That’s why I expect Obama’s promise that no one with an income under $250K will have a tax increase to evaporate soon.

there is plenty of incentive to work when you are unemployed: after the first couple of weeks on unemployment the depression sets in and it only gets worse from there.

re: deficit spending and tax cuts – both parties have half of the issue ass backwards. you raise taxes and cut spending in the good times because people and businesses can afford it, and you increase spending and cut taxes in the bad times to stimulate recovery, using the money you collected during the good times.

the republicans always want to cut taxes, and the democrats always want to increase spending, but no one wants to do anything about the obvious drains on the economy, like wars, and no one wants to take steps to ensure we are becoming economically self reliant, i.e. energy independence.

Certainly when I’ve been harder up than I am now I didn’t care about what the guy next door earned – I cared about what I was eating for dinner. I think I’m heading slightly OT, but the whole idea that relative poverty is more important than absolute poverty, or even that relative poverty is important at all grinds my gears. What matters is making sure kids eat properly, in good housing, with good education, not making sure that their parents earn some arbitary proportion of the national wage.

So, to long windedly answer your question, I don’t care how much the richest earn, as long as other people, particularly the poorest, eat well, I don’t think you should care either.

Which is why the Laffer curve has been laughed out of respectable economic circles: its claims are trivial where they’re right, and wrong where they might be meaningful.

Still, the Laffer Curve is a tour de force of economic thought when compared to the Right’s bowlderization of it: “Tax cuts always pay for themselves.”

He seems shocked that anyone would have a moral problem with large deficits. That is, with

As it is now, 10% of all money the government spends is interest payments. Totally wasted money that mostly goes straight to foreign investors. This has risen significantly just in the short but profligate Bush years, and will only rise higher during the term of Bush 3.

This is, in a very real sense, borrowing from our children without their consent, in order to continue unsustainable economic patterns today. It’s very much immoral, yes. I am astounded that someone as widely read as Krugman can simply ignore this simple fact.

The excellent thing about so many of the comments here are how beautifully they illustrate the very phenomenon that Krugman was describing: pre-existing ideological beliefs getting in the way of empirically-driven policy. Among all the comments critical of Krugman, I don’t see anything actually addressing the substance of his argument. Instead, I see generalized capitalism-vs-socialism arguments being offered as if that were the point of disagreement.

Econ 101 concepts and the idividualism vs. collectivism dichotomy are attractive heuristics that lighten the cognitive load of understanding real world economies in their vast complexity. But comforting yourself with the elegant simplicity of Friedman or Hayek at the expense of addressing empirical reality is never going to lead to effective policy.

The right wing in this country discovered a brilliant but dangerous campaign giveaway to help get themselves elected. Instead of a chicken in every pot, they put a narrative in every noggin – this pacifying, simplifying story that reduces all of society’s stakeholders and their motivating interests to tribal ingroups and outgroups, where the finances of a nation work just like the finances of a family. It sure has worked, but if you wonder why we have such a hard time responding to big problems, look no further than this very thread to see how far smug ignorance can lead you astray from addressing the actual problem at hand.

When the top 25% of taxpayers pay over 86% of total income taxes received by the IRS, it should be obvious that the middle income brackets are not paying their weight.

No it is not obvious in the slightest. If the top 25% take in more than 86% of the total income, then there is absolutely nothing strange with them paying 86% of the taxes.

We live with a progressive tax system. The rich have *always* from day 1 of the first income tax in this country paid more than the poor. In fact, they paid *all* the income tax.

If you want a flat tax that taxes everyone the same percentage, then be prepared for the bottom 50% paying their entire income to the government. Does that sound fair? Does that sound even remotely practical? Do you think it would be a good thing for the rich of this country to live in a place where their workers live in abject poverty?

Is the answer really to put in more money to use more resources? Borrowing more money in the public sector, when we are already borrowed up to our gills in the private sector

Surely it would be better to improve the way we spend money/resources? There are so many things that can be done.

By the way, I agree that spending money to lift people out of absolute poverty should be a priority and something worth spending money on.

And on the subject of irrelevant arguments, the link in #7 takes you to a completely specious argument. The author of it is either pretending to be unaware that the level of demand in America after the war similar to the collapse of demand during the depression, or that the demand environment is not related to the outcome of the spending cuts.

June 19′s German tv news announced that, in a new trend, there are many (30,000) azubi (in-company training positions for young people) that are not filled because their economy is starting to cycle upward. FWIW. Of course these positions might be available because of recent deficit spending. Data?

