How are we going to pay for all this shit?

You throw out these questions, all of which are very intriguing, BUT YOU DON'T GIVE THE ANSWERS. Originally Posted by Tiny

Very interesting observations; thanks for posting.

It seems that one thing people often forget is that tariffs impose costs and produce a number of unintended consequences, especially when clumsily and incompetently implemented, as has been the case recently.

If the primary goal is pushback against Chinese neo-mercantilism and the ultimate fulfillment of their global hegemonic lusts, we should recruit the Europeans and the Canadians to our side, instead of alienating them with tariff practices we've sometimes aimed at them over the last few years.

To this end, a few conservative economists, including Peter Morici and the three generations of Richmans (conservative/libertarian economists) have advocated for a regime of scaled tariffs, with rates that rise and fall with the relative bilateral trade balances between the US and the subject country. For instance, the rate would be low (or zero) for a number of nations, but much higher for nations with which we run a big trade deficit (such as China).

Although I have no idea how well this would work in practice, I suspect it's got to be better than what we do now.

Still, I think our main problem is that we, as a nation, consume way too much relative to what we save, produce, and export. Many economists (even conservatives like Bob Barro) have opined, therefore, that we would do better to largely replace our income and payroll tax system with a consumption tax, such as a VAT. In fact, Rand Paul advocated this idea during his 2016 campaign, suggesting a combination of a low-rate flat income tax and a consumption tax which was described by one observer as simply a subtraction method VAT.

This would, at least in some measure, disincentivize consumption of all that crap we import, and incentivize saving and investment.

. Originally Posted by CaptainMidnight

Singapore unilaterally eliminated tariffs entirely. Chile unilaterally reduced tariffs across the board. As you know, both were huge success stories.

Do you think it makes sense concentrating on bilateral trade balances? Intuitively I don't think it should. Japan is going to have a huge trade deficit with Saudi Arabia. But surpluses with countries that buy its manufactured goods. I don't see how the world benefits from comparative advantage if countries are managing bilateral trade balances.

I 100% agree with the rest of your post. You put it very well, if we could "disincentivize consumption of all that crap we import, and incentivize saving and investment", that would go a long way towards reducing or eliminating the current account deficits we run up year after year. And a VAT or other consumption tax would take us in that direction. The problem, as you know, is that at some point it might not work out as Rand Paul envisioned, with the VAT displacing the income tax in part. Instead it's added onto the income tax and we end up like some moribund European economies (e.g. France) with government revenues around 50% of GDP.

Lusty Lad and I discussed something related a few years ago. I'd latched onto something I read, specifically,

GDP - Consumption - Government Spending = Exports - Imports

and was naively arguing that solely by increasing "savings" (the excess of GDP over spending), we'd eliminate the trade deficit. There's some truth in that, but as LL pointed out it's actually a lot more complicated.

OK, I'm going to kind of contradict what I just wrote. Look at the Chinese. Historically they worked their asses off and saved a huge percentage of what they earned. As Why_Yes_I_Do put it in this thread, they were like slaves, earning a pittance so we could buy toys and clothes and televisions at cut rate prices. And what did we send them? Paper. Well, figuratively speaking paper. They got our dollars and we got real stuff. Who got the best end of that deal?

So I kind of waiver at times in wondering how important our trade deficit is. But, in my heart, being a thrifty type who might fit in better in Switzerland or Singapore than the spendthrift USA, I don't believe we should ignore our current account deficits and the resulting IOU's we're running up in favor of foreigners.

I also 100% agree with your belief that a unified approach to China, instead of going it alone, is the way to go.

You do recall the reason for the tariffs was because the China was not purchasing our goods that they had committed to buy, in spite of us generously exporting to them the pollution and slave labor. Right? Originally Posted by Why_Yes_I_Do

Hey Why_Yes_I_Do, See CM's thoughts about combatting Chinese neo-mercantilism and mine on slave labor in post just before this one.

if you milk middle income tax payers for every dime you can, you're going to raise a lot more money than by milking the upper income earners, who will just stop recognizing income (see Mystery 3 above).
Originally Posted by Tiny

I would like to match (you say milk) the taxpayers to a rate that equals taxpayers wants.

Don't any of you see that as the problem?

Ego wise...we can discuss certain particular segments of certain taxes to enforce our current beliefs. Be it trade deficit with China or the Laffer Curve.

But the bottom line is that over the last 40 years debt to GDP has risen by a multiple of 4.


Reagan
Let's cut taxes AND increase Military spending. There was no pain for that increased spending.

So there is this whole 40 year time frame where people do not want to pay for their wants (except for the 90's) That is the problem. Imho

Find me a politician who can sell less spending and a tax hike. Less military spending. A tax hike on entitlements. And can curb the medical costs of seniors. And I'll show you the second coming of Jesus.

