Obama vs. Ryan's plan to Reduce Federal Debt

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There is no need to reduce the federal debt in the US and moreover, Ryan's plan presupposes that another round of voodoo economics will miraculously work - that taxes on the rich will be reduced causing more revenue. This means that by default Obama's cannot help but be the best plan. Ryan is a fraud. He proposes reducing spending to Coolidge-era levels but with an imperial military the likes of which did not exist under Coolidge.

Why isn't there a need to reduce the federal debt?

Reducing the federal debt is not necessary because there's been a federal debt since Van Buren and also there were times when the debt to GDP ratio was significantly higher. The debt could double tomorrow and it would be no catastrophe. After all, if the debt were to double tomorrow its size compared to GDP would still be lower than Japan's and I don't see a major economic panic there.

Do interest payments mean anything to you? Then again you have demonstrated you want the US to fall apart on numerous occasions.

First, ability to pay interest is linked to GDP. Debt to GDP is not that bad. So interest payments possibly paid is not bad by historical standards either.

Interest payments are small and as the Fed controls the interest rates they decide how much interest is paid. Moreover, the Fed could always buy up most of not all of the Treasuries thus the interest will go to the Fed. The Bank of Japan owns half of Japan's debt which is more than 200% of GDP there. There is no hyperinflation there which is what the usual suspects would claim happens when a country "monetises the debt", instead there's deflation!

Andrew Jackson paid off the debt and caused a depression. That's something people should know. In Romania, Nicolae Ceausescu repaid the debt and subjected his people to a decade of deprivation. Not long after the debt was paid Ceausescu paid in a different way for his troubles.

Even with the Republican plan the CBO predicts that we still have to raise the debt ceiling indefinitely because of the tax cuts. If it is not a real problem now, when does it become a problem, and at that point what do we do to get in under control, since it is questionable if we can get the debt under control now?

STOP

DREAMING.


Why?

The Ryan plan also closes loopholes. In fact, that's one of the big advantages of the Ryan plan. It appears to be only the Obama plan that leaves most of the tax loopholes in.


I'm thinking $600 a year is significant for the first couple, as is $2490 for the second couple. That could make the difference between giving the kids birthday and Christmas gifts and giving them IOUs.

And considering the lower paid spouse - usually the wife - in those married couples is probably only taking home around $130 and $1000 respectively every two weeks, after federal, state, and FICA/self employment taxes and child care expenses, Obama's proposed 5% increase will cut that in half and likely make many of those lower paid spouses quit working. The net result is that tax receipts will actually drop rather than increase.

Meanwhile, small businesses will quit hiring and the employment picture will rapidly give up all the gains that have been made since the Bush tax cuts were extended four months ago.

Obama follows through with what he says to rarely that I don't even listen to his speeches anymore. Due to his pathological narcissism he has lived in a dream world most of his life. He can talk about budget reduction, and perhaps he can convince himself that he really is making progress on the deficit, but the truth is that the only things he has ever been able to think of to do to get out of a situation is spend his way out of it. Obamas plan may look more appealing in some ways, but he probably doesn't have a plan to implement it much less any intention to follow through with it. Paul Ryan's plan may be more painful, but it is more likely to get implemented and completed. Obama can keep the title of president and pretend to be a great and powerful leader in his fantasy world, but the burden of getting anything done will fall on the republicans.

Revenue must go up, expenses down. There is no other way. Dreaming that an expanded economy will pay the bills hasnt worked in 30 years of trying. The CBO, Reagan's former budget chief (Stockman) and Greenspan are all in agreement.

You can't have free government, as fun as that may sound and as conductive as it may be to winning elections.

It becomes a problem when the debt becomes a substantially larger proportion of the GDP. That can be avoided by cutting the deficit - which is different from the debt - down from the unsustainable levels of the past few years back to more sustainable levels. However, it's okay to allow the debt to grow at about the same rate as GDP growth.


The part of Obamacare that does the most to increase health insurance coverage rates has already been declared unconstitutional by a lower court:

http://www.foxnews.com/opinion/2011/02/ ... important/

It's not unlikely that would be upheld by the Supreme Court if it gets there. If it doesn't, we have the strange situation that Obamacare only applies to half the states.

Very true. If Obama had been serious about deficit reduction, he would have addressed entitlements in his original budget proposal, rather than leaving it up to the Republicans.

Approximately the first $20,000 is not taxable at all with standard deductions, personal exemptions, and $800 tax credit for working, so it is very close to $400 a year for the first couple and $2290 for the second couple. This is with no children. Add in the children and it goes down further accordingly with additional exemptions and tax credits.

If the first couple both work where talking $6 to $8 on average missed on each paycheck. We're talking a sacrifice of a couple of trips to starbucks; it doesn't have to be the kid's Christmas presents.

If no one is willing to pay for the debt it won't get paid; I think most of us can sacrifice something, but it doesn't have to do anyone real harm. With Ryan's plan the CBO estimates that the debt ceiling will still have to be raised indefinitely, because of the tax cuts. These plans are a start, but it is questionable if any of them as is will be enough to get the debt under control.

The Obama plan also closes loopholes; all of the details have not been released. The rich do use the loopholes; losing those loopholes are more significant than the three percent increase in the top tax bracket for many.

Why is raising the tax bracket three percent bad for business and cutting the loopholes good for business. The end result is less money for the business and more for the government in both cases.

