banks a little (and helping out the borrower) if the bank was truly predatory.  BUT... most of these loans were "predatory" becuase of the future interest-rate hikes!  So what's wrong with simply forcing the conversion to a 30-year fixed (or longer maybe? Why NOT a 40 or 50 year? They have 100 year loans in europe!) at market rates if the person can afford that, and saying "sorry, but we can't help you" to the people who CAN'T?  Seems to me that if they had done JUST THIS, at least at first, the economic fallout would not have snowballed as much as it did, and much of the resulting economic and fiscal fallout would have been mitigated.  And the Banks would be discoraged from pursuing these kind of bullshit loans in the furture! See? Everybody wins, except the people who just went crazy wth their debt.  (And for them, there's bankrupcy.)

And even if you agree with the IDEA of "helping people out" by lowering their principle?  It ain't happening anyway.  The program's a MESS. It really hasn't done what it's set put to do.  Too many loopgoles for the Bank, and it's WAAAY to complicated.  And that's not a Liberal/Conservative issue or a Democratic/Republican issue.  The issue is that BANKS have too much influence, and LAWMAKERS never try the simple solution.  Again - that not Lib/Con or PUb/Dem either: it's because almost EVERYONE OF THESE BASTARDS on BOTH SIDES of the ailse is a friggin' LAWYER.  And making the law simple would but lawyers out of business.

My rant for the day.