Hoyer: We May Have to Raise Taxes
[Guest post by DRJ]
House Majority Leader Steny Hoyer (D-MD) admitted today that Congress may have to raise taxes to pay down the deficit:
“Tax increases may be necessary to rein in $12 trillion in federal debt, House Majority Leader Steny Hoyer (D-Md.) said Monday.
Hoyer emphasized the need to reform Social Security and Medicare, but he also made it clear that raising taxes will have to be on the table.
“No one likes raising revenue, and understandably so,” Hoyer said in an address at the Brookings Institution. “But if you’re going to buy, you need to pay.
“If need be, I am hopeful that both parties will agree to look at revenues as part of the solution — not as a gateway to higher spending, but as part of a compromise that cuts spending and balances the budget,” he added.”
It wasn’t everyday Americans who insisted on “buying” (with enormous bailouts) institutions like Fannie Mae, Freddie Mac, investment firms, General Motors, and Chrysler. If Congress wants to spend money, it should figure out how to pay for it first.
So how much will taxes go up?
“To hit the deficit target relying only on tax increases on the rich, as identified by Obama, the income tax rates for those earning more than $250,000 would have to be increased to more than 70 percent, Williams and his colleagues Rosanne Altshuler and Katherine Lim wrote in a Tax Policy Center paper released last month.”
There won’t be many rich people left at this rate.
— DRJ
Will the last gullible rich leftist please turn out the lights on the economy? Thanks.
KingShamus (fb8597) — 3/1/2010 @ 7:46 pmHow often have Democrats offered a deal where higher taxes would be matched by reduced spending?
How often have they taken the tax increases and spent more than ever, then blamed Republicans for raising taxes?
I would hope that Charlie Brown has a clue about Lucy by now.
Machinist (9780ec) — 3/1/2010 @ 7:46 pmLooters and moochers.
Machinist (9780ec) — 3/1/2010 @ 7:49 pmIt is about time to call in the exemptions of the half of the population that pays zero in income taxes.
Much of the monstrous borrowing of the last year from our grandkids has publicly been proclaimed to be beneficial to this ‘unfairly’ underfinanced cohort. So let them share in the credit for participating in the enormous job of digging out from under that mountain of Obamadebt.
Begin at an annual $10 each (that’s $1,500,000,000 into the Treasury) – which is considered ‘nothing’ by the Obama administration, in its haste to squander money. But it can and should be honored by a grateful citizenry, if we all are expected to participate in the emergency bailing of the sinking ship of state.
And it wouldn’t hurt to deflate the sense of entitlement to a free ride, held by such a large sector of the electorate. Such entitlements held by anyone are detrimental to political health, particularly when held by half the population of the country.
For sobering example, see Greece, country of.
Insufficiently Sensitive (8906ed) — 3/1/2010 @ 7:52 pmthis is unprecedented!
sane people would think first of spending less…..
redc1c4 (fb8750) — 3/1/2010 @ 8:00 pm“No one likes raising revenue, and understandably so,”
Yea, right. He forgot to add: “But as a liberal, as a Democrat, my choosing to raise taxes actually will be about as dislikeable and unpleasant as taking a lunch break at 1:15 PM instead of the stroke of noon.
Mark (411533) — 3/1/2010 @ 8:07 pmThen put down the credit card you moron!
SaintGeorgeGentile (dc531b) — 3/1/2010 @ 8:11 pmSo smack dab in the middle of one of the worst recessions in our country’s history, this senile bastard wants to raise taxes to pay for his party’s boondoggles. F-ck you.
Dmac (799abd) — 3/1/2010 @ 8:15 pmNo, you’ll be raising taxes, moron.
Revenues will go down.
Lazarus Long (a4f63e) — 3/1/2010 @ 8:17 pmand the economy will go along with it…. no sense expanding your small business, and you might even want to lay off some people and reduce your volume, so you don’t hit that bracket.
yup, this will w*rk wonders on the already nonexistent ‘recovery” they keep trying to tell us about.
redc1c4 (fb8750) — 3/1/2010 @ 8:26 pmHoyer’s “I am hopeful that both parties will agree to look at revenues as part of the solution — not as a gateway to higher spending, but as part of a compromise that cuts spending and balances the budget.” ranks right up there with dopey Joe’s, We Have to Spend Money to Keep From Going Bankrupt.
And what happens when all the rich people have been sucked dry? Where do we then find the *revenue* (that sounds much or palatable than taxes, no?) because of course, “We don’t have a spending problem, we have a revenue problem”. Whose piggy bank gets raided then?
