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The Real Motivation of the Pain Caucus

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time_magazine_cover.jpg.CROP.promovar-mediumlargeAbove: Publication Appearing in 3 Weeks At Your Dentist’s Office Insults Your Intelligence

Time Magazine made the smart decision to put its dumb cover story about the national debt behind a paywall. The premise — the national debt is like household debt and should be considered as if it’s apportioned equally to every U.S. resident — is stupid on its face. But Matt O’Brien has read the thing because nobody else will, and it’s even worse than its premise:

The government can borrow for 10 years at 1.77 percent, for 20 years at 2.16 percent, and for 30 years at 2.58 percent. It’d be hard for those to get any lower. And that’s what makes Grant’s debt doom-mongering not just wrong, but world-historically so. Think about it like this. The reason we care about the debt is that lenders might. In other words, if the debt got to be too big a share of the economy, then investors might demand tougher terms to make up for the fact that we looked a little riskier. Reducing the debt, then, is about reducing interest rates. Indeed, that was the rationale behind Bill Clinton’s big deficit-reduction package in 1993. But that’s impossible when interest rates are already as low as they can go, like they are now. So what would be the point of cutting the debt?

Easy: cutting the government. That, more than the debt, is what Grant really cares about. You can tell by the fact that his solution to what he thinks is too much red ink is … a big, fat tax cut? Actually, yes. “Are we quite sure,” he asks, that “we want no part of the flat-tax idea?” What he doesn’t say, though, is that if you’re going to cut taxes by, say, $8 trillion over 10 years—that’s how much Ted Cruz’s flat tax would cost—then you’re going to have to get rid of a lot of the government to bring the debt down. So goodbye Social Security, goodbye Medicare, goodbye Medicaid, goodbye Obamacare, and probably goodbye food stamps and unemployment insurance, too. (The actual debt is $19 trillion, but that includes obligations we owe ourselves, like Social Security.)

When you’re considering a flat tax, it’s not because you care about the national debt, it’s because you think wealth needs to be massively redistributed upwards, with the debt as the tissue-thin pretext.

…as Warren Terra notes, the Sultan of Shrill has more, and it’s outstanding.

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  • Warren Terra

    Paul Krugman’s blog post on the article. It’s only three paragraphs (four sentences), and I don’t think it’s really right to post the whole thing, so I’ll just go for the sarcasm:

    Time magazine decides that now is a good time to devote its cover to dire prophecies about looming US insolvency, with the lead article by James Grant — signatory of the infamous 2010 letter warning Ben Bernanke that his policies would cause inflation and debase the dollar, crusader for a return to the gold standard.

    Was Time purchased by Zero Hedge when I wasn’t looking?

    • Derelict

      The real bottom line to this Time article is: DO NOT elect a Democrat.

      As we know, Democrats are simply tax-n-spend liberals who expand government in order to give benefits to people who don’t deserve them, thus creating deficits that will eat all of us in the night. Republicans are fiscally responsible* and will ensure prosperity through pursuit of prudent and proven policies** such as tax cuts for the wealthiest.

      *For certain meanings of the word “responsible” that include profligate spending, tremendous expansion of both the size and intrusiveness of government, and the creation of historic debt.

      **These policies are proven to make the deficit and the national debt skyrocket while confining the benefits to less than 1% of the population.

      • Murc

        As we know, Democrats are simply tax-n-spend liberals

        Whenever anyone trots that out unironically I say “you’re goddamn right we are. We believe in paying for stuff. We’re the party of fiscal probity and I’m proud of that.”

        • D.N. Nation

          I don’t remember which exact one of his YouTube videos it’s from, but I always like CGP Grey’s definition of taxes as “what grownups use to pay for civilization.”

          • alex284

            I’m pretty sure that’s from Oliver Wendell Holmes.

      • Nobdy

        Democrats: Both the economy and the federal deficit do better under Democrats than Republicans historically.

        Republicans: Maybe, but we talk a lot more about how we will magically fix both even though our plans are nonsense and as a practical matter disasterous.

        Media: The Republicans have a point. They do talk more about it. Seems like they’re the serious party of fiscal responsiblity. Why would they say it if it weren’t true?

        • Linnaeus

          Democrats: Both the economy and the federal deficit do better under Democrats than Republicans historically.

          If you want to live like a Republican, vote for a Democrat.

        • The Lorax

          Media: Democrats say the economy is better under Democratic presidents. Republicans say it was the best it has ever been under Reagsn. Who is to say who is right?

        • addicted44

          Invoking the correct magic incantation appears to be the entirety of the Republican platform.

          Ted Cruz insists the problem with terrorism in the world is that Obama refuses to call it Islamic Terrorism.

      • cpinva

        “Republicans are fiscally responsible* and will ensure prosperity through pursuit of prudent and proven policies** such as tax cuts for the wealthiest, and unnecessary, unpaid for wars.”

        there, fixated that for ya.

        • Breadbaker

          Medicare Part D called and suggests you are underinclusive in describing what they spend but don’t tax on.

    • Docrailgun

      Wait, haven’t heard that we’re not allowed to listen to or believe anything Krugman says because he was bought and paid for by Goldman Sachs, he’s a secret RepublIcan, eats babies for breakfast like HRC and held the pillow for Clinton when she killed Scalia AND when she killed Vince Foster?
      That’s what I heard, anyway.

      • efgoldman

        held the pillow for Clinton when she killed Scalia AND when she killed Vince Foster?

        A calumny! He was at an overseas conference when Vince Foster was killed. Everybody knows that Huma Abedin helped Hillary!!

      • alex284

        Krugman has gone off the deep end on this election. “Sanders isn’t making terrible personal accusations about Clinton, but isn’t that really the WORST terrible personal accusation he could make?! Argle bargle!” I don’t think it’s because he was bought or anything, but because declaring support for a primary presidential candidate requires saying stupid stuff on the internet.

        I wish we’d go to same-day primaries just because of how long and stupid the current process is.

        • Warren Terra

          same-day primaries would be a huge for the establishment candidate; on the other hand, a complete wacko flash-in-the-pan who flashed at just the right moment might get nominated.

        • kped

          He’s never made an argument remotely like that. All of his arguments against Sanders are far more legitimate than your caricature.

          The way I see it with the critiues against him: When you have Huffpo, Salon, and Taibi against you…you are probably right.

          (Taibi is against him more for that Zerohedge shot Krugman took at the bottom of this post. Matty was very freaked out about QE and QEII, along with the nutters at Zerohedge, and Krugman very patiently and correctly took those conspiracy theorist nutjobs to the woodshed. Taibbi is now getting personal thinking he smells blood in the water)

          • Colin Day

            Salon is against Bernie? Has anyone told HA Goodman?

            • kped

              ? I mean the recent critics of Krugman. The recent ones I’ve seen are Salon, Huffpo, and Taibi. And honestly, those three have no credibility anymore in this election cycle to me.

        • addicted44

          Can you actually quote Krugman making an argument to that effect?

