Tom Naughton

I’ve been busy going through Java training for work while also preparing a show for an upcoming cruise and have ignored this blog for a few weeks as a result.  My bad.

My daughters finally announced yesterday that they no longer believe in Santa or the Easter Bunny.  Well, it was fun while it lasted.  I’ll miss seeing their eyes light up when they talk about Santa bringing them presents, but on the other hand, the sooner they stop believing in magic people giving them free things, the less likely they’ll grow up to be liberals.   My Hollywood friend Paul still believes in Santa, only he substitutes “government” for the giver of all free gifts.

Round 16 – Paul

Hey Tom!

With regards to the debt and deficit, I am not suggesting that ‘only’ the rich pay more in taxes.  I think we should let all the Bush tax cuts lapse! What’s more, the Republicans were right to oppose an extension of the payroll tax.  If we want to get serious, about paying down our bills, then ‘everyone’ should help.  We should make it a national priority equivalent to war.  Everyone should want to help.  It’s in our common interest.

And allow me to point out that Bush never imposed a war tax to fund Afghanistan or Iraq.  That deliberate oversight has probably added at least a trillion to the debt.  And the bills will continue for years as we pay benefits to disabled soldiers.

Yet to hear Republicans talk, one would think those wars were funded by Iraqi oil.  Nor have Libertarians acknowledged the costs.  Ron Paul has said we should leave Afghanistan.  But he has never linked its costs to the debt.  Instead the impression is always left that Obama piled that debt with all his “socialism”.

Those wars have cost about a trillion and the Bush tax cuts cost a trillion.  Add them together and you get the lion’s share of the debt.  And it’s absurd to think the rich can’t pay more in taxes.  Their current 36% is the lowest in 80 years.  For most the post-war era, they paid 70%.  And the disparity between rich and poor was much lower then.   So at the very least they could pay 46%.  Until the debt is manageable.

It seems like blatant hypocrisy for guys like you to howl about the debt and then scorn as “socialists” people like me who want to pay it down.  And that was one of the reasons I sent you that article from THE NEW YORKER.  Its author traced Libertarian rhetoric to Cold War extremists.

Did you know, for instance, that Fred C Koch, father of The Koch Bros, was a principal funder of The John Birch Society? The Birchers, as you may have heard, were anti-communist zealots who saw conspiracies everywhere.  And even most Republicans steered quite clear of them.  But one can easily see the Bircher influence in Libertarian rhetoric.  Attendant with Koch money.

Libertarians like you, Tom, are living in the McCarthy era.  You probably would have viewed Civil Rights legislation as an encroachment on states rights.  That was the common view of many conservatives.  And you would have opposed the creation of Medicare as many Republicans did.  Leaving Seniors to fend for themselves.  Even fluoride in drinking water would have met with your disapproval.

In other words, you are what’s commonly known as a ‘retarded McCarthyite’.  As characterized by your tendency to label as ‘socialist’ people who want to pay down the debt.  It’s funny how everything old gets new again while getting older yet.  Like Libertarians.  Most of whom are too young to know they’re actually recycled Birchers!

Paul

 

Round 16 – Tom

Greetings, Paul –

With regards to the debt and deficit, I am not suggesting that ‘only’ the rich pay more in taxes.  I think we should let all the Bush tax cuts lapse! What’s more, the Republicans were right to oppose an extension of the payroll tax.  If we want to get serious, about paying down our bills, then ‘everyone’ should help.  We should make it a national priority equivalent to war.   Everyone should want to help.  It’s in our common interest.

So you’re serious about paying down the debt, you believe everyone should help, but you also want a national healthcare system that would pile up trillions more in debt? Very consistent of you.

Yes, reducing the debt should be a national priority.  Sooner or later, it will come a necessity, whether we deal with it now or not.  But we cannot possibly tax our way out of the debt (more on that below).  We can only pay down our bills through large and painful spending cuts.  Those cuts will happen, like it or not.  We can do it now and manage the process, or we can wait until the debt bomb explodes and the spending comes to an abrupt halt because there’s no way to borrow more money.

And allow me to point out that Bush never imposed a war tax to fund Afghanistan or Iraq.  That deliberate oversight has probably added at least a trillion to the debt.  And the bills will continue for years as we pay benefits to disabled soldiers.

Wars are indeed expensive, which is why we should think very carefully before engaging in them.  The cost of the Iraq war to date is estimated at $800 billion.  Let’s round up to $100 billion per year.   That doesn’t explain an annual deficit exceeding $1.5 trillion.

Yet to hear Republicans talk, one would think those wars were funded by Iraqi oil.

