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What happens when Obama raises taxes?





jmi256
A lesson for those on the left struggling with basic economics. Bush's tax cuts expire at the end of this year, and despite the hilarious claims recently made that Obama cut taxes (again shows the left’s basic ignorance of Econ 101), tax rates will be going up for Americans. And what does this mean for the economy? As the article below points out, a lot can be learned from the successes of the past instead of going down the path Obama and the Dems are taking us. I don’t necessarily agree with everything he says, but the author makes some good points.

Quote:
Tax Hikes and the 2011 Economic Collapse
Today's corporate profits reflect an income shift into 2010. These profits will tumble next year, preceded most likely by the stock market.


People can change the volume, the location and the composition of their income, and they can do so in response to changes in government policies.

It shouldn't surprise anyone that the nine states without an income tax are growing far faster and attracting more people than are the nine states with the highest income tax rates. People and businesses change the location of income based on incentives.

Likewise, who is gobsmacked when they are told that the two wealthiest Americans—Bill Gates and Warren Buffett—hold the bulk of their wealth in the nontaxed form of unrealized capital gains? The composition of wealth also responds to incentives. And it's also simple enough for most people to understand that if the government taxes people who work and pays people not to work, fewer people will work. Incentives matter.

People can also change the timing of when they earn and receive their income in response to government policies. According to a 2004 U.S. Treasury report, "high income taxpayers accelerated the receipt of wages and year-end bonuses from 1993 to 1992—over $15 billion—in order to avoid the effects of the anticipated increase in the top rate from 31% to 39.6%. At the end of 1993, taxpayers shifted wages and bonuses yet again to avoid the increase in Medicare taxes that went into effect beginning 1994."

Just remember what happened to auto sales when the cash for clunkers program ended. Or how about new housing sales when the $8,000 tax credit ended? It isn't rocket surgery, as the Ivy League professor said.

On or about Jan. 1, 2011, federal, state and local tax rates are scheduled to rise quite sharply. President George W. Bush's tax cuts expire on that date, meaning that the highest federal personal income tax rate will go 39.6% from 35%, the highest federal dividend tax rate pops up to 39.6% from 15%, the capital gains tax rate to 20% from 15%, and the estate tax rate to 55% from zero. Lots and lots of other changes will also occur as a result of the sunset provision in the Bush tax cuts.

Tax rates have been and will be raised on income earned from off-shore investments. Payroll taxes are already scheduled to rise in 2013 and the Alternative Minimum Tax (AMT) will be digging deeper and deeper into middle-income taxpayers. And there's always the celebrated tax increase on Cadillac health care plans. State and local tax rates are also going up in 2011 as they did in 2010. Tax rate increases next year are everywhere.





Now, if people know tax rates will be higher next year than they are this year, what will those people do this year? They will shift production and income out of next year into this year to the extent possible. As a result, income this year has already been inflated above where it otherwise should be and next year, 2011, income will be lower than it otherwise should be.

Also, the prospect of rising prices, higher interest rates and more regulations next year will further entice demand and supply to be shifted from 2011 into 2010. In my view, this shift of income and demand is a major reason that the economy in 2010 has appeared as strong as it has. When we pass the tax boundary of Jan. 1, 2011, my best guess is that the train goes off the tracks and we get our worst nightmare of a severe "double dip" recession.

In 1981, Ronald Reagan—with bipartisan support—began the first phase in a series of tax cuts passed under the Economic Recovery Tax Act (ERTA), whereby the bulk of the tax cuts didn't take effect until Jan. 1, 1983. Reagan's delayed tax cuts were the mirror image of President Barack Obama's delayed tax rate increases. For 1981 and 1982 people deferred so much economic activity that real GDP was basically flat (i.e., no growth), and the unemployment rate rose to well over 10%.

But at the tax boundary of Jan. 1, 1983 the economy took off like a rocket, with average real growth reaching 7.5% in 1983 and 5.5% in 1984. It has always amazed me how tax cuts don't work until they take effect. Mr. Obama's experience with deferred tax rate increases will be the reverse. The economy will collapse in 2011.

Consider corporate profits as a share of GDP. Today, corporate profits as a share of GDP are way too high given the state of the U.S. economy. These high profits reflect the shift in income into 2010 from 2011. These profits will tumble in 2011, preceded most likely by the stock market.

In 2010, without any prepayment penalties, people can cash in their Individual Retirement Accounts (IRAs), Keough deferred income accounts and 401(k) deferred income accounts. After paying their taxes, these deferred income accounts can be rolled into Roth IRAs that provide after-tax income to their owners into the future. Given what's going to happen to tax rates, this conversion seems like a no-brainer.

The result will be a crash in tax receipts once the surge is past. If you thought deficits and unemployment have been bad lately, you ain't seen nothing yet.

Source = http://online.wsj.com/article/SB10001424052748704113504575264513748386610.html?mod=googlenews_wsj
deanhills
Isn't the portion in the heading 2011 Economic Collapse a bit strong though? I thought the economy started to pick up? Are people seriously thinking Economic Collapse in 2011?
Bikerman
Have a care when reading Laffer. He is a good economist but he often makes authoritative-sounding statements without the evidence.

