Wednesday, March 28, 2012

Budgets

Like befuddled deer leaping into a mirage of water
Deluded fools in their ignorance cling to outer forms
And with their thirst unslaked, bound and confined,
They idealise their prison, pretending happiness.
 - Royal song of Saraha

According to Alternet, this is what's in the "Budget for All":

• Direct hire programs that create a School Improvement Corps, a Park Improvement Corps, and a Student Jobs Corps, among others.
• Targeted tax incentives that spur clean energy, manufacturing, and cutting-edge technological investments in the private sector.
• Widespread domestic investments including an infrastructure bank, a $556 billion surface transportation bill, and approximately $2.1 trillion in widespread domestic investment.
Look at that. Amazing. It's going to hurt us, somehow. It has too much relevance to the state of reality.

So what does a country need to have equality and prosperity?

France and Brazil were the first to have trade surpluses  after the recession hit. What's also curious is, according to the Economist, the tax pictures of the two countries look about the same, "Brazil levies enormous taxes on just about everything: despite an estimated half of its economy being informal, its tax burden approaches 40% of GDP." France's comes close.  They also have very strong cultures of democracy, but I'm putting that aside for now.

I bring this up because there are other proposed budgets that will be cheered for the wrong reason. When I see his logic, it's impossible for me to take seriously someone like Business Insider's James Pethokoukis who wants to have "economic growth" without taxes, since taxes would be "economy-crippling." He laments that "the middle" as well as "the wealthy and the bankers" are both in it together, getting "pinched." This is common rhetoric in the business press, from the Economist to Business Insider. One simply wags his finger when taxes and regulation come up. Is this factual, or just a superstition?


According to Pethoukoukis's paper, France is always "inventing new forms of taxation" and busily having protests. The paper admits these are what outsiders don't like about the country, and pretty much leaves the discussion there.

As the two countries stand today, France now has a trade deficit, partly due to the Euro. However, they also have a president who is saying things like this:

“There’s no reason why deregulated finance, which brought us to the current situation, can’t participate in the restoration of our accounts.”

So maybe France doesn't have the winning strategy. But the picture of crippling an economy with taxes just doesn't hold up. While Coca-Cola warned France that they would lose business for a tax there, it's still obviously operating, and adjusted its policy to the regulations. They also have far more opportunity, the poor can become richer easier.

Moving on to Brazil, what do we see? They still have a trade surplus.

If the hostile rhetoric against the "Progressive" budget tells you anything, it's that whatever good there is in the plan isn't going to be looked at.

More:
Starting with the center of the road budget, the Bowles-Simpson act, which was defeated before I had time to even know what was in it:

  1. $200 billion reduction in discretionary spending[13] with proposed cuts including reducing defense procurement by 15% and closing one third of overseas bases, eliminating earmarks, and cutting the federal work force by 10%.
  2. $100 billion in increased tax revenues through various tax reform proposals,[13] such as introducing a 15 cent per gallon gasoline tax and eliminating or restricting a variety of tax deductions such as the home mortgage interest deduction and the deduction for employer-provided healthcare benefits.
  3. Controlling health care costs by maintaining the Medicare cost controls associated with the recent health care reform legislation,[13] in addition to considering a public option and a further increase in the authority of Independent Payment Advisory Board.
  4. A reduction in entitlements, including farm subsidies, civilian and military federal pensions and student loan subsidies.[13][14]
  5. Modifications to the Social Security program to raise the payroll tax and the retirement age.[13]

So, the priorities, man! Tax the ancient oil, whatever, work out the kinks in the mortgage blah blah, good. But, cuts to school loans, what the heck? Good riddance to this, and Obama's bonanza of tax cuts is hardly any better. The Ryan budget, which puts our spending at a measly 19.8% of GDP, needs to go too.

So is there anyone who has the right idea in the business press? Hard to find them. Dug up this gem though, that Business Insider pretends to link to, who says

For the record, I think the “fiscal responsibility” zeal now sweeping through Congress is equal parts delusion and sham. For a vigorous debunking of the current fixation on deficits, see James K. Galbraith’s recent Nation essay. Real fiscal responsibility would mean ramping down military misadventures and making smart investments in future health, prosperity, and ecological sanity. Devoting real resources to school lunches is a perfect example. Doing otherwise is a grave mistake.

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