Yes, I remember them making that poppycock prediction.

Nor have Libertarians acknowledged the costs.

Are you @#$%ing kidding me?! Libertarian writers have been all over that one.  Do a bit of Google research before you make blanket statements like that.

http://www.lewrockwell.com/gregory/gregory215.html

Ron Paul has said we should leave Afghanistan.  But he has never linked its costs to the debt.

Like I said, do a bit of research before you make blanket statements like that:

http://www.lewrockwell.com/paul/paul437.html

Instead the impression is always left that Obama piled that debt with all his “socialism”.

Obama piled another trillion or so on top of the already existing deficit for bailouts, “stimulus” packages, etc.  That’s a matter of public record.

Those wars have cost about a trillion and the Bush tax cuts cost a trillion.  Add them together and you get the lion’s share of the debt.

The Bush tax cuts didn’t cost the treasury a trillion dollars.  I’ll deal with that below.  But for the sake of argument, even if you believe the fiction that a 10% income-tax cut reduces income-tax receipts by 10%, that would account for $90 billion per year in “losses” to the treasury.  Again, I’ll round up to $100 billion.

So even if we assume $100 billion per year for the Iraq war and $100 billion in (fictional) lost revenues because of the Bush tax cuts, that would explain $200 billion per year of an annual deficit that is approaching $1.6 trillion.  How exactly does that add up to the lion’s share?

I understand why you’d want to believe that, of course.  By clinging to that belief, you can continuing telling yourself that we can solve our debt crisis by ending the war and raising taxes on the rich, instead of facing the reality that we will only avoid a debt bomb by drastically cutting government spending.

And it’s absurd to think the rich can’t pay more in taxes.

How exactly do you know what the “rich” can and cannot afford? How do you know that someone earning $250,000 per year doesn’t have two kids in college costing $50,000 yer pear each? (A “rich” friend of mine has two kids in college, with a third starting college next year, and he warned me of the future costs.)

Their current 36% is the lowest in 80 years.

Really? The 28% top rate under Reagan’s second tax cut wasn’t lower? Look, I know you don’t enjoy math as much as I do, but trust me on this: 28% is lower than 36%.

For most the post-war era, they paid 70%.

No, Paul, that’s not what they paid.  That was the nominal top rate, but almost nobody actually paid it …  and this is where I’ll get into the leftist fiction that a 10% tax cut reduces revenues by 10%, while a 10% tax increase boosts revenues by 10%.  That belief assumes that tax rates have no effect on economic activitity — a belief so absurd, I doubt even Paul Krugman buys it.

When tax rates are high, the so-called “rich” — the people most able to boost economic growth by starting or investing in new ventures — become motivated to shield their income rather than produce more of it.  I’m currently taking on a lot of extra work, filling my evenings and weekends.  If I were facing a 70% bracket, do you really think I’d give up my evenings and weekends in order to give the government 70 cents of every dollar? Hell, no …  my time is valuable.  I’d stop taking on the extra work.

If I had $100,000 saved that I was considering using to start a new business, do you think I’d start that business (and risk my life savings) if the government were going to seize 70% of my earnings? No, I wouldn’t.  That’s why FDR (economic ignoramus that he was) found to his great chagrin that jacking up taxes didn’t bring in the revenue he thought it would.  Taxes suppress economic activity.

This is what Treasury Secretary Andrew Mellon recognized back in the 1920s:

“The history of taxation shows that taxes which are inherently excessive are not paid.  The high rates inevitably put pressure upon the taxpayer to withdraw his capital from productive business.”

Mellon (through Congress, of course) cut the top rate from 73%, to 50%, then to 25% — much like Reagan.  According to leftist theology, these massive tax cuts must have cost the treasury some whopping reductions in revenues.  But of course, they didn’t.  Treasury receipts dipped at first (thanks to a major recession in 1921), but were dramatically higher by 1928 — higher than before the tax cuts.

Even more interesting is the share of total income taxes paid by the top 1%:

1920 – 29.9%
1924 – 43.2%
1928 – 61.3%

Holy firecrackers! Mellon engaged in a major “giveway to the rich” (to use the leftist term for allowing people to keep more of their own money), and yet they ended up paying more in total taxes and far higher share of the tax burden as well.  How can this be?

This was exactly what Mellon predicted.  He lowered rates to a reasonable level, and the rich stopped wasting their efforts trying to avoid taxes and started putting their capital and energy to good use.  The economy grew, and the rich didn’t mind paying their taxes since the rate was reasonable.