          On the other hand, he has clearly explained his issue with Sanders in a blog post and op-ed. He doesn’t think the Sanders campaign thinks deeply about the issues, and seems too fond of solutions that sound great in a soundbite, but fall apart when when you dig deeper.

          You may disagree with him on the accuracy of those statements, but they’re nothing like what you are characterizing his opposition as.

          Edit: As someone who disagreed with Krugman when he was criticizing Obama in the 2008 primary, only to realize that he was right all along in recognizing him as a fairly centrist democrat, who was probably to Hillary’s right on domestic issues, I’ve learned from hard experience to never dismiss him easily. He may be wrong, but it’s rarely because he didn’t think things through.

        • I think this is hugely overstated. I’ve been a little put off by the tone of some of his criticism of Sanders, but he’s not nearly as tendentious as, say, Gawker is these days against Clinton.

    • The next sentence is good, too, although somebody edited out a “the fuck” between “Who” and “thought.”

      Who thought this was a great way to make the magazine relevant and credible right now?

  • Orphos

    “We need to pay off our debt… so let’s cut taxes!” Want to call it the most insane public policy of the late 1900s? I’m not sure it actually is more insane than nuclear development and policy, but it’s up there.

    I also love that they ditch the household metaphor as soon as they talk about cutting taxes, even though the “debt is bad” argument relies on that metaphor to make any sense.

    • LosGatosCA

      It doesn’t have to work, or make any sense, it just has to sell.

    • Gabriel Ratchet

      What, you mean taking a lower-paying job isn’t a perfectly logical way to handle household debt?

      • so-in-so

        It might lower the number of new credit card offers you receive.

        Or not.

    • cpinva

      and let’s not forget the demand that any new program/change in a currently existing program be paid for, so the effect on the budget is zero. if the idea is to reduce the national debt/debt service, shouldn’t the overall effect of any changes be to reduce the national debt/debt service? republicans, they make no sense in so many different ways!

    • malraux

      I still favor the greenspan idea that we need tax cuts because we are running a surplus that might pay off the debt and that would be bad.

  • Awful and shameless as this is, I don’t think it’s as bad as Newsweek’s “What would a Trump Presidency really be like?” story by Matt Cooper last month. That was seriously creepy. They compared him to Eisenhower.

    • Warren Terra

      I have no problem making that comparison: according to Google, Trump is four inches taller. He also has a lot more money than Eisenhower ever did.

      On every other metric I can think of, Trump doesn’t really measure up.

      • Mark Field

        Finger length?

        • Warren Terra

          I doubt there’s easily (read: lazily) available data for Ike; Trump’s stats are disputed (vigorously!); and in any case rumor has it it’s another area where Trump doesn’t measure up. So, probably not an exception.

      • Aaron Morrow

        Much likelier to be popular at Gettysburg nowadays?

  • Denverite

    Out of curiosity, would people on here be against a “flat” tax with the following features:

    1.) $30k personal exemption, plus $10k per kid claimed.
    2.) No household filings — two income families file two returns (only one parent can claim the kids).
    3.) All income is taxable. Capital gains, inheritance, etc.
    4.) Rate is set to account for all income and payroll taxes.
    5.) Very limited deductions. Medical expenses, college tuition capped at public school level, child care, adult care, maybe a few more for costs that really soak the non-rich.

    I don’t know if I’d go for something like that, but I can guarantee the GOP wouldn’t.

    • AMK

      No. There is no such thing as a serious or workable “flat tax” that does not function purely as a sop to the Kochites and neofeudalists who fund the GOP.

      • Denverite

        Sure. But it seems like that’s because they still want to carve out massive categories of income, not so much because the tax they assess afterward is “flat.”

        (Scare quotes because it’s not technically flat if you have some sort of personal exemption so you’re not taxing below- or near-poverty income.)

        • AMK

          Ok so we make all categories of income equal. Buffet’s deca-billions in BH capital gains are taxed at the same 10% or 15% rate as Scott Lemieux’s Guardian checks and the neighborhood dog walker’s tips. Makes a lot of sense!

          And there’s a reason why all these flat tax proposals are paired with sales taxes and/or VATs. It’s because the people who come up with this know damn well that virtually none of the income the superrich get in any form is spent on “shopping” for anything, so they’re effectively paying a much lower percentage of income in taxes than the dog walker.

          • Anna in PDX

            Wouldn’t this be a step in the right direction from the system we have now, in which Buffet’s deca-billions are taxed less than Scott’s Guardian checks?

            • Davis X. Machina

              Wealth is the outward and visible sign of the Lord’s election. It’s good.

              Wages are compensation for work, which is required for man as punishment for Eve and Adam’s sin in the Garden. They’re bad.

              So of course you tax wages more than capital gains.

              Deus lo vult.

      • Snarki, child of Loki

        “There is no such thing as a serious or workable “flat tax” that does not function purely as a sop to the Kochites and neofeudalists who fund the GOP.”

        I think you’re making too strong a statement here.
        For example, a ‘flat tax’ that required a billionaire be chosen by lot every 3 months and publicly decapitated might be acceptable.

        Worth a try, at least.

        • For example, a ‘flat tax’ that required a billionaire be chosen by lot every 3 months and publicly decapitated might be acceptable.

          What’s “flat” about that?

          Run over by a nice big steamroller, that’s the ticket!!!

          • MAJeff

            What’s “flat” about that?

            The blade?

        • randy khan

          I’m pretty sure that’s a head tax.

          • Sev

            I believe it’s a capitation payment.

        • Anna in PDX

          One out of every ten of them, like in Roman times.

    • Warren Terra

      You can argue for a limited number of rates, but even your progressive version of the flat tax rather blurs the lines between people making $100k and people making $1M.

      • Denverite

        Fair. I think as a practical matter you end up taxing a lot more of that $1M as regular income in most cases (because I think most people making $1M are seeing a substantial portion of it as non-W-2 income), but you certainly have a point that it seems unfair to tax the merely-well-off and the rich at the same marginal rate.

        • Jeff R.

          I know you’re trying to come up with a flat tax that would be appealing to non-conservatives, but I just don’t think it works. Like Warren says, you’re (mostly) treating people with 100,000 the same as 1M and even 10M or 100M. Most of your ideas I’d go for but I’d have steeply progressive rates starting at 5% or so and go well above 50% for over a million. The two keys are roll in SS and medicare taxes with regular income tax and treat all income the same. I think it would change the incentives for different kinds of income.

          While this is all idle speculation, I do I expect something like this to be implemented by the Charlotte Clinton administration sometime around 2080.

          • j_doc

            The two keys are roll in SS and medicare taxes with regular income tax and treat all income the same.

            The other way to think about this proposal is how to make these elements appealing to conservatives. I’m not sure that’s possible with today’s GOP in a way that wouldn’t be terribly pyrrhic.

    • catclub

      Yes, very much against.

      There is no reason a surgeon who earns $500k should pay the same rate as Lebron James who earns $32M.

      Never mind the hedge fund manager who ‘earns’ $400M.

      ETA: As to this:
      3.) All income is taxable. Capital gains, inheritance, etc.

