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  • Peonage

    Posted by TM Lutas on April 14th, 2011 (All posts by )

    Peonage is a form of involuntary servitude that is undertaken to pay off a debt. Realistically, peonage is what we in the US are facing if we do not get our spending under control.

    Today, when politicians propose to continue the spending train with unrealistic, pie-in-the-sky spending cuts that will never happen, they are proposing decades of peonage for us and our posterity. This is worse than wrong policy, it is viscerally offensive to everyone who understands the situation.

    The norms of political correctness in the US do not normally permit a white to accuse a black of working to violate the 13th amendment. We do not live in normal times. President Obama is dancing on the edge of a precipice and if he persists in going over the edge, he will be taking the country with him. We must have serious proposals from both parties to step back and restore sustainable government finances. The Republicans have stood and delivered. President Obama and his party have prettied up debt peonage for the nation.

     

    6 Responses to “Peonage”

    1. PenGun Says:

      The Bush tax cuts are most of the problem. Eliminating them would go a long way to restoring balance.

    2. Paul Milenkovic Says:

      Yes, the Bush tax cuts are indeed the problem. In order to drop tax rates on the wealthy few who generate financial and intellectual capital to create jobs, the political bargain was to drastically lower taxes on a large number of the less-than-wealthy, to the effect that, what is the figure, that the half of us do not pay any Federal income tax at all (just about all of us, however, pay FICA, though)?

      So what are you going to do? The Nancy Pelosi Plan of letting the tax cuts sunset? That would have raised the most revenue by far, but it would have raised taxes on a lot of people who have been paying little or no income tax? The Barack Obama Campaign promise, of extending the tax cuts “on families making less than (the magic) 250K/year” while “making the very wealthy pay their fair share”? That would have raised under the best assumptions 20% of the Pelosi Plan at the expense of making the economy worse. What we got as result of those Republican Hostage Takers of extending all the tax cuts doesn’t stand to kill the economic recovery but gives away the store.

      The best plan as far as paying for what people are demanding in the way of government services would be to extend the Bush tax cuts only on the very wealthy — would raise nearly as much money as the Pelosi Plan while maintaining incentives for job growth. Can you imagine that plan getting any traction?

    3. TMLutas Says:

      US 2010 expenditures are $3.4T. Is anybody seriously proposing taxes sufficient to raise revenues in the zone of $3.4T? I have not heard of any real efforts to do that, certainly none that would accomplish that goal.

    4. Paul Milenkovic Says:

      “US 2010 expenditures are $3.4T. Is anybody seriously proposing taxes sufficient to raise revenues in the zone of $3.4T? I have not heard of any real efforts to do that, certainly none that would accomplish that goal.”

      I guess in theory you could raise 3.4T. I mean the economy is somewhere north of 10T, so why could you not raise taxes to close that gap?

      The problem is that given the weak state of the putative economic recovery, you would probably crash the economy, much in the manner that the Hawley-Smoot tariff and the other tax increases attributed to Herbert Hoover and the Republican Congress did back at the start of the Great Depression.

      So what state of affairs drove the Republicans to those disasterous policies? Basically, it was concern about deficits and debt in a time of economic contraction. Government did not make up that big a piece of the national economy back then, either. Now the call is to close the deficit gap from the spending side from Republicans, on the tax side from deficit-hawk Democrats.

      So yes, the concern Herbert Hoover and Andrew Mellon had was real, if debt gets out of hand, that too can lead to ruin. The belief, however, from Ben Bernanke and from the Obama economic team is that in the short term, debt is focusing on the wrong concern, and on avoiding the putative mistakes of Herbert Hoover, they may be making the error Herbert Hoover was trying to avoid. But given deflation in parts of the economy (wages, house prices) and inflation on other parts of the economy (oil, food), it is hard to tell right now.

    5. Jeff the Bobcat Says:

      So if it is acceptable to tax the wealthy at a higher rate than the rest of us for the same government provided “benefits”, would it be fair to charge the wealthy a higher price for all goods and services? Example: poor guy and rich guy go to the grocery store to buy a banana; poor guy pays $.58/pound, rich guy pays $5.80/pound. Why can’t everyone pay a fair share of the burden? Because we know there are more votes in the taxpayer segment called “poor” or “working class” than in the “rich” category. The top 50% of taxpayers are already paying 97% of the taxes (source: IRS 2008 figures).

      We need to right our collective financial ship and do so in a way that doesn’t just hit the top. Spending cuts, re-alignment of duplicated services/departments, real evaluation of what the government is supposed to do and just doing those things, AND a manageable increase in tax revenues from EVERYONE.

    6. TMLutas Says:

      Paul Milenkovic – There is no demand without a willingness to pay. There is no willingness to pay the tax rates that the current level of services require. We got around that for quite some time by promising our children’s work product in exchange, the peonage that I’m talking about but that door is starting to close. Now we have to decide whether we have actual demand for these services when we’re paying for them in the here and now.

      the outcome of this process is not very clear yet.