Now That’s Rich By PAUL KRUGMAN Published: August 22, 2010 We need to pinch pennies these days. Don’t you know we have a budget deficit? For months that has been the word from Republicans and conservative Democrats, who have rejected every suggestion that we do more to avoid deep cuts in public services and help the ailing economy. But these same politicians are eager to cut checks averaging $3 million each to the richest 120,000 people in the country. What — you haven’t heard about this proposal? Actually, you have: I’m talking about demands that we make all of the Bush tax cuts, not just those for the middle class, permanent. Some background: Back in 2001, when the first set of Bush tax cuts was rammed through Congress, the legislation was written with a peculiar provision — namely, that the whole thing would expire, with tax rates reverting to 2000 levels, on the last day of 2010. Why the cutoff date? In part, it was used to disguise the fiscal irresponsibility of the tax cuts: lopping off that last year reduced the headline cost of the cuts, because such costs are normally calculated over a 10-year period. It also allowed the Bush administration to pass the tax cuts using reconciliation — yes, the same procedure that Republicans denounced when it was used to enact health reform — while sidestepping rules designed to prevent the use of that procedure to increase long-run budget deficits. Obviously, the idea was to go back at a later date and make those tax cuts permanent. But things didn’t go according to plan. And now the witching hour is upon us. So what’s the choice now? The Obama administration wants to preserve those parts of the original tax cuts that mainly benefit the middle class — which is an expensive proposition in its own right — but to let those provisions benefiting only people with very high incomes expire on schedule. Republicans, with support from some conservative Democrats, want to keep the whole thing. And there’s a real chance that Republicans will get what they want. That’s a demonstration, if anyone needed one, that our political culture has become not just dysfunctional but deeply corrupt. What’s at stake here? According to the nonpartisan Tax Policy Center, making all of the Bush tax cuts permanent, as opposed to following the Obama proposal, would cost the federal government $680 billion in revenue over the next 10 years. For the sake of comparison, it took months of hard negotiations to get Congressional approval for a mere $26 billion in desperately needed aid to state and local governments. And where would this $680 billion go? Nearly all of it would go to the richest 1 percent of Americans, people with incomes of more than $500,000 a year. But that’s the least of it: the policy center’s estimates say that the majority of the tax cuts would go to the richest one-tenth of 1 percent. Take a group of 1,000 randomly selected Americans, and pick the one with the highest income; he’s going to get the majority of that group’s tax break. And the average tax break for those lucky few — the poorest members of the group have annual incomes of more than $2 million, and the average member makes more than $7 million a year — would be $3 million over the course of the next decade. How can this kind of giveaway be justified at a time when politicians claim to care about budget deficits? Well, history is repeating itself. The original campaign for the Bush tax cuts relied on deception and dishonesty. In fact, my first suspicions that we were being misled into invading Iraq were based on the resemblance between the campaign for war and the campaign for tax cuts the previous year. And sure enough, that same trademark deception and dishonesty is being deployed on behalf of tax cuts for the wealthiest Americans. So, for example, we’re told that it’s all about helping small business; but only a tiny fraction of small-business owners would receive any tax break at all. And how many small-business owners do you know making several million a year? Or we’re told that it’s about helping the economy recover. But it’s hard to think of a less cost-effective way to help the economy than giving money to people who already have plenty, and aren’t likely to spend a windfall. No, this has nothing to do with sound economic policy. Instead, as I said, it’s about a dysfunctional and corrupt political culture, in which Congress won’t take action to revive the economy, pleads poverty when it comes to protecting the jobs of schoolteachers and firefighters, but declares cost no object when it comes to sparing the already wealthy even the slightest financial inconvenience. So far, the Obama administration is standing firm against this outrage. Let’s hope that it prevails in its fight. Otherwise, it will be hard not to lose all faith in America’s future. http://www.nytimes.com/2010/08/23/opinion/23krugman.html
All of those cuts are going to be extended…too hard to let only part expire. If Dems were smart they would let them all expire and then introduce a bill that re-enacts the middle/low cuts and let the Republicans block that. Won’t happen though.
“So far, the Obama administration is standing firm against this outrage. Let’s hope that it prevails in its fight. Otherwise, it will be hard not to lose all faith in America’s future.” Ok, Krugman is going from liberal leaner to internet troll. Wtf? I used to like this guy.
ohai Wrote: ------------------------------------------------------- > “So far, the Obama administration is standing firm > against this outrage. Let’s hope that it prevails > in its fight. Otherwise, it will be hard not to > lose all faith in America’s future.” > > Ok, Krugman is going from liberal leaner to > internet troll. Wtf? I used to like this guy. Why? Because he supports Obama?