      If you could do it, great. I am not holding my breath.

    • Aaron Morrow

      No.

      While that’s better than an actual flat tax, it’s still more regressive than the income tax we have now, even throwing in capital gains and inheritance.

      To be fair, I like that you’re thinking about capital gains as well as inheritance taxes, and I’d be tempted if you considered rolling the regressive Medicaid payroll taxes and estate recovery provision in there.

      We need more tax brackets, not less. (That reminds me, the one broad-based tax “cut” I’d support is adding a 20% tax bracket to the income tax, and only if we’re increasing the number of tax brackets above what we have now with at five more or so.)

      • Denverite

        I’d be tempted if you considered rolling the regressive Medicaid payroll taxes and estate recovery provision in there.

        I did say the rate would account for all payroll taxes. I’m more ambivalent on Medicaid estate recovery. I don’t think it’s really being abused. But that’s a state-by-state issue.

        • sparks

          I have only anecdotal evidence, but if they’re anything close to true, MediCal is abusive on estate recovery.

          • Denverite

            Oh, if it’s Medi-Cal, I’d believe it. They’re not big on using things like “judgment” and “discretion.”

            • sparks

              No, they’re really not. It’s better to do as Norman Bates would if one wants to keep inherited property. “Mother/Father” can make occasional fleeting appearances and nobody’s the wiser.

            • skate

              i can see your finger quotes from here.

        • Aaron Morrow

          First, I apologize. I meant to say Social Security taxes, as they are currently regressive. I actually enjoy how secretly progressive Medicare taxes are; the ACA added to the flat payroll tax an additional withholding tax and a surtax on net investment income.

          To me, Medicaid estate recovery is less an issue of abuse than
          (a) a non-progressive funding stream that the federal government currently requires the states to use, and
          (b) something that working class, middle class, and upper class who think they’re middle class often confuse for an estate or inheritance tax. It’s all the “death tax” to them.

      • Pat

        I’d like to see tax brackets on the estate tax. Right now, the first $5M is tax free, which seems fine. What would be nice would be 3-5 brackets, with the last one taxing something like 50% of any money over $100M.

        Let the Romney boys pay half their dad’s money in taxes.

        If the Democrats take both houses, they should totally put in a giant estate tax rise through using reconciliation. You want to bring the Republicans to the table? A tax like that is all that their big guys would care about. Put it in place, and then make the Republicans give us stuff to make it go away.

    • cpinva

      “2.)No household filings — two income families file two returns (only one parent can claim the kids).”

      this is already the default setting for married folks. using the “married, filing a joint return” is a non-revocable election.

      I can tell you right now, I wouldn’t. as cumbersome as our current system is, any version of a “Flat Tax” proposed so far has been nothing more than a boon to the rich.

      • Denverite

        this is already the default setting for married folks. using the “married, filing a joint return” is a non-revocable election.

        My point is that the current tax code gives a huge break to single income families, and I’ve always thought we should get rid of that. My tax rates shouldn’t be lower than someone making the same income just because I’m married and she’s not.

        • dr. fancypants

          I’ve always thought we should get rid of that.

          A flat tax certainly can be a solution to the marriage penalty/bonus situation. However, since your approach isn’t fully flat (because of the personal deductions), we’d see single-earner couples find ways to attribute enough income to the non-earner spouse to take full advantage of their deductions. Probably not as big a tax dodge as when people used to do that in the old pre-current-marriage-rules days, but it’ll be there nonetheless.

    • Joe Bob the III

      Here is the thing I wonder about. We use the tax code to encourage or discourage a wide variety of behaviors. Social engineering , if you will. If we were to go to a flat tax with extremely limited deductions and modifications, we throw out the tax code as a tool for creating economic (dis)incentives. Assuming there are a lot of things we would like people to continue doing or not doing, absent a tax penalty/bonus how do you make those things happen?

      Would we simplify the tax code just to see a parallel set of regulations grow for the purpose of accomplishing the things the tax code used to do? As bad as the tax code is, it seems like there are even worse alternatives. In terms of how we experience government, economic incentives have a much lighter touch than straight regulation.

      • JKTH

        That reminds me that there are a lot of poor people who would get hit with a tax increase due to the loss of credits.

      • bobbo1

        A tax code full of incentives and disincentives gives rich people who can hire tax lawyers a huge advantage. Get rid of them all (the incentives, not the rich people), and pass laws giving money to people to do stuff we want them to do. More transparent and democratic. Also too, tax inheritance at 100%.

      • gmack

        You’re raising an important issue. As Michael Katz points out in his book, The Price of Citizenship, the U.S. actually does have a reasonably robust welfare state; it’s just that a good bit of it is administered through the tax code (via deductions, credits, and so on). You can argue that this is “lighter” form of regulation, but there are important downsides. First, a good bit of these tax deductions, credits, etc., function as welfare for the middle class and the rich (the mortgage interest deduction is the most obvious case: If you’re poor, you might be able to get vouchers to help pay for housing; if you’re middle class, you get a subsidy too, but it comes through the tax code, and so is not ever counted as “welfare”). One consequence of this is that this way of administering benefits to the population helps undermine social solidarity: My mortgage interest rate deduction is just my right; your housing vouchers are welfare that’s destroying our country. Finally, the use of the tax code in this way is also responsible for the enormously complicated tax system we have. And this is an important and overlooked issue; a lot of the reason why a flat tax seems attractive to non-rich people is because it’s simple, or appears to be simple. This stands in a direct contrast with the completely unintelligible tax code we currently have, and this experience of the complexity is one of those yearly rituals that convinces people that the government is utterly inefficient, corrupt, and so on.

    • wengler

      No. The rich should be paying a much higher effective tax rate than everyone else. Right now they don’t. Under your flat tax I would imagine their effective taxes would be even lower than most people.

      • Denverite

        Under your flat tax I would imagine their effective taxes would be even lower than most people.

        How so if you count a lot of stuff that is taxed at low rates now (mostly capital gains stuff) as regular taxable income?

        (Note: I understand this is all wankery because if the political climate is such that a flat tax is seriously being considered, it won’t be such that we would count capital gains as regular income and wrap payroll taxes into that flat tax structure.)

        • Aaron Morrow

          While effective tax rate on the rich would be about the same under the new system as everyone else, assuming a proportional distribution of deducts, I suspect their effective tax rate would be less than other the current system. (I’m assuming a definition of “rich” that includes people who earn a lot of taxable income, and I’m trying to guess at an appropriate single tax rate.)

          I don’t see how you’re not increasing the effective rate on the working class and much of the middle class. Did you counting an estate tax and an inheritance tax at the same single tax rate?

          • Denverite

            (I’m assuming a definition of “rich” that includes people who earn a lot of taxable income, and I’m trying to guess at an appropriate single tax rate.)

            That’s just it. I suspect most of the people we would consider to be rich earn a lot of non-taxable income (or income taxed at capital gains rates).

            I don’t see how you’re not increasing the effective rate on the working class and much of the middle class. Did you counting an estate tax and an inheritance tax at the same single tax rate?

