Monday morning is going to be interesting.

[prophetofdoom]

I think this whole downgrade situation is a big stage show. Here is why...

1) Alan Greenspan said the US cannot default on debt. This is because the FED can always print more money. Yes, this will increase inflation. But, it is true, the US can always print more money to pay the "debts." The fiat money system will eventually inflate itself to death.. but from my point of view they still have a few more years before that happens.

2) The ratings agencies have very little credibility. These are the same boys that told people mortgaged backed securities where AAA rated before sub prime crisis. The fact is, they downgraded the rating for political reasons... just because congress was bickering on a budget... doesn't mean there is significant chance of default. I never believed that the US would default even when the media was playing up this supposed "crisis."

[HoosierGuy]

A commentary by Josh Marshall from TPM - Suddenly It's the 70s All Over

No two times are the same. And the economic travails of the 1970s were entirely different from what we have today -- they were tied to inflation, oil shocks and what seemed at least like low growth -- not massive contractions and 'first world' debt crises. But with the mix of roiling economic crises, mushrooming riots spreading across the United Kingdom, it's hard not to think we've been transported to a different decade, a different era. And certainly not a better one.

Suddenly It's the 70s All Over | Talking Points Memo

[prisonchaplain]

We seem to be at a logger jam. There are solutions. The debt can be paid down, whether through cuts in federal spending, raised taxes, or both. The longer we wait, the worse it will be. History will judge today's government quite harshly if a pathway to a balanced budget and stable planning is not found soon.

[slamjet]

I think this is just hilariously correct:

Colbert Report

[MarginOfError]

Let's get rid of useless departments and cabinet positions. There's a good way to cut spending without raising taxes.

Just to throw another wrench into the works--getting rid of useless departments will mean a higher unemployment rate. So either you pay them unemployment benefits (thereby reducing the savings by not paying them a full wage), or you let them sink into poverty. Neither are really good for the economy.

This was one of those screwy situations where you were going to get hosed no matter what you did.

I've come to think that if we're really going to get out of the mess we're in, it's only going to be through a great deal of pain that involves tax reform, raising taxes, cutting spending, and convincing people not to take on piles of debt.

If we could get some way to reform the tax code and prevent the government from getting their hands on some contributions, I'd be willing to pitch in an extra $5 per year with my tax filing to go directly to paying down the deficit. Yeah, I know it wasn't really my problem, but if I'm going to put my money where my mouth is on leaving a better future for my children, I'm going to have to own the problem now--which is exactly what no one in politics wants to do.

[PrinceofLight2000]

So either you pay them unemployment benefits (thereby reducing the savings by not paying them a full wage), or you let them sink into poverty.

Well folks, looks like getting a good private sector job or becoming an entrepreneur is entirely out of the question.

I've come to think that if we're really going to get out of the mess we're in, it's only going to be through a great deal of pain that involves tax reform, raising taxes, cutting spending, and convincing people not to take on piles of debt.

Tax reform on its own would make revenue skyrocket because of the lack of loopholes. I doubt we'd need to raise rates at all if we had a flat tax Edited August 10, 2011 by PrinceofLight2000

[MarginOfError]

Well folks, looks like getting a good private sector job or becoming an entrepreneur is entirely out of the question.

Think a little bit longer on that....what's the current unemployment rate....supply, demand.....keep thinking.......maybe it will come to you.

If you could lay off government workers one day and instantaneously have private sector jobs for those people the next day, then sure, your criticism is valid. Care to explain how that works?

Tax reform on its own would make revenue skyrocket because of the lack of loopholes. I doubt we'd need to raise rates at all if we had a flat tax

You're probably right. I'm all for a graduate flat tax and the elimination of all deductions and credits.

[FunkyTown]

You're probably right. I'm all for a graduate flat tax and the elimination of all deductions and credits.

I'm for a flat tax, too. You'd have to worry about international companies being able to shift their sales team to a tax-free zone, however. Ideally, a certain percentage of all money-making scheme(Whether sales, stocks, savings or good old fashioned paychecks) would go straight to the government. No loopholes. No scheming and tax dodging. Just good old fashioned flat tax.

[rubondfan2]

Are we so far gone that we still are going to continue to argue lower taxes vs. higher taxes vs flat taxes? How about NO taxes (at the Federal level, of course)? You see, this problem did not start last year... or 3 years ago... or 10 years ago... or heck, even 50 years ago. This problem started in 1913 - 1916 when a constitutional amendment was passed to allow Congress to begin imposing an income tax. Why a constitutional amendment? Because the Supreme Court had stuck consistently to the constitution on the issue of a Federal income tax by effectively stating that the Founders never intended for there to be one and that the constitution, as written, did not support in any way the concept of a national tax.

