10 year budgeting

[AZRedhawk44]

Who started all the 10 year malarkey going on in Federal budgeting recently?

Seems the cool trend nowadays is to talk about net cuts to the deficit as quantified to the decade, but talk about new spending on only an annual basis.  But somehow the black magic of Mordor on the Potomac makes them balance.  Obamacare is a classic example of this, using 10 years of income to pay for about 6 years of federal freebies for the FSA.  "Fiscal Cliff" talks are another example.  Raise taxes now, in exchange for tax cuts over 10 years.

Why does NOBODY else out there realize that the 2012 Congress cannot bind the financial decisions of the 2018 Congress, and whatever 10 year plan the 2012 folks come up with cannot be used without approval of the subsequent Congress?

[longeyes]

As you well know, they do realize.  It is the munchkins who do not.

[TommyGunn]

Who started all the 10 year malarkey going on in Federal budgeting recently?

Seems the cool trend nowadays is to talk about net cuts to the deficit as quantified to the decade, but talk about new spending on only an annual basis.  But somehow the black magic of Mordor on the Potomac makes them balance.  Obamacare is a classic example of this, using 10 years of income to pay for about 6 years of federal freebies for the FSA.  "Fiscal Cliff" talks are another example.  Raise taxes now, in exchange for tax cuts over 10 years.

Why does NOBODY else out there realize that the 2012 Congress cannot bind the financial decisions of the 2018 Congress, and whatever 10 year plan the 2012 folks come up with cannot be used without approval of the subsequent Congress?

Didn't it start back in the hey-day of the former Soviet Union?     

[brimic]

Didn't it start back in the hey-day of the former Soviet Union?   

Even they were smart enough to only have '5 year plans.'

[Ron]

Even they were smart enough to only have '5 year plans.'

I suspect our betters think the reason the USSR failed was because they only planned 5 years in advance.

The farmers running this plantation are playing the long game on us.

They are letting us keep our toys (guns) while they rewrite the past, plan the future and will end up owning everything.

[TommyGunn]

Even they were smart enough to only have '5 year plans.'

Hmmmm, I thought they arrived at 5 yr plans after the 15 and 10 years plans didn't work out so well.  Of course little they did DID turn out well ......

[griz]

What puzzles me is the reporting that the "new budget will reduce the deficit by XX trillion dollars", as if the immediate tax increases will actually be offset with huge spending cuts by the next administration.  I'm not sure if the reporters are stupid enough to believe it or just to lazy to look at the numbers.

[Ron]

Hmmmm, I thought they arrived at 5 yr plans after the 15 and 10 years plans didn't work out so well.  Of course little they did DID turn out well ......

Nothing wrong with the system per se, that system of governance will work great with the correct people running the show.

[Ron]

What puzzles me is the reporting that the "new budget will reduce the deficit by XX trillion dollars", as if the immediate tax increases will actually be offset with huge spending cuts by the next administration.  I'm not sure if the reporters are stupid enough to believe it or just to lazy to look at the numbers.

The media are colluding with the power brokers to keep the populace from becoming informed or alarmed.

Having uninformed dupes in our free press as our watchdogs (big government lapdogs) is necessary to the transformation.

Alternative forms of media will be dealt with eventually. We can keep our blogs and toys (guns) for now.

[longeyes]

"Freedom's just another word for nothing left to lose."  I guess we're going to find out how true that is.

[Fly320s]

"Freedom's just another word for nothing left to lose."  I guess we're going to fight out how true that is.

Freudian slip?

[birdman]

It plays well with the average (read: stupid) voter who doesn't know the difference between deficit (an annual shortfall) and debt (the aggregate money owed), not to mention doesn't understand that we seem to budget or debate on an accrual based accounting, but use a cash basis (I.e. ignore future liabilities) for debt assessment purposes.

This is even more painfully obvious and amazingly wrong when statements are made that something reduces the DEFICIT by $X billion over 10 years, when in fact they mean it reduces the net negative TOTAL OUTLAY (ie debt) RELATIVE TO A BASELINE over that period of time, and the actual DEFICIT reduction is zero or negative.

Same "taking advantage of stupid" that allows "cuts" to mean "reduction in growth".

Basically, people are stupid, and the language of politics has changed to take advantage of this.  One can "cut" spending and "increase revenue" by simply spending less than a previously made-up increase, and ignoring obvious responses to revenue measures that have been proven time and again throughout history.

Place the blame on the populace, not those that act in their own interest.

Just like in the housing crisis, one can only really blame those that acted contrary to their (or even the community's) self-interest.

[longeyes]

Freudian slip?

Probably.  Corrected.

[MechAg94]

1.  Politicians don't want to cut anything as it angers some donors and some voters.
2.  Politicians want to be able to say they cut spending to appears some donors and some voters.
3.  Using the Ten Year Model allows them not make any substantive cuts yet still brag about huge numbers reduced

[HankB]

. . . Basically, people are stupid, and the language of politics has changed to take advantage of this.  One can "cut" spending and "increase revenue" by simply spending less than a previously made-up increase . . .

