Comments on: Why a U.S. government shutdown is worth it http://blogs.reuters.com/james-pethokoukis/2011/02/25/why-a-u-s-government-shutdown-is-worth-it/ Politics and policy from inside Washington Sun, 07 Apr 2013 21:23:48 +0000 hourly 1 http://wordpress.org/?v=3.4.2 By: SteveAdams http://blogs.reuters.com/james-pethokoukis/2011/02/25/why-a-u-s-government-shutdown-is-worth-it/comment-page-1/#comment-10892 SteveAdams Fri, 25 Feb 2011 22:25:43 +0000 http://blogs.reuters.com/james-pethokoukis/?p=5875#comment-10892 We had an approaching SS and Medicare problem years ago. Now it's not a problem it's a terminal illness. To make up the current deficit gap with something close to 50% spending cuts and 50% tax increases we would have to double the tax generated from income and corporate income taxes and give a 20% across the board cut to spending. However, doubling the income tax rates would put the top rate at 70% with state and local rates bringing the marginal tax to 80% that won't fly. Either people will hide the income or they will drop out. - Please go to med school and become a surgeon so the gov can take all of your money and you can earn as much as the liquor store owner who lives much better hours. :) You could increase salaries to get the same effect but note by a vote in congress. Even if you get an extra $550bil out of taxes - which would be a 50% increase in the taxes paid (probably not doable) you still need at least a 20% across the board cut in spending including SS, Medicare, Defense and everything else except debt payments. Ain't gonna happen - see $100bil in cuts last month. Then for around every 2% increase in the Fed interest rates you'll need another 10% across the board cut. So, do all of these things and add some fairy dust and it will all turn out ok. Otherwise our kids our toast. We had an approaching SS and Medicare problem years ago. Now it’s not a problem it’s a terminal illness. To make up the current deficit gap with something close to 50% spending cuts and 50% tax increases we would have to double the tax generated from income and corporate income taxes and give a 20% across the board cut to spending.

However, doubling the income tax rates would put the top rate at 70% with state and local rates bringing the marginal tax to 80% that won’t fly. Either people will hide the income or they will drop out. – Please go to med school and become a surgeon so the gov can take all of your money and you can earn as much as the liquor store owner who lives much better hours. :) You could increase salaries to get the same effect but note by a vote in congress.

Even if you get an extra $550bil out of taxes – which would be a 50% increase in the taxes paid (probably not doable) you still need at least a 20% across the board cut in spending including SS, Medicare, Defense and everything else except debt payments. Ain’t gonna happen – see $100bil in cuts last month.

Then for around every 2% increase in the Fed interest rates you’ll need another 10% across the board cut.

So, do all of these things and add some fairy dust and it will all turn out ok. Otherwise our kids our toast.

]]> By: auger http://blogs.reuters.com/james-pethokoukis/2011/02/25/why-a-u-s-government-shutdown-is-worth-it/comment-page-1/#comment-10885 auger Fri, 25 Feb 2011 17:49:34 +0000 http://blogs.reuters.com/james-pethokoukis/?p=5875#comment-10885 The obvious solution to the financial void involves both spending and revenues. When both sides keep their hands above the bargaining table, the problem may recede The obvious solution to the financial void involves both spending and revenues. When both sides keep their hands above
the bargaining table, the problem may recede

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