US Politics - Super-Congress Edition

[Mlle. Zabzie]

How many times must we shoot down this completely bullshit propaganda?

Most of the republican party believes that 50% of the population are out there paying no income tax, but even republicans making $18,000 a year pay withholding and would never in their wildest dreams consider themselves to be one of the 50% who pays no tax.

I need to correct this a bit. The Earned Income Credit (which is fully refundable) can apply at those levels, and it is intended to make people whole for withholding tax.

I believe that the rates are as follows:

For 2011, earned income and AGI must be less than:

•$43,998 ($49,078 married filing jointly) with 3 or more qualifying children

•$40,964 ($46,044 married filing jointly) with 2 qualifying children;

•$36,052 ($41,132 married filing jointly) with 1 qualifying child; or

•$13,660 ($18,740 married filing jointly) with no qualifying children.

Investment income must be $3,100 or less for the year. Investment income includes interest, dividends, capital gains, and royalties.

And, to be fair, those same people have to pay state sales tax (unless they live in a state without sales tax).

Also, you have to file an income tax return to benefit from the EIC, and there are plenty of people who just fail to do that.

[TrackerNeil]

And when the GOP takes a stand against spending now, that's also irresponsible hostage taking because it risks default. That is an approach that requires surrender without even the right to fight the battle, because those are the only two tripwires that exist. "Agree to our spending priorities, or you're taking hostages".

I don't think this is a fair description of the situation. President Obama was ready to make a deal, but the House wouldn't make a small deal, and wouldn't make a big deal, and wouldn't make any deal that involved anything other than spending cuts. Obama has repeatedly proven he's willing to deal, but the problem is that John Boehner can't control his caucus, many of whom are eager for default. And so we are where we are.

FLoW, what's going on here is not the normal push-and-pull of politics; it's one party dangling the economy over a cliff unless its demands, which change from day to day, are met. The Democrats never did this to Bush when they controlled Congress, and the Republicans shouldn't do it to Obama.

[Shryke]

We have to keep in mind that the debt ceiling is itself a completely arbitrary rule.

The United States is one of two countries that has a debt ceiling. The other is Denmark, for those keeping score. All other countries simply change policy when bond rates become a problem: Greece, for example, started austerity once their bond rates hit those astronomical values (last time I checked the Greek 2 year is 28%). Greece is kind of a bad example, though.

One could argue that debt ceiling laws increase accountability, but I think that's a bit optimistic.

There's a few other countries with something roughly similar. Germany and I believe Switzerland both have "debt brakes" which are actually limits on the deficit and not the debt and are also tied to GDP at full employment (hence allowing them to keep spending levels up despite a recession) and has provisions for crises and so on.

It's kind of hilarious to see an amendment to their constitution with a complex statistical filter in it in order to calculate full employment GDP.

I'm not. I give it a few more days before the debt ceiling is increased without any attached legislation.

We can only hope. Either that, or the Treasury tells Congress to go fuck itself, goes by the budget already passed and Obama waits for the GOP to try and impeach him.

[Former Lord of Winterfell]

How many times must we shoot down this completely bullshit propaganda?

Most of the republican party believes that 50% of the population are out there paying no income tax, but even republicans making $18,000 a year pay withholding and would never in their wildest dreams consider themselves to be one of the 50% who pays no tax.

Note that I specifically referenced income taxes, and then come back when you understand the difference between income taxes, and payroll taxes.

[Mlle. Zabzie]

Note that I specifically referenced income taxes, and then come back when you understand the difference between income taxes, and payroll taxes.

FLOW - that's not fair either. "Payroll" taxes are, in fact, at least partially income taxes. They consist of three pieces: (1) advance withholding of actual income tax liability, (2) social security withholding and (3) medicare taxes. (1) is clearly an income tax. Currently, both (2) and (3) are imposed on wages, which, for most people will be more or less indistinguishable from income, at least in common parlance (yes, I know the difference). Starting in 2013, wealthy individuals will have to start paying the medicare tax (in full, not just the 1/2 that is usually withheld from wages by an employer) on "net investment income" which makes it look even more like an "income" tax to them.

[Former Lord of Winterfell]

I don't think this is a fair description of the situation. President Obama was ready to make a deal, but the House wouldn't make a small deal, and wouldn't make a big deal, and wouldn't make any deal that involved anything other than spending cuts.

