The solution is what precisely no one in politics wants to do: increased taxes and cut spending. Widespread progressive reform, while being frugal and gutting benefits.
I’m convinced it’s literally impossible to deal with.
We have pretty strong real world evidence that austerity contracts the economy, makes things worse. Government spending brings more money into circulation, stimulates the economy.
Austerity measures may seem obvious, but we’d be far better off rolling back tax cuts for the wealthy of the last several decades, and provide better/more services to those who need it.
We have the world’s first trillionaire, yet he pays a lower tax rate than most of us.
That’s actually the logic I use- if we hadn’t had those tax cuts we’d still have a huge debt but not “pain is unavoidable”. We could have been running a relatively flat deficit that you could argue we’d eventually grow out of. You can’t argue that anymore but perhaps restoring those taxes would bring us back to more sane territory
I mean, we could tax a worryingly large percentage of GDP, plus make significant cuts to the military, and existing services + the interest we pay on debt would still keep us in the red.
…Hence, that’s a nice sentiment, and social services can certainly be reworked.
But we are in a debt spiral. The way out is a way no one on the political spectrum will like.
U.S taxes are ~17% of GDP, while spending is 23%. That’s already significant.
Lets increase corporate taxes manyfold so its the primary source of revenue, and gut defense spending to 1/3 its size, while cutting income tax on the poor. Lets not touch medicare or anything at all, even though its arguably insufficient. Let’s pretend that’s somehow politically viable and wouldn’t topple the US government from its side effects:
And that’s before the AI bubble pops, and kills tax revenue, and increases that $1 trillion in interest costs dramatically through the government’s interest rates rising.
There’s basically no way around this without touching something painful, like social security. “Tax the corporations” alone will not be enough; we are past that point, unfortunately.
I appreciate the work that you have put into researching this.
I’m still not convinced that the process doesn’t start at the top and work its way down as opposed to the old tried and true American way of cutting “entitlements” (fucking hate that word) first. I think that it would make much more sense to start by making those who have used all kinds of tax loopholes and defied regulation to shift the burden onto the tax payers (coal plants, Walmart tesla etc.) and essentially have tax payers help prop up their businesses and the government be their piggy banks (defense contractors and Haliburton etc.) than to go back to what we have been doing for so long and cutting programs that actually help improve the way of life gdp and don’t look like real money on paper like snap Medicaid and Medicare.
That’s FDR kind of stuff. And it’s stuff that helps get us back into the black policy and happiness wise which is a metric that no one wants to be added to how to factor the gdp because it would send America to dead last in the world. This place is a prison.
But, separately, I am asserting that the theoretical amount of money we gain is not the right order of magnitude. What you propose by itself would yield revenue, but barely enough to make a dent.
And if I’m wrong, if it’s somehow an extremely large amount of money that’s gained, we run into a more fundamental issue: if we are going to tax such huge percentage of GDP (let’s say over 30%, well above the EU average) getting setup to spend it correctly is very tricky. Historically, such a sharp rise would be a sign of civilizational collapse, especially for a large heterogenous “empire” like the United States (as opposed to somewhere like Denmark, a relatively compact state that developed a high-tax economy gradually).
The idea is good. But it’s just not enough by itself, even theoretically, once borrowing costs explode, which is all-but-certain to happen now. I simply do not agree that tax reform alone is going to fix this.
Yeah…
The solution is what precisely no one in politics wants to do: increased taxes and cut spending. Widespread progressive reform, while being frugal and gutting benefits.
I’m convinced it’s literally impossible to deal with.
We have pretty strong real world evidence that austerity contracts the economy, makes things worse. Government spending brings more money into circulation, stimulates the economy.
Austerity measures may seem obvious, but we’d be far better off rolling back tax cuts for the wealthy of the last several decades, and provide better/more services to those who need it.
We have the world’s first trillionaire, yet he pays a lower tax rate than most of us.
That’s if the budget has been under control previously.
I think we have crossed the threshold where pain is unavoidable.
That’s actually the logic I use- if we hadn’t had those tax cuts we’d still have a huge debt but not “pain is unavoidable”. We could have been running a relatively flat deficit that you could argue we’d eventually grow out of. You can’t argue that anymore but perhaps restoring those taxes would bring us back to more sane territory
Or we could tax the rich and expand services to the poor and needy?
I mean, we could tax a worryingly large percentage of GDP, plus make significant cuts to the military, and existing services + the interest we pay on debt would still keep us in the red.
…Hence, that’s a nice sentiment, and social services can certainly be reworked.
But we are in a debt spiral. The way out is a way no one on the political spectrum will like.
The way out is to make corporations and the most wealthy of us pay their share of taxes and not rob the country blind.
U.S taxes are ~17% of GDP, while spending is 23%. That’s already significant.
Lets increase corporate taxes manyfold so its the primary source of revenue, and gut defense spending to 1/3 its size, while cutting income tax on the poor. Lets not touch medicare or anything at all, even though its arguably insufficient. Let’s pretend that’s somehow politically viable and wouldn’t topple the US government from its side effects:
https://www.thefiscaltimes.com/newsletter/20261016-US-Budget-Deficit-Rises-Third-Highest-History
…We would still barely break even.
And that’s before the AI bubble pops, and kills tax revenue, and increases that $1 trillion in interest costs dramatically through the government’s interest rates rising.
There’s basically no way around this without touching something painful, like social security. “Tax the corporations” alone will not be enough; we are past that point, unfortunately.
I appreciate the work that you have put into researching this.
I’m still not convinced that the process doesn’t start at the top and work its way down as opposed to the old tried and true American way of cutting “entitlements” (fucking hate that word) first. I think that it would make much more sense to start by making those who have used all kinds of tax loopholes and defied regulation to shift the burden onto the tax payers (coal plants, Walmart tesla etc.) and essentially have tax payers help prop up their businesses and the government be their piggy banks (defense contractors and Haliburton etc.) than to go back to what we have been doing for so long and cutting programs that actually help improve the way of life gdp and don’t look like real money on paper like snap Medicaid and Medicare.
That’s FDR kind of stuff. And it’s stuff that helps get us back into the black policy and happiness wise which is a metric that no one wants to be added to how to factor the gdp because it would send America to dead last in the world. This place is a prison.
It’s a good idea. Kill the tax loopholes.
But, separately, I am asserting that the theoretical amount of money we gain is not the right order of magnitude. What you propose by itself would yield revenue, but barely enough to make a dent.
And if I’m wrong, if it’s somehow an extremely large amount of money that’s gained, we run into a more fundamental issue: if we are going to tax such huge percentage of GDP (let’s say over 30%, well above the EU average) getting setup to spend it correctly is very tricky. Historically, such a sharp rise would be a sign of civilizational collapse, especially for a large heterogenous “empire” like the United States (as opposed to somewhere like Denmark, a relatively compact state that developed a high-tax economy gradually).
The idea is good. But it’s just not enough by itself, even theoretically, once borrowing costs explode, which is all-but-certain to happen now. I simply do not agree that tax reform alone is going to fix this.
Why gut benefits? How about finding a way to properly tax the 1%?
The military budget is what needs to be cut. Benefits and programs do not need to be cut.