the last fiscal conservative
A voice crying in the wilderness:
At some point, taxes have to be back on the table as the price that must be paid for profligate spending. Only then will the American people realize that they can’t have their cake and eat it too, as Republicans have preached for the last decade. Only when the American people go back to believing that spending must be paid for will they stop demanding something for nothing and put the country back on the path to fiscal sanity.
More Bruce Bartletts, please.
Yeah. “Starve the beast” was one of those theories that looked absolutely BITCHIN’ on the chalkboard but it, instead, lead to “hey, we can put whatever we want on the credit card!”
Had the Republicans instead said “PAY AS YOU GO”…
Ah, woulda coulda shoulda.Report
As someone who outright laughs when most Republicans start waxing elegant on fiscal responsibility, I will say that Bruce Bartlett is one of the few right-of-center people I actually treat credibly on the subject. He was willing to take some pretty severe lumps to criticize Bush on the topic back when Dubya was popular, and the likes of David Brooks were not concerned at all with these spending issues back then. Bartlett does indeed walk the talk.
I think it’s telling that he’s basically been excommunicated from the movement for his sins. Of course, these days, it’s de rigueur for the right to denounce Bush as being “too liberal”, so one would figure that Bartlett would have been welcomed back into the fold as a bold, far-seeing truthteller. That he’s still treated as an outcast so far as I can tell merely shows that the Republicans care more that he spoke out against their guy rather than that he showed that his first duty was to his (and allegedly their) principles, and it just shows how hopelessly corrupted by power the GOP is: that what Bartlett did is evidently not forgivable, while Dave Vitter gets to keep his Senate seat because, well, he’s a team player.Report
Lev, what you’re seeing is the substitution of tactics and loyalty for principles and ideas. It is the last refuge of a group of people who have worked very hard for twenty years to first get a place at the political table, and then worked hard to take the chairmanship of that table, but along the way ran out of politically viable policy ideas for what to do once they got into that position of power. In fact, it is quite sad and to the detriment of the country that this is the situation.Report
“…what you’re seeing is the substitution of tactics and loyalty for principles and ideas.”
TL, I hope I misread you, but it sounds like your dissing “loyalty.” E.D. wont like that. Loyalty uber alles!Report
Bob, I think you’re being sarcastic, but in case you aren’t — there are values other than loyalty and no, loyalty wasn’t the target of my attack. The lack of ideas for that loyalty to advance was.Report
Yep, one may call it sarcasm, but I like “black humor” better.Report
I feel like you should have included a clip from “The Last American Virgin” to go with post. Just sayin’Report
Well maybe you should look into it, E.D. send him a note, see if he wants to be a Gentleman.Report
I have no problem with modest tax increases as a way of eliminating debt HOWEVER spending has to be brought under control first. Otherwise it’s like giving an alcoholic a case of beer and asking them to not drink it. In it’s current state, any money that the government gets will be spent.Report
In the past, I probably would have agreed with this, but I have to say that the evidence seems to suggest at this point that there is not much correlation between government’s willingness to increase revenue and its willingness to increase spending. Which is to say that I don’t think it matter which order you do things (ideally you’ll do both at once, though) so long as the ultimate effect is to get the deficit under control and to get Americans to understand more directly the cost of their government.Report
No sale Mike. Republicans have been cutting taxes first and then procrastinating on restraining spending for what, 19-29 years now? If costs are going to be controlled that bitter medicine would politically have to be combined with a tax cut sweetener to make it go down. The smoldering ruin of the Republicans reputation as fiscally sound and political fortunes are testament to the failure of the starve the beast model. And they have noone to blame for it but themselves.Report
I never said continue to cut taxes. I’m saying the government has to demonstrate they can control spending before they ask for more money.Report
I don’t think that they even know how.
Elections have to turn on cutting spending the way that they used to turn on tax cuts. Without that, it’s never going to happen. I suspect that raising taxes (even to the right of the peak of the laffer curve) will be the *ONLY* thing that will result in cutting spending. Nothing else will.Report
Thanks Jaybird, but that was not the thrust of my question.
Overtaxed is obviously akin to being charged $100 for a baloney sandwich at a pushcart, extra for mayo and tomato.