Dana (1e5ad4) — 3/1/2010 @ 8:34 pmI miss them every day, but I am actually grateful that my now deceased “greatest generation” parents did not live to see what is becoming of the country they loved and worked so hard to bequeath to us.
elissa (2aad45) — 3/1/2010 @ 8:36 pmThey have a funny way of showing it.
Techie (43d092) — 3/1/2010 @ 8:41 pmDid he really say they want to cut spending and balance the budget? Without spontaneously combusting?
JD (5cc18e) — 3/1/2010 @ 9:00 pmAs long as we never do the things FDR did, we won’t have to worry about another Great Depression…
John Hitchcock (f11d8f) — 3/1/2010 @ 9:00 pmYou don’t understand how to cut spending, JD. In order to cut spending, you arithmetically reduce your planned geometric spending increase.
John Hitchcock (f11d8f) — 3/1/2010 @ 9:03 pmHow can you people be so heartless as to want to keep your own money?
Official Internet Data Office (40c230) — 3/1/2010 @ 9:10 pmI remember how TEFRA, the tax increase that Reagan was maneuvered into signing, had a provision that there would be 2 dollars of spending cuts for every dollar of tax increase. No, it was three dollars for every dollar of tax increase ! How did that work out ? Reagan disappointed me by signing lots of spending bills but Bob Dole was there to urge every tax increase but was AWOL on the spending cuts.
That is the story of spending and taxes since Eisenhower’s presidency.
Mike K (2cf494) — 3/1/2010 @ 9:21 pmReagan got three dollars in tax increases for every dollar of spending cuts. He later said he was “swindled.”
Official Internet Data Office (40c230) — 3/1/2010 @ 9:33 pmAlthough I can certainly appreciate the zeal of the Congress to take my money and spend it on local projects for the implicit purpose of being re-elected, I wish they would stop.
Ag80 (f67beb) — 3/1/2010 @ 9:34 pmThe three for one sounds like Bush Sr.’s deal. They got him to agree to break his No new taxes pledge and then reneged on their part. Then they slammed him for increasing taxes.
Reagan’s tax cuts almost doubled revenues but the Democrats spent one and a half extra dollars for each extra dollar that came in. I did not know Reagan raised taxes. When was that?
Machinist (9780ec) — 3/1/2010 @ 10:41 pmIt is time for the “Bonus Army” to once again march on DC (Obamavilles, anyone), and this time they should bring “farm implements”.
AD - RtR/OS! (aa95b5) — 3/1/2010 @ 10:44 pmMachinist, they raised the FICA taxes as part of the ’83 rescue of SocSec.
AD - RtR/OS! (aa95b5) — 3/1/2010 @ 10:50 pmThank you. I was thinking too narrowly.
Machinist (9780ec) — 3/1/2010 @ 10:58 pmA democracy cannot exist as a permanent form of government. It can only exist until the voters discover they can vote themselves largess from the public treasury.
From that moment on, the majority always votes for the candidates promising them the most benefits from the public treasury, with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.
The average age of the world’s greatest civilizations has been 200 years. These nations have progressed through this sequence:
–Dr Alexander Tytler, Scotsman, history professor at the University of Edinborough on The Fall of The Athenian Republic around the time of the birth of the US
John Hitchcock (f11d8f) — 3/1/2010 @ 11:08 pmGood words, but probably not written by Tytler.
Vatar (3899d0) — 3/1/2010 @ 11:38 pmFrom that moment on, the majority always votes for the candidates promising them the most benefits from the public treasury,
Tytler was dead-on about a pathetic aspect of human nature. His observations from over 200 years ago call to mind the saying that as much as things change, some things never change. He certainly could be describing the mindlessly liberal, effete cities and states throughout America or, worse of all, nations like our neighbor Mexico (whose version of the Democrat Party always gets a million benefits of the doubt) where various forms of dysfunction and never-ending mediocrity reign supreme—and which very well may be a window into the US’s future.
However, I still believe this nation will naturally always do better than its skeptics may believe or assume. However, with the US now over 233 years old, and with a “Goddamn America” politician in the White House — and with Euro-lazy socialism on one side and Third-World-anomie on the other — it’s not hard to imagine Tytler from the 1800s peering a few generations into the future and regrettably turning out to a reliable soothsayer.