My position is that all the economic pontificating does not address this real problem. So now I turn into Adam Smith mode and just worry about what is good for WTF...at present , the stock market. Will there be another 1929 anytimesoon? Are we soon to be the 1990 Soviet Union?
What stocks are good to be in in such a case?

Oh and I too would like to hear the answers to 1-4.

Singapore unilaterally eliminated tariffs entirely. Chile unilaterally reduced tariffs across the board. As you know, both were huge success stories.

Do you think it makes sense concentrating on bilateral trade balances? Intuitively I don't think it should. Japan is going to have a huge trade deficit with Saudi Arabia. But surpluses with countries that buy its manufactured goods. I don't see how the world benefits from comparative advantage if countries are managing bilateral trade balances.

I 100% agree with the rest of your post. You put it very well, if we could "disincentivize consumption of all that crap we import, and incentivize saving and investment", that would go a long way towards reducing or eliminating the current account deficits we run up year after year. And a VAT or other consumption tax would take us in that direction. The problem, as you know, is that at some point it might not work out as Rand Paul envisioned, with the VAT displacing the income tax in part. Instead it's added onto the income tax and we end up like some moribund European economies (e.g. France) with government revenues around 50% of GDP.

Lusty Lad and I discussed something related a few years ago. I'd latched onto something I read, specifically,

GDP - Consumption - Government Spending = Exports - Imports

and was naively arguing that solely by increasing "savings" (the excess of GDP over spending), we'd eliminate the trade deficit. There's some truth in that, but as LL pointed out it's actually a lot more complicated.

OK, I'm going to kind of contradict what I just wrote. Look at the Chinese. Historically they worked their asses off and saved a huge percentage of what they earned. As Why_Yes_I_Do put it in this thread, they were like slaves, earning a pittance so we could buy toys and clothes and televisions at cut rate prices. And what did we send them? Paper. Well, figuratively speaking paper. They got our dollars and we got real stuff. Who got the best end of that deal?

So I kind of waiver at times in wondering how important our trade deficit is. But, in my heart, being a thrifty type who might fit in better in Switzerland or Singapore than the spendthrift USA, I don't believe we should ignore our current account deficits and the resulting IOU's we're running up in favor of foreigners.

I also 100% agree with your belief that a unified approach to China, instead of going it alone, is the way to go. Originally Posted by Tiny

I don't think it makes sense to be so concerned about bilateral trade deficits per se, for reasons to which you alluded. My take on the idea of "scaled tariffs" proposed by Morici, the Richmans, and a few others, is that it could be useful to use the framework as a tool to deploy against egregiously mercantilist states like China that rig their currencies, erect barriers to restrict imports, wantonly steal intellectual property, etc.

Although i didn't see your discussion with Lustylad on domestic savings and the trade balance, I certainly agree with the observation that increasing savings wouldn't eliminate the trade deficit, although it likely would reduce it. As you said, that would depend on a number of moving parts, obviously including (but not limited to) the proportion of consumption dollars spent on imported goods.

Dan Mitchell, who has written a lot of good stuff on taxation from a conservative/libertarian viewpoint, has made the case that introducing any form of consumption tax (even at a relatively low rate as envisioned by Paul) -- without eliminating the income tax -- would just give lawmakers the temptation to start ratcheting it up at every turn.

Then progressives would grab every opportunity to haul in huge amounts of revenue in an effort to establish a full-on European-style social democracy. (They're already making that effort now, of course, but without actually bothering to make the faintest effort to pay for it!)

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I'll start with question #3 (as labeled by Tiny) and come back later and dive into the others:

Did the 1980s deficits, in any significantly material sense, result from tax cuts for the wealthy? (For that matter, after all the tax law changes during the Reagan era were passed, were taxes on the wealthy raised at all? And if your answer is "yes," are you sure?) Originally Posted by CaptainMidnight

Often it has been said (or at least insinuated) by opinion talkers and writers that the main reason, or at least one of the main reasons, for the 1980s deficits was "tax cuts for the wealthy."

But was it, really?

Note that the top-bracket marginal income tax rate was cut from 70% to 50% in 1981, and then all the way down to 28% in 1986. So it's easy for the uninformed to conclude that Reagan cut taxes for the wealthy -- big time!

The super-high rates, though, were completely phony. It was extremely easy to shelter most of your income, and almost every wealthy or very high-income individual did so. One of the worst drawbacks to the high rate was that it shoveled hundreds of billions of dollars into malinvestment, not that it didn't collect all that much revenue.

Here's a pretty good explanation:

https://money.cnn.com/2010/09/08/new...n_years_taxes/

Note that many wealthy Republican donors were not happy about the 1986 tax reform, which was co-sponsored by Democrats and passed the Senate by an almost unanimous vote (97-3).