I would be totally OK with reestablishing that same tax rate and bracket today. Call me a wild and crazy soak-the-rich guy, I don’t mind.

Money that is not directly tied to the act of being voluntarily given in exchange for value creates distinct problems.

Let’s look at schools: sure, we can all agree that students should get good educations. But unfortunately, studies have shown there is not a strong corellation between funding and academic success. See, for instance,

http://elsa.berkeley.edu/econ/ugrad/theses/charlene_tow_thesis.pdf

Money not tied to satisfaction can simply patch over weak underlying system. In many cases, more money is simply not the answer, because it can make people lazy and/or defensive of retaining pay higher than they are worth (i’m talking about certain corrupt school districts, or government workers in greece rioting and burning things because they risked a salary cut).

Then, you have the problem that with funding comes control. In California you can get a free public education at thousands of schools..but you are not free, right now, to teach your children in your own home. All schools must use state approved curriculum in order to be certified. Both of these are very new things in American society, and I think it is fair to say that the higher level of central control that came since the DoE was founded in 1980 has coincided with a deteriorating quality of graduates.

Same with health care: The more it is centrally funded, the more it will be centrally controlled. This is just the nature of things.

Unfortunately, when things are centrally controlled, for profit interests have an increased incentive to infiltrate and take control of it in order to smash smaller competitors- such as the flagrant regulatory capture of the FDA by the pharmaceuticals.

Then, you have the problem that money that is meant for one thing, in the long run, doesn’t end up there. So, you want money for schools and bridges and food for the poor. All well and good. So you agree to have $100 dollars taken from you every week to support these things. And, for a while, it does. But, what if there is, say, some sort of “war”? Well, you are obligated to pay this $100 a week. You can’t choose not to pay it, no matter what it is spent on. But hey, what do you know, war is pretty important. Expensive too. And us poor Amerikuns sure seem to get involved in a lot of them. It’s a good thing you are putting $100 into the pot every month, we might just need that for some tanks and bombs…

Finally, the most fundamental problem. You have the right to support any cause you want, in any way you want. But what if I don’t support it? Do you have the right, through force of arms, to make me support the causes that are important to you? I don’t believe that you do, and I don’t see how the creation of an entity called the “government,” which I did not vote for, ask for, want, or support in any way at any time in my life, changes that fundamental fact.

At least, if it’s a local thing I don’t support, I can simply move out of town. But if it’s a national thing I don’t want to support, or even more so find morally repugnant, then the only option I have to not support this thing that I find so wrong it is to break away from my family, friends, and homeland, and renounce my citizenship. That’s not very fair, is it?

You might say that it’s ridiculous to call funding roads “morally repugnant”; I refer you to the paragraph three above, about war.

In order to exist in the United States today, you must pay money to support Prisons, the CIA, corporate subsidies, WMD research, genocidal wars, etc etc etc. If you pay taxes in America today, YOU ARE GUILTY of aiding and abetting the crime of mass murder.

The mechanisms by which you are compelled to support these unspeakable crimes, such as the income tax, are ones that are kept in place because the average person, such as yourself, thinks we need them in order to have fire departments, schools, and bridges.

So, if you support these worthy endeavors you mention, I would suggest devoting your time, money, life energy, and creativity to organizations that can provide them peacefully. Not to supporting organizations that through force impel your neighbors to support the same things you do.

This is simply how we must act as individuals in
a society in order to achieve a peaceful world.

Date. National Debt
1990 4T
1999 8T
2010 13T

How high will you take it? My guess is Krugman will never ask to cut spending.

The historical record is clear: states that continually assume larger and larger obligations, whether to their creditors or to their own dependent populations, inevitably decline. For the interested, I refer you to the excellent book by Jane Jacobs, “Cities and the Wealth of Nations”.

True, austerity programs will lead to short-term economic sluggishness. But in the long run, their absence will be fatal.

True, as well, Krugman is correct that the plutocrat beneficiaries of the state are getting off easy. But increasing public spending will make that problem worse, not better.

It is too early to see what effect the federal and state governments’ infrastructure spending will have, as most of the projects are still on the drawing board. However, most economists agree that public infrastructure spending will keep more people in employment as government contractors soak up some of the workers laid off by the private sector. Building infrastructure during a downturn also represents better value for the taxpayer, as labour and material costs generally decline from their peaks and make infrastructure construction cheaper than in boom times. Improved infrastructure should also increase the economy’s capacity for growth when good times return, as long as the projects are well chosen.