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David W Pratt
12-08-2010, 11:41 AM
Why does everyone seem to talk of the "cost" of the tax cuts?
It seems to me that that is like talking of the "cost" of not getting a raise.
The thing that costs is the spending.
What percent reduction in the Federal budget would cover the $900B "cost" of the tax cuts and the extension of the unemployment benefits?

S.V. Airlie
12-08-2010, 11:48 AM
Well if it was on the local level, Trickle down. Less police, less fire protection, less aid for our schools.Umm.... A lot of people will be screaming because they no longer will have what they think they deserve

S.V. Airlie
12-08-2010, 11:53 AM
The extension of unemployment benefits is a cost. The extension of existing tax cuts is not. A tax cut is a tax cut. Revenue not brought in. Something has to give... Less services as an example.

S.V. Airlie
12-08-2010, 12:00 PM
If the tax cut is already in force, extending it does not reduce revenues further. Replace "services" with "spending" and you'll find the solution.
True but it still costs money. If one cuts services it hurts. You can't have both. the tax cuts have been in place for a few years, hence there is no greater loss in revenue now.

L.W. Baxter
12-08-2010, 12:20 PM
The framework of our social contract facilitates the accrual of wealth. The same system that includes unemployment benefits to secure living necessities also makes it possible for businesses and individuals to secure profits and assets. In a world without law, one would have to defend one's possessions with a sword. We humans have been there, done that, eh?

There is no practical difference to the bottom line between expenditures and collections. Taxes and entitlements are integral and inextricable parts of our social contract. The arguments over percentages are just details, not issues of philosophical profundity.

Bruce Hooke
12-08-2010, 12:28 PM
Why does everyone seem to talk of the "cost" of the tax cuts?
It seems to me that that is like talking of the "cost" of not getting a raise.
The thing that costs is the spending.
What percent reduction in the Federal budget would cover the $900B "cost" of the tax cuts and the extension of the unemployment benefits?

In government speak it seems like "cost" is used as shorthand for anything that reduces the amount of money projected to go into the Federal Treasury and since the tax cuts were set to expire at the end of this year the projections for 2011 and beyond were based on the old, higher tax rates, so extending the tax cuts is a "cost." Probably not the best choice of words but it seems to me that the much more important question is how are we going to work towards a balanced budget over the long haul? Getting all wound up about adding some weeks to the unemployment benefits is missing the point as this is a short term cost and what is killing us on the Federal budget is the ongoing imbalance between income and expenses.

What those who would cut Federal spending over the long haul also need to deal with is the fact that more than half of the Federal budget goes to things like Social Security, Medicare and Medicaid (not to mention benefits to those who are now or were in the military), that cannot be cut simply by saying "cut all Federal programs by x%" but must be addressed specifically through legislation that addresses who will bear the burden of the cuts. To put it another way, when you cut Federal spending you are largely not shedding Federal employees you are cutting money going to all of us as individuals in various ways, and to towns and states.

TimH
12-08-2010, 12:36 PM
There is an opportunity cost associated with the continued loss of revenue.

David W Pratt
12-08-2010, 04:53 PM
Still hoping for an answer to the last question, how big is the Federal Budget and what % would the cost of the unemployment benefits be?

S.V. Airlie
12-08-2010, 05:07 PM
Still hoping for an answer to the last question, how big is the Federal Budget and what % would the cost of the unemployment benefits be?

For 2010 this is what I've got... not including appropriations such as the wars etc..

Total: $2.381 trillion

Broken down

Mandatory
in billions
677 SS
571 other. not specified
453 Medicare
290 Medicaid
164 interest on debt

umm other small(er) amounts

Don't know % cost of unemployment benefits

Receipts

1,061 T income taxes
940B SS
222B Corp Taxes
23B Customs
20B estate
22B DEposit ( interest?)
16B other

John Smith
12-08-2010, 07:24 PM
The extension of unemployment benefits is a cost. The extension of existing tax cuts is not.

The problem is there is no free lunch. It costs money to fight two wars, money we are presently borrowing. Tax cuts reduce revenue. That means we need to borrow more money to continue fighting the two wars.

The government works for us. We pay for its functioning with taxes. A tax cut is a pay cut to the government. A $100 tax cut has the same affect as $100 of spending, with the exception that some of that spending is more inclined to create jobs and/or stimulate the economy. If you wish pay less taxes, then you must expect the government to do less.

Many would cheer that concept, but I don't believe they realize how many services we get from the government that we take for granted; services that cannot be without taxes.

Would you like to not have schools? Electricity from dams? Libraries? Roads and highways? Police, firefighters, court systems, military, dredged harbors, marked channels? light houses? Records of birth, death, marriage, divorce kept. Schools? Would you really want no one watching the quality of food/drink?

Perhaps, if there is no cost to tax cuts, we should simply eliminate all taxes, as it wouldn't cost anything, and the government would be swimming in money?

John Smith
12-08-2010, 07:26 PM
How much spending would we have to cut, given the current tax rates and the size of our deficit, to break even? By that I mean income equals outgo. Where would you make those cuts?

S.V. Airlie
12-08-2010, 07:28 PM
Donn you were saying the same thing regarding the tax cuts.. You implied that they were in force there is no gain in the revenue lost. I think here you have basically said what I did initially. Yes maybe I didn't understand you but it appears to be the same argument I had

TimH
12-08-2010, 08:35 PM
The problem is there is no free lunch. It costs money to fight two wars, money we are presently borrowing. Tax cuts reduce revenue. That means we need to borrow more money to continue fighting the two wars.

The government works for us. We pay for its functioning with taxes. A tax cut is a pay cut to the government. A $100 tax cut has the same affect as $100 of spending, with the exception that some of that spending is more inclined to create jobs and/or stimulate the economy. If you wish pay less taxes, then you must expect the government to do less.

Many would cheer that concept, but I don't believe they realize how many services we get from the government that we take for granted; services that cannot be without taxes.

Would you like to not have schools? Electricity from dams? Libraries? Roads and highways? Police, firefighters, court systems, military, dredged harbors, marked channels? light houses? Records of birth, death, marriage, divorce kept. Schools? Would you really want no one watching the quality of food/drink?

Perhaps, if there is no cost to tax cuts, we should simply eliminate all taxes, as it wouldn't cost anything, and the government would be swimming in money?

Good explanation John. Hopefully it will be understood.

Tom Montgomery
12-08-2010, 08:47 PM
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"The cost of tax cuts?" Surely you are joking. Don't you know that tax cuts more than pay for themselves? The more money the wealthy can keep the more they will invest leading to all boats rising with the tide.

The prosperity will trickle down, eventually. Hang in there and continue to believe in The Dream.
.

TimH
12-08-2010, 08:52 PM
Trickle down in the form of investment in foreign countries and foreign goods (foreign jobs)