Economic Policy, Obama vs Romney

[zoogs]

http://www.reddit.co...romneys/c63crvp

 

This is pretty good. Although:

 

In general, both Romney and Obama do not give too many specifics because it is easy to pick apart specifics. Plus, (according to the person they were interviewing this morning on NPR, don't remember who) the general voter makes a more gut level decision about the theme of a candidate (Obama looking out for the little guy vs Romney having successful leadership/business skills).

 

Nonetheless, the user gives a thorough breakdown of each 'plan' and the criticisms of it.

[carlfense]

Interesting stuff. Thanks zoogies.

[zoogs]

Obama Plan

 

1. Obama wants to raise taxes for the 250k+ income bracket. Republicans argue this will hurt small business, although manova claims only 2% of small business owners fall under this bracket.

 

Interestingly, he also argues that those making $300k will see a tax increase of only up to $200 a year. I am not sure this math works out for an increase of 3% (from 33 to 36%) in income over 250k. 3% of 50,000 is $1500. For a small business owner making $500k, the 3% figure amounts to $7500. Am I doing this wrong?

 

2. The BUffet Rule (30% tax rate for people who earn > $1m a year. Currently those who make this amount from investments pay around 15%.)

 

The number of people for whom this rule would apply though, appears to be pretty low. Manova says $50 bn in 10 years will be raised - is that a /year #? or cumulative? Still a drop in the bucket.

 

Romney Plan

 

Lower corporate tax rates from 35% to 25% so they have more money to hire people, expand, etc. Why it will fail: Most large businesses do not pay the 35% rate anyway. Companies have record amounts of cash on hand. It is not the tax rate that is keeping companies from hiring people, it is a lack of demand for their products.

 

1. I thought this one was interesting.I wonder if it is not a case of large businesses exploiting holes in the tax code, while small businesses are still paying the 35% rate to their detriment.

 

2. Romney will scale back government spending in mysterious and magical ways. The last thread I posted about budget things has a more in-depth look at government spending categories, but the problem with the spending cuts is the same as the problem with Obama's targeted tax increases. Whether cutting or spending, they are drops in the bucket that don't begin to address the scope of the issue.

 

3. Reducing or simplifying business regulations. This, I completely agree with. I do not think there is a downside to this. Naturally I don't mean cut all oversight and industry regulation.

 

Overall

Because of that drop-in-the-bucket stuff, both plans appear to be merely tilting at windmills. Full of rhetoric and appeals to each party base, but hopelessly insufficient in scope.

 

I do wonder if we can't both protect & encourage businesses, while also drawing more money from them at the same time, by going with that 3% increase on 250k+ income, but at the same time aggressively reforming the tax code and simplifying things. I believe this would go along more with the conservative platform.

 

But generally, I do not see a solution that doesn't involve a) big spending cuts (the kind we simply cannot do), b) massive economic growth. Maybe in concert we can get close over time. Any plan that focuses solely on targeted revenue increases from taxation hurts growth and still doesn't pay for what it needs to. That's my biggest concern about my current support for another Obama term.

[BigRedBuster]

There is absolutely no way to fix the problem without MASSIVE spending cuts. Look at the numbers. They don't lie like the politicians do. Every single argument we have about tax rates, doesn't even come close to covering the built in costs that have been put into place in the government through entitlements.

 

Time to suck it up America. Every single person needs to have a gut check and realize they can't rely on government support.

[Sub-Husker]

We need to spend our way to recovery, and to get spending money in the hands of the dwindling middle class.

 

Without a thriving middle class, all austerity programs will destroy our economy.

 

Inflation is not the principal enemy.

[Comish]

We need to spend our way to recovery, and to get spending money in the hands of the dwindling middle class.

 

Without a thriving middle class, all austerity programs will destroy our economy.

 

Inflation is not the principal enemy.

I agree that inflation is not the principal enemy, but stagflation is a contributor.

And, while inflation has been made the bogeyman, the fact is that we are experiencing inflation, but not labeling it as such.

[sd'sker]

We need to spend our way to recovery, and to get spending money in the hands of the dwindling middle class.

 

Without a thriving middle class, all austerity programs will destroy our economy.