His most famous contribution to economics is the 'Laffer Curve' which is used by many, including him, to attack any plan to raise taxes. The basic argument is that the more you raise taxes the less money you actually take in revenue (and vica versa). It is a gross oversimplification of his OWN WORK and he should at least have the grace to blush when he repeats the canard.

Laffer postulated a curve - like a normal distribution curve or a 'bell' curve.
When tax is 0 then obviously tax revenue is 0. It then rises as you increase tax. Laffer noticed that above a certain point it started to go down again - and he drew this as a curve a bit like this:


This is how most other economists know him. The problem is that he presented very little evidence to support his curve and the evidence that he DOES constantly refer to - the US capital gains tax hike in 1986 which produced a lowering revenue the year after (actually it was more flat than declining) - is dishonest. Once I read that the first time, years ago, I knew that laffer was being dishonest. Why ? Because any economist knows what happened. The hike was announced months before it happened. Anyone with sense therefore conducted any large asset transfer before the deadline and paid the tax at the old rate before it hiked. This meant a huge surge in tax revenue just before the change, and a return to normal, or slightly below normal, after the change. You don't need to be an economist to understand that, and I think any economist that pretends (or pretended) otherwise, like Laffer, is clearly dishonest. The proof came in the following years as things returned to normal and the 'downward trend' was revealed to be exactly what I describe above - a short term blip produced by forewarning about the tax rise. Laffer STILL raises it in support of his curve, however, when he KNOWS it is bollox.

Obviously there will come a point when tax rises are counter productive - people will do anything to avoid paying them, including leaving the country. To pretend, however, as Laffer does, that this is a symmetric curve, or that the US is actually close to that point now, is unsupported assertion dressed up as economic 'theory'.
jmi256
deanhills wrote:
Isn't the portion in the heading 2011 Economic Collapse a bit strong though? I thought the economy started to pick up? Are people seriously thinking Economic Collapse in 2011?


Yeah, I thought the term "Economic Collapse" may have been a bit strong, but I think any reasonable person can agree that if Obama fails to extend Bush's across-the-board tax cuts at the end of this year, business and the economy will suffer and find it harder and harder to stay afloat. And due to the huge amounts of spending and waste under Obama, we’ll soon see even bigger tax increases and/or the establishment of new taxes on the American people, who will be further burden to pay for Obama and the Democrats’ failure. The smart money is on much higher taxes for the foreseeable future thanks to Obama, no matter what happens in November. Why do you think so many people are converting their Traditional IRAs to Roth IRAs, even though they have to pay the tax at conversion? They know it’s better to take the tax hit now under the lower Bush tax rates rather than the future higher rates.
handfleisch
By all means let's continue Bush's great techniques that gave the USA so much peace and prosperity. Yeah let's keep lowering taxes on the rich, it worked so well the first time to turn a budget surplus into a budget deficit. Yes it worked great, as great as his war in Iraq and his deregulating banks. Come to think of it, let's follow the Republican's Drill Baby Drill, too, we can see the success it is having off the coast of Louisiana. Good idea!
deanhills
handfleisch wrote:
By all means let's continue Bush's great techniques that gave the USA so much peace and prosperity. Yeah let's keep lowering taxes on the rich, it worked so well the first time to turn a budget surplus into a budget deficit. Yes it worked great, as great as his war in Iraq and his deregulating banks. Come to think of it, let's follow the Republican's Drill Baby Drill, too, we can see the success it is having off the coast of Louisiana. Good idea!
Handfleisch, Bush has not been around since January of 2009! Don't you think it is time to let go of him? Obama has been in the seat since January 2009. By now surely we can stick with the present President? He is all we have right at the moment.
handfleisch
deanhills wrote:
handfleisch wrote:
By all means let's continue Bush's great techniques that gave the USA so much peace and prosperity. Yeah let's keep lowering taxes on the rich, it worked so well the first time to turn a budget surplus into a budget deficit. Yes it worked great, as great as his war in Iraq and his deregulating banks. Come to think of it, let's follow the Republican's Drill Baby Drill, too, we can see the success it is having off the coast of Louisiana. Good idea!
Handfleisch, Bush has not been around since January of 2009! Don't you think it is time to let go of him? Obama has been in the seat since January 2009. By now surely we can stick with the present President? He is all we have right at the moment.


Have you ever considered not posting on every single topic on this forum, and have you ever considered carefully reading the subject and taking a moment to think before posting? Because you constantly write what amounts to nonsense posts like this one. The whole point of this thread is that the OP says we should continue the Bush tax policies of the megarich tax breaks. So your point that I am inappropriately bringing up Bush and the consequences of his policies is nonsense. Why don't you just delete this post of yours and then stop posting on every single thread without even carefully reading or thinking things through?
jmi256
handfleisch wrote:
By all means let's continue Bush's great techniques that gave the USA so much peace and prosperity. Yeah let's keep lowering taxes on the rich, it worked so well the first time to turn a budget surplus into a budget deficit. Yes it worked great, as great as his war in Iraq and his deregulating banks. Come to think of it, let's follow the Republican's Drill Baby Drill, too, we can see the success it is having off the coast of Louisiana. Good idea!