That is simply not true. Boehner was willing to make an agreement that had $800B in new revenue, and that had some legislative trigger to ensure that the spending cuts were actually made. They might have actually reached an agreement, but then Democrats got wind of the plan and started to rebel. The "Gang of Six" proposal that included significantly more in taxes came out midweek, and Democrats used that to tell Obama he needed to go back and get an additional $4-500B in taxes. That was more than the GOP could accept, and there was also disagreement about the triggers, because neither side (quite rightly) trusts the other.The details are muddled, and vary a bit between sources, but there's no question that Boehner was willing to agree to significant revenue increases. It all seems to have fallen apart primarily over the extra revenues, although I think the triggers were a huge problem as well.

http://www.chicagotribune.com/news/nationworld/la-na-obama-boehner-20110723,0,7916220,full.story

http://swampland.time.com/2011/07/23/the-inside-story-of-obama-and-boehners-second-failed-grand-bargain/

http://www.reuters.com/article/2011/07/22/usa-debt-idUSN1E76L1J620110722

FLoW, what's going on here is not the normal push-and-pull of politics; it's one party dangling the economy over a cliff unless its demands, which change from day to day, are met. The Democrats never did this to Bush when they controlled Congress, and the Republicans shouldn't do it to Obama.

No, it is very much the normal push and pull of politics. This kind of brinksmanship has been going on in budget battles for decades, and for all the kerfluffle, the "default" threat really is just the "shutdown" threat in another guise, because there is enough money to pay for debt service. So really, we're just talking about massive cuts in discretionary spending, which is the same thing you get in a true shutdown. And "shutdown" brinksmanship has been common. As for "changing demands", the only thing upon which there seems to be agreement is that this issue of $400B in extra revenues came about only after the agreement on the $800B, and that was a changed demand that came from Democrats rebelling against the $800B figure, not from Republicans.

But look, I'm not sure why this all has to devolve into one side being more "evil" than the other. The adult truth is that there simply is a fundamental disagreement over how to solve the debt mess. Republicans demand more in spending cuts than the Democrats are willing to give, and Democrats are demanding more in tax revenues than Republicans are willing to give. It's really that simple. So we'll get something passed that will get us past this temporary crisis, and we'll hammer out those differences in the 2012 election.

There are times when compromise really is a bad thing. Some disagreements need to be solved via elections. So we're going to have nasty acrimony for awhile, but the ceiling will get raised. And we'll hammer all this out in the 2012 elections.

[Former Lord of Winterfell]

FLOW - that's not fair either. "Payroll" taxes are, in fact, at least partially income taxes. They consist of three pieces: (1) advance withholding of actual income tax liability, (2) social security withholding and (3) medicare taxes. (1) is clearly an income tax. Currently, both (2) and (3) are imposed on wages, which, for most people will be more or less indistinguishable from income, at least in common parlance (yes, I know the difference). Starting in 2013, wealthy individuals will have to start paying the medicare tax (in full, not just the 1/2 that is usually withheld from wages by an employer) on "net investment income" which makes it look even more like an "income" tax to them.

Okay. So you're saying that when I made a distinction between "income taxes" and "payroll taxes", that's a distinction unique to me that other people really don't understand, and that doesn't commonly exist in budget/tax debates.

Then I guess we just have a disagrement on that point.

[Mlle. Zabzie]

Okay. So you're saying that when I made a distinction between "income taxes" and "payroll taxes", that's a distinction unique to me that other people really don't understand, and that doesn't commonly exist in budget/tax debates.

Then I guess we just have a disagrement on that point.

No, not what I was saying. What I was trying to convey is that I think that the point lockesnow was trying to make is that for the average person making $18K, both "income" tax withholding (part (1) in my example) and "payroll" tax withholding (parts 2 and 3) are deductions from a paycheck in way that "feels" like being taxed. Furthermore, that person may or may not be eligible for the EIC. I think the point is that while the person may not be subject to tax under Section 1 of the IRC, they still feel as if they pay taxes because (absent the EIC) their income (functionally) is subject to a ~8% tax in the form of payroll tax withholdings. Therefore, the oft-repeated mantra that half the population pays no income tax is somewhat misleading because, functionally, they pay tax in the form of social security and medicare taxes.

[DanteGabriel]

You do realize that nearly half the population pays no federal income tax at all? And that this $800B in revenues would come from closing loopholes that benefit the wealthy. Right?