            Yes, all income. Inheritance, gifts (over some de minimis amount), business income, other capital gains, everything.

            • Aaron Morrow

              Nice. What do we call it when reactionaries react?

              As I said, I admire progressive taxation as a principle, and I think you’ll end up either lowering total taxes collected or raising them on the working class and much of the middle.

              That said, if one could show math that proves that such a system is more progressive than the current system, I’m willing to admit that I’m wrong.

              • Denverite

                Yeah, probably so — and in any event, it’s all wankery.

            • sonamib

              Do you get rid of sales taxes in your proposal? Otherwise the effective tax rate on rich people is lower since they tend to spend a smaller share of their income on consumer goods.

    • j_doc

      I think an inevitable problem is that an all-or-nothing flat tax very clearly separates the population into “taxpayers” and “moochers”. In the scheme you outline, more than half the population really would pay no federal taxes. Which works out OK from an inequality point of view, but could be terrible politically. For example, if we think SS is so popular because “everyone pays”, then what happens when more than half of the population isn’t paying anymore?

      Flat tax defined as one bracket just makes no sense to me. Four or five graduated brackets are not that much more complicated. The brackets aren’t where the complexity lies.

      • xq

        I think SS is popular because everyone gets it, not because everyone pays. And I doubt that calling more than half the population “moochers” would be a political winner for the Republicans.

        • j_doc

          I think SS is popular because everyone gets it, not because everyone pays.

          Fair point, and I hope that would be sufficient.

          But even now, not quite everyone gets SS/Medicare – you or your spouse do have to have paid a modicum into it. Remove that, and I think future conservatives would have an easier time selling the toxic claim that “those people” don’t deserve your hard-earned tax dollars. Heck, 47% of voters already buy into that false 47% meme.

          • Pat

            That’s not true. You only get SS if you have worked in a job that paid SS taxes. I know some farmers who discovered this very late in life. Fortunately, they could re-file their taxes using some arcane regulations that allowed them to back-pay SS taxes.

      • Flat tax defined as one bracket just makes no sense to me. Four or five graduated brackets are not that much more complicated. The brackets aren’t where the complexity lies.

        This is an excellent point.

        • ColBatGuano

          That isn’t made nearly enough.

    • mpowell

      It’s not that this is a bad plan, but what do you think you’ve really achieved? A progressive tax rate is not what makes taxes complicated. It’s deductions, phase-outs, different rates on different income sources, etc. Aside from deductions things could be made a lot simpler if tax law updates didn’t try to slice the salami so carefully that only ‘x group’ sees tax rate increases.

      But deductions are the elephant in the room. On the one hand, you have to grant deductions to anyone running a business. You can’t tax revenue at the same rate as income. On the other hand, this is always going to be a big loop hole for a certain segment of high earners. Better tax enforcement is probably your best approach there.

      • Ronan

        Is tax complexity itself a problem though ? Is that complexity not a normal and important part of any tax code?
        Put it this way, the argument seems to go that the tax code is so complex because it represents decades of lobbyists, the public and special interests carving out niches and caveats for themselves. But if you could wish away all those politics, develop a near perfect tax code that represented societal norms on fairness and had across the board buy in, wouldn’t it still be incredibly complex?
        What would an optimal tax system for a complex economy look like, if developed by a group of technocrats removed from all political bargaining? I would guess still incomprehensible to most.
        “Simplicity” seems to me like a bit of a red herring.

    • medrawt

      I don’t think you can slide the personal exemption high enough to really offset the regressive nature of the tax for low income families without cutting yourself off at the knees in terms of total revenue. You wind up hunting for a sweet spot – 10% with a $35k deduction! 13.5% with a $42k deduction! – that I don’t think you’ll find, or won’t find to be preferable to a progressive set of tax rates.

    • alex284

      Meh. I’m an economist so I think that something like a 75% top marginal tax rate on the highest incomes is totally fair, but then I would be hard-pressed to think it’s fair to impose such a rate on a teacher.

    • Brautigan

      No. It’s stupid. It doesn’t “simplify” anything – finding your tax rate takes all of about 10 seconds (only takes that long to find your reading glasses).

      It’s defining “income” that’s the bear. And there is no way to get around that when you are taxing . . . wait for it . . . “income”.

    • DAS

      I’ve been trying to figure out how to work in a two-bracket system (because, as described by others below, there is a difference between, for example, a family earning $250K and one earning $250 million / year). The problem is the no household filings issue causes problems for families where one wage earner earns the bulk of the money but the other wage earner earns somewhere around $25K/year.

      For a flat tax, you could have a system where you allow a person to claim a spouse on his/her return (and then that spouse cannot claim his/her-self). In a family of four, the primary wage earner has an exemption of $70K (self, spouse, and one kid) while the secondary wage earner takes the other kid ($10K) and each has all the exemptions to which they are entitled.

      But I cannot figure out how to extend that to a two tiered tax level.

    • addicted44

      Let’s be clear. A flat tax is opposed to a progressive tax. There are other parts of the actual tax plans which may involve stuff such as reducing tax credits, or taxing more sources of income, etc., but those don’t have anything to do with the “flat” tax.

      Basically, the entire flat tax theory resides on the idea that what’s really hurting America right now is that millionaires are struggling to look up a table and do a simple 4th grade math calculation.

      That’s ALL a flat tax provides over a progressive tax. In return for not having to do a 4th grade math calculation, it either greatly increases the tax burden of the poorest, or gives a massive tax cut for the riches.

      Edit: I looked up the 2016 tax tables. The IRS doesn’t even need you to do a math calculation anymore. The only task is to look up the number associated with the $50 range which your salary falls into. SMH.

      • UserGoogol

        A minor technical issue I kind of like about a flat tax is that you don’t have to keep track of who earns what money, just how much money is earned. If people earn income over multiple different fake identities, it’s taxed the same, while under a progressive tax fake identities lower your tax obligation. Of course, a flat tax like that would have to be really really flat, with no exemptions. But if you want to be fanciful, you could replace a standard exemption with a basic income. You’d still have to track people’s identities, but only for the purposes of giving out the basic income, not monitoring their earned income, so people can go around earning money anonymously.

        The system I just described is completely unrealistic (progressive taxation is not the only reason the federal government tracks individual incomes, anyway) and this minor technical property is a stupid reason to favor a flat tax over a progressive tax, but if I could just wave my hands and rewrite fiscal policy from scratch I think it’d be a neat idea to have a flat income tax and get the progressiveness from spending and non-income taxes.

        But uh, I guess my point is that people can have plenty of reasons for supporting a flat tax.

  • UserGoogol

    I think it’s a fallacy to say “their argument doesn’t make sense therefore they have ulterior motives.” People are perfectly capable of being irrational. So I think people are entirely sincere when they support a flat tax for the following reason: “Taxes are too complicated. A flat tax is simple! So let’s do that.” It has a certain superficial appeal to it, even if a flat tax is fundamentally addressing the wrong kind of tax-code complexity.