Yeah, cause we’re so much better under Obama, right?..... Right? Brick wall
handfleisch
jmi256 wrote:
handfleisch wrote:
By all means let's continue Bush's great techniques that gave the USA so much peace and prosperity. Yeah let's keep lowering taxes on the rich, it worked so well the first time to turn a budget surplus into a budget deficit. Yes it worked great, as great as his war in Iraq and his deregulating banks. Come to think of it, let's follow the Republican's Drill Baby Drill, too, we can see the success it is having off the coast of Louisiana. Good idea!



Yeah, cause we’re so much better under Obama, right?..... Right? ](*,)


Immensely.

But since you're implicitly admitting Bush was a disaster for the country, then why would we want to go back to the Repubs and their catastrophic policies?
jmi256
handfleisch wrote:
jmi256 wrote:
handfleisch wrote:
By all means let's continue Bush's great techniques that gave the USA so much peace and prosperity. Yeah let's keep lowering taxes on the rich, it worked so well the first time to turn a budget surplus into a budget deficit. Yes it worked great, as great as his war in Iraq and his deregulating banks. Come to think of it, let's follow the Republican's Drill Baby Drill, too, we can see the success it is having off the coast of Louisiana. Good idea!



Yeah, cause we’re so much better under Obama, right?..... Right? Brick wall


Immensely.


Right, everything is just peachy (As long as you ignore the millions of unemployed, the ecological disaster and gross mismanagement in the Gulf, the waste of billions of taxpayer dollars, a law that forces Americans to buy something from Obama's campaign contributors or face fines and possible IRS action, flip-flopping of closing Gitmo, a fragmented and leaderless war effort, etc. all under Obama. The list can go on and on. Only the most brainwashed supporters still fall for the BS coming from the left.) Thanks Obama!







handfleisch
jmi256 wrote:
handfleisch wrote:
jmi256 wrote:
handfleisch wrote:
By all means let's continue Bush's great techniques that gave the USA so much peace and prosperity. Yeah let's keep lowering taxes on the rich, it worked so well the first time to turn a budget surplus into a budget deficit. Yes it worked great, as great as his war in Iraq and his deregulating banks. Come to think of it, let's follow the Republican's Drill Baby Drill, too, we can see the success it is having off the coast of Louisiana. Good idea!



Yeah, cause we’re so much better under Obama, right?..... Right? ](*,)


Immensely.


Right, everything is just peachy (As long as you ignore the millions of unemployed, the ecological disaster and gross mismanagement in the Gulf, the waste of billions of taxpayer dollars, a law that forces Americans to buy something from Obama's campaign contributors or face fines and possible IRS action, flip-flopping of closing Gitmo, a fragmented and leaderless war effort, etc. all under Obama. The list can go on and on. Only the most brainwashed supporters still fall for the BS coming from the left.) Thanks Obama!


LOL. Don't stop, you're starting to get amusing. You forgot to mention how Obama caused global warming. (Oh, I forgot, you think that's a hoax. Never mind.)
Alaskacameradude
Quote:
LOL. Don't stop, you're starting to get amusing


I can guarantee you that the millions of unemployed and those suffering from the recession do
NOT find it amusing. Obama better get something done on that front, or the Dems are going
to see what 'AssQuest 2010' is REALLY about in November.
handfleisch
Alaskacameradude wrote:
Quote:
LOL. Don't stop, you're starting to get amusing


I can guarantee you that the millions of unemployed and those suffering from the recession do
NOT find it amusing. Obama better get something done on that front, or the Dems are going
to see what 'AssQuest 2010' is REALLY about in November.


Besides being an example of the dishonest taking of words out of context, your post, if right about people's choices in November, would be a reminder of how many Americans have the memory, patience and understanding levels of a fruit fly.

A year and a half ago Obama took office in what everyone agreed was a thankless and dire situation amid fears of a depression after years of fiscal mismanagement. Compared to that, the recovery is already going quite well and the skyrocketing unemployment rate has leveled off. Yes, workers are suffering and it definitely looks like getting the rate down is going to take a lot of work. However do you really propose that Americans should start blaming that on Obama and the Democrats after less than two years? Do you think we should actually turn back to the collapsing Republican party? The Repubs not only have no alternative ideas at all, they have only become more extreme proponents of the free market lunacy that brought us to this point.
jmi256
Some of the language is maybe a bit stronger than some would prefer and I’m sure some will complain about the source, but the article is a good summary of some of the tax increases Americans will face thanks to Obama and the Democrats in power.

