I am not really sure how meetings with the President go. When I see pictures of the Oval Office I wonder how anything gets done. There is some old wooden desk and what looks like couches.
There is no smart board, there are no computer screens, no interactive podiums. I wonder why don’t they just draw out battle plans with sticks in the sand and be done with it.
Anyway, since I assume the only graphics available are those that are printed out and handed to everyone, here is something they might want to pass around the prayer circle.
This is the estimated real cost of financing the US government over ten years. Its quickly approaching zero.
And, so I ask – Why is the US government still collecting taxes?
I mean seriously. What is it that you hope to accomplish by collecting taxes. One, might say to finance government expenditures, however, they can be financed for free in the bond market.
Lets just forget about stimulus. How about the simple fact that people don’t like to pay taxes. Here is the perfect opportunity to put this off until the future at very low cost. Why not do it?
Why not?
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Wednesday ~ September 28th, 2011 at 2:40 pm
Eric
Because unless you can roll it forever at 0%, somebody will have to pay taxes to cover it or to pay interest on it. Seems unlikely that you could roll it forever at 0%, especially if you succeed in stimulating the economy.
Anyway it seems very selfish for the taxpayers of today to do that to the taxpayers of tomorrow.
This is exactly the kind of thinking that brought us leveraged buy outs, option ARMs and home equity lines of credit. Give it a rest already!
Wednesday ~ September 28th, 2011 at 2:56 pm
anon
Because those tax cuts would be saved or would be invested in China (multiplier 1).
Wednesday ~ September 28th, 2011 at 3:03 pm
anon
Because those tax cuts would be saved (hoarded) or invested in China (which crowds out U.S. production) – while the U.S. government can collect and spend it domestically.
Wednesday ~ September 28th, 2011 at 6:11 pm
IVV
Unfortunately…. if saving or investing in China are superior options to spending domestically, then it probably should happen.
It says bad stuff for all of us at home, but it suggests that spending domestically is a loser in the long run.
Wednesday ~ September 28th, 2011 at 3:07 pm
Ernie Tedeschi (@ernietedeschi)
I think the answer is one of political economy: fiscal policy is sticky. It’s tough to let tax cuts expire, no matter how necessary the revenue is; the last decade is definitive proof of that.
It’s an even greater concern when you’re basing your fiscal policy on a market as dynamic as bonds. Perhaps demand for Treasuries will be level or greater over the next few years. Perhaps it will be less. And remember that the government would be affecting the yield from the supply side too.
Wednesday ~ September 28th, 2011 at 3:17 pm
Eric
Because most government spending and transfers represent consumption (or non-productive investment in military hardware) rather than investment. Investment generates returns that can cover debt service, while consumption generally does not — except perhaps through the magic of the multiplier, which may not apply because of the points anon mentioned above.
Because the significantly higher debt burden this implies could impede the ability of the government to respond to future crises or simple recessions.
Because political action by Republicans would make it extremely difficult to impose meaningful progressive taxation again _especially_ if it works.
Wednesday ~ September 28th, 2011 at 3:35 pm
Paul
Because unless you think that people should never have to pay taxes again it is a terrible idea. Can you imagine our current political system being capable of raising taxes from 0?
Wednesday ~ September 28th, 2011 at 5:03 pm
anon
Taxes must be smoothed over time, because the deadweight loss of taxation grows with the square of the tax rate. So, while there’s clearly a case for increasing government debt at the margin (provided that long-term interest rates don’t rise too much), it is not prudent to shift all tax collection into the future.
Thursday ~ September 29th, 2011 at 9:41 am
Benny Lava
There is no political capital for more debt. The Republicans won’t stand for it because they know it will help Obama’s re-election. So there’s the pragmatic answer.
On a philosophical level once people enjoy paying zero taxes can you imagine them getting used to paying 40%?
On a technocratic level I question how valuable this will be. I don’t see how it stimulates enough demand to raise unemployment. Tax cuts did nothing in 2002 and 2008 and 2009. Why will it be different this time?
Thursday ~ September 29th, 2011 at 11:18 am
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[...] Why is the US government still collecting taxes? [...]
Thursday ~ September 29th, 2011 at 12:23 pm
Scruffy Scirocco
You seemed to have failed to consider that those bonds are just loans, and have to be paid back with. . . .Tax revenues.
Thursday ~ September 29th, 2011 at 12:30 pm
SagasuLinks - Why Is The US Government Still Collecting Taxes, Ctd
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Thursday ~ September 29th, 2011 at 1:09 pm
Johnny
I wish this was a joke.. You have the logical skills of a 4 year old if you think we can stop collecting taxes and live off borrowed money for all eternity.
Thursday ~ September 29th, 2011 at 4:03 pm
Jack
In related news, I just got an offer for a credit card with a 0% APR for 12 months. Can anyone think of a reason I shouldn’t just quit my job and live on that? The truth is I just don’t like working. Please let me know …
Thursday ~ September 29th, 2011 at 4:48 pm
Matthew
Because if they increased borrowing, interest rates would not stay at zero – borrowing demand would surpass loaning supply, forcing rates up.
Friday ~ September 30th, 2011 at 11:29 am
TomM
Because the reason they are nearing 0% is because bond holders know the government is virtually guaranteed to pay them back in the future…with taxes…
Friday ~ September 30th, 2011 at 3:48 pm
josh
@johnny hey smart guy, we ARE living off borrowed money. We constantly get “borrow” money from the federal reserve just to pay it back, with more interest. We will always be in debt because the greedy bankers created the federal reserve, which is not a real federal program, and the legislation was not drafted by lawers, but bankers, with their best interests in mind, not ours. We borrow 100, we have to pay back 105. Is that simple enough for you? Then guess what? We have to pay back that 105.. So that means, we have to borrow 105, and now pay back 110. Make since? Federal Reserve is a Joke, not to mention your “Federal Tax Returns” which is completely UNCONSTITUTIONAL.
Open your eyes America. Stop following, and make up your own mind, with facts. Just like 9/11 was set up. If you think it was all “terrorists” your retarded. Find pictures and videos showing the multiple explosions inside the buildings, and the slanted cuts of the structure beams, and the pools of MOLTEN STEEL from THERMITE that was over 2000 degrees F. up to 6 weeks afterwards. Which is 500 degrees F hotter than jet fuel can burn. Also, multiple “terrorists” who were on those planes supposedly, are STILL ALIVE today, and their names where NOT on the flight manifests! And how could a 757 just EVAPORATE after hitting the pentagon, and the ground in PA? Google plan crash images, and you will see it is never disintegrated. And yet, they suppsedly could identify the bodys, HUMAN ORGANIC BODYS from that wreckage to determine they were terrorists, however TWO 6 ton ROLLS ROYCE ENGINES and a WHOLE 757 plane, steel and all just DISINTEGRATED?? Yeah, right. Funny.
OPEN YOUR EYES AMERICA!
Sunday ~ September 23rd, 2012 at 10:15 am
Andrew
You’re right.We cannot stop collecting taxes and live off borrowed money for all eternity.
Friday ~ January 11th, 2013 at 2:03 am
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