Supporters included Biden, Gore, Kerry, and Ted Kennedy.

.

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I'll start with question #3 (as labeled by Tiny) and come back later and dive into the others:



Often it has been said (or at least insinuated) by opinion talkers and writers that the main reason, or at least one of the main reasons, for the 1980s deficits was "tax cuts for the wealthy."

But was it, really?

Note that the top-bracket marginal income tax rate was cut from 70% to 50% in 1981, and then all the way down to 28% in 1986. So it's easy for the uninformed to conclude that Reagan cut taxes for the wealthy -- big time!

The super-high rates, though, were completely phony. It was extremely easy to shelter most of your income, and almost every wealthy or very high-income individual did so. One of the worst drawbacks to the high rate was that it shoveled hundreds of billions of dollars into malinvestment, not that it didn't collect all that much revenue.

Here's a pretty good explanation:

https://money.cnn.com/2010/09/08/new...n_years_taxes/

Note that many wealthy Republican donors were not happy about the 1986 tax reform, which was co-sponsored by Democrats and passed the Senate by an almost unanimous vote (97-3).

Supporters included Biden, Gore, Kerry, and Ted Kennedy.

. Originally Posted by CaptainMidnight

WTF should read your link. Reagan et al didn't cut taxes too much. Rather, they spent too much. The link says tax revenues as a % of GDP during the Reagan administration averaged 18.2%, a smidge higher than the 40 year average and a smidge lower than during the Carter years. From the link,

Two bills passed in 1982 and 1984 together "constituted the biggest tax increase ever enacted during peacetime," Thorndike said.

The bills didn't raise more revenue by hiking individual income tax rates though. Instead they did it largely through making it tougher to evade taxes, and through "base broadening" -- that is, reducing various federal tax breaks and closing tax loopholes.

And that's the way it should be.

The link in my post yesterday to a report by Chief Economist to the Vice Chairman of the Joint Economic Committee, describing how tax reform during the Reagan administration increased the % of income taxes paid by upper income taxpayers, is broken. Apparently the write up was removed from the House of Representatives' web site. No matter, it's still available on the Senate's web site:

https://www.jec.senate.gov/public/_c...april-1996.pdf

If you look at the graph at the top of page 2, you'll clearly see that the share of the income tax paid by the top 1%, top 5% and top 10% increased, while the share paid by the bottom 50% decreased, from the start to the end of Reagan's terms.

WTF should read your link. Reagan et al didn't cut taxes too much. Rather, they spent too much. . Originally Posted by Tiny

You should read what I've said repeatedly.

Reagan started this nonsense of debt increase. That debt seems not to matter. The graph lustylad provided bears that out. The debt to GDP ratio. Especially the gross.

That is what I have contended.

The best any of you have countered is this...He spent too much.


I will address one other thing. I've mentioned the Laffer Curve and what I perceive as the supply side guys constant chant of "cut taxes" as some tax religious fact. It is not always the right thing as Bush Sr and Clinton seemed to prove.


And always look at the final results. What has the last 40 years shown? Would you bet that let's sat Trump gets elected in 2024....would you bet that he reduces debt by offering up another tax cut?

What I can not believe is that there are still many of you arguing with the facts.

Reagan started this nonsense and the numbers bear that out.

All other is just noise trying to whitewash that fact.

you should recuse yourself regarding Reagan

you've hated him as much as you've loved jerry sandusky and joe paterno

How are we going to pay for all this shit?

Hunter's paintings.

Hey Why_Yes_I_Do, See CM's thoughts about combatting Chinese neo-mercantilism and mine on slave labor in post just before this one. Originally Posted by Tiny

I was waiting on the explanation of the difference between a VAT and a tariff before I asked why should our government make money off of something we won't, or more correctly shouldn't, purchase. Isn't a tariff or VAT more of a punishment or deterrent to the consumer, i.e. cause them to change their behavior? There is no collected tax if we don't buy it. Either way, the end price falls to the consumer, unless you happen to swallow the ridiculous BS being spewed by the current admin. Inflation remains a cascade down event - IMHO.

We're on a provider board, so most should understand that size matters. The US is large enough that we don't need to wait on Canada or the UK to make purchasing decisions that impact us directly. Notwithstanding, I damn sure don't buy in to the nonsense that we need to spend more tax dollars to help fix California's port problem that they created.

I do not believe the benevolent Xi cut tariffs across the board. The trade imbalance has been astronomical and growing for a long time. Plus, Xi seems to be an ungrateful bastard. We shipped him a lot of our pollution and slave labor and what do we get in return? Cheap, single use and disposable Chinese junk.