Quote:
Six Months to Go Until The Largest Tax Hikes in History
In just six months, the largest tax hikes in the history of America will take effect. They will hit families and small businesses in three great waves on January 1, 2011:


First Wave: Expiration of 2001 and 2003 Tax Relief
In 2001 and 2003, the GOP Congress enacted several tax cuts for investors, small business owners, and families. These will all expire on January 1, 2011:

Personal income tax rates will rise. The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which two-thirds of small business profits are taxed). The lowest rate will rise from 10 to 15 percent. All the rates in between will also rise. Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as higher marginal tax rates. The full list of marginal rate hikes is below:
- The 10% bracket rises to an expanded 15%
- The 25% bracket rises to 28%
- The 28% bracket rises to 31%
- The 33% bracket rises to 36%
- The 35% bracket rises to 39.6%

Higher taxes on marriage and family. The “marriage penalty” (narrower tax brackets for married couples) will return from the first dollar of income. The child tax credit will be cut in half from $1000 to $500 per child. The standard deduction will no longer be doubled for married couples relative to the single level. The dependent care and adoption tax credits will be cut.

The return of the Death Tax. This year, there is no death tax. For those dying on or after January 1 2011, there is a 55 percent top death tax rate on estates over $1 million. A person leaving behind two homes and a retirement account could easily pass along a death tax bill to their loved ones.

Higher tax rates on savers and investors. The capital gains tax will rise from 15 percent this year to 20 percent in 2011. The dividends tax will rise from 15 percent this year to 39.6 percent in 2011. These rates will rise another 3.8 percent in 2013.

Second Wave: Obamacare
There are over twenty new or higher taxes in Obamacare. Several will first go into effect on January 1, 2011. They include:

The “Medicine Cabinet Tax” Thanks to Obamacare, Americans will no longer be able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin).

The “Special Needs Kids Tax” This provision of Obamacare imposes a cap on flexible spending accounts (FSAs) of $2500 (Currently, there is no federal government limit). There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children. There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education. Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education.

The HSA Withdrawal Tax Hike. This provision of Obamacare increases the additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.


Third Wave: The Alternative Minimum Tax and Employer Tax Hikes
When Americans prepare to file their tax returns in January of 2011, they’ll be in for a nasty surprise—the AMT won’t be held harmless, and many tax relief provisions will have expired. The major items include:

The AMT will ensnare over 28 million families, up from 4 million last year. According to the left-leaning Tax Policy Center, Congress’ failure to index the AMT will lead to an explosion of AMT taxpaying families—rising from 4 million last year to 28.5 million. These families will have to calculate their tax burdens twice, and pay taxes at the higher level. The AMT was created in 1969 to ensnare a handful of taxpayers.

Small business expensing will be slashed and 50% expensing will disappear. Small businesses can normally expense (rather than slowly-deduct, or “depreciate”) equipment purchases up to $250,000. This will be cut all the way down to $25,000. Larger businesses can expense half of their purchases of equipment. In January of 2011, all of it will have to be “depreciated.”

Taxes will be raised on all types of businesses. There are literally scores of tax hikes on business that will take place. The biggest is the loss of the “research and experimentation tax credit,” but there are many, many others. Combining high marginal tax rates with the loss of this tax relief will cost jobs.

Tax Benefits for Education and Teaching Reduced. The deduction for tuition and fees will not be available. Tax credits for education will be limited. Teachers will no longer be able to deduct classroom expenses. Coverdell Education Savings Accounts will be cut. Employer-provided educational assistance is curtailed. The student loan interest deduction will be disallowed for hundreds of thousands of families.

Charitable Contributions from IRAs no longer allowed. Under current law, a retired person with an IRA can contribute up to $100,000 per year directly to a charity from their IRA. This contribution also counts toward an annual “required minimum distribution.” This ability will no longer be there.

Source = http://www.atr.org/six-months-untilbr-largest-tax-hikes-a5171#
ocalhoun
handfleisch wrote:
However do you really propose that Americans should start blaming that on Obama and the Democrats after less than two years? Do you think we should actually turn back to the collapsing Republican party?

I think we should turn forward to the Libertarian party.

Your statement there gives an excellent representation of why new parties and more parties than just two are needed -- we can't throw the bums out, because that means we'll get worse ones to replace them!
handfleisch
ocalhoun wrote:
handfleisch wrote:
However do you really propose that Americans should start blaming that on Obama and the Democrats after less than two years? Do you think we should actually turn back to the collapsing Republican party?

I think we should turn forward to the Libertarian party.

Your statement there gives an excellent representation of why new parties and more parties than just two are needed -- we can't throw the bums out, because that means we'll get worse ones to replace them!


well arguing with a Libertarian about politics is like arguing religion with a Scientologists. Suffice to say, the Democrats are far from perfect, but all the alternatives are much worse
Fappiness
handfleisch wrote:
By all means let's continue Bush's great techniques that gave the USA so much peace and prosperity. Yeah let's keep lowering taxes on the rich, it worked so well the first time to turn a budget surplus into a budget deficit. Yes it worked great, as great as his war in Iraq and his deregulating banks. Come to think of it, let's follow the Republican's Drill Baby Drill, too, we can see the success it is having off the coast of Louisiana. Good idea!


