The Soul Of America . . .

[hippiewannabe]

That's a big load of demagoguery and pandering. The Democrats want to play the good parent, giving the kids candy and toys, and make the Republicans the bad parent, who talks about deferring gratification and the need to pay the bills. Unless the author is stupid, he knows damn well there is no way to tax this problem away, spending must be reduced.

It's true that at the start of Bush II's presidency, the amount of taxes taken out of the economy by the government was the highest it had been since World War II. The Bush tax cuts brought it back to historical norms, maybe a bit below. But it was the collapse of capital gains taxes, because of the collapse of asset prices, along with the Obama payroll tax holiday, that caused the percent of GDP taken in taxes to fall to such a low.

The Laffer curve is theoretically unassailable, and empirically proven. The new 40% federal tax bracket brings the marginal rate to 50% in high tax states. Any further increase will lead to less revenue.

The income disparity is not caused by taxes on high income people being too low, it is caused by technological advances leading to reduced returns to unskilled labor, and increased returns to knowledge. When I graduated college with an engineering degree, a high school drop-out assembly line worker made more than me. That was a historical anomaly caused by American post-war manufacturing hegemony, and union monopoly power. Both of those fleeting effects are gone, and now global wages have become more rational. The cure is not to punish the successful, it is to help everyone become successful through education and good life decisions.

[Amskeptic]

That's a big load of demagoguery and pandering.
The cure is not to punish the successful, it is to help everyone become successful through education and good life decisions.

Demagogery and pandering, hippiewannabe? Could you define and support those allegations?
Pandering?

Since when did taxes become "punishment" of the successful? Do you think the stinky rich poor boo-boos are being PUNISHED?? They made out like thieves during the recession. Look at how they bitched and moaned at a lousy 3% only on income above $250,000.00, even as they watch people get thrown out of their houses for robo-mortgage fraud executed by banks, as they watch 40% of all bankruptcies last year caused by medical emergencies because they want to keep healthcare privatized and profit-driven. You think they are being punished??? in this country? Education and good life decisions? What is good life decisions? Ask Bernie Madoff?

We have an entire corporate class that has set up relationships of mutual boardroom sits so they can continually increase top pay and ridiculous golden parachutes whether they torpedoed the company or not, they are not merit-based, their results basis is only on stock value, not the longterm prospects for the company. We are rewarding foolishness to an unprecedented degree, it is rotten. What is "successful" anyway? Do we have to define the American Experience to corporatists who think their definition of successful is wealth and more wealth?

When I read this quote, "The income disparity is not caused by taxes on high income people being too low, it is caused by technological advances leading to reduced returns to unskilled labor, and increased returns to knowledge." I felt woozy. Nobody here said that income disparity was "caused" by top marginal tax rates being too low. Who said that? Income disparity is caused by greed, codified into the minds of the self-satisfied so deeply that the asshole who tanked Lehman Brothers thinks he's owed a bonus. The guys at Goldman Sachs who are intrinsically tied to the destruction of millions of pensions and mortgages, think they were owed bonuses! The late chairman of AIG deciding that it might be a good idea to sue the US government for "too onerous terms" of the bailout, these people are completely disconnected and clueless at the suffering they unleashed, and I say tax the snot out of speculative trades, tax capital gains at 50%, tax ammunition to holy high hell (the lead that is leaching into the environment not to mention other costs), get the carbon tax fired up and do not allow these multi-billionaire energy companies simply "pass it along". Hell no. Greed is a sickness, we got it at the top.

There is no rationale whatsoever that American workers have seen their wages stagnate even though their productivity has increased 100%.
There is no rational argument that "knowledge" is why the Waltons have more wealth than 40% of Americans. No way. They gamed small town America into providing them tax breaks then stressed out the local services budgets with puke bullshit unliveable wages for their workers. Is that the America you champion?
Colin

[denjohn]

Growing Income Gap Could Spark Our Own Tahrir Square

Watching the pro-democracy demonstrators in Tahrir Square in Cairo several weeks back followed by the storming of the Wisconsin state capitol building by crowds upset over the prospects of being disenfranchised here in the U.S., I wondered when there might be pro-democracy demonstrations popping up all over the United States. After all, one of the major factors of the leaderless demonstrations in the Arab world is the oppressive economic disparities between rich and poor. As can be seen from the graph below, the gap between the richest one percent of Americans and the rest of us continues to widen. Eventually this gap will reach a breaking point. No society can sustain this rising disparity before the other 99% figures out the system is rigged against them.

In many respects, corporatocracy causes this growing disparity. By its nature it continues to drive economic wealth to the rich while leaving the lower and middle classes pretty much stagnated. This becomes especially notable when you adjust for inflation. Some argue that 99% of us are actually worse off now, in terms of spendable income, than we were thirty years ago!

The rest of the article is at http://globaldialoguecenter.blogs.com/j ... quare.html

[yondermtn]

That graph says to me that the top 1% have a lot of their income tied to investments and the stock market unlike the middle and bottom fifths. I'd like to see the graph continue to 2012.

What do we do about this?

[yondermtn]

Good to know us peasants are represented by fellow peasants.

http://money.cnn.com/2013/01/16/news/ec ... ?iid=HP_LN

[denjohn]

The Laffer curve is theoretically unassailable, and empirically proven. The new 40% federal tax bracket brings the marginal rate to 50% in high tax states. Any further increase will lead to less revenue.

