At What Point Does This Become a Constitutional Crisis?

[onejayhawk]

I think the deficit is being portrayed by the tea party as being an Armageddon so severe that if we don't completely balance the budget in the next year, then our economy and country are doomed to 3rd world status. And I don't think I've over exaggerated their stance in that sentence.

I don't doubt that it's a serious problem. But I think their "solution" to the problem is worse than the problem itself. My opinion is that it can be gotten under control the same way we got in this mess -- by a series of steps over a longer period of time. Getting out of Afghanistan and Iraq will help. Scaling back the military budget and overseas bases will help. The expiration of the Bush tax cuts will help. Freezing cost of living increases on SS will help. Raising the age on SS by one year will help. The economy getting better will help.

We heard all their arguments back when Clinton took office. It was Armageddon. We were all doomed. The Chinese were going to own us. Woe is us. And Clinton (or Clinton and Congress or Clinton and whoever) turned it around in 6 short years. We did it before and so long as we don't let the extremes stampede us over the cliff, we can do it again.

This may be nitpicking, but the deficit is only a minor concern of the Tea Party. Their concern is the debt. Until the deficit is at zero, the debt increases. So it is necessary, as a first step to eliminate the defict and keep it gone. Hence deficit reduction talks are futile. It is not a hard logic to grasp, but it seems to have elluded the entire Washinton press corpse.

J

[onejayhawk]

The windfall from the development of the Internet turned it around in six years. I don't see a similar breakthrough on the horizon.

This is astute. Most people cannot seem to grasp the fact that Capital Gains taxes balanced the budget in 1999. As you say, there is no similar bubble to burst.

I'm fine with saying the added tax revenues from the dotcom explosion played a part. But they alone were hardly responsible for a 500-600 billion turnaround. According to Factcheck, those revenues amounted to " hundreds of millions in unanticipated tax revenue from taxes on capital gains and rising salaries" and not hundreds of billions. So to say the development of the Internet was responsible for the surplus is only partially correct, at best. And barely even partially correct at that.

Not only the internet. En toto, the CG taxes in 1998-2000 were hundreds of $Billions above normal. This reflects the trillions of dollars of profits taken in the sell off.

J

[Wonderboy]

Not only the internet. En toto, the CG taxes in 1998-2000 were hundreds of $Billions above normal. This reflects the trillions of dollars of profits taken in the sell off.

J

If you take out those capital gains (which I am fine with saying were part of the reason for the surplus) but also take away the higher tax rate for upper income taxpayers and add the cost of two wars, we'd have had a deficit back then and not a surplus. I think that proves in large part why we are at where we are today.

And moreover, if the Bush tax cuts hadn't gone into effect and we hadn't invaded Iraq, we wouldn't have any where near as large a deficit as we have today. (We might still have one, due to the mortgage meltdown fiasco, which I also lay at the feet of the Bush administration although that's another argument. But it wouldn't be anywhere near where it is today.)

So we are where we are today due to the Bush tax cuts and two wars. Had it not been for that, we might have weathered the real estate debacle. But the three of them together, right in a row, have put us where we are today. Not spending. Not social security. Not foreign aid.

Although again, I'm happy to concede spending has something to do with it, as well as it will have something to do with how we come out of it. But spending issues pale in comparison to the big three, being the tax cuts for the wealthy, two wars, and the mortgage meltdown.

PS: Hey, at least we're being civil about this! It's shocking to think that you and I could probably agree to a compromise solution to this mess while our counterparts in Congress can't even agree on what day it is.

[senorsheep]

Wonderboy, God love you, when it comes to Bill Clinton and his relationship with the 90's economy, you are as unrepentantly delusional as any Reagan fanatic. For God's sakes, all you true believers from either side, 2011 isn't 1984 or 1992. The economic climate has evolved significantly in the past 20-30 years, and will continue to evolve significantly. It's so much more complicated that looking back to whatever point in time your party's favored economic policies produced results you liked and trumpeting that strategy as the panacea for this and every fiscal situation.

[Wonderboy]

Wonderboy, God love you, when it comes to Bill Clinton and his relationship with the 90's economy, you are as unrepentantly delusional as any Reagan fanatic. For God's sakes, all you true believers from either side, 2011 isn't 1984 or 1992. The economic climate has evolved significantly in the past 20-30 years, and will continue to evolve significantly. It's so much more complicated that looking back to whatever point in time your party's favored economic policies produced results you liked and trumpeting that strategy as the panacea for this and every fiscal situation.