    • petesh

      One would reasonably expect a candidate for president to know better, but Trump is running this year, so that’s in question. As for Cruz, he knows damn well. The supporters are the marks.

    • Nobdy

      “Taxes are too complicated!”

      “Ok. What if the IRS computes your estimated taxes based on your W-2, 1099s, and other employer filed forms and sends them to you to check over? That would cover over 90% of the country’s income tax prep needs?”

      “I don’t want the IRS prying into my business! The Turbo Tax lobbyist told me that.”

      “But they already have this information. They use it to check the forms YOU submit!”

      “I’m cranky and stupid and don’t understand that a flat tax would not benefit me because I only make $45,000 a year. Flat tax! Flat tax! Flat tax!”

      There’s a reason Homer Simpson is such an effective satirical character. Of course everyone thinks that they are Lisa and not Homer. Human frailties and all that.

      • Denverite

        That would cover over 90% of the country’s income tax prep needs

        Is this true? If you include mortgage interest, property taxes, child care credits, HSA contributions, student loan interest, and charitable donations, I bet that covers a heck of a lot more than 10% of tax filers.

        • catclub

          Expand to bank filed forms and you get mortgage interest.
          HSA contribs are generally through the employer – or bank filed again. property taxes SHOULD be computerized and the organizations that collect them COULD report them easily to the Federal and State government.

          Is student loan interest deductible?

          Now you are down to only charitable contribs and child care credits. The number of people who presently itemize deductions
          for those is probably less than 5%. The standard deduction grabs almost all of them.

          • Nobdy

            Student loan interest is deductible but I believe servicers already send that info to the IRS. Basically the IRS collects the vast majority of this information anyway. Private charitable donations and complex investments are a separate story, but as you point out it is a small percentage of the population that has to actually deal with those.

          • Denverite

            HSA contribs are generally through the employer

            Am I the only one that funnels all of our family’s medical costs through an HSA when I do our taxes? I just did it last week. Figure out how much we spent, transfer that amount ot my HSA, then have the HSA cut me a check for the same amount. Voila. Taxes owed go down by 25% of that amount (or whatever the marginal rate is).

            Is student loan interest deductible?

            Yes, with a phase out starting (I think) around $90k and ending completely around $130k.

            Now you are down to only charitable contribs and child care credits. The number of people who presently itemize deductions
            for those is probably less than 5%. The standard deduction grabs almost all of them.

            No way. The child care credit is a free $1200 for anyone who pays at least $6k in childcare in a given year. And if you are paying for childcare, you’re paying more than $6k. As for charitable contributions, you’re probably right, especially if you disregard anything below the $500 you don’t need to itemize or have appraised.

          • cpinva

            “Expand to bank filed forms and you get mortgage interest.”

            don’t need to, the IRS already gets a copy of the F1098, with your mortgage interest/real property taxes reported on it. it would already be included on the 1040 prepared and sent to you by the IRS.

            “Is student loan interest deductible?”

            yes. again, it’s reported to both you and the IRS by the lender. as a rule, the amount of average charitable deductions is going to have a negligible effect on your Sch. A.

        • brugroffil
          • Denverite

            That’s still a lot lower than 90%, but it’s surprisingly high to me.

            • JKTH

              For all the VSP/elite whining about how complex calculating your taxes is, it really isn’t for most people.

              • Bill Murray

                really, I am 54, have made around 6 figures, before the decimal place, for the last 10 years and a little less for the 10 years before that and have never taken more than an hour to do my taxes, usually less than 30 minutes

            • Cassiodorus

              Why? Standard deduction is far greater than the itemized deduction for most taxpayers.

              • Denverite

                Probably because I’m simultaneously overestimating (1) how many people own their own property, (2) how many people have a mortgage on said property, and (3) how many people pay mortgage interest greater than the standard deduction.

                • Cassiodorus

                  Even in California, with relatively high state income tax and high property values, the mortgage interest deduction is roughly the same amount as the standard deduction for people buying a home of the median home value (assuming they have the minimum amount of income necessary to afford the home).

              • Aubergine

                That’s true for the Aubergines. Oh, for those halcyon days of mortgage interest deductions. Now that the old barn is paid for, the money goes to Uncle Sam, not Wells Fargo. I’ll pretend ours goes to the National Park Service and the Centers for Disease Control. I’ll let the brother-in-law pay for his homies in the House Republican Caucus.

            • Nobdy

              You might not get to 90% without making a few more institutions mandatory reporters, but you could get pretty close. There is a reason the tax prep lobby fights this.

              Norquist and Co too because they want to keep taxes painful. If most of the country just got a form from the IRS and a refund every year it would be much harder to treat the IRS as the Boogeyman.

        • Aaron Morrow

          Since the IRS gets my 1098 (Mortgage Interest Statement) and my 1098-E (Student Loan Interest Statement), that might be what gets one to 90%.

          Since my property taxes are paid by my mortgage holder, I don’t see why they or the local government couldn’t report that to the IRS as well. Child care credits, HSA contributions, and smaller charitable donations are more difficult as I suspect it would be a major lift to start mandating reporting to the IRS, but it’s definitely easier to put your taxes together if you fill in three blocks instead of twenty.

      • rjayp

        You want complicated? Define income.

    • catclub

      Taxes are too complicated. A flat tax is simple!

      Left out is that the ONLY thing actually simple about taxes is the tax rates, once you have identified what is an is not income.

      A perfectly progressive tax rate structure is still simple.
      All you need to do is plug in the (properly identified) income
      and you get the rate.

      All the complication is in the ‘properly identified income’.

      • brugroffil

        Yeah, but a lot of people just don’t conceptually get progressive tax brackets. People honestly think that if Bracket A is $50k-99,999k and a 10% rate and Bracket B is $100k-200k and a 20% rate, a $1 raise that pushed you from 99,999 to 100,000 would double your tax bill.

        • Cassiodorus

          I’ve met plenty of people who should know better, including senior policymakers in state governments, who thought that. The first time I heard one of them say it, my jaw almost hit the floor.

          • mpowell

            I have been informed that it actually works this way in some European countries from people who used to live there. I’m not sure what to make of this. Do the people I’m talking to not understand the distinction? Or is the policy just that crazy?

            • What countries? I couldn’t find anything like that and totally don’t believe it :)

            • Aaron Morrow

              Given that many of us have been informed that it actually works this way in the United States from people who still live here, I know what I’m thinking…

      • cpinva

        “Left out is that the ONLY thing actually simple about taxes is the tax rates, once you have identified what is an is not taxable income.”

        “All you need to do is plug in the (properly identified) taxable income
        and you get the rate.”

        “All the complication is in the ‘properly identified taxable income.”

        I apologize for being difficult about this, but there is a difference!

        • catclub

          yes, of course. I was subsuming taxable into properly identified, for the tax rate calculation.

      • randy khan

        And for a lot of people the IRS or state will do the calculation for you – there actually are tax tables in the instructions that tell you what you owe if you make a certain amount. No fancy multiplication is required.