I agree that we need spending cuts, starting w defense, but re taxes there is so much misinformation and disinformation out there that it's hard to know what to believe.
This article has a different take on the issue:
New Study Destroys Theory That Tax Cuts Spur Growth
http://www.businessinsider.com/study-ta ... wth-2012-9

One economic theory has been repeated so often for so long in this country that it has become an accepted fact:

Tax cuts spur growth.
Most Americans have gotten so used to hearing this theory that they don't even question it anymore........
But is the theory true? Do tax cuts really spur growth?
The answer appears to be "no."
According to a new study by the Congressional Research Service (non-partisan), there's no evidence that tax cuts spur growth.
In fact, although correlation is not causation, when you compare economic growth in periods with declining tax rates versus periods with high tax rates, there seems to be evidence that tax cuts might hurt growth. But we'll leave that possibility for another day.
One thing that tax cuts do unequivocally do--at least tax cuts for the highest earners--is increase economic inequality. Given that economic inequality is one of the biggest problems we face in this country right now, this conclusion is very important..............
Why is the rise in inequality so troubling? Well, beyond the issues of fairness and stability, increasing inequality is hurting the economy. Unlike middle class and upper middle class folks the country's highest earners don't spend all the money they earn. So this money doesn't get circulated back into the economy, where it can become revenue for other companies and salaries for other workers. (If there were a dearth of investment capital, the money might get invested, but we've got plenty of investment capital right now. Our problem is a lack of demand).

So, what's the bottom line?
Well, the bottom line appears to be that low taxes do not spur economic growth and DO cause greater economic inequality.
So, although it sounds like heresy, presidents and Congress-people who actually want to fix the economy might want to consider raising taxes rather than cutting them. Or, at the very least, keeping them the same.

Bold and underline are mine.

[Amskeptic]

Our problem is a lack of demand

Well HELLO!
Why does Washington/corporate elite studiously and painstaking avoid this very fact? Would it not *serve them* to have happy consumers?
Colin

[denjohn]

From Jesse at http://jessescrossroadscafe.blogspot.co ... about.html

If You Remember Nothing Else About the Financial Crisis, Remember This

Few knowledgeable people talk about the need for financial reform anymore, just a few short years after the financial crisis and collapse.

The right talks about getting tough on the weak and settling old scores, and the left is losing its way in obtuse gimmickry and quack economics that promote their own statist agendas. Pile enough rancid margarine on the bread and you won't see its thinness or the mold.

The broad center, independents, and progressives are largely silent, having averted one almost certain disastrous choice in the most recent national election, only to find themselves still on unsteady ground with a weak and wavering 'champion' who may once more betray their trust for his own interests, and the deal.

And yet this is not nearly our darkest hour. That may be yet to come.

All the reform that has occurred so far has been largely window-dressing. Financial and political corruption is a tax that the real economy cannot support or endure while remaining free.

Until there is substantial reform, there will be no sustainable recovery. This is only the appearance of recovery in the empire of illusion.

"From 1973 to 1985, the financial sector never earned more than 16 percent of domestic corporate profits. In 1986, that figure reached 19 percent. In the 1990s, it oscillated between 21 percent and 30 percent, higher than it had ever been in the postwar period. This decade, it reached 41 percent.

Simon Johnson, 13 Bankers


"The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises.

If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time."

Simon Johnson, The Quiet Coup

[denjohn]

The Road Down from Empire (January 16, 2013)
"Most of what’s going on in Washington DC these days can be described very exactly in those terms. Despite popular rhetoric, America’s politicians these days are not unusually wicked or ignorant; they are, by and large, roughly as ethical as their constituents, and rather better educated—though admittedly neither of these is saying much. What distinguishes them from the statesmen of an earlier era, rather, is that they are face to face with an insoluble dilemma that their predecessors in office spent the last few decades trying to ignore. As the costs of empire rise, the profits of empire dwindle, the national economy circles the drain, the burden of deferred maintenance on the nation’s infrastructure grows, and the impact of the limits to growth on industrial civilization worldwide becomes ever harder to evade, they face the unenviable choice between massive trouble now and even more massive trouble later; being human, they repeatedly choose the latter, and console themselves with the empty hope that something might turn up."

And...

"As America stumbles down from its imperial peak, in other words, the one growth industry this country will have left will consist of efforts to maintain the pretense that America doesn’t have an empire, that the empire isn’t falling, and that the fall doesn’t matter anyway. (Yes, those statements are mutually contradictory. Get used to it; you’ll be hearing plenty of statements in the years to come that are even more more incoherent.) As the decline accelerates, anyone who offers Americans a narrative that allows them to pretend they’ll get the shiny new future that our national mythology promises them will be able to count on a large and enthusiastic audience. The narratives being marketed for this purpose need not be convincing; they need not even be sane. So long as they make it possible for Americans to maintain the fiction of a brighter future in the teeth of the facts, they’ll be popular."
http://thearchdruidreport.blogspot.com/ ... mpire.html

[Amskeptic]

The Road Down from Empire (January 16, 2013)
As the costs of empire rise, the profits of empire dwindle, the national economy circles the drain, the burden of deferred maintenance on the nation’s infrastructure grows, and the impact of the limits to growth on industrial civilization worldwide becomes ever harder to evade, they face the unenviable choice between massive trouble now and even more massive trouble later; being human, they repeatedly choose the latter, and console themselves with the empty hope that something might turn up."

As the decline accelerates, anyone who offers Americans a narrative that allows them to pretend they’ll get the shiny new future that our national mythology promises them will be able to count on a large and enthusiastic audience. The narratives being marketed for this purpose need not be convincing; they need not even be sane. So long as they make it possible for Americans to maintain the fiction of a brighter future in the teeth of the facts, they’ll be popular."

Let's at least keep our eyes open. There is Life After Empire for those with a strong enough constitution to endure privation and discomfort with a modicum of politeness and humor and the understanding that all of God's creatures who are surviving around us without benefit of a "civilization", have much to teach us. Penguins, for example . . .
Colin