My question was, have Americans ever been overtaxed, if so what did it look like.Report
Well, we’re in “intrinsic value” territory at this point.
I don’t know that items have intrinsic value. If I have a copy of Superman #100 and I am asking for $20 and you are only willing to pay $10, we won’t trade. If I have a gun and force you to pay $20, then I am stealing from you… even if you would have been willing to pay $10.
If you know what I mean.Report
Bob: a good sign of overtaxation would be when people are actively avoiding increased income because the higher taxation makes the extra effort not worth it. Non-cash compensation schemes abound in the form of company perks (clubs, cars anything to compensate the worker without actually paying him/her more), tax shelters become ubiquitous and people are actively discouraged from producing. Stagflation is also a sign of over taxation I’m told.Report
I’d say that the government has to balance the country fiscally and that would involve both tax increases and budget cuts. I’m with Jay on this one. Taxes have to go up some because the people need to learn to associate spending with increased taxes. Bush spent eight years sowing the attitude that spending could occurr without taxes. That attitude needs to be stopped. I agree that we’re over spending but I don’t see any indication that we’re currently over taxed.Report
Voters don’t want the government to cut spending. Why would politicians want to demonstrate their ability to do something no one wants them to do?Report
Friends,
Seriously, have Americans ever been overtaxed? I read occasionally that FDR made a mistake by upping taxes or cutting spending during his first term, thereby setting back recovery, but other examples elude me.
What does being overtaxed look like in an American setting? Being under-taxed, now we all know what that looks like, ask that laid off teacher next door.
The Seeker (another voice crying in the wilderness)Report
“Overtaxed” is, of course, a relative thing.
However, I think that we’d be able to say something like “what we get from the government is worth X dollars a year. We pay Y dollars a year.”
If X < Y, we are being overtaxed.
This will result in some people being severely undertaxed and some people being severely overtaxed. Then we can discuss "fairness".Report
Well of course Jay. But if X >Y and has been for a while under the fiscal incompetence of previous administrations then at some point that national credit card has to be paid. Either by printing (inflating) our way out or taxing and restraining spending but it will have to be paid.Report
Has any government ever successfully printed its way out of debt?
I mean, like, ever?Report
Yes actually, Post WW I Germany printed its way out of debt to the allies. The inflation that resulted was devastating to the Germans; inflation is essentially a highly regressive and destructive form of tax. The experience of having to carry a weeks wages in a wheelbarrow gave the Germans a cultural horror of inflation that lasts to this day but their government did successfully discharge their debt that way though of course they also paved the way for a much more unpleasant regime to take their place.Report
A big difference between Germany and the current U.S. currency is its global distribution. The bills are coming due. If the U.S. pays for the bill itself, all of the burden will fall on domestic tax sources and future generations in the form of decreased assets and services. If it’s inflated away, Saudis, Chinese and other foreign holders of the dollar will pay a share.Report
Hrm. This makes me wonder whether it would be a spectacularly bad idea or one of those bad ideas that would turn out to have a surprising number of positive (though surely unintended) consequences.Report
I’m struggling to think of positive ones outside of us getting rid of debt on the cheap. The negatives spring to mind in a legion though. Inflation is really really really not fun.Report
That is an excellent point Cascadian. Though it should be considered as much a cost as a benefit. If the US inflates the debt away the Saudis and Chinese etc will definitly pay a share. They’d also doubtlessly abandon the US Dollar as a global currency of choice which would be a devastating blow to American prestige and financial economics.Report
If the U.S. doesn’t find products, services, or exceptional growth in productivity that will happen anyway.Report
I’ve not seen much sign that the US is suffering on that front. It remains the largest and most dynamic creative economy on the planet. National finances seem to me the greatest threat at this time.Report
Then why is the U.S. on the wrong side of trade imbalances with nearly every trading partner? How is this sustainable?Report
Putting on my macro economics hat Cascadian I’ll try and explain breifly. This is possible because every US trading partner is so eager to grow their own economies that they are willing to subsidize US consumption. They do this by buying US Dollars (which entitle them to a small fraction of the US GDP) and instead of spending them to buy US goods they sit on them. They’re essentially giving the US free GDP.