I don't disagree with much of what you say. And I'm fine with saying Bill was lucky in many respects. However, I don't think luck was all of it. It's more than a coincidence there was a deficit before, a surplus during, and a deficit after his administration. So while it's better to be lucky than good, it's even better to be both, and I think he was.

My main point was that it wasn't any one single thing that lead to the surplus or the deficit, but rather a combination of things that occurred over a period of time. And likewise, I think that's what will pull us out of this. Not a balance budget amendment, not freezing the debt limit, not cutting all government services. Just like being overweight, it took us a long time and a lot of gradual steps to get where we are, and it's going to take a long time and a lot of gradual steps to get us out. It's not Armageddon, and I think it's counterproductive to claim it is or that Armageddon steps are required to fix it.

And again, it's sad that as far apart as you and I are on many issues, I have no doubt you and I could work out a reasonable solution that would work.

[Gregg]

If you take out those capital gains (which I am fine with saying were part of the reason for the surplus) but also take away the higher tax rate for upper income taxpayers and add the cost of two wars, we'd have had a deficit back then and not a surplus. I think that proves in large part why we are at where we are today.

And moreover, if the Bush tax cuts hadn't gone into effect and we hadn't invaded Iraq, we wouldn't have any where near as large a deficit as we have today. (We might still have one, due to the mortgage meltdown fiasco, which I also lay at the feet of the Bush administration although that's another argument. But it wouldn't be anywhere near where it is today.)

So we are where we are today due to the Bush tax cuts and two wars. Had it not been for that, we might have weathered the real estate debacle. But the three of them together, right in a row, have put us where we are today. Not spending. Not social security. Not foreign aid.

Although again, I'm happy to concede spending has something to do with it, as well as it will have something to do with how we come out of it. But spending issues pale in comparison to the big three, being the tax cuts for the wealthy, two wars, and the mortgage meltdown.

PS: Hey, at least we're being civil about this! It's shocking to think that you and I could probably agree to a compromise solution to this mess while our counterparts in Congress can't even agree on what day it is.

I am in no position to argue with anyone in this discussion. Some interesting points. I find Wonderboy's take particularly interesting. It does seem that you are underestimating the real estate debacle. At least with wars there are consumable products that need to be produced.

The failing real estate market reaches out and cripples so many industries that the true costs might not even be able to be calculated. Just think of washers and dryers and all of vendors that supply parts to the main manufacturers of these products. Then take a look at almost everything in your house and work backwards. Deconstruct everything in your house down to it's barest parts and you will begin to see how much damage is done.

[senorsheep]

I don't disagree with much of what you say. And I'm fine with saying Bill was lucky in many respects. However, I don't think luck was all of it. It's more than a coincidence there was a deficit before, a surplus during, and a deficit after his administration. So while it's better to be lucky than good, it's even better to be both, and I think he was.

My main point was that it wasn't any one single thing that lead to the surplus or the deficit, but rather a combination of things that occurred over a period of time. And likewise, I think that's what will pull us out of this. Not a balance budget amendment, not freezing the debt limit, not cutting all government services. Just like being overweight, it took us a long time and a lot of gradual steps to get where we are, and it's going to take a long time and a lot of gradual steps to get us out. It's not Armageddon, and I think it's counterproductive to claim it is or that Armageddon steps are required to fix it.

And again, it's sad that as far apart as you and I are on many issues, I have no doubt you and I could work out a reasonable solution that would work.

I'm pretty sure Bill Clinton would be shrewd enough to recognize that raising taxes now, with the unemployment situation being what it is, would risk some pretty significant damage on that front. He did it when the economy was roaring - in that landscape, it made sense. It galls me that important people making these decisions can't even seem to acknowledge something that obvious.

And, yes, the lack of willingness to compromise on both sides is depressing. The concept of sacrifice is "The other side should give up their priorities, but ours are morally just, and therefore untouchable." Republicans, you're not willing to entertain the idea of any military spending cuts, really? Democrats, you're not willing to go one year with no social spending increases, really? Ugh. Clown show.

[cardboardbox]

Oakland As and I had this discussion in an earlier thread. Coming year's deficit was projected at $1.65 trillion for the coming year. I'd happily agree to eliminating the Bush tax cuts once the Dems make up the difference. Heck, at this point, I'd settle for 75% of the difference just to get us to a bad year in the Bush II era. Eliminating the Bush tax cuts nets about $150 bn to 225 bn. Cut a trillion out of the budget and you'd get all sorts of center-righters like me on board.