Where are you getting a five percent increase for those making over 250K. If the tax cuts expire for those making over 250K, it will be three percent and only a three percent increase for the dollars that are over 250K.

So if a couple makes 260K the expiration of the three percent tax break means three percent of 10K which is $300 a year or about $12 less in take home pay every two weeks. And if it were 5% were talking $500 a year or about $19 less for the couple every two weeks. We're still talking about a few trips to starbucks; not a rational reason to quit a job.

There is no evidence that the tax cuts of 2001 stimulated the economy. People saved instead of spent. There is some evidence that the tax cuts for businesses in 2003 stimulated the economy but they were not cuts in tax brackets.

Three percent over 250K is not going to cause anyone to close the shop down, unless they have a serious addiction to Starbucks. And Obama's plan does include incentives for small businesses that will more than offset the tax bracket issue for those businesses that make close to 250K.

Taxes have been cut so much in the last 10 years, through a multitude of tax bracket reductions, tax exemptions, tax credits, etc. and they weren't funded. The people that make over 250K still get all the credits and extra exemptions from 2001; and those tax cuts still aren't funded.

I just can't see where it is the end of the world, if we all take a small part in paying our way as a nation. Especially if it means a couple of trips missed at Starbucks.

You obviously don't have kids. Our combined income is more than $60k, and there's no way we can afford frivolities like Starbucks. If we pay more in taxes, our choices are to take it out of groceries or out of toys. I'd rather have the kids go without Christmas presents than go without food.

And if affluent single folks who can afford Starbucks cut it out, that's more Starbucks employees who are out of their jobs. Not a good result.


The Obama plan clearly does not close major loopholes, or it wouldn't need to raise marginal rates.

Losing the loopholes does not provide an incentive for the "rich" - by which we mean your doctor and people like that - to quit their jobs if they have a spouse. Increasing the marginal rate does.


Obama has said he wants to increase the top marginal rate from 33% to 39%. So you're right - it's not a 5% increase, it's a 6% increase. Even worse.


There's plenty of evidence that extending those tax cuts at the end of 2010 stimulated the economy. Or hadn't you noticed that the unemployment rate has dropped a full percentage point since November, even with more people rejoining the labor force?


There have certainly been a plethora of questionable tax credits in the last couple of years, and I believe they are among the tax loopholes closed by the Ryan plan. The bottom line is that the Ryan plan gets the deficit under control without raising overall taxes. Why stifle the economy with tax increases if you don't need to?

Starbucks is just an example of the insignificance of a 1 percent increase in taxes. I doubt a couple who made $60,000 would stop going to starbucks over a $6 to $8 reduction in each of their paychecks. Obama already is giving an extra $800 in making work pay tax credits. Would it be that bad if one were to give back half of it to help reduce the deficit?

The tax rate currently from 250,000 to $373,650 is 33%. Without tax cuts it is 36%
The tax rate over $373,650 is $35%. Without tax cuts it is 39.6%.

Under Obama's plan it goes up three percent from $250,000 up until $373,650.
And 4.6% for amounts above $373,650.

If you need a link I can provide one, but a quick google search on tax brackets brings up the info.

There is no direct evidence that the one percent decrease in unemployment was because taxes were not increased. There has been a gradual increase over the last six months. Many of the jobs were health service and social assistance jobs; some related to the increase in demand of health care due to the healthcare reform act.

It is likely that there may have been some business people who held out on decisions until a decision was made on taxes, but it was not the only reason we added jobs.

There is no evidence that a three percent increase in taxes for people making over $250,000 is going to be an incentive for someone to quit their job. Even if they make $300,000, It is a $57 bi-weekly increase shared by two people.

In a decision for a spouse to quit a job they stand to save a three percent increase in taxes on taxable wages and lose 97% of the taxable wages. It wouldn't be a rational choice to quit based on a 3% decrease in taxable wages.

My point with loopholes is not about spouses quitting jobs, it is about businesses that take advantage of these loopholes paying higher taxes without them. A Business profitting $300,000 a year, in owner income, would likely gain more tax advantage from loopholes than a $57 bi-weekly increase resulting from a three percent tax increase. And, again Obama is offering incentives for small Businesses in his plan.

There is no evidence that the three percent increase on small businesses form 250K to $373,650 is going to stifle small business. They still get to keep the same lower tax brackets from 2001 for the amount under $250,000 that everyone else is retaining. The full tax cut in 2001 created no significant increase in jobs; People that make $300,000 only stand to lose a minority portion of that tax break; not likely to create a serious impact to anything in their life.

As a percentage of total income they are getting a one-half of a percent increase in taxes for a couple profitting $300,000 as a owner of a Business, $1500/$300,000.

Even if their rate were increased 1 percent for the amount earned under $250,000, which isn't in the Obama plan, they would still retain a large portion of the 2001 tax bracket decreases, along with everyone else sharing that 1 percent increase, if such an increase were proposed.

Ryan's decrease in taxes from 39.6% to 25% is likely to create new jobs, but on the back of the impoverished, disabled, and future generations of the elderly. There is no need to stifle the life of all of these people when a more balanced approach can be taken. And finally the CBO estimates Ryan's approach won't work to keep us from having to raise the debt ceiling in the future, because of the extent of the tax cuts he proposes.

Last edited by aghogday on 14 Apr 2011, 12:31 pm, edited 1 time in total.

Only in America would a proposal to cut taxes be seen as a serious attempt at reducing deficit.