    • alex284

      Perhaps, but Jim Grant’s job is to tell people how to invest their money. You would think he would know what words like “solvent” mean and what the interest rates on US bonds are (at least a ballpark).

  • AMK

    And the really sad thing is that Time Magazine is supposed to be some kind of serious publication for subscription-paying adults, instead of a conversation starter for a 7th grade social studies class.

    • Derelict

      Um, since when? Time Magazine fell into the ditch back when it accused Westmoreland of all kind of stuff, got proven wrong, and refused to retract. Since then, it’s just been sliding down hill as the printed-out version of clickbait.

      • cpinva

        well, in fairness to Time, there was no “light at the end of the tunnel.”, except that of an onrushing train.

    • politicalfootball

      As always, the Onion explains it all. Turns out that Time is planning a magazine aimed at adults.

      • sonamib

        That video is pure gold.

  • What a bunch of dreck. And what does Time think will replace all of those oh-so-safe government bonds? Facebook stock?

    • Honoré De Ballsack

      And what does Time think will replace all of those oh-so-safe government bonds? Facebook stock?

      FREE MARKETS SOLVE EVERYTHING!!!!11111!!!

    • tsam

      NO–this is why Obummer did the apology tour–he borrowed more money than all the printed money in the world from the chinese so that he could indebt us to them so deep that we turn to communism because china owns us and it was all for welfare and whatnot.

  • FMguru

    I know it’s tough out there in big media, and a lot of very good and talented people have been rendered unemployed by the structural and technological changes wrought by the internet era, and a lot of important reporting (especially at the state level) simply isn’t being done any more.

    But man, the diminution of the influence of the big newsweeklies has been entirely to the benefit of our political discourse. Same for the collapse of rating in cable news. Anything that reduces Joe Klein down close to the level of influence of Random BuzzFeed Commenter #42069 is A-OK in my book.

  • BiloSagdiyev

    $42,998.12 sure is a scary number. Most of us can’t reach into our bank accounts and write that check right now.

    However, expressed as a fraction of your lifetime earnings… yawn. We are awash in innumeracy. Just like when the GOP was screaming back in 2009 about A TRILLION DOLLARS, yes, bignumberitis, goddamn, that’s a big number. Except the US GDP at the time was something like 17.5 of those, and the hit it took starting around 2007 was more than 1T.

    As long as people don’t know the numbers or the facts and the context, they’re going to be led around by salesmen. Ugh.

    • so-in-so

      Its less than what many people pay for a CAR, that probably lasts them less than 10 years.

      • cpinva

        “Its less than what many people pay for a CAR, that probably lasts them less than 10 years.”

        people who pay that for a car are making a hell of a lot more than I am, and I make considerably above the national median/mean.

        • New cars are pricey, especially the SUVs and pickup trucks that everybody seems to want these days.

          I just did a quick search and a Chevy Tahoe/Suburban is close to $70,000!

          Because you need something roughly the size of a city bus to take your one kid to soccer practice.

          • Denverite

            My spouse’s newish (eight months old) Kia Sportage was “only” $22k. It sorta counts as a SUV.

            • Usually referred to as a “Crossover” because it’s built on a car chassis rather than a truck chassis.

        • so-in-so

          Well, I’ve never bought one, but there are certainly lots of expensive cars out there. The average new car seems to be well above $20,000, so the point remains that that number shouldn’t be totally scary for much of the population assuming you were given time to pay it off.

        • DrS

          A little google-fu found me this which found an average price paid for vehicles of $33,560 during the month of April.

          Of course, a lot of people never buy a new car, or don’t have enough income to ever buy a car new, even if they do have a car.

          But yeah, the number shouldn’t scare people, even if it were an accurate assessment of the debt, which of course it is not.

          • Denverite

            Of course, a lot of people never buy a new car, or don’t have enough income to ever buy a car new, even if they do have a car.

            I didn’t buy a new car until I was 31 (a car that I’m still driving, nearly a decade later). That remains the only new car I’ve ever bought. (My spouse bought one last summer.)

    • Joe Bob the III

      Similarly: I always like it when people complain about how many pages are in a piece of legislation.

      “Obamacare is 2,700 pages!!!”

      And that’s inherently bad because…? Changing health insurance for 300,000,000 people is complicated.

      • How many pages was the PATRIOT Act?

        • so-in-so

          The governor of North Carolina thought their anti-anti-discrimination law was so complicated at four pages that he wanted Springsteen to sit down with him so he could explain it.

          • DrS

            Which is crazy, cause I can explain it in one sentence.

            “We really don’t like the queers, so we’re going to fuck with them”.

        • erick

          I don’t know how many pages it was but it is wonderfully ironic that some of those pages had the laws that they used to nail Hastert.

      • West

        And along with that is the inability to distinguish between pages of original legislation and pages of follow-up regulations. For professional reasons I always keep handy a copy of Section 42 of the tax code, which created the low income housing tax credit. The govt site from which I downloaded did not paginate, but it looks about 50-60 pages. I’d hate to even guess how many thousands of pages of follow-on regulations and letter rulings and administrative clarifications have since been issued.

        This is true of all legislation that actually accomplishes anything. The initial Sec 42 legislation was tough, but then people started acting upon it – you know, building affordable housing or some such crazy damn thing and claiming the tax credits like they were allowed. And so then the regulators had to sort out how to make practice fit legislation. That’s been really tough, and it keeps evolving 30 years down the road.

        If the initial legislation had been so deeply flawed that no one had ever acted on it, the page total would have stayed at the original 50-60.

        Likewise with Obama Care, likewise with the Patriot Act (I have to assume for my peace of mind that those Podunk PDs buying armored personnel carriers are filling out some paperwork).

      • BiloSagdiyev

        I would like to know if the, “Jesus! Look at how many pages! Who knows what the hell’s in that thing? Fuck it, let’s just walk away!” excuse can apply to their King James Supply Side Jesus Bible.

  • WabacMachinist

    There’s been altogether too much talk lately about economic inequality and the Democrats are showing signs of heresy ($15 minimum wage, indeed) so Time’s contribution was: “look over here, folks, there’s a Big Federal Debt & We’re All Going To Die!!”

    • Murc

      Or worse, turn into Greece.

      • cpinva

        as long as some of their food comes with it.

      • Colin Day

        Oh, no! We might discover logic! Then the game’s up for Time.

    • Malaclypse

      You know, the federal debt is roughly 110% of national income, while my (modest) mortgage is roughly 225% of my household income. Funny how no banker said my mortgage would be impossible to repay.

  • DrDick

    More reasons why I quit reading Time 20 years ago.

  • Joshua

    I was shocked to see TIME bleating about the debt and deficit. I thought we were past that nonsense.

    But, in context, it makes sense. Right now, smart money is on the Democrats to win the White House, and one of the most effective weapons the GOP opposition has is whining about the debt. It got them the House in 2010. The DC Establishment LOVES furrowing its brow about the deficit, as long as it’s assumed to be there because the government is spending money on the poors (as opposed to cutting their taxes and spreading freedom abroad). It lets the GOP trot out its well-worn images of a family fretting over a budget around the dinner table.