So wait, what's your point about the half of the population that supposedly pays no federal income tax? People on the low end of the socioeconomic scale have it too easy?

[Former Lord of Winterfell]

So wait, what's your point about the half of the population that supposedly pays no federal income tax? People on the low end of the socioeconomic scale have it too easy?

No, dipshit. In the context of someone who cares only about the wealthy paying more taxes, as did the poster to whom I was responding, whether the money comes from raising the rates or from eliminating loopholes that benefit the rich is immaterial. In both cases, the additional tax revenue is coming from the wealthy.

[Shryke]

No, it is very much the normal push and pull of politics. This kind of brinksmanship has been going on in budget battles for decades, and for all the kerfluffle, the "default" threat really is just the "shutdown" threat in another guise, because there is enough money to pay for debt service.

No, it's not business as usual. Debt is debt. Including debt to internal or domestic things. If the US defaults on SS, it's not like nobody notices.

There's also the added bonus of potentially fucking with the US ability to borrow which not only fucks the country royally and costs the US obscene amounts in the future, but can also send the markets into some sort of calamity.

None of these happen when the US government shutdowns.

So really, we're just talking about massive cuts in discretionary spending, which is the same thing you get in a true shutdown.

No, it's much more then that. You are basically looking at no discretionary spending. Possibly even negative discretionary spending. (ie - cutting into non-discretionary spending)

But look, I'm not sure why this all has to devolve into one side being more "evil" than the other. The adult truth is that there simply is a fundamental disagreement over how to solve the debt mess. Republicans demand more in spending cuts than the Democrats are willing to give, and Democrats are demanding more in tax revenues than Republicans are willing to give. It's really that simple. So we'll get something passed that will get us past this temporary crisis, and we'll hammer out those differences in the 2012 election.

Because that's what's going on. Yes, there's disagreements over how much the government and such should fund, but that's not what's going on here. What's happening is one side is taking these disagreements and then threatening to destroy the world economy to get their way on the matter. This isn't politics as usual, this is the economic version of nuclear brinksmanship madness.

There is no rational disagreement over how to solve the debt ceiling. You raise it. Otherwise, the Onion is literally right and the Democrats and Republicans are arguing over whether to ruin the US economy. Specifically with the Republicans saying it's not a terrible idea.

There are times when compromise really is a bad thing. Some disagreements need to be solved via elections. So we're going to have nasty acrimony for awhile, but the ceiling will get raised. And we'll hammer all this out in the 2012 elections.

And until then, the GOP has to compromise because it only constitutes the majority in one house of congress.

It doesn't matter whether compromise is good or bad, it's a necessity unless you have enough votes.

[Shryke]

No, not what I was saying. What I was trying to convey is that I think that the point lockesnow was trying to make is that for the average person making $18K, both "income" tax withholding (part (1) in my example) and "payroll" tax withholding (parts 2 and 3) are deductions from a paycheck in way that "feels" like being taxed. Furthermore, that person may or may not be eligible for the EIC. I think the point is that while the person may not be subject to tax under Section 1 of the IRC, they still feel as if they pay taxes because (absent the EIC) their income (functionally) is subject to a ~8% tax in the form of payroll tax withholdings. Therefore, the oft-repeated mantra that half the population pays no income tax is somewhat misleading because, functionally, they pay tax in the form of social security and medicare taxes.

Yeah, I'm not seeing the difference as anything but technical. The government is taking money from your income to finance services.

[DanteGabriel]

No, dipshit. In the context of someone who cares only about the wealthy paying more taxes, as did the poster to whom I was responding, whether the money comes from raising the rates or from eliminating loopholes that benefit the rich is immaterial. In both cases, the additional tax revenue is coming from the wealthy.