If I’m China and you’re the US. I lend you 20 bucks so that you can buy lemonade from me. If you look just at trade all you see is me selling you lemonade and not buying anything back. But the lemonade you’re buying from me is being bought with -my money- that I’m lending you. Sooner or later the holders of all those US dollars have to either start buying things from the US (and the US has -plenty- to sell) with them otherwise their well we end up pretty much where we are right now. I’ve never been very swayed by arguements predicated on trade imbalance concerns.Report
I have a trade imbalance with Safeway. I do nothing but give them money and they do nothing but give me food. And a week later, the food is gone!Report
“Sooner or later the holders of all those US dollars have to either start buying things from the US (and the US has -plenty- to sell) with them otherwise their well we end up pretty much where we are right now.”
Yes, and now what. I’m not interested in a GM auto. If I come from the wrong country, I can’t invest in port facilities. Personally, I’m waiting for things to unwind a bit more to buy some beach front property or some farm land in Lynden. I remember the Japanese purchasing a good chunk of California in the ’80s. Perhaps this is due to repeat.
The macro model has been to rely on the American consumer as the global generator. Now that this model is coming to its logical conclusion I don’t see how this gets unwound without profound changes. When its still cheaper for China to use unskilled workers over automation, I don’t see a place for anything more than a “jobless recovery” on this side of the ledger.Report
Perhaps I should have been more clear. They will have to either buy many more American dollars in order to keep the American currency at the value that it is (if they do not then we’re at inflation and they’ll sufer) or else they need to let the curriencies fluctuate in which case American goods of all kinds become cheaper and easier to buy and the money comes home to America producing jobs as people buy American services while Americans work and pay off their debts.Report
Maybe the best way to think of it is a parable.
If the banker lends you 100k you may stay up all night worrying about the bank. But if the banker lends you 100 billion the banker will stay up all night worrying about you.Report
Hi Bob. I’m not entirely certain but I gather that immediatly pre-Kennedy Americans were over taxed and it’s been argued that they were over regulated in the Carter years.Report
Jaybird,
“Well, we’re in ‘intrinsic value’ territory at this point.”
If we are it’s because you took us there. And that is not bitching on my part. I may not have been clear in my question, golly-gee.
What I was trying to ask – has there been a historical period where it is generally agreed that Americans were overtaxed and if so what did it look like from a macro point of view?
The fact that deficits, federal, continue to grow strongly suggests that tax rates are way too low.
The other hand is just as obvious, demand for government programs do not go away, regardless of what republicans and conservatives advocate.
North,
Thanks for pointing to the Eisenhower era as a possible example. I’m generally unfamiliar with the economic situation at that time, hell, I’m generally unfamiliar with economics period.
And if more proof is needed I will prove it by saying that I’m under the impression that a lot of the perks you mention are indeed taxed. I’m not sure that tax shelters and Swiss bank accounts can be attributed to good faith belief that tax rates are too high, greed would be my guess but that is not the topic here. Perhaps you are correct on both points.
I have never seen the argument that stagflation is in part attributable to higher taxes, but that proves nothing. There are many thing I’m unaware of.
As for regulation under Carter, airline deregulation began during his administration. Again, he may have been for strict regulation in other areas.Report
“The fact that deficits, federal, continue to grow strongly suggests that tax rates are way too low.”
I’d run with the “spending is way too high”. Above and beyond the whole “waste, fraud, and abuse” line item that we refuse to take out of the bill in committee, there is the whole “seen/unseen” thing. Let’s say that we say “you know what, the TSA isn’t appreciably better than when we put the airlines in charge of it. It’s security theater, not security. Let’s return that particular responsibility to the airports, we’ll let them keep the equipment and manuals and whatnot as a sunk cost, but we’re going to stop having the surly wand guy be a federal employee.”
You know (you *KNOW*) that there will be a bunch of people who will explain that, maybe the TSA doesn’t keep us appreciably safer (but we haven’t had another 9/11!!!) but putting all of those people in the unemployment line will have societal effects that will be devestating! Without looking at the amount of money we’re taking from folks, shaving off a little from overhead, shaving off a little more for taxes, then giving to someone who isn’t doing appreciably much of anything and whether merely not spending that money wouldn’t be a better outcome.
