The capital investment dollars needed to avoid that second dip are sitting on the sidelines waiting to find out if the federal government is going to continue its current failed policies or take the tried and true tack of cutting taxes and slashing spending.
If that were true, then why are the tax rates lower now than at any other time in the past 50 years and yet, there are still no jobs? We are in this pickle because we spent trillions on wars without raising any money for those wars, not to mention that we send a fortune to other countries daily to pay for our energy needs. All of that money is flowing out of our economy. I do agree with slashing spending, but it needs to be across the board - defense is not untouchable.
tower, you are only considering taxes like income. Sales and penalty taxes (on cigarettes, alcohol, luxury) as well as fees are higher than ever before.
We are in this pickle because we rang up so much debt when times were good that their was almost no water left in the well when times became less than good. The annual deficit is over $1.5 Trillion annually right now. You could not spend a single dime on defense next year at all and that might cut the annual deficit in half. You would need to eliminate every function of government except the support for the individual welfare of each and every citizen in each and every state to balance the current budget. No EPA, no Justice, no SecState, no Education, no Energy, no Transportation, no Treasury, no Interior, no Labor, no Congress, no Executive, no Corps of Engineers, no HHS, no SS Administration - no government at all. That's how out of control the problem is. We haven't spent $14 Trillion on wars without raising money for those wars. That money has been spent on the individual welfare of each and every citizen in each and every state and left us in a position now where when we perhaps do need to incur a little debt to allow the economy to catch its breath and recover we are unable to do so because so much debt has been incurred already. We didn't spend $850 Billion (plus interest) building a new Hoover Dam or repairing our crumbling infrastructure, we spent it creating and saving public union employee jobs and benefits. FDR - at the height of his failed Keynesian dreams - was only spending 10% of the national economy.
We were able to spend 45% of the economy fighting WWII - incurring massive debt the whole time - because we didn't already have a massive amount of debt on the books. At the end of the war, the tax rates were cut, the federal budget was cut in half and the resulting boom lead to the greatest sustained period of economic growth the nation has ever seen - which allowed us to actually retire the war debt and still embark on creating the interstate highway system. Debt is fine when it is short term and you have a means of paying it back - neither of which apply to the current federal debt. The debt is long term and we have not only no means of paying it back, we have no intention of paying it back - ever. This nation has spent the last 40 years going further and further into debt instead of paying it back; and the vast majority of that debt has been incurred to pay for the individual welfare of each and every citizen in each and every state out of the federal treasury, something the federal government was never intended to do, and at the expense of expanding and maintaining the infrastructure upon which the nation depends for commerce to maintain a healthy economy, which is something the federal government is supposed to be doing.
The federal budget needs to be 15% of the economy, whatever the economy happens to be, on a regular and consistent basis. We can go to 20% for a year or two under emergency situations, perhaps even up to 50% for an all out national war effort, but we can't plan on a continuous 25% slice going to the general government each and every year and have a hope of keeping our head above water. 17% is pushing the envelope, 20% to 25% is simply ridiculous. There is no good reason, and really not any bad ones either, for the federal government to plan on spending that much of the fruits of the citizen's labors each and every year.
Well, there's the problem. You think I said ONLY cut defense. Notice that I said "across the board". Are you seriously going to argue that tax cuts spurred the industrial boom that followed the factorization of the US in response to WW2? You need to do a little research if you think that "lower tax rates" spurred that growth. It had nothing at all to do with taxes. It had to do with America's new found ability to produce goods in large volume the world wanted and needed. Here is a link to income tax rate history.
http://www.taxfoundation.org/publications/show/151.html
towermonkey wrote: Well, there's the problem. You think I said ONLY cut defense. Notice that I said "across the board". Are you seriously going to argue that tax cuts spurred the industrial boom that followed the factorization of the US in response to WW2? You need to do a little research if you think that "lower tax rates" spurred that growth. It had nothing at all to do with taxes. It had to do with America's new found ability to produce goods in large volume the world wanted and needed. Here is a link to income tax rate history.
http://www.taxfoundation.org/publications/show/151.html
The actual problem is the obscene amount of federal spending above and beyond any hope of what it will receive in revenue on a continual basis. It wasn't simply the tax cuts, it was a combination of tax cuts and massive spending cuts that spurred the growth of the private sector at the conclusion of WWII.
The other thing your little charts fail to show is how many people actually were subject to those punitive income taxes. In 1936 for instance, only one person paid the 79% income tax on income above $5 Million - John D Rockefeller Jr.
How about we look at the tax rates realistically instead of simply numbers on a sheet for a change. How about we look at the number of people in 1947 who were actually paying those rates compared to the number of people today that would be paying them.
Let's look at the results of those tax rates and see the amount of revenue they created and compare that to the tax rates today and the amount of revenue they create. Funny thing happens when you put some perspective on it. You find that the amount of revenue received as a percentage of GDP has remained essentially the same regardless of what the tax rates are. Which means that you can raise the tax on the evil rich and the evil corporations all you want and the revenue received is going to remain about the same as it currently is; which is 50% less than what the federal government wants to spend.
We don't have a revenue problem in this nation, we have a spending problem.
Your beliefs do not alter reality as it exists TM. The reason you've heard that phrase before, the reason it is so memorable, is because it happens to describe reality as it exists despite the beliefs of those who are unwilling to accept it.
Like most anything, the real answer usually lies somewhere in between. I have been a proponent of cuts in SS, Medicare and Defense along with a small national sales tax, slightly higher tax rates on the over $250k club and and slightly larger tax on the over $1,000 k club. I don't happen to like SS the way that it is structured now, but to try and change it loses elections. Medicare needs to go back to pre-Bush form. Defense needs to be drastically cut back. I simply don't buy this crap about why we need to have bases all over the world acting as the world's police. If that is the case, then the rest of the world needs to pay for the services rendered. Somehow I doubt they will be interested.
I would mostly agree with you on the fixed bases in other nations - we have a fleet of floating bases that can be anywhere in short order to protect our national interests and the means of gassing up our aircraft that allows them to reach anywhere in the world from the interior of our own nation or the decks of one of those floating bases. I do think it prudent, given our treaty alliances, to have our forces train with the forces of other nations so that they can work more effectively as one unit should that necessity ever arise and those tankers have to be based at strategic locations around the globe in order for them be able to refuel the aircraft on the way to their final destination and on their way home at the conclusion of their mission.
The federal government needs to get out of the individual welfare business altogether. It's the primary reason that the hole is so deep at the moment. The endless wars on concepts and the empire building of the nation are all the result of trying to find a way to justify and sustain the power the federal government has decided it should have for itself. Look at the history of the financial support the federal government has decided should be allotted to it by the citizens. Prior to FDR the only time it topped 5% on an ongoing basis was when the nation was engaged in a declared war - it hasn't dropped below 15% since the consolidation efforts began in earnest and is now looking like the expected norm will be more along the lines of 25% if allowed to continue.
Reminds me of something I heard a few years back. If the church can survive and even thrive on a 10% tithe, why can't the government?