    Ultimately it kept the Democrats from enacting their agenda, and that’s the point. The right has no new ideas, so I guess it’s not really not a surprise that they’ll trot this stuff out again. It will work.

    • so-in-so

      Of course, I just think nobody really expected Time to be the new GOP house organ.

      • alex284

        But they are clearly too dumb to realize that they were being used by rightwing ideologues as an organ of the GOP.

      • Joshua

        I’m not sure they are. It’s just conventional DC wisdom that the deficit is bad, and TIME is nothing if about conventional DC wisdom.

        • JKTH

          They manage to do even worse than that though by throwing in goldbuggery.

        • CP

          This. Part of the whole “DC is wired for Republicans” thing is the extent to which Republican memes have thoroughly permeated the entire mentality in Official Washington, even far beyond people who identify or think of themselves as Republican.

      • JustRuss

        Really? The same Time who made Dick Cheney’s(yes, that Dick Cheney) post-Iraq 1 piece about why Bush the Elder was correct not to press on to Bagdad disappear from their website shortly before Iraq Part Deux? TIme has been carrying GOP water for a long time.

        • DAS

          A long time? Don’t you mean since it’s inception? I.e. wasn’t Henry Luce one of the co-founders of Time?

    • WabacMachinist

      One major reason why the issue worked for the GOP in 2010 was that Obama bought into the idea that we’re facing this humungous debt crisis. The fight’s really over before it even begins when you accept the opposition’s basic premise.

  • Nobdy

    Why do so many people desparately want to live in a society where the poor are destitute and miserable with no hope?

    Do they like looking out the windows of their limos at homeless people shivering in the cold? Do they enjoy the idea of people dying from treatable diseases for lack of money? Do they read about the suicides and drug use in rural America and think not “how do we stop this?” But “more more more?”

    It can’t be greed all the way down because regressive policies are bad for the economy, nullifying the savings for most who support them (not the Kochs obviously, but what do the Kochs need more money for?) It has to be something else.

    • cpinva

      “Why do so many people desparately want to live in a society where the poor are destitute and miserable with no hope?”

      the easy answer is that it makes them feel better about their personal situation: “sure, we aren’t rich, but we’re a hell of a lot better off than those poor buggers!” of course, a lot of us do that now, but if we fixed it so the average town/city had streets that looked like Calcutta, we’d really think we hit the jackpot, and quit bugging our corporate overlords for a bigger slice of the pie. that would make the shareholders very happy.

      • Nobdy

        Maybe.

        Personally I tend to feel really bummed when I see poor people because I feel empathy for them and guilt for all I have.

        I would much rather pay higher taxes and know that everybody else around me had food, shelter, and medical care.

        When I was at a certain elite school there were homeless people who slept in the doorways of the school bookstore/café and it always made me feel like an a**hole. We talk a good game about liberal values, and I did a lot of volunteer work, but in the end we support and benefit from a society willing to discard and exploit other people so we can have a slightly nicer style of living. That makes us complicit and guilty.

        • Linnaeus

          That’s because you actually think about these issues seriously.

        • so-in-so

          RWers get around that by convincing themselves that all poor people deserve their lot for ‘reasons’ (lazy, “liberal”, etc).

          Plus the current crop take a**hole as a complement. They strive at it.

        • j_doc

          Many people can’t/don’t understand that a more equitable society is safer, healthier, and just more fun to live in than a deeply unequal society – for everyone, even the rich.

    • Joshua

      As other countries (India, Brazil, etc.) have shown, the upper crust can handle a lot more inequality and a wider wealth gap than we have here without feeling bad about it.

      However… I think the Kochs, truly, deeply, totally believe that the safety net and the mixed economy we have hurts the poor more than it helps them. I think they and others are acting in good faith on that.

      • Linnaeus

        Post hoc rationalizations can be entirely sincere.

      • JKTH

        Everything the Kochs have done leads me to believe they operate on the pretense that money in someone else’s hands is money not in their pockets.

        • JustRuss

          Yeah. Not long ago they bought a couple mills near me. All the little perks that employees enjoyed were immediately terminated. Less money spent on keeping employees happy means more for them. They really are that greedy.

      • Nobdy

        Maybe…but the elite from developing countries send their kids to the west for education and often buy property here as an escape valve if things get too bad. They see the downsides too even if they don’t connect the dots.

        I think the Kochs argue from a moral not a practical perspective. It doesn’t matter to them what actually alleviates suffering, they just think it is immoral to give people ‘free’ stuff. Of course that doesn’t apply to themselves or their companies so it is a very compromised morality that creates de facto two classes of people.

        • runsinbackground

          Taking reasonable precautions against the possibility of a slave revolt isn’t a sign of proper feelings of guilt or shame, it’s just good sense.

      • Jeff R.

        I don’t think it’s very useful to try to divine people’s motivation for their actions in the political sphere. I think of it more as a parlor game than any sort of political analysis. It’s better to look at what they do rather than why. Still, I go back and forth on whether particular people are running a con or are true believers. Rove, I always thought was in on the con, but his metldown during election day 2012 made me start to doubt it. The Kochs obviously have a lot to gain monetarily with a conservative agenda. I’m not so sure with the amount they’re willing to spend they really will get a return on their investment. That, as well as their family history makes me tend to agree that they are true believers. So, yeah, they’re acting in good faith, for certain values of “good.”

      • sonamib

        As other countries (India, Brazil, etc.) have shown, the upper crust can handle a lot more inequality and a wider wealth gap than we have here without feeling bad about it.

        “Without feeling bad” is really understating it. In Brazil, the upper classes lost their goddamned minds when Lula was elected and implemented a few policies to reduce income inequality. They still haven’t gotten over it, and now they’re out on the streets asking for Dilma’s impeachment, even though she’s one of the least corrupt major politicians, and she was willing to compromise with right-wing economics. They just can’t stand the fact that the left is running the country.

        • Ronan

          Are the anti corruption protests in Brazil a reactionary movement of the wealthier classes ?

          • sonamib

            Not so much in 2013, but right now, yes. Like I said, they’re calling for the impeachment of Dilma, of all people. Most of the Congress members that are filing corruption charges against Dilma are under their own corruption investigations. And they couldn’t find a single serious accusation against her!

            The big crime Dilma’s supposed to have done is… some dodgy accounting shenanigans that made it look like the national deficit was lower than it actually was. The shenanigans were corrected the next year after there was some public outcrying. That’s supposed to be the impeachable offense.

            Meanwhile, the vice-president and the President of Congress have actual money-laundering schemes in Switzerland and Panama, and they would be the ones ruling the country when Dilma’s out.

            So yeah, the selective indignation against some pretty minor Dilma offenses is just right-wingers freaking out that they’ve been shut out of the presidency for 14 years now.

            I should also mention that the protests calling for impeachment aren’t the only protests happening right now. There are also legalist protests against the impeachment, even from people who don’t like Dilma and consider her a neoliberal sellout.