Say this year's budget is around 3.8 trillion. If Obama plans to spend 4.8 trillion next year, that's a big increase. If, however, we only spend 4 trillion next year, The Anointed One will have CUT SPENDING BY 800 BILLION DOLLARS IN ONE YEAR! No other President has done that!

<errr . . . but we're still going to spend 200 billion dollars more than we did this year, isn't that a spending increase?>

Shut up, you racist!

[toysoldier]

Even they were smart enough to only have '5 year plans.'

If I remember correctly the 5 year plans in the USSR corresponded to actual 5 year periods. The 10 year calculations seem to apply to a sliding 10 year window that never actually ends.

[Myself]

So I have been reading the info released by the media about the current stalemate.  The Pres. et al are firm on the tax the rich end of the equation being the solution.  I set about to try to determine, based on published studies and projections, what the tax on the top 2% will really accomplish (other than looking good to the majority of the 98% who don't know things work). 

Here is what I could come up with.  You may get a different answer as studies abound and of course contradict each other.  If the congress implements the return to the Clinton era top rates the revenue generated would be about 98 billion dollars next year. (No 10 year BS please).  This assumes that such a tax change would have no negative repercussions on other rev. streams.

As a former owner in a C corp., S corps., and multiple limited partnerships I can state without a doubt that there will be a negative impact on how much flows down to employees in wages, bonuses and benefits.  It has to come from somewhere.  This will of course affect tax revenues.

For the roughly 40% of S corp owners in the top 2%, the ones operating on slim margins will be seriously squeezed.  You are personally taxed on your corporations "profits" which you may not have the cash to pay.  This is partially due to having to pay taxes on inventory and receivables, which you may not sell or collect.

Not counting all the other not talked about taxes that are going to be implemented we are talking about a possible maximum 7% reduction in a projected 1.5 Trillion dollar deficit.  I mean lets get real, there must be drastic spending cuts.

[longeyes]

Your problem is you are way too rational.  :)

[Myself]

I never preach to the choir either.  Sometimes I think I should write a book called "How things really work".  I wonder if anyone would read it?

[longeyes]

 It is the word "really" that troubles us.  :)

[drewtam]

Is the "tax the rich" refrain even plausible? If the top bracket increases, will it really be a net increase after accounting for the AMT? Or is it a top bracket shell game, where the high income will pay more income tax rate and less AMT? With all the partisan noise out there, it is hard to get the facts on the negotiations.

Somehow the picture of br'er rabbit wailing "don't throw me in the briar patch" is coming to mind.

[birdman]

Is the "tax the rich" refrain even plausible? If the top bracket increases, will it really be a net increase after accounting for the AMT? Or is it a top bracket shell game, where the high income will pay more income tax rate and less AMT? With all the partisan noise out there, it is hard to get the facts on the negotiations.

Somehow the picture of br'er rabbit wailing "don't throw me in the briar patch" is coming to mind.

Yes, a marginal rate increase on the top bracket AND the standard AMT fix would raise the effective tax rate on "the rich" (using of course Obama's definition of 'rich')

[drewtam]

yeah, thats my questions, are they (congress) really going to do both AMT and top rate, or is it just a shell game of only changing the top rate.

[brimic]

Is the "tax the rich" refrain even plausible? If the top bracket increases, will it really be a net increase after accounting for the AMT? Or is it a top bracket shell game, where the high income will pay more income tax rate and less AMT? With all the partisan noise out there, it is hard to get the facts on the negotiations.

It doesn't matter in a practical manner, its all semantics in order to make sure noone claws their way into the upper class in the coming 2-class system.

The whole 'tax the rich' scheme is to penalize high earners or highly productive people, not the 'wealthy' or the people who are actually 'rich.'

[birdman]

yeah, thats my questions, are they (congress) really going to do both AMT and top rate, or is it just a shell game of only changing the top rate.

Well, it's like this.
Right now, if nothing passes, the AMT fix wont happen and middle and high income brackets will all pay more
If the AMT fix is passed in the form it always have been (an adjustment in line with the bracket changes then everyone will likely pay the same as this year, (if rates are kept the same) or the higher brackets will pay more (if the rates rise).

If rates rise, because nothing is passed, everyone pays more.
If Obama gets his way, the upper brackets pay more regardless of AMT changes
If deductions are phased out, but rates remain the same (a GOP way of increasing revenue without changing rates), the upper brackets will pay more.

Basically, in 100% of the scenarios, the upper brackets pay more.

But Brimic is correct, we actually have a MORE progressive system of taxation in terms of fraction of govt revenue paid by income brackets, and the "bush tax cuts" actually INCREASED not only the total revenue, but the share of revenue paid by the upper brackets AND they actually paid MORE in terms of percentage of income.  The current system dis-incentivizes entrepreneurship and economic growth.

Also, the estate tax change that will happen will seriously hurt a large number of small businesses and farms.