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steve
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Von- Revising the AMT has become a much larger issue because the Bush tax cuts led to greatly expanded applicability of the AMT. If the tax cuts are extended, we should expect AMT modifications to accompany it, as has happened each year. As a practical matter, if not a legal one, the cost of the AMT fix is part of the Bush tax cuts, as they are likely to be extended, and I suggested nothing more. I don't claim that anyone disputes that the tax cuts contribute to deficits. However, by saying that tax rates have nearly returned to 2000 levels, you are suggesting that this impact is small. I am arguing that this impact is large.
Toggle Commented Jun 18, 2009 on John Self: A Deficit Note at Obsidian Wings
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I don't know where you get the idea, Von, that we largely are already back at 2000 tax rates. The JGTRRA income tax rates remain in effect. The CBO analysis you link to shows a revenue impact from EGTRRA and JGTRRA of $220B for 2015. AMT fix - which is related to the tax cut acts - adds $40B. In other words, extension of the Bush tax cuts is appropriately regarded as the largest single component of the projected out-year deficits.
Toggle Commented Jun 18, 2009 on John Self: A Deficit Note at Obsidian Wings
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What Von neglects to mention - in addition to the proposals for tax increases to devote to health-care reform, as noted by Bunk at 8:25 - is that the primary element of the Obama Budget Proposals category that is contributing to deficits in the bar graph (thanks for the graph, but dispense with the 3-D effects next time, would you please?) is extension of the Bush tax cuts. Logically, then, Von should be calling to a return to 2000 tax rates.
Toggle Commented Jun 18, 2009 on John Self: A Deficit Note at Obsidian Wings
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What is the basis for claiming that the Stimulus was "back-loaded"? Fiscal 2009 was almost roughly half over by the time the bill passed. FY09 stimulus spending is roughly half of 2010. You greatly overemphasize 2015 given the very small fraction of spending to occur after 2011. Moreover, if the recession is worse than predicted a short time ago, then that makes the wisdom of a big stimulus, with a multi-year timeframe, that much greater. Across-the-board Direct payments or poorly targeted tax cuts have relatively little stimulus value according to those who have studied them. This is distinct from unemployment benefits, which are targeted. I have a job and I saved my 2008 stimulus money and if I got more I would save it too.
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Why, Von, do you say only that the deficit problem needs to be addressed by cutting programs (at 3:03 pm)? Why not raise taxes to, say, what they were in the 1990s? You also say at 3:03 that you think it will take a Republican congress to achieve this. This seems quite backwards to me - their stimulus protests notwithstanding the Republicans show less appreciation for the problem of long-term deficits, and a less plausible response to the problem, than the democrats.
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Sorry to be late to the party. Let's look past the bailouts and the stimulus, since it is the long term that is significant. What all of this discussion overlooks is that domestic discretionary spending in Obama's budget is projected to increase at a rate of 2.3%/year. This is consistent with realistic expectations of economic growth, and not at all with drunken-sailor analogies. The long-term deficits are largely built in by our tax code and entitlements. I agree that we are in a heap of trouble, but it is wrong to put the blame on Obama, except to the extent that his campaign promises make it difficult to increase taxes enough to pay for our obligations. The only thing of significance that Republicans have contributed to this debate is cries for more tax cuts. There is little question that the fiscal situation would be even worse with Republicans in charge.
Toggle Commented Jun 10, 2009 on Let it come down at Obsidian Wings
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