But $2.4 trillion over 10 years is a joke. Lessee, that averages out to $240 billion/year, which would barely put a dent in the deficit. Pissing in the wind stuff, there.

We need to cut 1.0 - 1.2 trillion out of the budget PER YEAR just to get to the less than optimal Bush era levels.

All that being said, I will give Harry Reid and John Boehner - who I routinely slam on - credit. They at least crafted plans. I disagree with both their plans, as I believe them to be wholly inadequate for the needs of the country, but depsite the political risk, they at least had the balls to put forth a plan. It's certainly much better than the so-called "adult in the room" in these negotiations.

you are the adult in this thread.

[Wonderboy]

The failing real estate market reaches out and cripples so many industries that the true costs might not even be able to be calculated. Just think of washers and dryers and all of vendors that supply parts to the main manufacturers of these products. Then take a look at almost everything in your house and work backwards. Deconstruct everything in your house down to it's barest parts and you will begin to see how much damage is done.

I'm in that industry and you are dead on point. To me, this is where the real solutions lays. Until all those foreclosures are off the market and the real estate industry stabilizes, almost nothing anyone else does will matter that much. And frankly, if the real estate mortgage were stabilized and growing even a tiny bit, all these deficit problems would fade away, at least in large part.

So imo, we are treating the symptoms and not the disease. Again, it's sad that the discussing has been hijacked by the deficit while the real problem -- and the real solution -- are elsewhere.

[Wonderboy]

I'm pretty sure Bill Clinton would be shrewd enough to recognize that raising taxes now, with the unemployment situation being what it is, would risk some pretty significant damage on that front.

Actually, Bill is in favor of raising those taxes on upper income taxpayers now.

http://situationroom.blogs.cnn.com/2011/07/01/blitzers-blog-bill-clinton-on-class-warfare/

But I see you point and agree there could be a risk. I just think there is more of a risk to our economy if we don't. And I think you made a good point a few weeks ago about how this income isn't trickling down from upper income to lower income people any more. (See! I read your posts!)

And, yes, the lack of willingness to compromise on both sides is depressing. The concept of sacrifice is "The other side should give up their priorities, but ours are morally just, and therefore untouchable." Republicans, you're not willing to entertain the idea of any military spending cuts, really? Democrats, you're not willing to go one year with no social spending increases, really? Ugh. Clown show.

Agree completely with every word.

[senorsheep]

Actually, Bill is in favor of raising those taxes on upper income taxpayers now.

http://situationroom.blogs.cnn.com/2...class-warfare/

I think you're hearing the parts you want to hear. I challenge you to go back and listen to that clip again very carefully and tell me if "Bill is in favor of raising those taxes on upper income taxpayers now" fully and accurately characterizes the thrust of his comments. Listen closely, and you'll hear a little piece in there about cutting taxes for business investment, and another about cutting social spending. Clinton understands the complexities of it all - I wish I had confidence that either current party has a similar understanding beyond their bumper sticker solutions.

[Fresno Bob]

I'm willing to sacrifice by having my income tax, sales tax, capital gains tax, and gasoline taxes all raised.....

[Wonderboy]

I think you're hearing the parts you want to hear. I challenge you to go back and listen to that clip again very carefully and tell me if "Bill is in favor of raising those taxes on upper income taxpayers now" fully and accurately characterizes the thrust of his comments. Listen closely, and you'll hear a little piece in there about cutting taxes for business investment, and another about cutting social spending. Clinton understands the complexities of it all - I wish I had confidence that either current party has a similar understanding beyond their bumper sticker solutions.

Well, in that case you are reading the parts of my posts that you want to read! Because that's been the thrust of my entire argument, that this is much more complex and that everyone from every side had to give in a little so we can chip away at this from all angles. Both spending and income production, even tax increases and targeted tax cuts. So I'm more than fine with what you (and Bill) are saying.

And you are right on that we seem to be currently governed by bumper sticker quotations. But you know who that means is ultimately responsible? The voters for voting in people who think making a political debate point is more important that governing our country. I mean, this is a clown show, but who elected the clowns? This is what you get when we elect people who think that while only 30% of the population agrees with them, that means they should never compromise with the other 70%. (And I'm directing that at both sides of the aisle, although I think the tea party supporters suffer from this the most.)

[B-Fly]

you are the adult in this thread.

Whereas I just want to see some trillion dollar coins.

[In the Corn]

Whereas I just want to see some trillion dollar coins.

Now that's making it rain!