"Dipshit," nice. I still fail to see how the lack of income taxes on the lowest earners does much to affect the accelerating gap between the rich and the poor, but at least I've pierced your impervious plutocrat-servicing hide and drawn some response. I was afraid you had me on ignore... :bawl:

[lokisnow]

The amazing zabzie has it completely right, flow, and you're being deliberately obtuse flow. My parents are college graduates in their fifties, republicans, who make around 80-100,000 together (dad is on comission) and they do not know the difference between withholding and income tax. I already knew what zabzie posted, and your pathetic attempt to dismiss a semantical difference between income tax and withholding tax (which encompasses income taxes) is laughable as a dodge, even if you deliberately phrased things so as to be able to make that dodge. And a larger point I have is that even just income tax, if fully refunded is still taken from peoples checks and people do not understand that if they get a full refund they paid no tax according to republicans and the 50 percent lie. Your lie about 50 percent paying no taxes is propaganda that is deliberately designed to make people like my parents believe that 50 percent of people out there who have no income tax taken out of their check. You know perfectly well your lie is designed to collapse the difference between owing no taxes and having no taxes taken out of ones paycheck so that people will be less informed on the realities of taxation in this country.

[TrackerNeil]

There are times when compromise really is a bad thing. Some disagreements need to be solved via elections. So we're going to have nasty acrimony for awhile, but the ceiling will get raised. And we'll hammer all this out in the 2012 elections.

But this disagreement isn't being solved in 2012, is it? It's being fought in July 2011, and the conflict is spooking the markets. I wouldn't have expected anyone to want to imperil a slowly recovering economy, but I guess I was wrong.

[Former Lord of Winterfell]

No, it's not business as usual. Debt is debt. Including debt to internal or domestic things. If the US defaults on SS, it's not like nobody notices.

There's also the added bonus of potentially fucking with the US ability to borrow which not only fucks the country royally and costs the US obscene amounts in the future, but can also send the markets into some sort of calamity.

None of these happen when the US government shutdowns.

If we hit the debt ceiling, we have enough money to pay interest on the debt, so there is no external default, and entitlements. We don't have enough money to pay for everything else, which puts us at about the same level as a shutdown.

No, it's much more then that. You are basically looking at no discretionary spending. Possibly even negative discretionary spending. (ie - cutting into non-discretionary spending)

Yeah. Pretty much the exact same thing you get with a true shutdown.

As for compromising, it all matters on whether you're compromising on substance or process. I do not want a substantive compromise that "splits the baby", and locks in both spending and taxes I don't like. Especially since the spending cuts won't happen as promised. I would prefer an "agree to disagree" compromise that keeps the issue alive but doesn't make those changes, and leaves that battle for another day.

[Shryke]

Actually, it seems to me that the markets haven't been spooked all that much yet. Am I wrong?

The markets aren't acting spooked because they still don't think the US government is crazy/stupid enough to default.

I'd say they are ... concerned though. "Closely monitoring the situation" would probably be most accurate.

[Xenophon]

No, it's not business as usual. Debt is debt. Including debt to internal or domestic things. If the US defaults on SS, it's not like nobody notices.

There's also the added bonus of potentially fucking with the US ability to borrow which not only fucks the country royally and costs the US obscene amounts in the future, but can also send the markets into some sort of calamity.

None of these happen when the US government shutdowns.

The bolded, I think, is the key point. Everything else could be seen as a government shutdown writ large (assuming, that is, that Obama won't actually commit political suicide by not paying SS). Not paying contractors, federal employees, suspending programs, etc. would be a massive headache and potentially cost a lot in lost jobs, lawsuits, etc., but it wouldn't come close to the harm caused by markets losing (more) faith in the US govt.

Now, we don't know that the markets actually will punish the US, if they can't get the debt ceiling raised on time. So far, they seem willing to play along, and lend the US whatever it wants, credit rating be damned. But, the USD is currently being propped up by the massive incompetence of various Euro-nations (just look at how the USD drops compared to the Euro at any hint of good news regarding Greece, Italy, etc.). And if that were to change, and the reserve currency of most of the world started to drop, the markets might get very spooked, causing bad things to happen to the US's ability to borrow.

[Xenophon]

The markets aren't acting spooked because they still don't think the US government is crazy/stupid enough to default.

Plus, there's not a good option to run to.

[Former Lord of Winterfell]

Yeah, I'm not seeing the difference as anything but technical. The government is taking money from your income to finance services.

It's a hell of a lot more than a technical difference when you're talking about closing income tax loopholes that don't apply to people not paying income taxes. I made the point about half the people not paying income taxes in response to a very specific issue -- the closing of those tax loopholes that benefit wealthy taxpayers. The loopholes they're talking about closing aren't going to affect those folks who don't pay any income taxes.

Babbling about payroll taxes in that context is like bringing up crayons in a discussion about sculpture -- it has no relevance.