All that to say: I don’t know that “undertaxed” is necessarily the problem. Part of the problem is taxes go for stuff that doesn’t appreciably do much of anything.
On top of *THAT*, any time spending is threatened to be cut, politicians are very good at saying “there’s no fat to cut!” and so a spending cut will inevitably result in cutting the budget for the police and fire department rather than at the Lincoln Navagator Lease plan for City Council Administrative Assistants (which is not to say that I don’t appreciate the hard work that the City Council Administrative Assistants provide).
But to answer your explicitly stated question:
“What I was trying to ask – has there been a historical period where it is generally agreed that Americans were overtaxed and if so what did it look like from a macro point of view?”
I suppose I’d point to the tax levied on tea in the early 1770s.
If “revolution” isn’t a good baseline, I don’t know what would be.Report
For an example shortly after 1776, actually applying to “Americans”, there’s the 1780s (for example, in Pennsylvania). State governments ended the printing of money, but most people in the state didn’t have anything except paper money; the government then levied taxes payable only in gold or silver, which people didn’t have, leading to bankruptcy cases and widespread foreclosures on farms. This led to rebellion, especially by backcountry farmers.Report
From what you relate of the Pennsylvania situation it sounds more like a specie dispute, “hard money” v. “soft money.”Report
“I suppose I’d point to the tax levied on tea in the early 1770s.”
The inhabitants of Boston in the 1770’s were not Americans, they were colonists, subject to the king and Parliament.
Was their beef with the rate of the tax on tea or it being imposed without their say?Report
Well, once again, (seriously, I’m not dragging us here!) we’re in ‘intrinsic value’ territory.
The tax on tea was something positively dinky, wasn’t it? I remember thinking “that’s all?”. Gimme a second with the wiki…
“The Tea Act retained the three pence Townshend duty on tea imported to the colonies.”
This was back when a pence meant something, of course. (Plus there’s that whole “the Colonists were really trying to destroy a request for the Prince Albert chapter of the Masons” issue that the Masons keep covered up. But let’s pretend we don’t know about the Masonic thing.)
In the early 1770s, Colonists were willing to revolt over a 3 pence duty on a luxury item.
Now, most folks have the governments (local, State, and Federal) skimming… what percentage of their paychecks and, apart from some grumbling, nothing really happens.
It’s hard for me to say that the Colonists were “overtaxed” and the folks today are “undertaxed”.
By the whole “willing to take up arms and destroy other peoples’ stuff” measurement, they were and we are.
But one can’t help but feel that that isn’t a particularly useful measurement.
God help me, I can’t think of a better one.Report
For an example on the other side. I’ve moved to Canada largely because I believe the U.S. is unstable and unsafe for my family. Though the tax liabilities up here are uncomfortable to be sure, the stability and security of a society that is realistic is worth the price to me. Voting with your feet will be a sign of both over taxation and, for those that can afford to relocate, underserviced. The U.S. suffers from a flight from reality (I can get a working society for free) but it also lacks the social cohesion that would encourage the wealthy to stick it out to make sure the whole experiment holds together.Report
Jay me lad, I understand your position. It’s a perfectly logical one to take as a libertarian and I sympathise.
That said, proposing to get our deficits under control exclusively by slashing spending, while perfectly sound in theory, is pure political poison in practice. The Republicans discovered to their great shock in 94 just how hard it is to cut spending. Ultimatly they knuckled under and cravenly embraced “starve the beast” an abominable excuse for unchecked deficit spending.
Now, I think that it’d be awsome if some great movement came riding out of the sunset, got themselves elected, cut spending mercylessly to get our finances in order and then were devastated by furious voters and routed in the following election. But there’s not a politician alive that is interested in that kind of electoral suicide.Report
Canada got themselves out of PET’s deficits. Of course, the cons up here are doing a good job of spending Canada back. The U.S. could do the same if they didn’t have the empire to support.Report
Cascadian, I’m 100% in agreement with you on the history. Canada dug themselves out in a classically Keynsian manner and are doing well now. But it should be kept in mind that the Canadians were able to do it pretty much because the Liberals primary for/opposition party turned into a pumpkin for 15 years.Report
Jaybird, I’m not hidebound on this issue, I am curious as to whether there has ever been a period when taxes were so high as to cause economic problems. I could not think of any, and in good faith I asked my question. I figured some one here might point to such a period.
