Wednesday, October 24, 2012
How do we fix the economy? The U.S. government's budget deficit is nearing a trillion dollars for the fourth straight year and unemployment remains high. With the Bush-era tax cuts that are set to expire at the end of 2012, what is the best move for continued economic recovery? President Obama says we should raise taxes on those making more than $250,000 to reduce the deficit. Others say that the richest 1% already pay more than a quarter of all federal taxes and higher taxes for job creators would slow economic growth. Are the nation's wealthiest not paying their "fair share," or should tax breaks be extended for everyone in the name of job creation?
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Dean, Columbia Business School
“The Father of Supply Side Economics," Fmr. Member, President Reagan’s Economic Policy Advisory Board
Chancellor’s Professor of Public Policy at UC Berkeley & former Secretary of Labor
Chief Economist of Moody's Analytics
Author & Correspondent for ABC News
Dean, Columbia Business School
Glenn Hubbard is Dean of Columbia Business School and the Russell L. Carson Professor of Finance and Economics. Hubbard is the author of two leading textbooks on money and financial markets and principles of economics, as well as co-author of The Aid Trap: Hard Truths About Ending Poverty and Healthy (2009), and Wealthy, and Wise: Five Steps to a Better Health Care System (2006). He previously served as Deputy Assistant Secretary at the U.S. Department of the Treasury from 1991 to 1993, and Chairman of the Council of Economic Advisors from 2001 to 2003.Learn more
Known as “The Father of Supply Side Economics.” Former Member, President Reagan’s Economic Policy Advisory Board
Arthur Laffer is the Founder and Chairman of Laffer Associates, an economic research and consulting firm, and Laffer Investments, an investment management firm. In the 1980s, his economic acumen and influence in triggering a tax-cutting movement earned him the distinction as “The Father of Supply-Side Economics.” Laffer was a member of President Reagan’s Economic Policy Advisory Board from 1981 to 1989 and served as Chief Economist in the Office of Management and Budget from 1970 to 1972.Learn more
Chancellor’s Professor of Public Policy at UC Berkeley and former Secretary of Labor
Robert Reich is Chancellor’s Professor of Public Policy at the University of California at Berkeley. Reich was Secretary of Labor in the Clinton administration from 1993-1997. He has written thirteen books, including the best sellers Aftershock (2011) and The Work of Nations (1992). His latest is an e-book, Beyond Outrage (2012). He is also a founding Editor of the American Prospect magazine and Chairman of Common Cause. He writes his own blog about the political economy at robertreich.org.Learn More
Chief Economist of Moody's Analytics
As Chief Economist of Moody’s Analytics, Mark Zandi directs the company’s research and consulting activities. Zandi’s recent research has studied the determinants of mortgage foreclosure and personal bankruptcy, analyzed the economic impact of various tax and government spending policies, and assessed the appropriate policy response to bubbles in asset markets. Frequently testifying before Congress, Zandi is a trusted adviser to policy makers on topics including the economic outlook, the merits of fiscal stimulus, financial regulatory reform, and foreclosure mitigation. Zandi received his Ph.D. at the University of Pennsylvania, where he did his research with Gerard Adams and Nobel laureate Lawrence Klein.
64% voted the same way in BOTH pre- and post-debate votes (19% voted FOR twice, 42% voted AGAINST twice, 4% voted UNDECIDED twice). 36% changed their mind (7% voted FOR then changed to AGAINST, 2% voted FOR then changed to UNDECIDED, 5% voted AGAINST then changed to FOR, 2% voted AGAINST then changed to UNDECIDED, 7% voted UNDECIDED then changed to FOR, 14% voted UNDECIDED then changed to AGAINST) | Breakdown Graphic
Broadening the base is as clear as mud. One side using the term to mean removing loopholes, the other side using the term to include a higher percentage of the taxes paid by middle income earners. Typical lack of clarity leading us to a floating definition of terms which then leads to inaction when the time for the calrification of terms comes and agreement can't be reached because terms were not clarified at the begining of the debate. Games lawyers play churning the waters, givng a good show, with no intention of resolving the issues.