Mark (411533) — 3/1/2010 @ 11:47 pmSounds like a typical big government bozo. But, then, he is a big government bozo.
Cut out a few dozen non-performing departments root and branch. Fire the employees for non-performance. Fire the managers for non-performance. Fire the appointed department heads for non-performance. Start with the Department of (Non-)Energy. I figure 32 years is a more than long enough chance to perform its intended, its chartered, function, don’t you?
{^_^}
JD (f3a33a) — 3/2/2010 @ 12:27 amThe Tree of Liberty is looking a bit anemic.
Dan S (b5ccb6) — 3/2/2010 @ 5:21 amIf it is inevitable, then what difference does it make. Heck, we made passed the 200 year mark. We should celebrate! The government should throw a really big party.
Hey was this ‘raising taxes’ thing expected or unexpected? Who (besides a Scotsmen) could have seen this coming?
Corwin (ea9428) — 3/2/2010 @ 5:59 am> “Tax increases may be necessary to rein in $12 trillion in federal debt, House Majority Leader Steny Hoyer (D-Md.) said Monday.
I’ll agree to tax increases the day they make permanent spending cuts to match, to NON ESSENTIAL services.
And that’s AFTER they cut all the new services they’ve added since 2007.
IgotBupkis (79d71d) — 3/2/2010 @ 7:05 amAt some point, we have to make a choice: either we raise taxes or we cut spending.
For the last generation, our politicians have been unwilling to choose either. At the end of the day, this is (I think) because pretty much nobody is willing to choose to accept a personal sacrifice: the recipients of government money aren’t willing to give it up, and the people paying taxes aren’t willing to pay more. Everyone wants someone else to bear the pain.
So we keep borrowing.
At the end of the day, I think the only deal which will even be possible is one in which everyone gets hurt – and that’s going to require spending cuts and tax increases both. Otherwise one group or the other will feel singled out and will fight to stop it from happening.
aphrael (e0cdc9) — 3/2/2010 @ 10:19 amaphrael ,
Respectfully, I think the biggest problem with your suggestion is that tax increases are self defeating. They lead to lower revenues as the economy shrinks and calls for ever higher taxes.
I think we have seen that it is tax cuts that lead to greater tax revenues in the long run as the economy grows. This has worked three times in my lifetime, under JFK, Reagan, and Bush after 9/11. Remember the dire predictions by Democrats about the killer deficits we were going to have because of the Bush tax cuts? As the economy grew those deficits ended up as a smaller percentage of the GDP then we had seen in some time.
I think tax increases are a downward spiral. We need a growing economy and some fiscal responsibility to attack this. Eating our seed stocks is not a long term solution. We also need a fairer tax system so the people voting on these spending increases are paying for them.
Machinist (9780ec) — 3/2/2010 @ 10:37 amI have to agree with Machinist regarding tax cuts and their history. Tax cuts do, indeed, lead to greater tax revenue due to the dynamic nature of any economy. And before anyone tries to argue the absurd “let’s cut taxes to zero percent so we can have lots of tax revenue,” it is important to examine the truth. And the truth is, we’re on the wrong side of the Laffer Curve, and we have been for a very long time. The truth is, our tax system is also a class-envy system where a certain segment of society wants to “soak the rich,” ignoring the fact those who are busily climbing the economic ladder are the same people who are providing employment to those at the bottom of the ladder.
I would suggest cutting taxes on people who actually make real money, eliminating EIC and requiring everyone who earns money to pay federal income tax. Before anyone claims I want to punish the poor and reward the wealthy, I suggest you remember I am part of the group who benefits from EIC (at least as far as last year and to this point this year is concerned) and my income level last year means I am due more income tax return than I paid in (welfare). So my principled position goes against selfish self-interest.
Remember the Clinton luxury tax on yachts, which nearly destroyed the yacht-making industry? Remember all the middle-class jobs lost because Clinton was “soaking the rich”?
I have to ask, liberals an progressives, where are you on the above spectrum?
John Hitchcock (7cbba5) — 3/2/2010 @ 10:55 amRemember the dire predictions by Democrats about the killer deficits we were going to have because of the Bush tax cuts? As the economy grew those deficits ended up as a smaller percentage of the GDP then we had seen in some time.
This statement is impossible: we had a budget surplus for several years under President Clinton. Any deficit whatsoever is a larger percentage of GDP than had been seen just a few years before President Bush.
They lead to lower revenues as the economy shrinks and calls for ever higher taxes.
