Mr. Obama was on the campaign trail yesterday promoting the Buffet rule.  The Buffet rule is a scheme to double the capital gains tax.

Unfortunately, the historical evidence is when the capital tax is raised, then revenues go down and when it is cut, revenues go UP.

If the President wants to maximize economic growth and thus revenue, he should not raise the capital gains tax.

http://online.wsj.com/article/SB10001424052970203918304577241513296604128.html

can the guest speak about this off-shore tax shelters for corps I’ve heard about? I would like to know how that works and how/which federal & local taxes they are accountable for?

In the photo above, Paul Ryan is holding a pamphlet that reads “The Path to Prosperity”.  Prosperity for whom?  Does he mean the old people facing cuts to their old age pensions or their medicines?

I’d respect it much more if it read “The road to Austerity:  Learning to Live With Much Less if you aren’t Wealthy”.

I hope that when people begin to retire and realize that nothing is there for them, and all the promises have been broken, the poor masses set this country ablaze.  The American experiment may finally have failed and it could be time to pull it down.

Hi, What does the guests think about the pledge the republicans signed to not vote any tax increase. I am personally chocked by that. I call that GANG Politics. I don’t think this is democratic behaviour. I am really surprised that the Americans did not denounce that.

Every time Paul Ryan opens his mouth he says his budget will increase revenues by lowering taxes, cutting loopholes and broadening the base.

So, how many loopholes did Paul Ryan propose to cut in his 98 page manifesto?

ZERO.

ZERO.

ZERO.

Paul Ryan wants to make sure that the rich have their taxes lower then they already are. Which is a much lower percentage then the average middle class person pays.

The majority of national debts has historically been paid through inflation.  Isn’t that how it will continue to work today?  What percentage of the national debt does Simon Johnson expect to be written off through inflation?  And what does that mean for people looking to retire in the next 20 years?

According to Obama and his allies, Americans will be guaranteed a minimum standard of living by BIG GOVERNMENT.  Obama and his allies’ BIG GOVERNMENT welfare state will cover Americans from all vagaries of modern 21st century life.  Below are Obama and his allies’ 7 point master plan for the U.S.:
1.       If you are born sick, the welfare state will pay;
2.       If you can’t afford a college education, the welfare state will pay;
3.       If you can’t find work, the welfare state will pay;
4.       If you become too ill, the welfare state will pay;
5.       If and when you retire, the welfare state will pay;
6.       When you finally die, the welfare state will pay your funeral; and
7.       Then after you die, the welfare state will pay to take care of your dependents.
As you can conclude from Obama and his allies’ 7 point master plan, his collectivist vision will build on the collectivist vision handed to him from his collectivist ancestors, and it will provide you cradle to grave security by eliminating your individual risk taking.
However, the omniscience, omnipotent Obama didn’t account for the fact that paying for these welfare state handouts will require confiscatory state taxation which disastrously skews economic incentives.
Of course, all socialist liberals and so called progressives will disagree because they have abdicated all ability of independent thought.

Paul Ryan is a fool if he thinks private insurance is cheaper that a “one big pool” insurance plan. Just look at the amount charged and the amount agreed for various medical services you have had. Then compare those numbers from 1,000 different people. The ACTUAL cost of providing the service is not the amount charged BECAUSE the “big players” wrest a big discount to get the “amount agreed”. The little guy has to pay MORE for the service to recover the costs NOT paid by the big guys.  

We can only HOPE that the people who make decisions LISTEN to Mr. Johnson. They won’t, of course. It is ALL about politics and NOT AT ALL about what is factual.

In Simon’s description of previous debt crises, he called them all ‘wars’.  In this one, it is only called ‘the present’.  Like the others, this crisis was caused by a huge war.  But it is an unfunded war accompanied by a huge and unprecedented tax cut.  In addition, we have not, over the last two decades, invested in any major infrastructure.  We have made it easier and easier for large corporations to take their money offshore and protect it.  A graph of corporate profits over the last decade shows quite a steep rise in corporate profits while wages relative to cost of living remain flat.  In terms of health care, government has not used it’s leverage  to lower costs of both care and medicine.  For example, the republican congress under Bush voted to make it illegal for unions or pension funds to get medicine cheaper from other countries… How can we NOT have a financial crisis ?  