I’d respect this guy so much more if he didn’t try to bludgeon with his Nobel Prize people who disagree w/ him (remember Arafat was a winner too). Also, the fact that he believes in liberal orthodoxy right down the line (does anyone believe in every party platform on every litmus test?) ruins his credibility. He’s an ideologue who lets his politics influence his analysis, not the other way around. He gives no credence to the other side of the argument, and often refers to people like Paul Ryan, or anyone else on the other side of the political spectrum as “stupid”. If you can’t debate them, just insult their intelligence…that seems to be his modus operandi. He reminds me of my least favorite type of professor from college…the kind that demanded your analysis be a reiteration of his own, or your grade would be imperiled.
Here is another viewpoint - From Cafe Hayek: If Smith Grows an Apple and Eats It, Does the Apple Come from Jones? by DON BOUDREAUX on AUGUST 23, 2010 in MYTHS AND FALLACIES,OTHER PEOPLE’S MONEY,TAXES Here’s a letter to the New York Times: Reasonable people can debate whether or not raising taxes is a sound means of funding government spending, but Paul Krugman isn’t reasonable (“Now That’s Rich,” August 23). Instead, he slings mud and insinuates that the proper relationship between Americans and their government is exactly the opposite of what the founders expressly took this relationship to be. For government not to raise taxes on high-income earners is not, contrary to Mr. Krugman’s assertion, for government “to cut checks averaging $3 million each to the richest 120,000 people in the country.” No checks will be cut and no money will be taken from anyone. All income is earned by individuals. It originates as their property and not that of any government or of some collective ‘us.’ Even if this money is deemed necessary to keep Uncle Sam solvent, remember that this government was created to protect individual rights that each of us receives from our “Creator” – that is, rights existing independently of any state. In contrast, according to Mr. Krugman’s mystical political dogma, all property (and, hence, each right) originates in government. Government is elevated to the status of Creator, while each individual is thereby reduced to the status of a serf living at the favor and pleasure of government. That belief, if pursued consistently, leads to the greatest tyranny. Sincerely, Donald J. Boudreaux
Because every single thing he says is pro-Obama/Democrat and anti Republican to a ludicrous degree. Every Democratic plan is 100% foolproof and every Republican plan is 100% bad. I understand that people will lean left and right in terms of economic ideology but frankly, lately Krugman has just been spewing partisan rhetoric. He’s like the Democrat version of Karl Rove (yes, I am making that comparison). I am just having trouble seeing this article, or anything else that Krugman has written recently as the true thoughts of a rational economist.
"Or we’re told that it’s about helping the economy recover. But it’s hard to think of a less cost-effective way to help the economy than giving money to people who already have plenty, and aren’t likely to spend a windfall. " This argument makes sense to me. Both wealthy and middle class Americans are dramatically cutting back on discretionary spending because of uncertainty surrounding the economy. Wealthy Americans who might have gone out and bought a yacht for a vacation home back in 2005 are more likely to stash money in a savings account and wait for better times. Middle class Americans are cutting back spending in record numbers and taking on less debt. http://www.nytimes.com/2010/07/17/business/economy/17consumers.html?_r=2&hp The idea that keeping the Bush tax cuts for the wealthiest Americans will stimulate business and the benefits will trickle down to the poor does not hold up if discretionary spending continues on the current path. I have to agree with Krugman’s thinking in that providing support for unemployed Americans who need the money to purchase necessities would do far more to stimulate the economy.
mwvt9 Wrote: ------------------------------------------------------- > Here is another viewpoint - > > From Cafe Hayek: > > All income is earned by individuals. It > originates as their property and not that of any > government or of some collective ‘us.’ Even if > this money is deemed necessary to keep Uncle Sam > solvent, remember that this government was created > to protect individual rights that each of us > receives from our “Creator” – that is, rights > existing independently of any state. > > Sincerely, > Donald J. Boudreaux Yes, Idiologically sure it is free of the state and sure we can say that our income is ours and ours only. Now the question is how are you going to enjoy all the benefits that are provided by the state if your not willing to pay for it? Sounds awfully like greek talk to me. It was this kind of mentality that caused the greeks to be in the state that they are in now. For years the greek people enjoyed all the perks of the state and the state didn’t take any measures to balance their spending. Why didn’t the state try to balance the books? Because it would have been political suicide since the people truelly believed they were entitled to all the benefits of the state without paying for it, well the money came from outside through bond markets and when that well ran dry, the state was ruined. I hate taxes as much as anyone else and I think there is tremendous corruption and wastefulness in the system. I believe there are a lot of things that could be done to make the system more efficient (thus in turn actually reducing taxes), but the fundamental idea that the collective whole pay into a system/service that is enjoyed by all is sound to me. If you guys want to complain about paying too much to the state, try moving to Canada. You will be running for the US border with wide open arms when you see how much our population is taxed. We even have taxes on tax (called a gas tax)!
