Does the Deficit Matter?

[LuciferSam]

Let's hope they're wrong, and we don't.

Why? We spent our way out of the great depression. Sure it took a major world war in which a lot of people were killed, but it still in involved major government expenditure and huge deficits. Think how much better off we'd have been then, and now for that matter, if government stimulated the economy in the same manner and there had been no WWII.

 

[Lynnie]

Why? We spent our way out of the great depression. Sure it took a major world war in which a lot of people were killed, but it still in involved major government expenditure and huge deficits. Think how much better off we'd have been then, and now for that matter, if government stimulated the economy in the same manner and there had been no WWII.

I don't know.....I don't think taxation and increased government spending is the cure all. We had a nasty, nasty recession around 1919-1920 (post WWI). There was absolutely no government intervention and we, as a Nation, came out of that one much stronger and rather quickly. The Roaring '20's were here! The Great Depression happened because there was virtually no oversight or regulation over banking and securities - 'brokers' were basically selling worthless paper and worthless stocks.

I guess each economic downturn has its own merits/issues and due to changes in the economies, not every solution works for every recession. However, I believe that most Americans would rather work hard and keep the government out of our recovery.

 

[scooterbug44]

I guess I don't see a nasty recession followed by a Great Depression in less than 10 years as "a strong recovery w/o government intervention."

 

[Lynnie]

Different causes.

 

[ugabuga]

Tax Hikes Coming?

Tax Hikes Coming?

Interesting article in US News & World Report:

?Most economists feel the solution [to the deficit] is a combination of tax increases and spending cuts, since doing one or the other alone would be too draconian....The first real opportunity to do something arises this fall, since income taxes for most Americans will automatically go up unless Congress and Obama extend some of the Bush tax cuts. Here's what's likely to happen:

...Obama wants to raise the top two income brackets from the Bush-era levels...from 35 to 39.6 percent and the rate in the next bracket will rise from 33 to 36 percent. That effectively means that taxes will rise for individuals with income over $200,000 and couples earning over $250,000 (after accounting for deductions). There will also be new limits (same as the old ones, before the Bush cuts were enacted) on the total amount of allowable deductions, which will bump a few additional people into these higher brackets. To enact these "tax hikes" on the wealthy, Congress doesn't need to do anything--it will happen automatically at the end of 2010, once the Bush tax cuts are over.?

?Those who would fall into the two higher brackets?account for just 3.4 percent of all taxpayers.?

?Republicans...[say it's] important...to start attacking the debt...[but argue] that enacting any tax increase in a weak economy is dangerous, because it could crimp spending just when it's needed most. There's truth to that, but the majority of evidence suggests that tax increases on the wealthy would cut into what they save, not what they spend.?

?The middle class will get a temporary pass, but it will only defer the inevitable pain. Obama has pledged no new taxes on the middle class, and no matter how implausible that is, it's hard to see him breaking that promise in his first term. Besides, raising the?income?tax?rates?on the majority of taxpayers?would?be risky in a lousy economy, so the odds are high that Congress will extend the Bush tax cuts for those who fall below the $200,000/$250,000 thresholds.?

When the Tax Hikes Are Coming - Yahoo! News

 

[30ashopper]

Why? We spent our way out of the great depression. Sure it took a major world war in which a lot of people were killed, but it still in involved major government expenditure and huge deficits. Think how much better off we'd have been then, and now for that matter, if government stimulated the economy in the same manner and there had been no WWII.

To get the country out from under that debt, tax rates were pushed to obscene levels and our economy experienced mediocre growth.

Take for example tax rates as recently as 1979. Look at where you fall in this table and ask yourself if you would be willing to pay these rates to cover the debt Obama is currently racking up?

14% $6,708
16% $9,917
18% $12,834
19% $18,959
21% $24,793
24% $29,169
26% $36,461
30% $43,753
34% $58,338
39% $72,923
44% $87,507
50% $102,092
55% $123,969
63% $167,723
70% $320,861

These rates are low compared to what FDR had set up after WWII.

If you make 40K a year, would you be willing to write a check to Uncle Sam for 12K of it? 70K a year, a check for 22K? or 100K a year, 45K?

 

[ugabuga]

To get the country out from under that debt, tax rates were pushed to obscene levels and our economy experienced mediocre growth.

Take for example tax rates as recently as 1979. Look at where you fall in this table and ask yourself if you would be willing to pay these rates to cover the debt Obama is currently racking up?

14% $6,708
16% $9,917
18% $12,834
19% $18,959
21% $24,793
24% $29,169
26% $36,461
30% $43,753
34% $58,338
39% $72,923
44% $87,507
50% $102,092
55% $123,969
63% $167,723
70% $320,861

These rates are low compared to what FDR had set up after WWII.

If you make 40K a year, would you be willing to write a check to Uncle Sam for 12K of it? 70K a year, a check for 22K? or 100K a year, 45K?

Shopper,

Are these 1979 dollars or 2010 dollars in your table?--It makes a BIG difference.

96.6% of Americans are in the current 25% bracket or lower. Effective tax rates are the lowest they've been in 60 years (see initial posting in the thread: Are Americans Overtaxed?)

 

[30ashopper]

Shopper,

Are these 1979 dollars or 2010 dollars in your table?--It makes a BIG difference.

Inflation adjusted 2009 income w/the rates in 1979.

96.6% of Americans are in the current 25% bracket or lower. Effective tax rates are the lowest they've been in 60 years (see initial posting in the thread: Are Americans Overtaxed?)

Yes but Luce was saying running up the debt we had in WWII would be ok. I just want to make sure everyone understood what kind of personal sacrifices we'd have to make in order to pay something like that off.

 

[ugabuga]

Inflation adjusted 2009 income w/the rates in 1979.

Good. Thx. That's the only way the table would have any real relevance to our discussion--& you're right, those are steep rates compared to today when fed marginal rates are the lowest they've been in 60 yrs.

 

[30ashopper]

This is the site I used to get the inflated dollar values, if you're curious. Seems to be pretty accurate -

The Inflation Calculator

Here are the historical tax rates -

Howstuffworks

Take a look at 1951. The entry level rate for 2009 income up to 16K a year was almost 23%. Those folks today get a pay check back from the U.S. Government at tax time.