Be quiet about Bush.
It's been two years.
He has virtually no effect on our economy now. We never had a budget surplus, not since Jackson's presidency.
We should keep drilling, it actually helps the economy, dimwit. One wreck proves nothing at all. You might as well bash Obama, he's the one making the mistakes.
Bikerman


Source - http://www.scribd.com/doc/3015540/US-Budget-Deficit-or-Surplus-1960present
deanhills
Quote:
So, would President Obama’s budget plan really increase deficit spending much more than other modern presidents? Well, yeah, to the tune of seven times more, measured as a percentage of economic output, than under President Kennedy over 45 years ago — as you can see in this chart.


Source: The Heritage Foundation
handfleisch
deanhills wrote:
Quote:
So, would President Obama’s budget plan really increase deficit spending much more than other modern presidents? Well, yeah, to the tune of seven times more, measured as a percentage of economic output, than under President Kennedy over 45 years ago — as you can see in this chart.


Source: The Heritage Foundation


DH, get a clue. Bikerman's chart cited the CBO. Yours was made by a right wing think tank that was married to Ronald Reagan. You're being lied to. Don't accept it.
Bikerman
But less than twice as much as proper comparators - the last two or three Presidents. Why on earth would you compare with 45 year old data...times have changed a little in the meantime....I mean, you might as well say Bush Spend 4 times as much ...... etc. 'Cherry picking' is the normal name for it...

You might also like to consider the 'est' ...... 'guess' is the other word....
deanhills
handfleisch wrote:
deanhills wrote:
Quote:
So, would President Obama’s budget plan really increase deficit spending much more than other modern presidents? Well, yeah, to the tune of seven times more, measured as a percentage of economic output, than under President Kennedy over 45 years ago — as you can see in this chart.


Source: The Heritage Foundation


DH, get a clue. Bikerman's chart cited the CBO. Yours was made by a right wing think tank that was married to Ronald Reagan. You're being lied to. Don't accept it.
You mean that Obama is not running up a deficit? Are you sure I'm the gullible one here? Governments in Europe are tightening belts, I don't even have to quote any literature on this, you can read it everywhere. Whereas Obama is spending like tomorrow is never coming.
Bikerman
Of course he is running a deficit. That makes it all the more counter-productive to use guesses by right wing 'think tanks'. Just use good sources and you can still show a growing deficit without introducing fantasy...
http://www.washingtonpost.com/wp-dyn/content/article/2010/06/30/AR2010063003396.html
PS - even that article is dodgy. It swaps measures all through - deficit is NOT the same as national debt. I thought the Washington Post was a paper of repute? That article doesn't say so, and I'm sorry I cited it.
It Just goes to show - always go to the source, not the reports of the source...
http://www.cbo.gov/
handfleisch
deanhills wrote:
handfleisch wrote:
deanhills wrote:
Quote:
So, would President Obama’s budget plan really increase deficit spending much more than other modern presidents? Well, yeah, to the tune of seven times more, measured as a percentage of economic output, than under President Kennedy over 45 years ago — as you can see in this chart.

Source: The Heritage Foundation


DH, get a clue. Bikerman's chart cited the CBO. Yours was made by a right wing think tank that was married to Ronald Reagan. You're being lied to. Don't accept it.
You mean that Obama is not running up a deficit? Are you sure I'm the gullible one here? Governments in Europe are tightening belts, I don't even have to quote any literature on this, you can read it everywhere. Whereas Obama is spending like tomorrow is never coming.

Typical Deanhills dishonesty. But at least you are not trying to cover it up with false naivete, for once. You know full well that no one said Obama is not running a deficit. I said that the Heritage Institute would fudge stats to show whatever they want to show. Really, if you're going to brazenly lie, why should anyone take your posts seriously?
deanhills
Bikerman wrote:
Of course he is running a deficit. That makes it all the more counter-productive to use guesses by right wing 'think tanks'. Just use good sources and you can still show a growing deficit without introducing fantasy...
http://www.washingtonpost.com/wp-dyn/content/article/2010/06/30/AR2010063003396.html
PS - even that article is dodgy. It swaps measures all through - deficit is NOT the same as national debt. I thought the Washington Post was a paper of repute? That article doesn't say so, and I'm sorry I cited it.
It Just goes to show - always go to the source, not the reports of the source...
http://www.cbo.gov/
OK agreed, yet your chart is only up to 2008. It does not include the period under Obama so is not really good for comparison. Hence why I have been searching for a more up to date chart. I did try your source, but I don't know where they are hiding their charts. I suspect your chart was compiled from data from the cbo.gov Website, and that the Chart is not actually from that Website. I am not knocking your chart, just saying that it is not completely clear who the author of the chart is and I would have liked to see a more up to date chart. If you can find your chart in the www.cbo.gov Website, of course then my apologies in advance.

