Osler's Razor

250k is not rich anymore.
 

At the cost of keeping the under $250K tax cuts and unemployment benefits... yeah, I don't know.

I was kind of hoping that this would be a "line in the sand" moment. I knew Obama was pretty much a centrist when I voted for him, but I thought he was the kind of centrist that could get stuff done versus an FDR-like radical, whatever the right wants to think of him.

But their protestations of him being super-liberal and far-left have become a sort of double-edged sword. They convince everyone that he is, and no matter what, conservatives will see him this way because he's a Democrat, and liberals will be very disappointed when he isn't the socialist demagogue the right says he is.

Still, I'm sick of seeing him extend the hand of bipartisanship to the GOP only to have it spit on and the incendiary rhetoric ratcheted up another notch, fueled by Bryan Fischer flying off the handle and Sarah Palin vomiting out some nonsense on Twitter.

At this point, the absolute best thing that could happen is a Martian invasion.
 

250k can be considered middle class depending on where you live AND how you live. I was against the tax cuts going higher than the 1 million mark.

But I hope this makes my parents happy and they chose to stimulate the economy by sending me some money!
 

I'm sorry, but $250,000 a year is very rich anywhere. You must be comparing yourself to neighbors in Beverly Hills.
 

The $250k number is for couples. And is that rich? The answer is maybe. If you are a married couple of 30 year olds with limited debt and no children, and you live someplace like Waco then $250k is a king's ransom. You're rolling in money.

If however you're two 50 year olds with a mortgage, 3-4 cars, 2-3 kids in college, another at home, and you're living in Dallas or Austin, or New York City, then it is a different story.

The more important question is why does it matter? Why should we just accept it as a fait accompli that if you're rich then high tax rates are reasonable or acceptable? There was a time in this country when the highest marginal tax rate was 92%. Heck, even under Reagan's tax cuts he only reduced the highest marginal rate to 50%. I tend to think that whether you're rich or poor, the idea that the government should take that much of your money is offensive and repugnant.

The bottom line is we can't tax our way out of our debt. Spending is the issue. Ask Europe about it, they'll tell you. And until someone gets serious about how we spend money in government then taxes are just a way for politicians to keep us distracted from the real crisis.
 

This goes back to mutual sacrifice. We chose in this case (AGAIN!) mutual indulgence. Dems wanted more spending and the money to fuel it. Reps wanted less spending and the tax breaks this would make possible. Instead we got more spending and less money to fuel it. How does this make ANY sense?
 

Kendall, your avatar very much emphasizes your point.
 

We accept it as fait accompli because the proportional share of wealth is so much higher for the top 1-2% of earners.

Think of it this way: everybody at the dinner table wants some of my wife's delicious pumpkin pie, and why not, it's freaking delicious. But my wife is not Superwoman: there is (realistically) a limited amount of pie she can make. Through various means, everyone at the table gets a different slice of pie. The uneducated guy down at the end of the table with a drug habit is pretty slow and feeble, so he gets a very slim piece of the pie. Me, at the other end, because of my privileged position, higher education, and ninja-like reflexes, am able to grab a piece that is vastly larger in proportion. So while 98% of the table gets only modest size pieces, I have a very big piece.

My wife (who in this situation will represent a civil government) decides that if she is going to continue doing things we all like, such as baking more delicious pies, we will have to all cede some of our pieces back to her. But rather than simply instituting a direct tax on pie from all of us, which she realizes would be unfair and akin to a robber baron from the Middle Ages, she determines a marginal pie rate.

Marginal pie is a slice of pie beyond a certain amount, figuratively the last bite of pie one would eat. Since I have a huge piece of pie, far more than I could easily consume (and I love pumpkin pie), it makes more sense to take a bigger cut of my pie.

But wait, people say. That's your pie. I "earned" it by being so close to my wife, by being faster, by having my parents get me a better education, etc. Shouldn't I have a bigger piece of pie? Aren't I entitled to it? Maybe next time my wife bakes delicious pie, I will sit on my duff watching football (but not crying, because this is my fantasy and here UT doesn't suck), and not help her mix the filling.

So there's a curve (at least according to classical economic theory) relating marginal pie rate (how much my wife is going to take back to ensure she keeps making pie) versus how much effort I am willing to expend to get pie. Take too much marginal pie, and I lose incentive to even try to get a big piece, because what's the point. But if my wife takes too little marginal pie, she's shortchanging herself because I'm getting away with pie that I can neither eat nor save.