John F.  Kennedy also proposed a reduction rates, which was passed in 1964 after his death.  The top rate was cut from 90% to 70%.  Here are the taxes collected before and after this giveaway to rich (in inflation-adjusted 2005 dollars):

1963 – $675 billion
1964 – $704 billion
1965 – $721 billion
1966 – $789 billion
1967 – $875 billion

Hmm …  doesn’t appear those tax cuts cost the Treasury anything.  It appears revenues went up by a rather large percentage.

After Reagan’s tax cuts, revenues (which had been relatively flat for several years if adjusted for inflation) increased by nearly $500 billion in inflation-adjusted dollars.  And once again, the share paid by the “rich” went up — from 28% to 40% — because once again, the people with money to risk and invest were far more likely to do so if Uncle Sam wasn’t going to confiscate most of the earnings.

And the disparity between rich and poor was much lower then.

1) It’s not the government’s job to fix the “disparity” between rich and poor.

2) Much of the increase in the “disparity” was on paper — because the rich were no longer motivated to shield their incomes and reported them instead.

3) After Reagan’s tax cuts, income went up in all groups, but went up faster in the top income group.  This was partly because of 2), and partly because they created new businesses at a record rate and earned more.  Newsflash: If an economic policy results in your income going up by $10,000 per year while mine goes up $100,000 per year, you haven’t been harmed.  You’re better off.

So both the Mellon and Reagan tax cuts resulted in the “rich” becoming more economically active, creating more jobs, increasing revenues to the treasury, and paying a higher share of the total tax burden.  As someone who believes the purpose of rich people is to support the rest of the population, you should be applauding those results, not complaining about a rise in disparity.  How exactly does suppressing economic activity and incomes among “the rich” to avoid a nasty ol’ disparity help the country?

Tax policy can certainly discourage the rich from taking risks and producing more wealth and more revenue overall, but it cannot fix the “disparity” by making the poor worth more than they are.  Your income is determined by the value other people place on what you produce, period.  The only way to raise the incomes of low earners is to make them more productive and therefore more valuable.  So what can possibly cause that to happen?

Some years back, during a gig as a comedian on a cruise ship, I ended up hanging around with a retired auto worker who’d spent his life working in a Ford assembly plant.  On a bus tour to see some ancient ruins in Mexico, we passed by one of those dirt-poor villages where people were living in tin shacks.  Many were outside, engaged in various forms of manual labor.

“Boy, that sure makes you think, doesn’t it?” said my auto-worker friend for the week.

Yes, it should makes us all think.  Why was my auto-worker friend — a laborer — so much better off than these people? Why was he able to own a nice house, a fishing boat, send his kids to college and take a vacation on a luxurious cruise ship, while these people were barely eeking out a living? Is it because he’s smarter than they are? Nope.  Is it because he worked harder than they do? No, he likely labored less and in much more pleasant conditions.

The reason my auto-worker buddy was so much better off is that the Ford Motor Company’s CAPITAL (in the form of plants and machines) enables an ordinary laborer to be so fabulously productive, he can trade that labor for a lifestyle that most people in most eras would consider rich.

You cannot pay people more than the value of the wealth they produce.  Productivity is what makes us wealthier, and productivity is a direct function of investment in CAPITAL.  I make a good living as a progammer because I invested in computers and programming software (and the time to teach myself programming), which made me far more valuable to other people.

So, do you want poor people to become wealthier? Then ask your government to stop sucking up so much capital and spending it.  Every dollar confiscated by your Uncle Same is a dollar that cannot be invested in the capital equipment that makes people more productive.

So at the very least they could pay 46%.  Until the debt is manageable.

At that rate, some people would be facing more than 50% in total taxes.  You’ll be back to the same old problem …  the motivation will be to avoid taxes, not to engage in productive activity.  You will simply end up hampering economic growth.  Taxes suppress economic growth, Paul.  You can’t wish that away, any more than you can wish away the law of gravity.

There’s also the moral issue, which is this: why the hell do you think you’re entitled to confiscate half of what anyone earns and spend it on yourself? Like I said before, if you want to steal from the rich, don’t be a coward and ask government to do it for you.  Get a gun and start robbing rich people.

It seems like blatant hypocrisy for guys like you to howl about the debt and then scorn as “socialists” people like me who want to pay it down.

If you want to pay it down (while simultaneously demanding a national health-care system that would send it through the roof) by confiscating more of what people earn rather than by cutting the huge federal programs that gave us these massive deficits in the first place, then yes, you’re a socialist, whether or not you’re comfortable with the label.

