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Friday, December 16, 2005

Luckily, He's Back to Normal

Earlier this week I posted of my dilema, I actually agreed with a good part of EJ Dionne's column in the Washington Post, something that rarely happens. True to form, EJ is back to his clueless, one sided self today.

EJ's rant this week is on supply side economics, something that actually works quite well. He also opines about Bill Clinton's tax increases, and how the deficit was reduced and budget balanced by them. Oh how Bill stuck it too the rich, and gave to the poor.

If his information was right, I might agree with him, except Clinton cut taxes in 1997 after he gave us the biggest tax increase in history in 1993. In fact, Clinton's 1997 proposal for taxes INCREASED the lowest 20% of taxpayers taxes by an average of $46 per year (Citizens for Tax Justice Numbers).

In fact, what ended up passing in 1997, and spurring the economy, was a huge tax break, most of which went to the upper tax brackets. Sound familiar? It was a case of supply side tax breaks, which spurred the economy.

Another part of his arguement is true, the budget did get balanced, sort of. As long as you don't mind counting social security reciepts as general revenue, the budget did balance. However, if we'd have done as Clinton promised, and locked that money up, there still would have been $200 million dollar deficits. But the feds have always been good with accounting tricks.

That said, I'd like to see them work in the framework agreement that we used then to keep spending under control. But that framework needs some rework, because of the increases in "mandatory spending" requirements (welfare, social security, medicare). When Clinton came into office those programs were about 45% of the budget, today they are about 65% of it, so cutting from "discretionary programs" only is no longer an option.

While EJ is happy to talk about the booming economy during the Clinton years, he neglects to mention that most of it was a tech bubble, that began it's implosion in early 2000. Clinton was still in office when the bust started, and it continued through 2001, when we were still running on his last budget. Nearly 100% of the stock market losses from the 1998-2000 boom were incurred while Clinton was either in office, or his budget was in effect.

Finally, he beats the (out of tune) drum of the rich got all of Bush's tax breaks. They got most of the cash, true. They have to, they pay the taxes. As I've posted before the upper 50% of tax payers cover about 90% of the tax bill of the country. If you look at percentages, not dollars, though the lower end of the scale got the biggest breaks, about 25% under Bush's cuts. In fact, if you are a family of four making $40,000 a year, you probably don't pay income tax anymore. It comes out of your check, but come tax time, you get it all back. This was not true during the Clinton years.

Thanks, E.J. for returning to your normal for, it made today's column so much easier to write.

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6Comments:

Blogger Maricopa Mark said...

And CP is back to normal after that last post!

It twists my mind to understand how the government operating in the black is a good thing. The saying, "the more you make, the more you spend" comes to mind.

8:56 AM  
Blogger Crazy Politico said...

They should be operating at zero deficit. A little bit in the black for a "rainy day fund" isn't a bad idea, but at the same time, too much extra income leads to spending like we have now.

9:04 AM  
Blogger DaddysGirl said...

Hey, I've been trying for a few years to explain all that tax stuff to my friends. Why don't they EVER listen??? Hmm, especially in my government class last year......

3:19 PM  
Blogger asacan said...

I am the family of four that has made somewhere around $43,000 of taxable income each year for the past several years. Because I'm in the military, as you know, my Basic Allowance for Housing (BAH) and Basic Allowance for Subsistence (BAS) is not taxable. Before the Bush "tax cuts for the rich" I paid $710/year in taxes even when I had itemized my deductions (mortgage interest, property taxes, etc.). Since the Bush "tax cut for the rich" I don't bother itemizing because my federal tax is $0.

Personally, I've been a little annoyed with the Bush tax plan. My family uses much more than the $710 yearly taxes we used to pay in governmental resources (schools, roads, etc.) I don't mind paying at least some of my share, it makes me feel more useful. What I would have preferred would have been a reduction in business/corporate taxes (ALL consumers pay that anyway, even the very poor) or more money going back to the people who are REALLY footing the bill for this country.

3:50 PM  
Blogger Crazy Politico said...

Ascan- At least you aren't bitching like the secretary at the Real Estate office I worked in. She paid in a total (Social Security, Medicare and Income taxes) a total of 2900 one year. She got a refund for just over $4000, and complained about it being too small!

DG, some time I'll give you the IRS charts, show them to your friends, it really screws folks up when they see in black and white the middle class aren't "getting screwed" by the tax system. Until you get to the alternative minimum tax, then it hurts.

4:18 PM  
Blogger asacan said...

Several years ago, we had a (not so) young sailor aboard the ship who had married a woman that had four children by three different men. The total amount of money paid for child support by the other men was relatively substantial, especially compared to his pay. They, of course didn't pay taxes on the child support (although the fathers did), but they were able to take the deductions and the tax credits. The sailor had no federal taxes withheld from his pay.

Due to the loop-hole that allowed him to get money back when they'd paid nothing in, they received "refunds" thousands of dollars. A couple years later (and another child) later, they had closed the loop-hole. He did receive some money from the federal government, but not the thousands of dollars that he'd become accustomed (or dependent) to.

Here's the very sad part. You'd think that someone who could benefit from such a situation would use it to get out ahead. But he didn't. His poor financial habits persisted, and he's just a squirrel running on a wheel. That's the thing that is never understood about these plans to steal from the rich to give to the poor. The people they give the money to don't know how to manage the money they're given.

6:02 PM  

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