Streams

The Next Budget Battle

Monday, October 21, 2013

Last week the U.S. government narrowly avoided a default that could have badly damaged its credit rating and the global economy. Former Congressman Bill Frenzel (R-MN), now with the Brookings Institution, discusses what comes next as Washington readies to do it all over again.

Guests:

Bill Frenzel

Comments [22]

Katherine from Brooklyn, NY

Why don't you have Paul Krugman or Joe Stiglitz or Robert Reich on your show to discuss the so-called "debt crisis," i.e., someone who knows that the debt is not the crisis Republicans insist that it is, and who can discuss this subject intelligently instead of a Republican congressman who knows nothing about economics?

I love the way Bill Frenzel tries to compliment Paul Krugman, then disses his knowledge in the same breath when he says, "But I FEEL . . .," revealing that he knows nothing about economics while depending on the apparent superiority of his feelings.

Oct. 21 2013 06:24 PM

@CDG
"Your first dollar earned on a job can cost you all your disability medical and financial assistance benefits."

That is not a tax...That's curtailing a benefit to which you are no longer entitled. If you want to put in threshholds of earnings - making it possible for a person on disability to EARN SOMETHING EXTRA - go ahead and petition the government to have the rules changed. Sounds like a good idea to me.

But don't call it a tax. It's not.

Oct. 21 2013 05:43 PM

An even higher effective tax is on people who collect disability or various public assistance.
Your first dollar earned on a job can cost you all your disability medical and financial assistance benefits. That's an effective tax rate of many thousands of percent.
Would RUCB_Alum deny that the Laffer curve applies to such disincentives to becoming economically independent.
Who is crazy enough to work, when the effective income tax rate exceeds 100%?

Oct. 21 2013 11:18 AM

High rates are precisely why GE and many other companies structure their deals so that the profitable parts are in foreign subsidiaries.

The marginal federal corporate income tax rate on the highest income bracket of corporations (for 2011, USD 18,333,333 and above) is 35%. State and local governments may also impose income taxes ranging from less than 1% to 12%, the top marginal rates averaging approximately 7.5%. A corporation may deduct its state and local income tax expense when computing its federal taxable income, generally resulting in a net effective rate of approximately 40%. The effective rate may vary significantly depending on the locality in which a corporation conducts business.
The United States also has a parallel alternative minimum tax (AMT) system, which is generally characterized by a lower tax rate (20%) but a broader tax base.

Oct. 21 2013 11:07 AM
Paul Furbacher from New Jersey

Brian, show after show, you bring on one deficit scold after another. Bill Frenzel is a member of "Fix the Debt". You didn't mention that, but should have.

Do some balanced research and then stop framing the issue as a debt crisis because we have a jobs and infrastructure crisis now. It seems as though you and the rest of the media just cannot spend the time to actually figure out what the real issues are, and instead just suck down and repeat without a thought whatever the prevailing hair-on-fire media-manipulating class wants you to talk about.

And for goodness sake, stop using to "Simpson-Bowles" as the starting point of these discussions. SB was never a good starting point. It was roundly dismissed by most economists from the start (i.e., those not on the payroll of political parties or "think [propaganda] tanks").

You finally shifted the discussion to "stimulus". Frenzel and the debt scaremongers are just wrong for what is needed NOW. Fixing some imaginary future, the forecasts for which are going downward daily, does nothing for NOW.

Ah, Frenzel attacking Krugman by referring to his "Nobel", "smarter than me" kind of slight. Right on, I could have predicted that at some point in this "discussion".

For every deficit scold, you should bring someone on for balance. I'd say your ratio of deficit scolds to those who actually make sense is about 10-1 or higher.

What about this generation?! Who cares that they cannot find jobs. All the deficit scolds care about is protecting the 1% and diminishing the government so that it fails completely. So far, they are accomplishing that goal spectacularly. They don't really care about the future, because if they did, they'd be singing a very different tune. China is out there building infrastructure for the future. (I've seen it; I travel there often.) We are satisfied to just let it rot. That holds great promise for "our children and grand children" which the deficit scolds prattle on and on about.

Oct. 21 2013 11:05 AM

@CaptainDrG

"We have the highest Corporate Profits tax rate in the world."

35% on paper but 6% in ACTUAL COLLECTIONS. Who's zooming who on this one CaptDrG?

Arthur Laffer is himself a laugh. Trickle down is part of his legacy.

Oct. 21 2013 11:00 AM
Nancy Lorence from NYC

I don't understand why your guests, when talking about the budget, never include the military and veterans' benefits in the discussion. It skews it to say that "entitlements make up 2/3 of the budget" (today's guest). By some analysts, the current and past military expenses (including interest on costs attributable to past conflicts) make up around 45% of the budget.

Oct. 21 2013 10:55 AM

We have the highest Corporate Profits tax rate in the world.
A great revenue enhancer would be to lower the Corporate Profit tax to a Laffer Curve maximum, to a rate that would make the US a competitive place to realize profits. Recently, even Obama recognized this.
Bringing profits back to the US would help US production, earnings, employment, & pay.

Oct. 21 2013 10:55 AM
Peter

We should also get rid of baseline budgeting that automatically increases budgets every year. Every time you hear a politician say we had to cut the budget and wonder why the actual budget increased, it is that they are talking about cuts in increases not real cuts as you or I would think of them. This means if they sit on their hands and pass no budgets as the senate has famously done for years, you still get increases.