A constitutional amendment was then "passed" (do a little Googling on the ratification process that took place around the 16th amendment and you may just come away with some doubts about the constitutionality of it all) and wamm-o... a national tax was born.

Now, what is interesting here is that even the proponents of the national tax swore that at a worst case the tax rate would never be above 5%... yep, that's right folks... 5% worst case. We're a far cry from that with rates upward of 30% or more, wouldn't you say?

Ok... so then couple the 16th Amendment (the institution of a national tax) with the 17th Amendment which followed a short time later and you have all the makings of a socialist/communist movement poised and ready to march forward. Why? Does anyone remember what the 17th Amendment did to state sovereignty? In short, the 17th Amendment changed the way we elect US Senators. The Framers intended US Senators to represent the individual states, not the people (that's what Representatives do). So, prior to the 17th Amendment, US Senators were elected by the state legislatures and not a popular vote of the people. With the passage of the 17th Amendment, US Senators were relegated to nothing more than 2 additional Representatives because it is now the electorate they ultimately have to appeal to, rather than their state legislatures.

This is a BIG problem, because no one has been truly able or equipped to properly defend and protect state sovereignty from the encroachment of the Federal government. The Federal government has had virtually unbridled access to encroach upon the rights of the individual states, and they have done so largely with money. Since the 16th and 17th Amendments were passed, Federal subsidies and financial support to the states for everything ranging from education to medicine have skyrocketed. The loosely passed 16th Amendment gave the Congress the runway they needed to begin ratcheting up the tax rates to match their spending rates. Along comes the "New Deal" under Roosevelt and well... our march toward socialism was pretty much made complete and virtually unstoppable. And now we have rampant [Federal] government spending, which was never supposed to happen and in fact was one of the worst fears the Founders felt which would ultimately bring down the United States as the beacon of freedom and liberty that they originally envisioned.

Benson, Goldwater, McKay, Clark (Reuben J.) all warned us. They all saw this happening. They all but got down on their knees and begged us to open our eyes, pay attention and fight for our freedoms... to fight to return sovereignty to the states. Did we listen? Clearly not.

I absolutely DO NOT want to pay one single penny more in income taxes. I refuse to even consider the very mention of "increasing taxes". Instead, freeze current spending. Work to cut Federal programs which are better handled at the state level, shut down foreign military bases and stop our imperialistic policing of the world, repeal the 17th amendment and the 16th amendment and eliminate the Federal income tax entirely.

What the Federal government is doing now could be compared to the management of an individual TV cable bill. The government this year wants to add a couple of channels to their bill. Next year they want to start paying for their neighbors cable bills... just cuz. And in year 3 they want to buy the cable company. Oh, and by the way, we plan to do this by asking our boss to give us a $0.25 per hour raise to cover the costs. This is what the current Federal budget plans to do with regard to spending and "programs" and military interventions. If we simply said, "let's stick with our current cable plan" and then phased out our cable subscription altogether (we should be reading more books anyway), then the savings alone would be enormous and certainly no additional revenues would be needed.

The debate should be about socialism/communism vs. free enterprise, liberty and state sovereignty; not about taxes and spending.

[HoosierGuy]

I'm for a flat tax, too. You'd have to worry about international companies being able to shift their sales team to a tax-free zone, however. Ideally, a certain percentage of all money-making scheme(Whether sales, stocks, savings or good old fashioned paychecks) would go straight to the government. No loopholes. No scheming and tax dodging. Just good old fashioned flat tax.

I'm not for a flat tax. The main reason is that many conservatives and libertarians are for it. That tells me it's just another scheme for the ultra wealthy to pay less taxes and put the burden on the middle and poor class. The ultra wealthy are fighting like rabid dogs, trying to keep the tax rate down. They know once the U.S. starts taxing them as we did in the 50s, 60s, and 70s, better things will happen for all Americans and then those Americans will continue wanting all people, including the ultra wealthy, to pay their taxes. The ultra wealthy know they are getting big breaks and they don't that to end, even if it means destroying the U.S.A.

[john doe]

I'm not for a flat tax. The main reason is that many conservatives and libertarians are for it.

