The BIG Wagon

[Ixiah]

Fiscal conservatives do not advocate tax rate increases. I did not say revenuye increases. Go try to sell that somewhere else.

Otherwise, it appears you agree with me.

But I must ask, do you advocate tax rate increases? If so, please don't call yourself a fiscal conservative.

Did you bother reading the official definition of a fiscal conservative? ABC - you're definitely a fiscal conservative but you fall in a subset that believes in no tax increases - ever. Sadly, your later statements sound similar to a hardliner in a religion - "do you advocate tax rate increases? If so, please don't call yourself a fiscal conservative".

As for your answer - tax rate increases should be avoided. The only time they should be allowed is when there is literally no way of making deep enough tax cuts to bring the budget in reasonable balnance.

[RoyalShock]

But, Ixiah, wouldn't a fiscal conservative in that case demand a reduction in spending?

I'm sure it's been over a century since the feds were in a position that they couldn't eliminate some spending or a program.

[ABC]

Rate increase are rarely, if ever, ok.

Revenues obviously increase w/o rate increases 98% of the time so why do we need rate increases?

And know I didn't read the definition of "fiscal conservative" on Wikipedia (citiation needed.)

[double dribble]

Careful Royal, to mention "spending cuts" to a liberal is like showing a cross to a vampire, or like crap tonight to Superman, or soap to a biker, or fur to a PETA member, or bikini wax to a NOW member...... you get the point.

[Ixiah]

But, Ixiah, wouldn't a fiscal conservative in that case demand a reduction in spending?

I'm sure it's been over a century since the feds were in a position that they couldn't eliminate some spending or a program.

Reasonable question. Sadly a lot of our spending we are 'locked into' which prevents many deep cuts.

For example a large portion of the revenue goes to pay for the interest on the debt. So defaulting would be an option though doing so would have dire results.

Social security is another big item - making deep cuts here is just not going to happen (its political seppuku).

Defense - well that is not going to happen either.

The sum of these items which can't be cut due to political reality or need (courts, prisons, etc.) form the baseline. This is the maximum amount of cuts that we can make. Ideally you want to cut to this point before a tax rate hike.

ABC - just type in "fiscal conservative" in wikipedia if your interested. You might want to type in "know" and "no" in a dictionary while you are at it. :whistle:

The rates thing is where we disagree. I think it may be necessary in rare circumstances while you say never or almost never. Its like our discussion about market intervention - you said never and I said rarely. Think we have kind of reached that point in this discussion.

I'm kind of curious though - at some point the rate started at zero. So literally following your philosophy we would have no taxes.

[SB Shock]

Here is the the ELEPHANT IN THE ROOM - you can't trust congress, they will spend every dime in revenue and will want to spend more because they believe that slowing the growth of spending is a cut.

You can raise taxes for the best intentions, but congress will not honor those intentions.

[ABC]

Let me repeat. We don't have to cut our budget to get it under control; we have to reduce the rate of growth.

[ABC]

I still haven't looked at Wikipedia (citatation needed.)

The Spending Explosion, from the Wall Street Journal:

http://online.wsj.com/article/SB122100742173517529.html?mod=opinion_main_review_and_outlooks

The real news in yesterday's Congressional Budget Office semiannual report is that federal expenditures on everything from roads to homeland security to health care will on present trends reach 21.5% of GDP next year. That's a larger share of national output than at anytime since 1992. If the cost of the federal takeover of Fannie Mae and Freddie Mac prove to be large and are taken into account, next year federal outlays could be higher as a share of the economy than at anytime since World War II. In this decade alone, federal spending has increased by almost $1.2 trillion, or 57%.

The Bush tax cuts also aren't the budget problem. Until this year federal tax collections have been surging. In the four years after the 2003 tax cuts become law, tax receipts exploded by $785 billion. This year revenues have declined by 0.8%, but a major reason is the $150 billion bipartisan tax rebate that has hit the Treasury without spurring the economy. Without these nonstimulating rebates, federal tax payments would have climbed another 2.5%, according to CBO. Revenue is expected to be a healthy 18.5% of GDP next year without any tax increase.

[RoyalShock]

Let me repeat. We don't have to cut our budget to get it under control; we have to reduce the rate of growth.

I hear what you're saying ABC, but due to rising costs, wouldn't controlling the rate of growth be tantamount to making cuts?

I know the meaning of the word "cut" is point of contention during budget battles, but it is what it is. For the record, I'm in favor of budget cuts. Them cuts are good!