Even the most rabid small government types allow for some degree of taxation. Even the most rabid big government type, me, allows that taxation may reach unsustainable rates.
Now with regard to the tea tax and the Revolution let me just point out that The Deceleration of Independence, and the bill of particular grievances, the tax issue “For imposing Taxes on us without our Consent:” come way down the lists of complaints, maybe 18th or 19th. Other issues seem to be of greater concern.Report
Dude, seriously, I am trying to answer.
It seems to me that you are asking, objectively, about something that is, it seems to me, exceptionally subjective.
If I am taxed at 67% but want for nothing, hey. I want for nothing! I am obviously taxed just right. Hey, I even have 33% of my paycheck in my pocket at the end of the week.
If I am taxed at 10% and see (my perception) nothing but wastefraudandabuse, then I’m sure that I’d be infuriated even if my needs (and then some) are met by me with the 90% of my paycheck that the government allows me to keep.
“taxes were so high as to cause economic problems.”
I see us still in perception territory. Your bug may be my feature. “Hey, do teenagers really need Jughead Jones hats? The fact that taxes are too high for you to see it as worth your while to sell crap to spoiled adolescents is a you problem. It’s not a me problem. It’s certainly not an economic problem.”
I can totally see someone saying that.
Thinking about it more, I would ask if a black market is being created. If one is created, we’ve probably got a problem somewhere. If the black market is for stuff that is legal but expensive due to taxes, then we’ve got an “overtaxed” problem.
At the time of the Boston Tea Party (according to the wiki page) there was a black market for tea. Fair enough.
Where do we have a black market in the US? Apart from illegal drugs (woo!), I’d look at stuff like cigarettes. There is a black market for smokes that don’t have tax stamps. People smuggle smokes into NYC.
What else do we have? Illegal (whoops, undocumented!) aliens working under the table? Is that an indication that there’s a taxation problem with regards to unskilled labor?
Using the black market measurement, I’d say that there would have to be.
I don’t know what objective measurements would be useful.Report
Please read “Dude, seriously, I am trying to answer.” as me saying “Dude, seriously, I am doing my best to give my answers without being snarky or jerky.” and not “I HAVE THE ANSWERS GIVEN ME BY GOD AND YOU HAD BEST LISTEN, KIDDO!!!”Report
“It seems to me that you are asking, objectively, about something that is, it seems to me, exceptionally subjective.”
Okay, I understand what you are saying, but is seems to me that if tax rates were to high economists could determine an episode where high taxes caused an economic dislocation. Oh say, the Panic of 1876 was caused by x, y and z, x being high taxes.
Now, if no particular episode can be ascribed to high taxation rates I am perfectly willing to to join you in saying it’s all relative, “one man’s meat, another man’s poison.”
I’m not detecting any snark, I’m also trying to stay out those waters.Report
We could bust out the Roman Empire.
In the tail end, it was forbidden for people to leave their farms. The assumption was that they would be doing so in order to avoid paying taxes (don’t these peasants understand how much peace costs?).
If you have to pass a law against emmigration, I’d say that that might be another method to say “okay, these people are overtaxed”.
The more I think about it, though, the more I like the idea of using the black market to measure.Report
Bob I’m happy to help. I’m not immensly more knowledgable than you are about tax history but a point I’d like you to consider. Yes, non-monetary compensation like those example benefits are taxed -now-. This is an example of the tax service and regulators catching but. But when these benefits were originally conceived of they of course were not taxed and thus were a way of avoiding taxes. This tells us that during that time we well may have been over taxed, thus leading to these tax loophole inventions, and that in more modern times the relative absence of this behavior, the creation of taxed compensation forms/loopholes, is a strong sign that we are not currently over taxed.Report