I'm not sure how a tax cut is going to have any immediate effects, unless you are proposing some sort of immediate rebate solution. In that case, we know that those types of programs are usually used a short-term economic prop that only keeps the drop from happening so early.3% seems like a massive amount of money to inject back into the system. With the Federal Reserve and the Treasury printing and pumping over a trillion dollars back into the economy, we should already expect an inflationary wave to hit us in the next couple of years. At this point, it seems like the markets are correcting themselves and we really just need to cradle the egg as it's falling instead of trying to stop it altogether.You should also remember that the congress, senate, and all other budget-makers are not the finest group of financiers. There is very little proof that we could see a federal smart spending program that does not get tied down with bureaucracy and waste.
The "brilliant" guy sealed his own fate with the example of Warren Buffet, making it clear that the richest people will always be able to find a way to colossally minimize their taxes. I paid 10% on adjusted taxable income of $15,000 while Mitt Romney, a 2 percenter, paid less than 4% more!!
I was impressed with the talent on the panel. I believe that the Laffer curve exists but I don't think that even Arthur Laffer knows where we are on the curve. I suspect the parameters may "float" with inflation.
We might have been near the optimum operating area of the curve during the Eisenhower Administration or the Clinton Administration or both.
Nobody talks about the wage-price spiral anymore.
Economists often say a one percent inflation rate is good. They haven't convinced me that any inflation is good. I do understand the relationship between inflation and balance-of-trade with other countries.
Since the Korean Conflict such things as housing, automobiles, motor fuel, college education, and health care have shown average annual inflation rates around 5.6 percent. During the same time incomes of the wealthy have risen at 6.0 percent or more, wages of most everyone else have risen at about 4.0 percent, and prices farmers get for their crops have risen at only 2.8 percent. All rates are annual averages.
I see executive compensation in the U.S. as an expression of pathological eliteism and I see many of the wealthy to be as clueless as Marie Antionette or Czar Nicholas II. The French and Russians haven't really fully recovered from the excesses of their respective revolutions.
We cannot have the general population lose faith in the rule of law or something like the "Occupy Wall Street" movement snowball into something far worse. If that happened one of the milder outcomes would be Grover Norquist, the Koch brothers, Wayne LaPierre, and possibly some UAW leaders being led to the guillotine.
It might be necessary to "tax the snot out of the rich" to restore public faith in the rule of law.
I see a high volume of firearms sales as a symptom that the public are losing faith in the rule of law.
I think this debate was REALLY UNFAIR. There was no representation of Conservative American values as both sides were Socialists: Fabian Socialists on the right, Marxist Socialists on the left. This tinkering of economies, taxing and devaluing, arguing over rich and poor classes are all Marxist point of views.
We should end the FED, and base our money on actual value and then their would be NO inflation bubbles, no over-printing and devaluing of our money for imperial wars, no tax on the money printed (our money), and less of a NEED to over-tax individuals. The poor would then have value in their money, their hard work, and the rich would have to produce more value instead of making it the way Romney did, through: tax schemes, government hand-outs, Wall-street manipulations/gambling, and offshore account *hoarding*. Taxation in the manner of the IRS is illegal in American under the Constitution. Free Wesley Snipes!
Quite good. Missing argument is that in the past lowering the tax rate with increased revenue occurred because the middle class was earning proportionately more than now thus was tapped those with cash in hand. Today, the middle class is struggling with minimum COLA while the bankers, CEOs, and ilk earn a proportionately bigger piece of the pie. The bulge in the pie is at the top, so that is where the tax rate needs to follow. Decades ago the bulge was with the middle class so taxing them and not the rich as much made sense and worked. Today it is mathematically incorrect.
A lot of people here aren't making valid points. You can correlate all Americas problems to the tax rates of the rich people. The rich people are in the higher tax brackets. You cant tax them more because they are more privileged than others. That doesn't encourage business growth. Doctors, lawyers etc. work very hard not only to get the position they have, but to maintain it. The small percentage of rich people pay the majority of taxes. Even if taxes were to raise on the rich, it wouldn't have much of an effect on the national debt. Thats why i believe the rich are taxed enough and we should worry more about spending.
"Bush tax cuts"...The U.S. government's budget deficit is nearing a trillion dollars for the fourth straight year and unemployment remains high."
The simple argument against the proposal is, if the rich are taxed enough, and they are at near the lowest levels in history, why are we having any economic problems at all right now. It's pretty simple, at times where there is a more equitable share of the revenue burden, the economy is better for everyone.
Nobody answered the question, "What do you mean by 'broaden the base?'"
I was floored by the attempted misdirection by Laffer. There are two orthogonal questions, (a) do we need more revenue and (b) who should pay (for whatever revenue we do need)? It is disingenuous (that means "lying," Arthur) to say that we'll lower taxes, solve all the problems. That is a discussion but was not supposed to be this one. The assiduous attempt to hide things makes me think he didn't believe his own rhetoric. One could decouple the topics by an approach that clearly sets revenue aside, like this: "Assuming an across the board tax reduction because of surpluses, should we tilt the tax schemes toward more progressive, or less progressive?"
I say more because of the trend in wealth concentration. The tax policy changes (mostly Bush cuts) have had the unsurprising effect of accelerating wealth stratification and so "obviously" we should rescind them, unless this kind of disparity is the goal, in which case, by all means keep it up.
At one point I thought we had agreement! Everyone seemed to like closing loopholes such that the rich pay a higher portion of their income. If so, but the GOP want to say that means they win the debate, I say that's grand!
There should be another debate on the Laffer curve itself. That manifestly remains a matter of ideology rather than science. I wish it could be laid definitively to rest and, if it can't be resolved, then We should resolve... not to talk about it any more!
This debate is fantastic...I wish it were framed so that it relates more closely with the current debate in Washington. Did the winning side (against the motion) effectively endorse the current republican position? I think they did because they seem to agree that closing the deficit by increasing the progressivity through closing loopholes exclusively (without increasing any marginal rates) is possible-and "fair". Zandi said that this is possible, at least with the proper political cooperation...and, from my limited understanding, this is exactly what Boehner (Republicans) is proposing as a "balanced" approach-that regarding earners of 250k or more; raising effective taxes, rather than marginal tax rates, qualifies as "raising taxes," while Obama (democrats) is arguing that only increasing rates on the >250k earners qualifies as "raising taxes." It seems that Mr Zandi and Mr Reich have effectively argued that the republicans approach would both work, and satisfy Obama's bi-partisan test. WHAT AM I MISSING?? (please excuse my caps)
The point that everyone seems to miss on this question, is should the rich pay more taxes because they have disproportionate access to Government than the rest of us. If one has a direct line to their Congressman and can therefore get laws that favor them, why shouldn't they pay more for that privilege? They seem quite willing to pay under the table!
who does not love a debate has no siblings
Hubbard's dishonesty is nothing short of spectacular. Even in the intro, instead of simply owning the obvious reality that he's partisan -- having worked for Bush and now Romney, while rather famously shilling for the financial services industry -- he drops some misdirection about working with former Sen. Bill Bradley and having some absurd claim on Obama's housing policy.
As was noted by Miles, there was some muddying of the question and that was done, of course, by Hubbard. By absurdly claiming that his goal is to get wealthy people to pay more taxes by eliminating their tax credits, he's conceding the point that they are currently not paying enough in taxes. But instead of admitting that, he tries to claim that the question refers only to the tax rates. If the organizers wanted that to be the question, they would have written it that way: Rich people pay a high-enough tax rate.
Hubbard, a prime mover in causing the 2007-2009 credit meltdown, is exhibit A for the notion that once you reach a certain level in political circles, you can be wrong over and over and over again, but still keep your job telling people how things are...
While I do enjoy the debate and the expertise that these debates have I do really wish that there was a better job framing the debate. this is as chronic a problem as people asking poor or off topic questions. maybe a separate section at which the debaters first have to say their interpretation of the motion, then any clarifications on its meaning and then, with a clear motion, the main debate can ensue without these kinds of problems.
Excellent debate. I came in hoping to better understand the view of those I did not agree with, nor understand. Indeed I better understand both stances represented now.
Unfortunately this debate, along with a few other recent IQ^2 debates, ended up getting muddied by the interpretation of the core question. The debate could have been better honed by specifying a clearer core proposition, and making it less up-for-grabs.
That being said, thank you for another excellent debate. I watch them all, and don't know where I'd be without this service!
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