Perhaps this Wikipedia US Public Debt Chart has some comparison opportunities, at least indicating Obama is outspending Bush by a large margin:
Bikerman
deanhills wrote:
OK agreed, yet your chart is only up to 2008. It does not include the period under Obama so is not really good for comparison.
The point is that NO compatison is going to be valid since he has only been in office a fairly short time. You can't compare the first year of one term with another complete term...just doesn't tell you anything useful.
Quote:
Hence why I have been searching for a more up to date chart. I did try your source, but I don't know where they are hiding their charts.
The Scribd users generally make their own charts and graphs - the important point is on the bottom of the graph - the figures are from the CBO.
Quote:
I suspect your chart was compiled from data from the cbo.gov Website, and that the Chart is not actually from that Website.
Quite right.
Quote:
I am not knocking your chart, just saying that it is not completely clear who the author of the chart is and I would have liked to see a more up to date chart. If you can find your chart in the www.cbo.gov Website, of course then my apologies in advance.
No, it was made by someone on the Scribd book/social site. It doesn't matter who makes the chart, the thing that matters is where the numbers come from. Why not make your own?
Quote:
Perhaps this Wikipedia US Public Debt Chart has some comparison opportunities, at least indicating Obama is outspending Bush by a large margin:
Compare what? A partial year of a term with a full term? Makes no sense. You will note that some presidents start on an up-slope and some on a down - that is not under their control. Obviously Obama had to spend money to implement his plans - he SAID he would. You judge him at the end of those plans, not at the start.

Why not get the last twelve months deficit figures, read the Obama bail-out and health-care documents - which give the numbers as projections - and then plot one against the other...that would be a nice and useful graph, instead of this numerology you post here.....
deanhills
Bikerman, a person would have to have his eyes very closed, not to SEE that Obama is spending at a horrific rate. Saying that you can't compare is not completely true though. Obama has been long enough in his seat for a projection to be made on the basis of Obama's policies that are expensive. And accumulating. Projection is that US debt will be 90% of GDP by 2020.

Quote:
President Obama's fiscal 2011 budget will generate nearly $10 trillion in cumulative budget deficits over the next 10 years, $1.2 trillion more than the administration projected, and raise the federal debt to 90 percent of the nation's economic output by 2020, the Congressional Budget Office reported Thursday.

In its 2011 budget, which the White House Office of Management and Budget (OMB) released Feb. 1, the administration projected a 10-year deficit total of $8.53 trillion. After looking it over, CBO said in its final analysis, released Thursday, that the president's budget would generate a combined $9.75 trillion in deficits over the next decade.

Quote:
The federal public debt, which was $6.3 trillion ($56,000 per household) when Mr. Obama entered office amid an economic crisis, totals $8.2 trillion ($72,000 per household) today, and it's headed toward $20.3 trillion (more than $170,000 per household) in 2020, according to CBO's deficit estimates.

That figure would equal 90 percent of the estimated gross domestic product in 2020, up from 40 percent at the end of fiscal 2008. By comparison, America's debt-to-GDP ratio peaked at 109 percent at the end of World War II, while the ratio for economically troubled Greece hit 115 percent last year.

Source: Washingtontimes
Bikerman
Anyone who is willing to project fiscal conditions over 10 years is either a fool or very bored. Anyone who takes them seriously IS a fool. You cannot accurately project fiscal parameters over a year. For a decade it is the equivalent of casting runes, and probably less reliable.

The CBO talk about the costs of the specific project, which CAN be predicted. That IS NOT THE SAME as saying that those costs will be the deficit and if you cannot see that then...well.....

I am also becoming increasingly concerned with the supposed quality press in the US. The last two quoted articles are hugely partial and misleading. If you want to know what the CBO ACTUALL SAID thern read the document.
http://www.cbo.gov/ftpdocs/100xx/doc10014/03-20-PresidentBudget.pdf

The important section here is :
Quote:
A Largely as a result of the enactment of recent legislation and the continuing turmoil in financial markets, CBO’s baseline projections of the deficit have risen by more than $400 billion in both 2009 and 2010 and by smaller amounts thereafter. Those projections assume that current laws and policies remain in place. Under that assumption, CBO now estimates that the deficit would total almost $1.7 trillion (11.9 percent of gross domestic product, or GDP) this year and $1.1 trillion (7.9 percent of GDP) next year—the largest deficits as a share of GDP since 1945. Deficits would shrink to
about 2 percent of GDP by 2012 and remain in that vicinity through 2019.

B Under current laws and policies, outlays are projected to decline from 27.4 percent of GDP in 2009 to about 22 percent in 2012 and subsequent years, as spending related to the current recession phases out, problems in the financial markets fade, and discretionary spending— under the assumptions used for the baseline—declines as a share of GDP.

C As estimated by CBO and the Joint Committee on Taxation, the President’s proposals would add
$4.8 trillion to the baseline deficits over the 2010–2019 period. CBO projects that if those proposals were enacted, the deficit would total $1.8 trillion (13.1 percent of GDP) in 2009 and $1.4 trillion (9.6 percent of GDP) in 2010. It would decline to about 4 percent of GDP by 2012 and remain between 4 percent and 6 percent of GDP through 2019.
deanhills
Bikerman wrote:
Anyone who is willing to project fiscal conditions over 10 years is either a fool or very bored. Anyone who takes them seriously IS a fool. You cannot accurately project fiscal parameters over a year. For a decade it is the equivalent of casting runes, and probably less reliable.