 

Inflation is not the principal enemy.

exactly. with a stronger middle class, that will help increase tax revenue by putting money into the consumers' (job creators) hands.

[carlfense]

I agree that inflation is not the principal enemy, but stagflation is a contributor.

By definition you can't have stagflation without high inflation . . . and we don't have high inflation.

[strigori]

Here is a great look at a part of Ryan's bill that has largely gone overlooked, mainly due to the complexity of how some budget cuts are hidden. Its scary really.

 

http://campaignstops.blogs.nytimes.com/2012/09/09/edsall-the-ryan-sinkhole/

[Comish]

I agree that inflation is not the principal enemy, but stagflation is a contributor.

By definition you can't have stagflation without high inflation . . . and we don't have high inflation.

I agree we don’t have high inflation (esp. by technical definition)

But we do have significant inflation on the items that impact most people on a daily basis, i.e. gas, food, etc. Just not enough on the entire spectrum to fit a technical definition.

[BigRedBuster]

Inflation calculations back when the cost of fuel and food didn't change that much made sense to leave those figures out.

 

NOW, that is where the major inflation is and it needs to be accounted for.

 

For instance, I firmly believe increased cost of fuel was the pin that burst the balloon on the housing market that caused this huge economic disaster. Everyone was maxed out on debt and nobody was had that extra money to account for the increased cost of fuel. Fuel goes through the roof and all of a sudden nobody has any money left in the bank and they can't make a mortgage payment.

That is inflation but it's not in the calculation.

[KJ.]

For instance, I firmly believe increased cost of fuel was the pin that burst the balloon on the housing market that caused this huge economic disaster. Everyone was maxed out on debt and nobody was had that extra money to account for the increased cost of fuel. Fuel goes through the roof and all of a sudden nobody has any money left in the bank and they can't make a mortgage payment.

That is inflation but it's not in the calculation.

 

[zoogs]

aw, yay! I love that this thread is finally getting some discussion. I was beginning to worry that people were simply more interested in talking about gaffes and lies. I'm happy that this thread is starting to take off.

 

We need to spend our way to recovery, and to get spending money in the hands of the dwindling middle class. Without a thriving middle class, all austerity programs will destroy our economy. Inflation is not the principal enemy.

 

Something interesting I learned about two forms of stimulus by our previous two administrations. It was described this way: the late Bush era stimulus involved lump sum checks, while the Obama administration doled out the money in each pay check, in small amounts.

 

The significance of this was explained this way: the former encouraged people to save, while the latter was more likely to just be spent away, and therefore, was less noticeable to the people they've benefited.

 

However, isn't overconsumption and fiscal irresponsibility at the individual level, a significant part of our country's problems? It has always been, I think. It was the first time I had ever seen anything that encouraged people to save money, as something that was a bad thing. Now, I could see the argument for businesses: you want businesses to make investments, to pour that extra money back into the economy. However, I think we want the middle class to save and be fiscally responsible, no?

 

I agree with BigRedBuster that there's no way around massive spending cuts. And massive economic growth. However, that isn't a simple philosophical issue so much a practical one. The degree of cuts we are talking about, they're simply not possible. Ergo, the rub.

[ZRod]

Ideally you would want people to save their money until they can afford what they want to buy and still be financially sound, yes. But you could also slow economic recovery by stifling demand. Just one of those things where you have to go with the lesser of two evils.

[strigori]

Ideally you would want people to save their money until they can afford what they want to buy and still be financially sound, yes. But you could also slow economic recovery by stifling demand. Just one of those things where you have to go with the lesser of two evils.

Unfortunately that's not how anything works anymore. If you saved and paid cash for most things your entire life, you are then considered a 'ghost' and will be unable to get a loan when you might need one, and even have a bad credit report possibly disqualify you from getting a job.

 

I spent a couple years eliminating nearly all my debts, then got denied an application for a home loan because I did not owe enough people money. Good credit scores, good income, good job history, just didn't owe enough people money.

 

Then there is just the cost difference between things now and 30 or 40 years ago when everyone did pay cash. New cars cost just a couple thousand, even for an expensive one. Now the average cost is closer to 30k. Sure people 'make more' but not the 6 times or more that the price of the car increased.