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Comment Re:Don't confuse The Republican Party with The Rig (Score 1) 357

[Quoting Ramesh Ponnuru in Bloomberg] "All in all, then, what Paul is proposing is a big tax cut for high earners and businesses with almost no direct benefits for most Americans. ..."
For the middle class, however, the plan looks like a wash:H
And when you look at the article you see that it's mischaracterized. He claims "For the middle class, however, the plan looks like a wash" because the massive tax cut would be offset by two factors:

  1) The replacement of the corporate income tax with a 14.5% "business activity tax" that doesn't include labor costs as a deduction. He treats this as if it were a hidden 14.5% tax on goods, neglecting the compensating benefits of reducing the corporate income tax, AND the costs of computing it and changing business decisions to work around it, to zero. (Yes, some corporations manage to structure their operations so they can get their corporate tax below 14.5%, or even down to zero. Want to bet whether it costs them less than 14.5% when tax-hacking costs are included?)

2) The alleged reduction in benefits to the middle class from cuts in government spending. Do YOU think that the middle-class actually gets any substantial benefits from the government spending that would be cut? Then take into account that cuts in government spending tend to stimulate the economy BIG time (by not having so much of its blood drained every time it circulates another round), something that his source for this claim - the pro-business "The Tax Foundation" - explicitly ignores in its analysis.

IMHO Ponnuru's article was another hit piece - part of business interests' attempts to convince the voters that tax reform plans which favor the working / middle classes, growing the pie and letting them keep a bigger piece of it, are bad ideas, so they elect another shill who is in the moneyed interests' pocket.

Comment That because LBJ bought a war on the credit card. (Score 1) 525

20 years ago, a working man could pay for his rent with one week's salary. Now on the average it costs 2 weeks or more... and that's before you've paid for other necessties such as food, utilities, and car payments and gasoline.

A large part of that is that the government went on a spending spree that hasn't abated. The extra work is to provide the value that's sucked out to pay off the creditors and for the latest spending schemes. That value has to come from somewhere, whether it's devaluation of the currency (from more dollars chasing the goods) or the double-whammy of government borrowing sucking out the investment market, which means that money isn't making more consumer stuff AND it has to eventually be paid back, at interest, out of taxes.

There was some government debt for a long time. But the big fall-off-the-cliff turning point, IMHO, was when LBJ ran, first the Vietnam (undeclared) war, then also the Great Society welfare entitlement programs, on credit (meaning looting future generations). Then Nixon tried to fix things by unhooking the dollar from gold, and it's been unchecked government spending, explosive inflation, and accumulating debt and interest ever since.

Comment Re: Weep for humanity. (Score 1) 342

One thing that is constant in most economies is that the majority of people are borrowers.

This has not always been the case, and borrowing has been enormously increased by the practice of letting central banks conjure money out of thin air. There was a time when businesses routinely saved their own money to finance capital improvements instead of borrowing and paying interest.


Comment Re: Weep for humanity. (Score 1, Interesting) 342

If everybody knows there will be deflation then they know that if they hold on to their money it will be worth more in future.

That's what Krugman claims, but it's bullshit now, and it was bullshit when Keynes first decided to try to convince people that they were better off being robbed by central bankers diluting their money.

Here's the example that disproves the claim: Everyone knows that when it comes to electronics, next year's model is going to be better/faster/more bang for the buck than this years' model, but the electronics industry isn't starving to death because of everyone sitting on the sidelines and refusing to buy devices because they'll get more for their money in the future.

Inflation benefits governments and other profligate borrowers. Deflation benefits savers (and everyone else, to a lesser extent.)


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