This really depends on where on the Laffer curve we are, right? Otherwise it would be true that zero taxation would have the highest revenue, a mathematical impossibility.
So the question is: given the current level of taxation, would reducing taxes increase revenue or decrease revenue? One thing which makes it difficult to answer that is the fact that previous experiences aren’t necessarily dispositive – a reduction from 80% and a reduction from 30% occur at different places on the curve, and so the results won’t necessarily correlate.
But fundamentally, my point isn’t an economic one, it’s a political one: you aren’t going to get the people who benefit from state spending to sacrifice their benefit for the public good unless they also believe that Bill Gates is sacrificing for the public good.
aphrael (e0cdc9) — 3/2/2010 @ 10:55 amThere’s a third way: hold budget increases to 1/2 the previous year’s GDP increase. In years when the GDP falls, freeze the budget.
It’s not really a cut, except in Washingtonspeak, where increasing spending less than you want to is considered a “cut”.
But this is sound. Taxes revenues remain a fixed percentage of GDP, and so will rise with the GDP. As long as increase in spending does not exceed the GDP’s rate of increase, eventually the budget will balance and the debt will be repaid.
What our government should be doing is finding ways to increase the GDP in real and lasting ways.
Some chump (050674) — 3/2/2010 @ 10:58 amAphrael – weren’t said surpluses based on 10 year projections during a period of irrational exuberance prior to the dot com bubble bursting?
I do not have the figures handy, but aren’t only approx 55-60% of people actually paying taxes right now? If memory serves, it may be even less than that.
JD (2a16e6) — 3/2/2010 @ 11:02 amthe truth is, we’re on the wrong side of the Laffer Curve, and we have been for a very long time
what criteria do you use for determining that?
I mean, I think it’s possible. But I also think that almost everyone on both sides to express an opinion on this is basing that opinion on ideology and not data.
How do we know where we are on the curve? Do we keep cutting taxes until cutting taxes reduces revenue and then determine that’s the inflection point? How do we know the inflection point is static and doesn’t change over time?
requiring everyone who earns money to pay federal income tax
I understand the point to this to be to ensure that everyone is invested in the system – under the same theory that says that homeownership causes people to maintain property which they would not maintain if they were renters, because they are invested in ownership; a similar argument says that if you are paying taxes, you are more concerned that the taxes be spent efficiently, and that the system be working. There’s something to that.
But, in general, I’m reluctant to endorse things which have a direct negative economic effect on those who are having the hardest time getting by. That seems like the last thing we should be doing unless it’s absolutely necessary to do so.
where are you on the above spectrum?
I don’t know how to answer that. Some days I’m in “spiritual faith”: I have a great faith in the American people and a belief that we can together make the world a better place – that we are, as others have said, in the early days of a better nation. I am very free, and find that I am more free as time passes and I unshackle myself from the bondage imposed by my fear of what others will think of me. Moreover, I want that freedom shared, and my support for social welfare programs is driven by a belief that those who work hard and yet live a life of poverty simply aren’t as free as those who work less hard and live a life of abundance. I live a life which is full of abundance, and I must admit that I am more selfish than I ought to be.
So where am I on the spectrum? 🙂
aphrael (e0cdc9) — 3/2/2010 @ 11:04 amActually, that luxury tax was enacted during Bush 41’s administration
Some chump (050674) — 3/2/2010 @ 11:05 amWhen do the evil Bush tax cuts come off the books?
JD (2a16e6) — 3/2/2010 @ 11:15 amJD – there were certainly projected surpluses based on dubious assumptions, but I distinctly remember 2-3 years of year-over-year surplus in the 1990s.
This article makes the point that those surpluses depended on the use of social security surpluses to buy government debt, and therefore were not real surpluses. Even so, the number that site puts forward as the ‘real deficit’ shows a deficit of $17.9B for 2000, a number which is sufficiently small that Machinist’s claim in #33 is still impossible unless GDP increased by a factor of 10 during the Bush presidency.
aphrael (e0cdc9) — 3/2/2010 @ 11:43 amAphrael said:
Heh. I just had this discussion with some friends the other day. My analogy was that the laffer curve could be analogized to a particle under quantum mechanics, that you can know the ideal position on the curve at a single moment, or the way that the ideal position is moving, but you can’t know both at the same time.
Anyway, back to your regularly scheduled postings.