I thought Trump was on the money for getting them to sign on the dotted line to commit to purchasing our goods and not waiting on other countries to join in. Sure Xi didn't like that, I mean being forthright and accountable. But then a virus leaked out of a Chinese lab and ate the world.

Now we can get into taxes for on and on. I view taxes as A) wealth redistribution and B) kick backs. The tax code is so complex and wonky in how it is structured to curry favor by shuffling money that you purchased with your time and effort. The point one of you made about "wealthy" being able to work around taxes is exactly the point. They have the resources to leverage the code - as designed - and are also benefactors of of the kick backs.

Maybe look at it a different way, any tax "break" given is for a reason (a bribe) and something goes somewhere or benefits someone else - and it can be taken away. I know, a crappy explanation, but I'm in a rush at the moment

Here is my example from back in the Clinton admin years:

• Walk into grocery store
• Give gallon of milk to clerk
• clerk say that'll be $3.00
• give clerk a $10.00 bill
• Clerk says thank you and gives you a receipt
• you say hey! You owe me $7.00
• Oh no sir, we will give that $7.00 to causes we choose to because you just aren't smart enough to make good choices with the money you earned.

Maybe look at it a different way, any tax "break" given is for a reason (a bribe) and something goes somewhere or benefits someone else - and it can be taken away. I know, a crappy explanation, but I'm in a rush at the moment

Here is my example from back in the Clinton admin years:

• Walk into grocery store
• Give gallon of milk to clerk
• clerk say that'll be $3.00
• give clerk a $10.00 bill
• Clerk says thank you and gives you a receipt
• you say hey! You owe me $7.00
• Oh no sir, we will give that $7.00 to causes we choose to because you just aren't smart enough to make good choices with the money you earned.

Originally Posted by Why_Yes_I_Do

Exactly. Just give the clerk $3.


Visualizing the $94 Trillion World Economy in One Chart


https://www.visualcapitalist.com/vis...-in-one-chart/

▼ Use This Visualization

Just four countries—the U.S., China, Japan, and Germany—make up over half of the world’s economic output by gross domestic product (GDP) in nominal terms. In fact, the GDP of the U.S. alone is greater than the combined GDP of 170 countries.

How do the different economies of the world compare? In this visualization we look at GDP by country in 2021, using data and estimates from the International Monetary Fund (IMF).

An Overview of GDP

GDP serves as a broad indicator for a country’s economic output. It measures the total market value of final goods and services produced in a country in a specific timeframe, such as a quarter or year. In addition, GDP also takes into consideration the output of services provided by the government, such as money spent on defense, healthcare, or education.

Generally speaking, when GDP is increasing in a country, it is a sign of greater economic activity that benefits workers and businesses (while the reverse is true for a decline).

The World Economy: Top 50 Countries
Who are the biggest contributors to the global economy? Here is the ranking of the 50 largest countries by GDP in 2021:

Search:

Rank Country GDP ($T) % of Global GDP

1 🇺🇸 U.S. $22.9 24.4%
2 🇨🇳 China $16.9 17.9%
3 🇯🇵 Japan $5.1 5.4%
4 🇩🇪 Germany $4.2 4.5%
5 🇬🇧 UK $3.1 3.3%
6 🇮🇳 India $2.9 3.1%
7 🇫🇷 France $2.9 3.1%
8 🇮🇹 Italy $2.1 2.3%
9 🇨🇦 Canada $2.0 2.1%
10 🇰🇷 Korea $1.8 1.9%

At $22.9 trillion, the U.S. GDP accounts for roughly 25% of the global economy, a share that has actually changed significantly over the last 60 years. The finance, insurance, and real estate ($4.7 trillion) industries add the most to the country’s economy, followed by professional and business services ($2.7 trillion) and government ($2.6 trillion).

China’s economy is second in nominal terms, hovering at near $17 trillion in GDP. It remains the largest manufacturer worldwide based on output with extensive production of steel, electronics, and robotics, among others.

The largest economy in Europe is Germany, which exports roughly 20% of the world’s motor vehicles. In 2019, overall trade equaled nearly 90% of the country’s GDP.

you should recuse yourself regarding Reagan

you've hated him as much as you've loved jerry sandusky and joe paterno Originally Posted by nevergaveitathought

Did Sandusky play with your peeper in the shower again?

I like Reagan. He was a likeable guy. He was not all there in his second term. What I don't like is that he sold arms to the Iranians to pay them back for helping him get elected. He destabilized Central America. But the worst he has influenced idiots susceptible to slight of hand to believe that debt only matters when there is a Democrat in the White House!

... Mate.

... Underage references?? ... Really?

Might wanna delete that.

### Salty

... Mate.

... Underage references?? ... Really?

Might wanna delete that.

### Salty Originally Posted by Salty Again

Don't be such a pussy. A picture is worth a thousand words.