Tell me if my logic is wrong.

[napi21]

If Congress eliminates the tax cuts for the top 2% earners, wouldn't it not only decrease the deficit by $700 billion over 10 years, but actually decrease the deficite by almost double tthat because there would be the taxes paid into the treasury for those items that are now exempt or taxed at a lower rate?

If I'm right, the Dems ought to be promoting that TOTAL reduction to the deficit instea of just harping on th $400 B they wouldn't have to borrow.

[HereSince1628]

1. your logic would be fine, but we are talking about the rich

In this case, not giving the rich a tax break will cause them to do two things

1) refuse to invest in products made in America, this will create further unemployment deepening the deficit and requiring even greater cuts to social security and medicare and medicaid.

2) refuse to report income from products made in their foreign factories, thus avoiding US taxes.

BUT even if they get their stinking taxes there is nothing to stop them from doing 1 and 2, anyway.

[napi21]

2. Maybe some of what you say is true but not most of it.

Remember, a big chunk of those tax cuts is the inhertance tax. There's only so much you can do to avoid those, The other large chunk is US earnings that have been taxed all along and can't, for various reasons, be dodged. They will simply increase the rate by 3%.

[NoNothing]

3. No, that doesn't make sense.

The deficit is reduced *because* the taxes are paid into the treasury. Once you use a tax dollar to reduce the deficit, you cannot use it to reduce the deficit again.

[napi21]

5. I understand that, BUT you wouldnt have to borrow the $ in the first place.

THAT's what I'm talking about. If those taxes are extended, the deficit would go UP $700 B. If it's NOT BOrROwED, the deficit would not increase (no added loan) but be reduced by most of that $700 B. They're only talking now about not aving to borrow the $$. I think they should also talk about the increase in revenue to further reduct the debt.

[NoNothing]

7. I'm afraid I still don't follow you.

ALL of the deficit is borrowed. The U.S. Government cannot spend money it doesn't have. If revenues do not equal spending, then the difference has to be borrowed. (The Fed can loan the U.S. Government money it doesn't have, but that's a separate issue.) So every increased dollar of revenue = one dollar less of deficit = one dollar less of borrowing. Remember, $DEFICIT = $REVENUES - $SPENDING. If extending the tax cuts decreases the deficit, that's only because it increased the revenues.

[Uncle Joe]

8. As for the government that would be spending-revenues=deficit

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=103x569194

9. In Reality, the US Government Spends First and Borrows Later; Public Spending Creates a Demand for Treasuries in the Private Sector.

As noted, the above argument is based on the common belief that the government must borrow in order to spend, and thus that the government faces "funding risks" in private markets. Such risks exist, of course, for private individuals, for companies, for state and local governments, and for national governments such as Greece that have ceded monetary sovereignty to a central bank. But the situation of the United States government is quite different.

The U.S. government spends (and the Federal Reserve lends) in a very simple way. It does so by writing checks -- in fact simply by marking up numbers in a computer. Those numbers then appear in the bank accounts of the payees, who may be government employees, private contractors, or the recipients of federal transfer programs.

The effect of government check-writing is to create a deposit in the banking system. This is a "free reserve." Banks of course prefer to earn interest on their reserves. Thus they demand a US Treasury bond, which pays more interest without incurring any form of credit or default risk. (This is like moving a deposit from a checking to a savings account.) The Treasury can meet that demand, or not, at its option -- it can permit, or not permit, the stock of US Treasury bonds in circulation to increase.

So long as U.S. banks are required to accept U.S. government checks -- which is to say so long as the Republic exists -- then the government can and does spend without borrowing, if it chooses to do so. And if it chooses to issue Treasuries to meet the demand, it can do that as well. There is never a shortfall of demand for Treasury bonds; Treasury auctions do not fail.

In the real world, the government creates demand for bonds by spending above the level drained by taxation from the system. The extent to which those bonds are held locally, or abroad (another common source of worry), depends on the US current account deficit. This also has nothing to do with approval or disapproval by foreign bankers, central bankers, or their governments of American deficit policy. A foreign country cannot acquire a US Treasury bond unless someone outside the United States has acquired dollars to pay for them, which is generally done by running a trade surplus with the United States. And when foreigners do acquire those dollars, then like domestic banks they prefer to earn interest, which is why they buy Treasury bonds.

Insolvency, bankruptcy, or even higher real interest rates are not among the actual risks to this system. The actual risks in this system are (to a minor degree) inflation, and to a larger degree, depreciation of the dollar. However at the moment there is wide agreement that a lower dollar would be a good thing -- against the Chinese RMB and now also the euro. So it is difficult to believe that the goal of deficit reduction per se serves any coherent, or presently desirable, economic objective.

We can conclude that there is actually no economic justification for the target of reducing the primary deficit to zero by 2015 or any other date. The right economic objectives are to meet real problems, not those conjured from thin air by economists. Bringing about a rapid end to unemployment, caring properly for an aging population, cleaning up the Gulf of Mexico, coping with our energy insecurity and with climate change are all far more important objectives than reducing a projection of future budget deficits.

[Goldstein1984]

4. The Rich are opportunists first, parasites second, and American third

If we make it too rough on them, there are plenty of developing nations where they can build houses on hills and mentor more of their ilk.

I, for one, would welcome to chance to try and build an economy where workers don't have to kiss the asses of the wealthy in hopes of a little trickledown.

[Ozymanithrax]

6. The tax cut for the middle class will increase the deficit over the next ten years...

by over 3 trillion dollars.

The Tax cut for the top 2% just cause us to dig the deficit hole at a slightly slower rate.

The only way to deal with the deficit is to (1) cut Defense spending and (2) end both tax cuts.

Once the economy recovers and is growing enough to put people back to work, then worry about tax policy.

[booley]

9. Isn't there interest on that borrowed money?

So when we say "400 Billion that wont' be borrowed" what we really mean is 400 billion plus the extra millions go with it that accrues over time.

That has got to add up. So borrowing less saves far more then just the amount that wasn't borrowed.

It seems to me any way.

But yes otherwise your logic seems to make sense.

[Winterblues]

10. It doesn't matter Democrats have already signaled surrender

All of the tax cuts will be re-instated including the ones for those making over $250,000 a year.. The Administration seems to think saying they will do it on a temporary basis is OK..Everyone knows after the temporary cuts are about to expire in two years at election time they will not be done away with...Democrats are showing they care more about their own political futures than they do about America. I find I can not listen to them at all anymore because it is all just talk...They talk the talk but they sure as hell can't or won't walk the walk..

[SoCalDem]

11. Car for sale: Asking $10k...(will accept $2k)

that's the way WE roll :(