Taxation without representation.  When will Americans/WS Occupiers realize that unless we have a referendum vote this issue between libetarians and liberals will never be settled by the politicians.

 Simon-I’m reading your book and have been a fan of the Baseline Scenario, however I can’t believe you just said that there is no role for stimulus at this point. What about federal aid to state and local government? Blue line is Reagan’s G after the recession. Green line is Obama’s G.  2.5 years post trough, Saint Reagan has a 10+% growth. Obama’s is down 2% or so. And the latter is praised by the Austerity crowd, while the latter is vilified?

I don’t think anyone believes that raising taxes on the rich will balance the budget, but it can provide PART of the money needed to HELP balance the budget.

I still advocate ZERO deductions for ANYTHING. Drastically drop the tax rates but leave them graduated by income. We’ll save a ton of government expense by reducing IRS costs substantially – a job killing thought to be sure.

Your economy lacks investment because there are fewer customers because we have killed off the customers by raising interest on their debt, lowering their wages and hours, or cutting their jobs.

Whether you are a Tea Partier or an Occupier I hope you are really listening to Simon Johnson.  He is giving you an objective review of how we got to this point and giving directions for how to get out of the situation. 

Put your talking points aside and try to be one of the new ‘adults in the room’ who will forge a coalition willing to take real steps to cut the deficit and strengthen America.  

Here we go…. death panels.

Death Panels have been Insurance Company EXECUTEives, for over a hundred years?

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The far Right claims they can take revenue off the table and pay down debt by cutting spending alone. But say we amuse ourselves with this irrational one-variable thinking… and we cut government spending down to the point that we get a balanced budget. Then what?
 

DEBT CAN ONLY BE PAID DOWN WITH EXCESS REVENUE.  But as we know from 2000, the far Right then had their chance to prove they’d start to pay down debt as Bush promised… and despite the then $6 TRILLION in debt, they pushed through round after round of irresponsible tax cuts claiming a surplus “proved” we were overtaxed.
 

The Right simply can NOT be trusted to with fiscal policy because they have a hidden agenda to sabotage government itself. Even now, with ALL the original justifications for that 2001 Bush tax cut gone… they insist they remain … and even MORE tax cuts be made.
 

Can anyone explain why the GOP has not gone utterly insane?

As I understand it, the deficit problem is primarily about the long
term funding of Medicare, and the problem in Medicare is end-of-life costs;
about 25% of Medicare spending occurs in the last 12 months of a person’s life.
 In other words, Medicare is insuring
against an inevitable event – death.  Spending
for hospice has been increasing, but so has spending for intensive care, and
yet polls show the majority of people do not want to die in a hospital.  When the health care reform legislation was
debated a simple provision to pay physicians to provide end-of-life counseling
was labeled ‘death panels’  The Democrats
don’t address this problem while the Ryan Republican plan shifts costs back
onto Medicare beneficiaries and probably puts Medicare into a death spiral, but
neither tackle the problem of end of life costs.  How do we get the issue of end-of-life care
back into the public debate in an open and honest way?  Ultimately, how do we shift public spending back
from the elderly to our children?

Why should the middle class want their taxes to go up when the  federal budget largely benefits the rich?

TIME FOR A BUDGET SURPLUS AMENDMENT?

Forget the Balanced Budget Amendment (BBA). It’s a cynical political ploy by the GOP. It leaves them free to pass all the irresponsible cut taxes they want while handcuffing the Democrats from restoring taxes to responsible levels or even raising them if needed.
The BBA is part of the GOP’s larger strategy to sabotage the finances of government to create massive deficits/debt hoping an eventual fiscal crisis will undermine signature Democratic safety net programs like Social Security, Medicare, and Medicaid. As if that wasn’t bad enough, it leaves the matter of the debt unresolved… setting in cement the theft by our generation of some $14 trillion from future tax payers… and by that I mean our kids and grandkids. The interest alone last FY was over $450 billion and $2.9 TRILLION was pissed away on interest during the Bush years alone.
We need to stop playing these budget games. Both Democrats and the GOP use the unified budget to conceal internal borrowing from the trust funds to make the real deficit look smaller. It’s the on-budget deficit that gives us the true picture.
What is needed is a no games On-Budget SURPLUS Amendment to restrain both reckless spending AND reckless tax cuts by all sides and force them to finally pay down our enormous debt which now is about $15 trillion dollars.
The task ahead is daunting. Even if we ran an annual $500 billion surplus, something that didn’t even happen in the best Clinton years, it would take us now some 30 years to pay down the debt. That neither political party sees the moral outrage in this situation is a damning indictment against our morally bankrupt and intellectually braindead political system.