On top of that, your proposal for paying it down won’t work.  If you doubled taxes — even assuming people would pay them, and assuming further still (against all evidence) that the higher rates wouldn’t suppress economic activity — we’d still have a river of red ink as far as the eye can see.  Until you start naming which parts of the federal budget you support eliminating (and I mean some big-ticket items), you’re not the least bit serious about the reducing the debt.

And that was one of the reasons I sent you that article from THE NEW YORKER.  Its author traced Libertarian rhetoric to Cold War extremists.

Did you know, for instance, that Fred C Koch, father of The Koch Bros, was a principal funder of The John Birch Society? The Birchers, as you may have heard, were anti-communist zealots who saw conspiracies everywhere.  And even most Republicans steered quite clear of them.  But one can easily see the Bircher influence in Libertarian rhetoric.  Attendant with Koch money.

Well, if the leftist journalists think they see a link between libertarians and Cold War Extremists, it must be true.  Of course, claiming to see a Bircher influence in libertarian ideas is a bit like claiming to see a Nazi influence in the writings of Karl Marx.  Libertarians trace their ideas back to Adam Smith, John Locke, and Thomas Jefferson.  Hayek wrote his most influential books in the 1930s and 1940s, before there was any such animal as the John Birch society.  If the Birchers adopted some pre-existing libertarian ideas, good for them …  that just means they’re not completely nuts.

Libertarians like you, Tom, are living in the McCarthy era.  You probably would have viewed Civil Rights legislation as an encroachment on states rights.  That was the common view of many conservatives.

For a guy who claims to be a history buff, you don’t seem to have studied the history on this issue.  The Republican party’s view on race has been the same since Lincoln: all of us should be treated the same under the law regardless of race, period.  It was Barry Goldwater who, as governor, ordered his state’s national guard to stop segregating blacks and whites.  He also supported the NAACP and fought for desegregation in schools in the 1950s– long before it was fashionable.  Charleton Heston also marched for civil rights protests in the 1950s — long before the cool people in Hollywood discovered the issue.  When the Civil Rights bill came up for a vote, higher proporitons of Republicans in both houses voted for it than Democrats did, and it was Republican Everett Dirkson who overcame a filibuster by Democrats.

Goldwater voted against the bill because he thought it would be used to justify a quota system.  Hubert Humphrey assured him that would never happen and said it if did, he’d eat every page of the bill on the capitol stairs.  Despite these clear statements of intent by the bill’s co-author, courts later decided what the bill actually meant was that we needed a quota system.  Humphrey never ate the bill.

Yes, I’m against quota systems.  I believe we should be treated equally under the law, regardless of race.

And you would have opposed the creation of Medicare as many Republicans did.

Indeed.  Since Medicare is going to bankrupt us, history will prove what a bad idea it was.

Leaving Seniors to fend for themselves.

No, it would leave seniors to keep the insurance policies they maintained as working adults instead of canceling them and going on Medicare.  It would also leave seniors to decide perhaps a $200,000 procedure to extend an 80-year-old’s life by another year isn’t a good investment.

Even fluoride in drinking water would have met with your disapproval.

Now you’re just getting silly, Paul.

In other words, you are what’s commonly known as a ‘retarded McCarthyite’.  As characterized by your tendency to label as ‘socialist’ people who want to pay down the debt .

You want to “pay down the debt” by adopting leftist policies that have failed to pay down a government debt anywhere at any time.  The states that are run according to your theories on how to manage a budget are the states that are massively in debt.  (Of course, that’s all due to snow and the need to heat government buildings.) There have been governments that paid down massive debts, but all of them did it through austerity programs that required deep cuts in government spending.  I don’t see you suggesting any programs that should be sent to the chopping block.

What’s “retarded” is failing to do some simple math and recognizing that we can’t possibly tax our way out of this deficit.  What’s “retarded” is claiming to want to reduce the deficit while simultaneously demanding huge new entitlements.  What’s “retarded” is calling for higher taxes to balance the budget when you can’t name a single big-government, high-tax state that’s running a surplus.  (Tennessee is, however.)  What’s “retarded” is clinging to a theory that’s failed over and over in practice.

It’s funny how everything old gets new again while getting older yet.  Like Libertarians.  Most of whom are too young to know they’re actually recycled Birchers!

You’ve tried ringing that bell, Paul, and frankly you look rather foolish doing it.  I know a lot of libertarians, none of whom are Birchers, most of whom probably have no idea who the Birchers are or what they believe.  If the Birchers adopted some libertarian rhetoric, that’s no reflection on us.  The Nazi political platform called for much of what today’s liberals also demand, but I don’t stoop to accusing Democrats of being recycled Nazis.  Stop acting like a frustrated child and debate like an adult.

Tom

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