fatgator Wrote: ------------------------------------------------------- > "Or we’re told that it’s about helping the economy > recover. But it’s hard to think of a less > cost-effective way to help the economy than giving > money to people who already have plenty, and > aren’t likely to spend a windfall. " > > This argument makes sense to me. Both wealthy and > middle class Americans are dramatically cutting > back on discretionary spending because of > uncertainty surrounding the economy. Wealthy > Americans who might have gone out and bought a > yacht for a vacation home back in 2005 are more > likely to stash money in a savings account and > wait for better times. Middle class Americans are > cutting back spending in record numbers and taking > on less debt. > > http://www.nytimes.com/2010/07/17/business/economy > /17consumers.html?_r=2&hp > > The idea that keeping the Bush tax cuts for the > wealthiest Americans will stimulate business and > the benefits will trickle down to the poor does > not hold up if discretionary spending continues on > the current path. > > I have to agree with Krugman’s thinking in that > providing support for unemployed Americans who > need the money to purchase necessities would do > far more to stimulate the economy. +1, Not to mention that the middle class are far more likely to spend or save right here in the USA than stash it in overseas swiss bank and other accounts.
Wow. Its just so refreshing when I get the rare opportunity to read another biased piece of garbage…
I could support letting the Bush tax cuts expire on the richest one-tenth of 1 percent, with the condition that the receipts be used to support private sector job creation and/or alternative energy research. Unfortunately, the money would either go directly into the general fund or be used to extend unemployment benefits, fund healthcare “reform”, fund welfare, etc.
PeteyPete Wrote: ------------------------------------------------------- > > He reminds me of my least favorite type of > professor from college…the kind that demanded > your analysis be a reiteration of his own, or your > grade would be imperiled. Yeah, I had a math professor like that.
Here’s another idea. How about we let the rich people keep the money under the condition that they spend it? This would help businesses, reduce taxes, and give your rich uncle an excuse to buy another big TV/Porsche/home remodeling, etc. See, everyone wins!
bchadwick Wrote: ------------------------------------------------------- > PeteyPete Wrote: > -------------------------------------------------- > ----- > > > > He reminds me of my least favorite type of > > professor from college…the kind that demanded > > your analysis be a reiteration of his own, or > your > > grade would be imperiled. > > > Yeah, I had a math professor like that. If only economics/politics were an exact science. In spite of the Nobel Prize awarded every year, an economist by definition, “is someone who can tell you today why his prediction of yesterday didn’t come true” BTW…loved the motivational speech. Worked like a charm for L3
ohai Wrote: ------------------------------------------------------- > Here’s another idea. How about we let the rich > people keep the money under the condition that > they spend it? This would help businesses, reduce > taxes, and give your rich uncle an excuse to buy > another big TV/Porsche/home remodeling, etc. See, > everyone wins! Historically, this has actually worked pretty well. Recently however, the rich have come to comprise far too large a proportion of consumer spending. As much of their spending is highly discretionary, it tends to be highly volatile. Middle class spending, when the middle class has money to spend, tends to be much more stable. I think the economy needs more stability right now, which means we need more people buying Levi’s, Ford Fusions, week long stays at the Orlando Holiday Inn, etc.
Republicans rule, no Democrats rule, no Republicans rule dood, no dood they are idiots, Democrats rule! Etc.
So a libertopian wants to keep the tax cuts. Wow, surprising. I guess he missed the part where the greedy get greedier and those with capital eventually come to comprise the majority of society. It’s already gone pretty far here and will eventually lead to our downfall if not checked. What’s funny is that some of the most stringent capitalists, those who have done the best in this country, disagree with his assertions. Why? Because they understand that aggregation of wealth prevents what they were able to do, aggregate wealth. What this country needs is less Paris Hiltons, not more. Yet, somehow, she is celebrated because she can run around like a drug addled cokewhore wastrel. Anybody who advocates that is a moron and can’t see past the next 100 years. I am not advocating wealth transference but rationalization must occur. Taxes in the upper brackets are at an all-time low and disparity at an all-time high.
Paris Hilton is irrelevant. She didn’t invent the concept of trashy socialite. Both political sides are lying to your face. We are in a lose-lose situation, no matter what each party will have you believe. Battening down the financial house will cause a decrease in consumption. Raising taxes on the wealthy will dampen employment. Both of these are probably necessary to pull us out of this mess within a five-year timeline.
justin88 Wrote: ------------------------------------------------------- >Raising taxes on the wealthy will > dampen employment. Says who?