By far, the two most inefficient, wasteful, and costly drains on our country’s and government’s financial functioning are the military  (It ain’t no coincidence that FUBAR and SNAFU originated in military parlance) and the health care system, in which there are two people involved in coding, billing and collecting for every one person actually providing health care.

Not to mention the fact that both institutions do a very poor job of accomplishing what they are intended to accomplish.

Why do you think the Greek people are up in arms?
Because their government over spent and now they want the Greek people to pay for their stupidity.

A great show today.  Simon Johnson and the callers were spot on.  Once again, a strong argument is made for a balanced approach to debt reduction based on empirical evidence.
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I’m afraid that the ahistorical, anti-empirical conservative ideologues who have hijacked the GOP aren’t listening.  The Tea-Party and its advocacy of a laissez-faire approach aren’t interested in what works for the 99% and a thriving middle-class.  They would rather indulge an older economic and social order that is reminiscent of the Gilded Age or the Roaring Twenties with an ever increasing concentration of individual wealth and corporate power as well as an unsustainable, conspicuous consumption that celebrates greed and envy.
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Simon’s comments reminded me of the thesis of David Stockman, Ronald Reagan’s Budget Director no less, when he described the “Bipartisan March of Fiscal Madness” last year in the NY Times.  In his op-ed piece, he correctly states the case against the Ryan budget as a cruel and unnecessary burden on the poor, elderly, disabled and disadvantaged.  If adopted, the Ryan plan would take us down a Path to America’s Ruin, dismantling social insurance and safety-net programs that have lifted generations of Americans from poverty, supported a record expansion of the middle-class, and provided economic security and social cohesion following two momentous wars and several recessions.
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The Stockman solution is captured in the acronym: RED.  Raise REVENUES; reform ENTITLEMENTS; and cut DEFENSE.   Even Reagan’s right-hand man advocates a balanced approach that would allow the Bush tax cuts to expire and that rejects the supply-side tax-cutting delusion feeding the Far-Right’s appetite for a free lunch (i.e. a cost free, painless path to prosperity).  �
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As to the characterization of Obama’s proposals as small potatoes, at least it would not worsen the structural deficit as the Ryan plan would.  And Obama has evidenced a willingness to compromise by cutting spending.  Indeed, last year Obama advocated a 2 or 3 to 1 spending cut to tax increase ratio to reduce the deficit by $4 trillion over twelve years.  His approach combines discretionary spending cuts, defense budget cuts, and health care cost-cutting measures together with tax increases primarily on the wealthy.
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I think the GOP Presidential Debates gave us a glimpse into the contours of the laissez-faire, libertarian Nirvana envisioned by Ryan et al.  Judging from the biggest applause lines we heard during the debates, that libertarian paradise would consist of a society where people without insurance are permitted to die if they cannot pay for their care out of pocket, a military that would reject the service of capable men and women if they are gay, a state that incarcerates and executes an ever-increasing criminal population rather than invests in the education and welfare of its people; and a government bent on coddling the super-rich by balancing the budget on the backs of the poor and undermining the middle-class (note that all of the GOP contenders raised their hands indicating that NO ratio of spending cuts to tax increases would be acceptable, that is,  NO revenue increases would be tolerated).
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The “Gipper” is probably turning over in his grave at the obstructionism, pandering and political brinkmanship of the GOP—the major factors in our inability to put our fiscal house in order.