[ABC]

If rates of growth were less than inflation, maybe it could be a cut.

Otherwise, not it is not a cut. How can anyone rationally call a 4% increase vs. a 5% increase a cut?

Take a look at the WSJ article and see what a difference small % increases make in bloating budgets.

[Shirley Schmidt]

Here is the the ELEPHANT IN THE ROOM - you can't trust congress, they will spend every dime in revenue and will want to spend more

Sounds like USD 259.

[ABC]

I should also add that sometimes cuts are warranted anyway.

The State of Kansas is facing a $160 million shortfall for the next budget year, which is 09-10 - so budget will have to be cut or taxes increased.

The State is preparing for this scenario and I think this process proves there is lots of fat left in the budget.

They are cutting international and national travel, hiring freezes, etc. Cuts can be done without having children starve.

"The University of Kansas plans to cut its need for state funding by $5.5 million through a temporary hiring freeze at the KU Medical Center and a reduction in operating expenses.

Kansas State University plans to cut $3.7 million by freezing new hires and delaying major capital equipment purchases.

Washburn University has plans to cut $304,000 from its budget but hasn't yet released further specifics."

http://cjonline.com/stories/091008/opi_330480215.shtml

[Ixiah]

If rates of growth were less than inflation, maybe it could be a cut.

Otherwise, not it is not a cut. How can anyone rationally call a 4% increase vs. a 5% increase a cut?

While the inflation rate is a good estimator of how much costs have risen it must be recognized that it is a 'generalized' figure. For example a department that has large transportation costs could well have an increase of costs of even greater then 5% so a 4 % would be a drop in its ability to do its functions.

[WuDrWu]

If rates of growth were less than inflation, maybe it could be a cut.

Otherwise, not it is not a cut. How can anyone rationally call a 4% increase vs. a 5% increase a cut?

While the inflation rate is a good estimator of how much costs have risen it must be recognized that it is a 'generalized' figure. For example a department that has large transportation costs could well have an increase of costs of even greater then 5% so a 4 % would be a drop in its ability to do its functions.

Ixiah, not to be mean, but this is classic flawed governmental thinking.

I run a business, my gas costs go up, my customer refuses to pay more for my product, I cut costs somewhere (my choice), look at alternatives (perhaps a more efficient mode of transportation), or I go out of business (eventually). Government just says "raise income" and the "customer" (you and me) have very little choice.

This thinking is the problem with government, your theory, and why people should pay more attention to ABC.


I failed to mention that in your scenario, let's say that inflation is less than predicted (it's been known to happen) ie you budget a 3% increase but inflation creeps ahead @ 2%...what's the chance we get a refund or taxes go down?

Answer = Less than zero.

[Ixiah]

Ixiah, not to be mean, but this is classic flawed governmental thinking.

Less buying power equals less ability to make the same purchases you did the year before. That is basic math and not some flawed thinking.

I run a business, my gas costs go up, my customer refuses to pay more for my product, I cut costs somewhere (my choice), look at alternatives (perhaps a more efficient mode of transportation), or I go out of business (eventually). Government just says "raise income" and the "customer" (you and me) have very little choice.

Please note I was referring to a specific department so you basic premise for this "as a whole" is a misunderstanding. To clarify my point - you cant use the inflation rate for all departments of government - rather they would have to be evaluated independently. If one departments costs are going up faster then the inflation rate then it may need to be given more funds (at the expense of others).

This thinking is the problem with government, your theory, and why people should pay more attention to ABC.

Why don't you tell me what my 'theory' is? Even ABC stated we tend to agree on several points (I summarize) so I'm unclear what your basis for this statement is.

I failed to mention that in your scenario, let's say that inflation is less than predicted (it's been known to happen) ie you budget a 3% increase but inflation creeps ahead @ 2%...what's the chance we get a refund or taxes go down?

Answer = Less than zero.

Completely agree - just as an example the Arena got a bunch of $ for the naming rights. Why wasnt the tax cut off earlier since this was going to occur? Yep, that money will be spent on something totally unrelated.

A bit of a funny story about local government I might share - one of the WSU accounting professors told me this years ago. The city wanted to do some sort of project and they got an estimate by the builder on how much it would cost. An accountant for the city then prepared the official estimate but it included a bunch of extras such as pay raises and such. The city then was in a quandry - the accountants disagree on the cost! So they then hired the WSU professor to review the two estimates just to say if you dont add these in it will be the first cost. If you do it will be the second. I would say hilarious but those were my tax dollars wasted. :shock: