David Leonhardt–Why Taxes Will Rise in the End

Free lunchism is ultimately the problem with the no-new-taxes pledge that so many politicians have adopted. A refusal to raise taxes, no matter how principled, cannot take us back to the good old days. It would instead lead to a very different American society. For taxes to remain where they are, Washington would need to end Medicare as we know it, end Social Security as we know it, severely shrink the military ”” or do some combination of the above.

“We cannot repeat the past when it comes to the federal budget,” Douglas Elmendorf, director of the nonpartisan Congressional Budget Office, recently wrote. “The aging of our population and the rising cost of health care have changed the backdrop for federal budget policy in a fundamental way.”

The most important part of the recent Republican budget plan, written by Representative Paul Ryan, was that it acknowledged this reality…

Read it all.


Posted in * Culture-Watch, * Economics, Politics, Budget, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Euro, European Central Bank, History, Medicare, Psychology, Social Security, Stock Market, Taxes, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The National Deficit, The U.S. Government, The United States Currency (Dollar etc)

26 comments on “David Leonhardt–Why Taxes Will Rise in the End

  1. palagious says:


  2. Br. Michael says:

    From what I have read, “spending cuts” is Washington speak for reductions in spending. So as ordinary people are concerned no spending cuts are actually being offered.

    With that understood what is absolutely clear here is that any tax increase will be real and immediate. Any “spending cut” will take place in the future and any “cut” in the future will never, never happen. The “cut” that will take place in ten or twelve years is nonexistent and to say that it is is the worst of frauds.

  3. Clueless says:

    I think we need to end Medicare as we know it as well as Social Security as we know it. They are both ponzi schemes stealing from future generations.

  4. Creedal Episcopalian says:

    [blockquote] It would instead lead to a very different American society.[/blockquote]


    And this is bad how?

  5. Sarah says:

    RE: “For taxes to remain where they are, Washington would need to end Medicare as we know it, end Social Security as we know it . . . ”

    Yes — when might we expect that to happen?

    Further, none of this is as dramatic as the fearmongers make it sound. Since money was forcibly stolen from individuals via State power for both Medicare and SS, we keep SS benefits for those 56 and older, while simply phasing out SS for the rest of us. Those from 50 to 55 get their retirement age raised to 75. The rest of us get nothing, but the money stops being stolen from our paychecks and we can transfer that money to actual investments that actually give a return rather than being sucked out to fund various little programs that our senators and representatives fancy.

    End of story.

    Medicare can be handled the same way, with folks being gradually levered to the free market [which does not now exist unfortunately — so we’d need to enact tort reform, allow insurance purchases across state lines, and allow every kind of policy under the sun, including bare bones policies rather than the ones that are currently mandated by the State with all sorts of gizmos and larded-up bennies that many don’t want or need.]

  6. Creedal Episcopalian says:

    Social Security and Medicare are dead either way, if we don’t fix them, our economy will implode. Whatever cannot continue will eventually stop no matter what you do.

    To fix medicine, start with tort reform. then tax company medical benefits as income, and disallow their deduction as expenses by corporations.
    Medical insurance should be exactly that: coverage for unusual contingencies. Make doctor visits and routine care out of pocket (if deductible) expenses, and the market will make them fair and affordable. The current practice of providing complete medical coverage as an employment benefit has made it too expensive, the same way income tax withholding hides the extent of income taxes. If most taxpayers had to stroke a check once a year taxes would become reasonable in a hurry.

  7. magnolia says:

    yes, that is the goal of pubs to get rid of medicare and ss. i think as people realise they are really aiming for they will be voted out on their ear. not everyone wants a ayn rand solution.

    May God smile upon each of you and not provide you with a catastrophe that you cannot afford. Not everyone will be so blessed.

  8. Creedal Episcopalian says:

    Not to be sarcastic or anything, but the whole point here is that Medicare and Social Security have already become a catastrophe that we cannot afford. And everyone except the fortunate 46% who PAY NO TAXES are so blessed.

  9. Sarah says:

    RE: “to get rid of medicare and ss . . . ”

    Right — because the Dems are doing such a great job “protecting” it.


    PS: I’m not a Republican.

  10. Alta Californian says:

    Nice to see the honesty here that ending those programs really is what conservatives want. What we’re seeing from Washington is a lie from not-so-GOP that they want to save Medicare and Social Security, when the truth is very much otherwise. You can argue that Democratic plans (or current lack thereof) do not save them, but you cannot argue that the right really wants to save them.

  11. TomRightmyer says:

    Using 2008 figures supplied by the Taxpayers Union (the latest and best source easily available on the web) 10% of tax payers pay 70% of federal income taxes, 40% pay 30%, and 50% pay nothing. I’d be curious about the effects of removing all deductions and exclusions from the tax base (closing all loopholes including mortgage and charitable contributions).

  12. Jim the Puritan says:

    If you look carefully, you will find that “spending cuts” are never really spending cuts. They are simply promised reductions of scheduled increases in spending. It’s a fun game, you create a paper budget increasing spending by 50%, and then promise “cuts” from that of 10% and tell people they should be grateful you are so frugal. It’s kind of like the stores that raise all their prices immediately before putting things on “sale.”

  13. Capt. Father Warren says:

    [i]but you cannot argue that the right really wants to save them[/i]

    Sure I can, out of self-interest if nothing else! I want those plans to be around for the truly needy. That includes my generation, my son’s generation, and his kids generation and onward.

    It is so humerous to hear liberals thump their chests at Constitutional Conservatives putting proposals out there to do just that. Humerous because the liberals in Congress haven’t proposed a budget in 2 years and the President for all his demogaging (yeah spelled that way on purpose) hasn’t thrown out any proposals other than the one his OWN party voted 97-0 against.

    But of course, for the liberals, it’s all about “good intentions”. Results don’t matter. So, show me a country that has refused to control its spending that ever turned out well. Greece, Portugal, Italy? And how do you propose our situation will somehow be better?

  14. Creedal Episcopalian says:

    LOL. Excellent neologism, but maybe it should be spelled “demogagging”, in order to avoid being a malaporpism ( that being the act of referring to a dolphin as a “fish”)

    Greece, Portugal, Italy. add Ireland, Spain, Argentina, the Roman Empire, the Soviet Union, 18th century France (That worked out really well). The definition of insanity is repeating the same action and expecting new results.

    And, from American Thinker, if we have that huge trust fund for Social security, why doesn’t Obama tap into it to stimulate the economy?

  15. David Keller says:

    Assume we decide to save them. Why do they have to look anything like they do now? I am approaching Medicare and SS age. I’d be happy for the Federal government to buy me out of SS and then figure out ANOTHER (ie new) way to fund SS for younger people. I would also be happy to scrap Medicare and substitute means tested insurance supplements. I would also be happy to wait until age 70 to collect SS because the way the current government has botched the economy I’m going to have to work ’til then anyway. Point is–Where is ANYBODY with a NEW idea to solve this mess? All I am hearing is the same old class struggle election time garbage.

  16. Alta Californian says:

    Hey, I’m exasperated that the Democrats haven’t put up a plan either. Personally, I’m most disappointed that the President has been unwilling to back his own deficit commission’s recommendations. Simpson-Bowles seems like a thoroughly reasonable mix of reforms that doesn’t radically change the program like the Ryan plan would. It also shares the sacrifice, including among people I care about, my parents for example (to say nothing of my future self who, sure, would like to retire at 65 rather than 68).

    Nevertheless, I still see the right working to end programs like SS entirely, which appears to me to be the end goal of the Ryan plan (voucherize, privatize, phase out). And, Warren, why wouldn’t you want to end it, most so-called “constitutional conservatives” don’t even think those programs are constitutional to begin with (but then nearly as I can tell “constitutional conservatives” don’t believe anything since Marbury v. Madison has been constitutional).

  17. Capt. Father Warren says:

    #16, Simpson Bowles would have been an reasonable place to start–agreed. As to the “right” wanting to kill SSN and Medicare—-do you have a particular person in mind who has said this? I’m serious; I’m not aware of a political conservative who is advocating this. If you know one, I’m curious who they are because I probably wouldn’t agree with them. As the richest (for the moment) nation in the world; I do buy into the safety net for the poorest, weakest, and least among us. But a lot of us are truly tired of paying for useless government programs: if I were king for a day, the Dept of Energy would be the first one to vaporize.