    • Hogan

      John Holbo explains it all:

      What is your impression at this point? I’m thinking: economic libertarianism. The man thinks the social and cultural issues are tasty, yes, but incidental. Appearances can be deceiving, however.

      “The new topics could well enhance conservatism’s appeal. Social conservatism is potentially more popular than economic conservatism. But severed from economic conservatism, social conservatism too easily degenerates into mere posturing. The force driving the social trends that offend conservatives, from family breakup to unassimilated immigration, is the welfare function of modern government. Attempting to solve these social problems while government continues to exacerbate them is like coping with a sewer main explosion by bolting all the manhole covers to the pavement. Overweening government may not be the sole cause of America’s maladies. But without overweening government, none would rage as fiercely as it now does. The nearly 1$ trillion the federal government spends each year on social services and income maintenance – and the additional hundreds of billions spent by the states – is a colossal lure tempting citizens to reckless. Remove those alluring heaps of money, and the risks of personal misconduct would again deter almost everyone, as they did before 1933 and even 1965.”

      What ‘offends’ conservatives about the welfare state is that it is economically inefficient: it destroys value by systematically encouraging masses of people to behave in reckless, value-destroying ways, which ultimately hurts those masses themselves. The cost of maintaining the safety net eventually frays even the satefy net, and then you’ve got nothing. Of course, this is putting the thesis rather crudely and ignoring numerous variants. But never mind that. It turns out economic inefficiency isn’t what ‘offends’ conservatives after all, at least not [David] Frum.

      “The great, overwhelming fact of a capitalist economy is risk. Everyone is at constant risk of the loss of his job, or of the destruction of his business by a competitor, or of the crash of his investment portfolio. Risk makes people circumspect. It disciplines them and teaches them self-control. Without a safety net, people won’t try to vault across the big top. Social security, student loans, and other government programs make it far less catastrophic than it used to be for middle-class people to dissolve their families. Without welfare and food stamps, poor people would cling harder to working-class respectability than they do now.”

      The thing that makes capitalism good, apparently, is not that it generates wealth more efficiently than other known economic engines. No, the thing that makes capitalism good is that, by forcing people to live precarious lives, it causes them to live in fear of losing everything and therefore to adopt – as fearful people will – a cowed and subservient posture: in a word, they behave ‘conservatively’. Of course, crouching to protect themselves and their loved ones from the eternal lash of risk precisely won’t preserve these workers from risk. But the point isn’t to induce a society-wide conformist crouch by way of making the workers safe and happy. The point is to induce a society-wide conformist crouch. Period. A solid foundation is hereby laid for a desirable social order.

      • j_doc

        The great, overwhelming fact of a capitalist economy is risk. … Without a safety net, people won’t try to vault across the big top.

        How can anyone be so unaware of the contradictions coming out of their own pen? Capitalism is defined by risk, taking risks generates wealth, and therefore we must be sure people are severely punished when they fail in order to discourage them from taking risks because capitalism? I’m not sure my own restating is any more of a parody than what Frum wrote. Does it even help to ask how many hedge fund managers and CEOs wind up destitute on the street? Because that should be good for them, right?

    • JustRuss

      I don’t get it either. I have an old friend who is just incensed at the idea of burger flippers making $15 an hour. He doesn’t come from money, doesn’t own a business, it won’t impact him personally at all. But there you are.

  • alex284

    GAAAAA That’s not what solvent means.

    “Solvent” does not mean “America has no debt,” it means “America can pay its debt.” Lots of very smart, rich people are willing to bet enormous sums of money that the latter is true, so Time’s case that it is not would have to be very good.

    But I have better things to do than to click the link and find out. This was the last response that needed to be made to Time, ever.

    • John Selmer Dix

      This is not in my wheelhouse, but isn’t it impossible for the US government to not be solvent, since it’ll be paying its debt in dollars, the printing of which it it and the Fed control?

      • erick

        Yeah, we could never be insolvent.

        Debt only matters in how it affects the overall economy, what is the inflation rate, what is the interest rate, unemployment, etc.

        You need go manage it from a macroeconomic view. There is nothing inherently good about having no debt.

        The problem we have today is it is too low, the government should have been taking advantage of low interest rates and slack in the workforce to invest in infrastructure the last 8 years.

        Some conservatives know this and are disingenuous. Others are just idiots who think the government is like a family budget. The first group is much smaller but takes advantage of the idiocy of the second group.

        • LosGatosCA

          Some conservatives know this and are disingenuous. Others are just idiots who think the government is like a family budget. The first group is much smaller but takes advantage of the idiocy of the second group.

          pretty much the explanation on any 0.0001% issue passed with the votes of the 45- 55% of the suckers.

  • LifeOntheFallLine

    I will fully admit that I am not an economist and have little if any interest in economics, but those are true conditions for the people at Time magazine, too, so I feel comfortable moving forward.

    IF the nation is to be run like a household and IF the national house has some pretty onerous debt and IF rates are at historic lows then why wouldn’t the solution be to refinance at least parts of the debt at the lower rates? I mean, I know that’s what people who had the means to do so did over the past few years with their household debts…

    • Murc

      Refi with who?

      Seriously. Suppose you hold US debt at an older, higher interest rate. Why are you going to give that up?

      That’s just one of the many ways in which the US debt isn’t like household debt. The US government cannot just issue new bonds and pay off existing bondholders early to roll the debt over at a lower interest rate. It doesn’t work that way.

      • kped

        Well, the US debt is constantly being refinanced, as maturities are reached and new debt is issued at lower rates. You may love your 30 year 7% debt, but if it’s maturing tomorrow, thats that. You want new bonds? Here they are at 2.5%. And there are always buyers of new debt, so it’s not a worry at all.

        • catclub

          Also, you refi by issuing 30 or 40 year bonds when those 10 year bonds, or 3 month T-bills, mature.

          No need to pay off the 30 year bonds early. (I do not know if those bonds have any call provision.)

      • LifeOntheFallLine

        I honestly did not know the answer to the question. Again, economics is not my wheelhouse. I know enough to know that the household debt argument is bullshit, but the rest of the stuff is beyond my ken.

  • It really is something how the entire freak-out about the Fed’s loose monetary policy and the impending runaway inflation just went right down the memory hole.

  • revrick

    There is a pretty straightforward response to this BS pearl-clutching. Ask the question: “how big is the private debt in the US held by individuals and corporations?” Likely, you’ll hear crickets. The answer is almost double the public debt! And how much squawking do you hear “won’t anyone think of the children?” in reference to the debt owed by families and companies. Yeah, about zero, amirite?

    Now add to this the fact that only the federal government can levy taxes or print money if it so desires. You’ll notice on the twenty in your wallet that it’s legal tender for all debts public and private. Which means that if China suddenly demands its money back we can just send them a boatload of hundreds and mention the Blue Light special at KMart.

  • jim, some guy in iowa

    zombie Henry Luce must be running the magazine

    • Hogan

      We’re old.

      • jim, some guy in iowa

        you’re not wrong, but I prefer “well-read”

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