Well there's a well-thought-out reason. Good for you. Don't think too much, just see what the conservatives and libertarians think and disagree with it, because they are always wrong in your mind. I wonder if you are going to tell us what your hero Juan Cole thinks of the idea.

[FunkyTown]

I'm not for a flat tax. The main reason is that many conservatives and libertarians are for it. That tells me it's just another scheme for the ultra wealthy to pay less taxes and put the burden on the middle and poor class. The ultra wealthy are fighting like rabid dogs, trying to keep the tax rate down. They know once the U.S. starts taxing them as we did in the 50s, 60s, and 70s, better things will happen for all Americans and then those Americans will continue wanting all people, including the ultra wealthy, to pay their taxes. The ultra wealthy know they are getting big breaks and they don't that to end, even if it means destroying the U.S.A.

Ironically, the one year I voted Green Party in Canada was when their fiscal platform was one I fully support. That's right. I voted Green because of their fiscal policy. They had the most realistic fiscal policy of all the Canadian parties at the time.

They were a party that encouraged civil liberties and economic liberties, while also curtailing the use of destructive short-term economic gains such as pit mining and strip lumber. I miss the leadership of the time, which pretty much represented everything I believe in government. The party drifted away from that inspired time, mostly because nobody voted for them. They became more fringe to get more rabid supporters, but in the process lost me as a supporter.

Hoosier... You're Canadian. Are you honestly and sincerely suggesting that the Green Party represents the most conservative segment of Canada? They argued for a flat tax because:

A) It was universally fair.

B) It was universally cheaper and easier to enforce and manage.

C) It produced a quantifiable part of the GDP and made deficit spending less likely as you could budget ahead of time.

That's just sound fiscal planning, Hoosier. It's like someone getting a job with a guaranteed income so they can get their house in order. Do you honestly think only the rabid right support flat tax?

[bytor2112]

I think Hoosier believes that the rich so called obtain their money by dishonest means. I have been in the investment world for a very long time and the vast majority of my higher net worth clients spent a lifetime of saving and doing without and had a work ethic that most people today couldn't relate to.

A solid understanding of economics and the fundamental unfairness of our progressive tax system is necessary to see the bigger picture and I dare say having some skin in the game.......actually paying a very significant portion of your income in taxes. Thousands of pages of convoluted tax code and the need for computer programs to calculate taxes and help identify deductions and credits should tell everyone that it is time for a change. Flat tax or fair tax and some serious spending cuts in DC and elimination of waste would change the future dramatically. No one wants to take on the "sacred entitlement cows"...social security and medicare, but we really have a mess on our hands. Cutting military spending? It's 4% of GDP. Let's take a look at waste and entitlements and unnecessary government agencies instead.

[MarginOfError]

AND, after establishing a graduated flat tax, I vote we set the IRS loose on the government and make sure that tax money is being spent appropriately and honestly.

[bytor2112]

AND, after establishing a graduated flat tax, I vote we set the IRS loose on the government and make sure that tax money is being spent appropriately and honestly.

Amen brother! and Amen!

[MarginOfError]

Amen brother! and Amen!

What!? Bytor and I just agreed on politics!? Either I'm getting more conservative or you're getting more liberal. Either way, I think it's a sign of the end of the world.

[HoosierGuy]

Hoosier... You're Canadian. Are you honestly and sincerely suggesting that the Green Party represents the most conservative segment of Canada? They argued for a flat tax because:

No, I'm not Canadian but I wish I were. And I would be willing to pay a small fortune for help to gain Canadian citizenship.

[prophetofdoom]

. Cutting military spending? It's 4% of GDP. Let's take a look at waste and entitlements and unnecessary government agencies instead.

Military spending is still a huge problem. When you say, it is only 4% of GDP, it is true. But, you are looking at the entire Gross National Product.. which is not government spending. It is everything that this country produces in one year.

Military Spending costs about 1 Trillion a year if you factor in all of the additional funding.

[bytor2112]

Military spending is still a huge problem. When you say, it is only 4% of GDP, it is true. But, you are looking at the entire Gross National Product.. which is not government spending. It is everything that this country produces in one year.

Military Spending costs about 1 Trillion a year if you factor in all of the additional funding.

About 15% of Federal spending......

[HoosierGuy]

Some European countries considering suspending short trading. The U.S. should consider banning speculation on energy and oil.

[PrinceofLight2000]

The U.S. should consider suspending idiotic moratoriums on energy and oil.