The CBO talk about the costs of the specific project, which CAN be predicted. That IS NOT THE SAME as saying that those costs will be the deficit and if you cannot see that then...well.....
OK. Here is a projection of deficits for the period 2010 to 2020 from the CBO office:
Quote:
Accumulating deficits are pushing federal debt to significantly higher levels. CBO projects that total debt will reach $8.8 trillion by the end of 2010. At 60 percent of GDP, that would be the highest level since 1952. Under current laws and policies, CBO’s projections show that level climbing to 67 percent by 2020. As a result, interest payments on the debt are poised to skyrocket; the government’s spending on net interest will triple between 2010 and 2020, increasing from $207 billion to $723 billion.

Source: www.cbo.com
Bikerman
You still are not reading the correct passages for the point you are trying to make. As in many things I'm afraid you are well out of your depth with this one and don't really understand what you are talking about. I would stick to something a bit easier to understand if I were you.
deanhills
Bikerman wrote:
You still are not reading the correct passages for the point you are trying to make. As in many things I'm afraid you are well out of your depth with this one and don't really understand what you are talking about. I would stick to something a bit easier to understand if I were you.
I perfectly illustrated (refuting your claim to the contrary) that 10-year projections have been made. I did this by quoting text from a Government Website. I take a lot of trouble to research what I post about, and I therefore find your comment VERY insulting and condescending, particularly with regard to: "I would stick to something a bit easier to understand if I were you." If you had been a fantastic specialist in economy then great, I may have been able to take this with a pinch of salt, but the little I know about "true" specialists, is that usually they don't try and win their points by poking holes in their opponents. They usually do it on the merit of the facts they are discussing.
Bikerman
deanhills wrote:
Bikerman wrote:
You still are not reading the correct passages for the point you are trying to make. As in many things I'm afraid you are well out of your depth with this one and don't really understand what you are talking about. I would stick to something a bit easier to understand if I were you.
I perfectly illustrated (refuting your claim to the contrary) that 10-year projections have been made. I did this by quoting text from a Government Website. I take a lot of trouble to research what I post about, and I therefore find your comment VERY insulting and condescending, particularly with regard to: "I would stick to something a bit easier to understand if I were you." If you had been a fantastic specialist in economy then great, I may have been able to take this with a pinch of salt, but the little I know about "true" specialists, is that usually they don't try and win their points by poking holes in their opponents. They usually do it on the merit of the facts they are discussing.
Baloney. You haven't refuted anything. The correct projections for what we were discussing are in my previous posting - from the same source. The thing is that I produced the chart because people were discussing the deficit. Your chart switched to federal debt which is a completely different metric. You then quoted 90% for the debt by 2020, but then amended that when, as I suggested, you looked at a reputable source - to 67% (which is what the CBO actually project).
Non of which has any bearing on the deficit graph that started this - different thing. The federal debt is an ambiguous term which can mean the government debt held by the public but may also be used to mean the 'gross' debt - which includes debts to other countries. Unless it is specific which is meant, then it is very easy to mislead by quoting one in the context of the other.
In my opinion the only way to sensibly discuss this with regard to specific presidents is to use a more complete dataset, which includes who controlled the house as well as other factors...
Here is one such dataset:
http://camres.frih.net/nationaldebt.htm
You can use it to make all the graphs you like.
deanhills
Bikerman wrote:
Baloney. You haven't refuted anything. The correct projections for what we were discussing are in my previous posting - from the same source. The thing is that I produced the chart because people were discussing the deficit. Your chart switched to federal debt which is a completely different metric. You then quoted 90% for the debt by 2020, but then amended that when, as I suggested, you looked at a reputable source - to 67% (which is what the CBO actually project).
Non of which has any bearing on the deficit graph that started this - different thing. The federal debt is an ambiguous term which can mean the government debt held by the public but may also be used to mean the 'gross' debt - which includes debts to other countries. Unless it is specific which is meant, then it is very easy to mislead by quoting one in the context of the other.
In my opinion the only way to sensibly discuss this with regard to specific presidents is to use a more complete dataset, which includes who controlled the house as well as other factors...
Here is one such dataset:
http://camres.frih.net/nationaldebt.htmYou can use it to make all the graphs you like.
Wow Bikerman. The one moment you say that no one can make 10-year deficit projections. I then set out to prove that the CBO did just that. Now you switch it completely around as a debate about this and that statistics.

Specifically this is what you said and I took you up on that:
Bikerman wrote:
Anyone who is willing to project fiscal conditions over 10 years is either a fool or very bored. Anyone who takes them seriously IS a fool. You cannot accurately project fiscal parameters over a year. For a decade it is the equivalent of casting runes, and probably less reliable.