Bush ran on preserving the Clinton Surplus and paying down debt first… with tax cuts second.

http://romcache.tripod.com/bush2000.pdf

I’m still waiting for one our Right wing friends to explain how we could afford tax cuts in 2001 when we finally got to a real surplus and We The People were already $6 trillion in debt and debt paydown barely got started. Someone’s going to say 911… but Bush was running on a tax cut even in May 2000. Recession? Hardly, again Bush was proposing a tax cut before there were any signs of a slowdown. And Newt was proposing a 800 billion tax cut in 1999 when we had not even gotten to a real on-budget surplus.

No one is asking the OBVIOUS question why the GOP put tax cuts above all else when we should have been paying down debt.

And why is the GOP so determined now to keep the Bush tax cuts where they were clearly a mistake…. and we’re now 9 TRILLION more in debt?

In constant dollars revenues in the past 11 years have been BELOW Clinton’s last year. Yet they deny there’s a revenue problem. Why is the GOP so desperate to deprive the government of revenue and pretend the entire problem is spending?

No bond for you Georgie. Get comfy in there. Clink.

Simon, how do you answer arguments posed by Richard Duncan and others who claim that ongoing balances in our current and fiscal accounts have created huge increases in monetary reserves, and will ultimately result in the collapse of the dollar?

many thanks for your attention.  p.s. Simon, I love your work, and follow it.

Simon, a comment and a question:

comment: the per capita share of the debt is approximately 15 trillion dollars/300 million citizens = $50,000 for every man, woman and child.  This will obviously be paid by citizens who have saved (probably through inflating their savings).

question: what do you think of Simpson Bowles?  The numbers look reasonable.  They got a super majority of balanced committee.

Rick in Florida

Guess who blew the whistle on the GSA?GSA employees who care about the country,that’s who.Guess what the GSA is supposed to do?.Vive the Irish

It’s hard to believe any one can be motivated enough to sit around and post messages to this board (any probably others) all day. 

I guess though there is a lot of money floating around out there after Citizens United.

Here’s another Orwellian Right lie that never dies… at least not with those who sabotage their intellects and believe lies… that Newt was responsible for the Clinton Surplus. The Right must make this claim because it has to discredit any positive effects of tax hikes, and exaggerate or invent benefits for tax cuts… not matter how irresponsible they are. First let’s be clear… the GOP in the 90′s did nothing to increase revenue. So they can’t take any credit there. The GOP only cut spending. The BBA mentioned below is the Balanced Budget Act of 1995 passed in Dec 95 and first effective in FY 96 which had already started.

      ANNUAL       BBA     WITHOUT              DEFICIT      CUTS      BBA  �
      FY94 -203.186
FY95 -163.952
FY96 -107.431    -22     -129.431
FY97 -21.884      -24     -45.884
FY98 +69.270     -58     +11.27
FY99 +125.610   -100    +25.61       

FY00 +236.241   -133    +103.241    

Source CBO’s: PROJECTING FEDERAL TAXREVENUES AND THE EFFECT OF CHANGES IN TAX LAW December 1998… the numbers above include the CBO’s estimated spending cuts from the BBA. Numbers are in billions and I adjusted the final numbers as if this tax cut never happened… which decreases the deficit for those 3 years.So would the Clinton Surplus have occurred without Newt’s spending cuts? The answer is YES. Would Newt’s spending cuts have created a surplus without the revenues from the 1993 tax hike… not by a long shot. The backup lie the Right uses is that a small 1997 tax cut “unleashed” the economy… as if the internet tech boom would not have happened otherwise.

I frequently enjoy listening to OnPoint. Tom Ashbrook is a great interviewer. What baffles me, however, is that Mr Ashbrook very seldom interviews the people that are commonly analyzed or critiqued. Why not invite these people to participate on the show, allowing both sides of an issue to be heard. Case in point, Simon Johnson is challanging Paul Ryan’s “Path way to Prosperity” plan. The Madison-Jefferson approach calls for all facts to be presented. Is there a reason why Mr Ryan hasn’t been invited on the show to discuss his plan and to answer listener questions?   

“We’re going to close the unproductive tax loopholes that have allowed some of the truly wealthy to avoid paying their fair share. In theory, some of those loopholes were understandable, but in practice they sometimes made it possible for millionaires to pay nothing, while a bus driver was paying 10 percent of his salary, and that’s crazy. It’s time we stopped it.”

Mystery Class Warfare President….