Hadlowe (30df33) — 3/2/2010 @ 11:56 amAphrael ,
Machinist (9780ec) — 3/2/2010 @ 12:33 pmI know that in my lifetime I have seen major tax cuts three times and all three times the economic boom resulted in that smaller slice of a much bigger pie resulting in much more tax money, much greater prosperity and freedom, and the shrinking of the “ruinous” deficits that were decried by the people who were so anxious to see higher taxes. I have not seen such an effect from tax increases, quite the opposite. We are in a recession and the very last thing we should be doing is raising taxes and crippling our industries, unless we want a deeper and longer recession. Can you point to an example of significant tax increases lifting us out of a recession?
Some chump…The luxury taxes were indeed signed by GHWB, but they were rammed through a Dem Congress by the Sen.Maj.Leader George Mitchell (D-ME), and they destroyed the boat-building industry in his home state, resulting in the unemployment of thousands, for a net loss when you weigh the income from the lux-tax against the out-go of unemployment compensation/welfare benefits.
aphrael…if you want a close examination of the relationship of tax rates to govt income, look no further away than Sacramento, under both the Wilson and Schwarzenegger administrations: as rates were raised to balance the budgets, income from those rates consistently fell as economic activity was suppressed.
If you want to catch the fox, you have to let the big dogs run.
AD - RtR/OS! (ad40ca) — 3/2/2010 @ 1:13 pm…also:
AD - RtR/OS! (ad40ca) — 3/2/2010 @ 1:20 pmJD…the budgets of the late years of the Clinton Administration certainly forcast surpluses, but the effect on the National Debt was an increase in each and every year, though IIRC the FY-00 increase in the debt was less than $1B, but it still was an increase. These good numbers were imposed on the Administration by the Gingrich Congress that slashed discretionary spending to keep it in line with inflation and population growth – don’t you remember the great howls from the Left about how mean those Republicans were because they were slashing the growth in spending (though the media always couched it as the GOP was “cutting” spending, even though FTMP they were doing no such thing)?
I was aware that it was created by a Democratic Congress. The initial commenter on this was incorrect in calling it the “Clinton luxury boat tax”.
I agree that it was a disastrous and really mean-spirited tax. But it wasn’t Clinton’s doing.
Some chump (050674) — 3/2/2010 @ 1:26 pmPete Wilson is an excellent example. He raised taxes in 1991 in a recession and tax revenues fell. California was the last state to emerge from that recession.
This statement is impossible: we had a budget surplus for several years under President Clinton. Any deficit whatsoever is a larger percentage of GDP than had been seen just a few years before President Bush.
The Clinton surplus was a projection before the dot com bust. There was never a surplus.
They lead to lower revenues as the economy shrinks and calls for ever higher taxes.
This really depends on where on the Laffer curve we are, right? Otherwise it would be true that zero taxation would have the highest revenue, a mathematical impossibility.
You are correct here but we have seen an optimal level after the 1986 tax reform. They reduced deductions and tax shelters and cut rates. That tax reform cost me $100,000. Even so, I supported it but I knew that the Democrats would nibble away at it and it would not last.
If we froze government spending and allowed the entitlements to grow at the CPI only. we would be a long way toward control of the budget. Spending is the problem.
Mike K (2cf494) — 3/2/2010 @ 1:32 pmYes, but he resisted their repeal, because he needed the money to pay for all of the things that cost him a Dem Congress in ’94.
AD - RtR/OS! (ad40ca) — 3/2/2010 @ 1:33 pmThey were IIRC finally repealed in the Capital Gains Tax Reduction package under the Gingrich Congress.
Spending is the problem.
Comment by Mike K — 3/2/2010 @ 1:32 pm
Tom McClintock for years tried to get the Legislature to index the growth curve to increases in population and inflation, and was rejected time after time.
AD - RtR/OS! (ad40ca) — 3/2/2010 @ 1:38 pmIf Davis had heeded him, he wouldn’t have been recalled as he would have had a budget surplus instead of the deficit we have seen that year, and every year since.
So, our vaunted Legislature keeps raising rates, and broadens the scope of taxation, all the while wondering why the tax base keeps shrinking as businesses and productive individuals leave the sinking ship of Kahleeforneeah!
Aphrael, where are you on the spectrum? Since you further explained yourself and tossed the question back to me instead of answering it directly, I’ll answer it for you as best I can. The way I see it, you are supporting government dependence for the “less fortunate.” And on that spectrum, the next step is bondage. That is my honest opinion of where you stand.
John Hitchcock (106f12) — 3/2/2010 @ 8:58 pm