  18. clayton says:

    I wouldn’t be so quick to make the Dept. of Energy mad; they have all the nuclear weapons. They can vaporize you a lot faster than you can vaporize them.

  19. Alta Californian says:

    Exhibit A: Clueless at #3.
    Exhibit B: Sarah at #5.

  20. Sarah says:

    RE: “Nice to see the honesty here that ending those programs really is what conservatives want.”

    And nice to see that the liberals would rather the systems that we have successfully bankrupted would utterly FAIL rather than actually allow the individuals to decide what to do with their own retirement and healthcare money.

    They’d rather have a failed collectivist system then a successful free-market system.

    Which just nicely demonstrates their real goals. They don’t care about the old people or the sick people. They care about State-control of individual money. They care about power.


  21. Capt. Father Warren says:

    Okay, as much as I respect Sarah and Clueless, they are not national stage Conservative politicians. And I read their comments as ending the ponzi schemes “as we know them”. Which I agree with also. They are immoral and unsustainable. We send people to jail for ponzi schemes that are barely a blip on the radar. But the Government runs the biggest ponzi scheme on earth and we are supposed to treat it with reverence. NO.

  22. Capt. Father Warren says:

    #18, if it makes you a little nervous me waving the wand at the Dept of Energy, I’ll be happy to put the Dept of Education in first place. Better?

  23. Alta Californian says:

    Well, Warren, I enjoyed that brief moment of agreement and sad it was so brief.

    Actually Sarah, they’d rather have a remediable Keynesian system than a failed laissez-faire system (a la 1929). Simpson-Bowles seems to me like a remedy to try, at least before blowing up the system we inherited from our great-grandparents. And I am as irritated at liberal unwillingness to try it as I am at conservative (i.e. your) intransigence about having anything but the complete destruction of the social compact we have held for the last century. Actually that doesn’t strike me as conservative, but as reactionary (dragging us back to where we were during the Hoover administration).

  24. Sarah says:

    RE: “intransigence about having anything but the complete destruction of the social compact . . . ”

    Yeh — nice “social compact” for the State to steal individual money, pretend like they’re investing it for our retirements, and then looting it to pay for their pet programs. What a scam.

    And for people to support such a scam just reveals their values.

    As far as whether my desire for the State not to steal people’s money out of their paychecks ostensibly to pay for retirement while actually supporting their other useless programs is conservative [by Alta’s definition] or reactionary [by Alta’s definition] I don’t particularly care either way. Knowing Alta’s values and foundational worldview regarding the role of the State, the Constitution, individual liberty, and private property, I’m perfectly happy to be named “reactionary” by Alta’s definition.

  25. Alta Californian says:

    Hither, page, go forth and have my chamberlain prepare a feast, for the oracle of South Carolina hath spake, she who sees into the hearts of men, and granted the favor so long here sought. At last, my life is complete! I’ve actually been waiting for this day, Sarah, when you would analyze my worldview and summarily dismiss my opinions. I’ve seen you do it so often before, I was actually feeling left out. (Sure I think the government can play a constructive role in economic affairs, provided it is checked, balanced, democratic, and transparent — I also personally feel we need conservatives around to prevent liberal excess thereof, and vice versa — my actual political philosophy is much more nuanced than you might think, but I’m not a principled anti-government libertarian, which is probably enough for you to write me off).

    And actually, I was using Merriam-Webster:
    a : tending or disposed to maintain existing views, conditions, or institutions

    : relating to, marked by, or favoring reaction; especially : ultraconservative in politics

    Probing a little further into “reaction”:
    b : resistance or opposition to a force, influence, or movement; especially : tendency toward a former and usually outmoded political or social order or policy

    Chalk me up, Sarah, as suspecting you of that exact “tendency”. But hey, we should be able to get along, I’m actually quite fond of the Victorian era too.

    Oh, and my invitation to dinner still stands.

  26. Alta Californian says:

    Oh, and you’re right, they should not raid the trust fund to pay for other programs.

    And on second thought, my exuberance was unnecessary, as I’m pretty sure we’ve had this conversation before.

    Anyway, invitation stands.