I used this quote to show that the Government has projected fiscal conditions over a 10 year period:
Quote:
Accumulating deficits are pushing federal debt to significantly higher levels. CBO projects that total debt will reach $8.8 trillion by the end of 2010. At 60 percent of GDP, that would be the highest level since 1952. Under current laws and policies, CBO’s projections show that level climbing to 67 percent by 2020. As a result, interest payments on the debt are poised to skyrocket; the government’s spending on net interest will triple between 2010 and 2020, increasing from $207 billion to $723 billion.

There are economists who claim that the deficit could reach 90 percent by 2020, I did not take that out of thin air. Refer an article by Kurt Brouwer (there are many more by others) on "A Glimpse at Deficits and the Decade Ahead":

Quote:
If the President’s proposals were enacted, the federal government would record deficits of $1.5 trillion in 2010 and $1.3 trillion in 2011. Those deficits would amount to 10.3 percent and 8.9 percent of gross domestic product (GDP), respectively. By comparison, the deficit in 2009 totaled 9.9 percent of GDP.

Measured relative to the size of the economy, the deficit under the President’s proposals would fall to about 4 percent of GDP by 2014 but would rise steadily thereafter. Compared with CBO’s baseline projections, deficits under the proposals would be about 2 percentage points of GDP higher in fiscal years 2011 and 2012, 1.3 percentage points greater in 2013, and above baseline levels by growing amounts thereafter. By 2020, the deficit would reach 5.6 percent of GDP, compared with 3.0 percent under CBO’s baseline projections.

Under the President’s budget, the cumulative deficit over the 2011–2020 period would equal $9.8 trillion (5.2 percent of GDP), $3.8 trillion more than the cumulative deficit projected in the baseline…

Under the President’s budget, debt held by the public would grow from $7.5 trillion (53 percent of GDP) at the end of 2009 to $20.3 trillion (90 percent of GDP) at the end of 2020. As a result, net interest would more than quadruple between 2010 and 2020 in nominal dollars (without an adjustment for inflation); it would expand from 1.4 percent of GDP in 2010 to 4.1 percent in 2020…

Debt to reach 90% of GDP

This estimate of Federal debt held by the public reaching 90% of GDP is something that should concern us. In their book, This Time Is Different (Eight Centuries of Financial Folly, Princeton University Press, 2009), Carmen Reinhart and Kenneth Rogoff make two critical points:

…If there is one common theme to the vast range of crises we consider in this book it is that excessive debt accumulation, whether it be by the government, banks, corporations, or consumers, often poses greater systemic risk that it seems during a boom…

…Although private debt certainly plays a key role in many crises, government debt is far more often the unifying problem across the wide range of financial crises we examine…

And, the number they peg as being very serious is debt at 90% of GDP. Once debt hits that level, a serious financial crisis is much harder to avoid.

As investors, whether in stocks or bonds or real estate, the financial soundness of our national balance sheet is of critical importance. Maintaining that soundness is all about keeping expenditures well below tax revenues in good times so that budget cutbacks don’t have to happen in recessions. Unfortunately, we the people, and our representatives seem to have forgotten that basic fact, at the local, state and national levels.

Now, we are in a recession so cutting back is very difficult. When we come out of this downturn, we should be focused on ways to cut spending and debt. My gut feeling tells me that our fearless — about spending our money — leaders will not willingly do that though.

Bikerman
The CBO's job is projection. I said that anyone - ie an individual - would have to be a fool or bored. The CBO are not 'anyone' and unfortunately for them they are required to do such projections even though they are essentially meaningless - and they directly contradict what you said btw so if you want to spout nonsense then use definitive nonsense.

Quote:
There are economists who claim that the deficit could reach 90 percent by 2020
And there are economists who say 40%, 50%, etc etc so what? In fact there is no economist I know of who says anything of the sort. But you don't understand the basics so you probably don't even realise how stupid that last statement is.
As for pulling it out of the air, we know where you 'pulled' it from - the same place you pull everything else. Google. That wouldn't be so bad if you actually understood it, but you don't.
The proof is in your last posting when you again confuse deficit with debt. The deficit will NOT reach 90% and nobody - even your economist on google - is saying it will. Your article says it will reach 5.6% of GDP.

It's futile trying to discuss this with you, as I said before. You don't even know what the basic words mean, so all you do is google, cut, paste and repeat....economics is quite a difficult subject about which I know a tiny bit, as I said before. Without a knowledge of even elementary terms then you are just going to continue tripping over the basics and getting nowhere. Google is not a teaching tool unless you set out to use it as one - setting out to make points you don't understand is not the way to go.

{My previous analogy with a primate was out of order and I have removed it}
silverdown
This is just a scary thought, loss of homes, cars, buisness's...
deanhills
silverdown wrote:
This is just a scary thought, loss of homes, cars, buisness's...
Right, when one discusses big economy, then one probably often loses sight of the suffering of those who are the victims. The Big Banks that got bailed out by lots of money, have their Board members intact, with awesome salaries and benefits galore. There were no pay cuts in Congress. Congress is still the same size and manufacturing even more rules and regulations to the equivalent of hundreds of pages, all of which will be costly to implement. Something is wrong in this equation. I see lots of spending and mostly Government and the Financial Sector gaining by it.
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