Oct. 21 2013 10:53 AM

I don't understand.

The process of the "sequester" is currently, excuse the expression,
the "law of the land". I thought our valiant chief executive and his cronies, just defended the principle that such should not be done away with?

Maybe time to have a discussion of the legislative principles and practices of Orwell's "Animal Farm".

Oct. 21 2013 10:51 AM
Denial of Service attack vs Health Exchanges ? from Why is online exchange access so slow?


Given the Tea Party's strong opposition to
"Obamacare" - is it possible that the SLOW
to HALTING service on the Health Exchanges
is due to a "DNS-attack" (denial of service
attack) possibly by a fringe group of Tea-party
affiliated hackers ?

Has a DNS attack been investigated as a cause of
the slow and decreased access to these online exchanges ?

Oct. 21 2013 10:51 AM
Taher from Croton on Hudson

Has anybody in the world of policy making and think tanks ever thought about retooling America’s antiquated mid20th century economy to spur growth and reduce the 73% debt to GDP ratio.
Or is simply driving many of the elderly to absolute poverty the only method?
Is any one in that policy universe concerned with a massive wasteful military that is used for looser and costly global military adventurism?

Oct. 21 2013 10:50 AM
Peter

I think what is forgotten is this congress no longer has individual appropriation bills like it had for most of our history, but these giant comprehensive funding limit bills that include everything. That is why we are here and that is also a small reason why we have so much waste. If there was no debt ceiling limit fight there would be absolutely no way for the Congress to do its constitutional work of controlling the purse. Now flame away... but remember one day the other side will have control and you will quickly change your ideals - just don't forget how you feel today, that would be disingenuous and we cant have that in politics can we?

Oct. 21 2013 10:49 AM

Each program should be passed on its own merits. Not as part of a 3000 page bill with lots of bad stuff hidden in it (such as crony giveaways, or the repeal of the bill of rights).
You can write your Federal Reps about this via:
http://www.downsizedc.org/etp/one-subject/

Oct. 21 2013 10:47 AM
foodaggro from Brooklyn

This old codger sounds like an eighty-year-old hillbilly hollerin' into a rotary phone back in the fifties.

Oct. 21 2013 10:45 AM

The framing of the topic is wrong.

1) remove the salary/wage cap on FICA/FISA taxes
2) re-regulate ALL industries via Sherman anti-trust, repeal of Gramm-Blailey-Leach & restoration of Glass-Steagall
3) start massive infrastructure renewal, repair & upgrade including requiring Universal Ultra-High Speed internet for educational, business & government purposes.
4) limit capital-gains to assets held over 10 years
5) add "carried interest" & all same tax year income to FICA/FISA income list.
Pass the Congressional Progressive Caucus budget!

Oct. 21 2013 10:45 AM
halloran

Perhaps your guest could describe his past history of accurate economic predictions, as a measure of his reliability now?

For example, while he was shouting "wolf" on "entitlements", and collecting a nice salary for doing so, did he predict the financial crisis, and its huge cost to the economy?

Did he claim that the stimulus or QE would generate inflation?

Oct. 21 2013 10:44 AM

"Where did you dig up that old fossil?" Han Solo in a New Hope

The entitlements have a $5-$6T sinking fund that WE PAID FOR by having our FICA rates doubled in the 80's. (Greenspan Commission]

Rather than invest the excess in line items that would have built the ability to PAY the Social Security easily, the Feds have spent it on current consumption.

They should have left the tax rates alone - the Bush tax cuts were a big mistake - the FICA rates need to go down AND be applied to more incomes subject to a curtailment of the self-employed at 2X median income.

Oct. 21 2013 10:44 AM

Brother, my kindergartner is smarter than you and he doesn't even have a Nobel Prize!!

Oct. 21 2013 10:43 AM

More hillbilly speak?

Oct. 21 2013 10:39 AM

Errr....Democrats let the President's budget get slimmed from $1200B to $980B. The GOP is till blocking sound increases to revenue.

Oct. 21 2013 10:36 AM

There is a MoveON.org petition to arrest the House leadership for sedition over the government shutdown and the threat to the creditworthiness of our nation.

Though I feel that a sedition charge might be going a bit far, I do agree with the heart of the complaint that the House OVERSTEPPED its Constitutional authority. No where in the Constitution do they get a line item veto on budget items. No where does a subsequent Congress get to nullify previous laws that they do not have the power to repeal. The only Constitutional method for repealing a law is (in this case) to override a certain Presidential veto. The judicial could nullify but in the case of PPACA, SCOTUS has affirmed. Any other method is unconstitutional.

Many conservatives throw up the 'the House controls the power of the purse strings' argument citing Art 1 SS 7 and 9. A1:S7 states that all bills affecting revenue MUST originate in the House and A1:S9 - ALL MONIES disbursed from the Treasury shall be as a Consequence of Appropriation. I do not think that their case holds water.

Does the government or any group of concerned citizens have ANY PLANS to sue the government over this last shutdown? Thousands were harmed and millions inconvenienced and a stunt like this should not happen again. I would like this President (slim hope as this will take a while to percolate through our judicial system) and future Presidents to be forearmed with the power to arrest the majority (or minority) leadership if they are block unencumbereds on the nation's budget and credit limit.

There is a reason that a stunt like this one had never been pulled in our history. It's treasonous.

Oct. 21 2013 09:51 AM

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