So there's a tricky balancing act of where marginal pie rates should be, and lots of things factor in to it. But there's nothing a priori about me that justifies my proportional share of that pie. Allowing me to keep more of my pie, which has been the case since 2003, hasn't done squat to improve the quality of dinner, and quite a few people at the table are now plateless and so cannot even earn themselves some pie if they wanted, yet my slice is still getting bigger.

But hot dang do I love pumpkin pie, so I'll fight tooth and nail and ask my buddies in the kitchen to put in a good word with my wife so that she doesn't do something drastic like cut off the flow of sweet, sweet pie to my gullet.
 

Sadly $250k is not rich in places like Northern Virginia, NYC, Boston, San Francisco and parts of Los Angeles where housing prices were out of control and still remain absurd.

As for the deal itself, Obama also got modifications to the Student Loan program out of this.

It was a compromise and the best deal he was going to get. He could have gone "line in the sand" and gotten nothing and looked foolish.

The Democrats could and should have dealt with the tax issue anytime over the past two years. They could have modified and extended the tax cuts for some, or not at all. But they put it off till way too late in the game. Unpopular votes should be taken at the beginning of a term in office so as to allow for explanations and modifications later.
 

Or the President could have accused the Republicans of being disingenuous in calling for lower deficits but requesting measures (tax cuts) that would vastly increase the deficit, then accused them of holding necessary relief to the American people as a hostage for tax breaks for their wealthy buddies, and in doing so reclaimed a bit of the public narrative from the rather one-sided view we have today, which is that "government spending" is out of control" (from the party that embroiled us in two costly foreign wars, created an entirely new department of the government and needlessly slashed government revenues in 2003) while bemoaning the invasiveness of government (from the party that would restrict access to medical procedures, cut off scientific research funding because it contradicts with their religious beliefs, and deny basic civil rights to people based on gender and sexual orientation) and arguing that government is too hard on the wealthy, even though the wealthy have seen an increase in total wealth at a time when the rest of the country is in a recession.

Sure, Obama could have fumbled and would look very foolish, but (and this is a big "but" here) if he had even one political advisor with the savviness or messaging capability of a Karl Rove he could have reframed 2010 from a year of Democratic defeat to a staggering illustration of Republican hypocrisy and self-interest.
 

I want pie. Give me pie.
 

Bake your own pie from a very precise protocol. That’s what research scientists do, at an average salary of 36K a year and an average NYC rent of 2.2k per month for a one bedroom apartment. The math is more than painful, it is embarrassing and absurd. Given that these are not people at the end of the table, that barely went to school and the only controlled substances they abuse go into research experiments. Research that will someday save the ass of someone who stuffed their face with more pie than they knew they didn’t need.
 

Flat tax makes the most sense - no exemptions, no IRS just taxed on what you spend.

Granted, not politically feasable, mostly because the average American doesn't understand basic economics.

More pie! Less pay for cooks!

Lee
 

Lee--

Um, I think we want to pay the cooks. It's the pie-takers we want to cut back on, right?

And Anon. Research Scientist in NY: Right on.
 

No, we want a bigger pie, but more equitable pie-sizes for everyone, and if that means better cooks and pie-slicers, then we all need to contribute to the pie-making and slicing. We need some sort of communal system of pie distribution, perhaps even shared effort in to making the pie, instead of letting a public baker make a pie while private bakers work to create artificial filling shortages to drive up the price of the finished product while exploiting sous chefs who make the crust and grease the pie pans.

Oh, look at that, it's lunch time.
 

I thought we could just print, I mean bake, more pies?

I guess this discussion is a moot point now because soon-to-be ex-Speaker Pelosi has been successful in defeating her President's "pie" initiative.
 

Maybe if we stopped baking pies according to the Keynes Cookbook in Neoclassical Ovens, we would get somewhere. The problem is that the only other cookbooks we have in the USA are badly-translated versions of the European Delight cookbook that people reject as "furriner food" and some crazy Austrian manual on the eating of raw flesh for strength and power.
 

I guess the zero-sum-gamers will never go away, even right after the their messianic master planners fail...again. I just wish someone would ask Buffett, Gates, and Clinton why they don't just give back the money they get from "tax cuts." I guess it's easier in America to force your neighbor to pay for your other neighbor. How charitable!

I also recently watched one of the Carter-Reagan debates and was surprised at how little has changed in the substance of the ideological debates. So I guess it's appropriate to say, "There [they] go again!"

Other Kendall
 

Of course we want to pay the makers more - But the country seems to think that we can all have more pie and pay less to the cooks.

Ah, well, next week when I am Empress of the Universe, this will all be straightened out. But next week never seems to arrive....

Lee
 

I love the Republican critique of government. Twenty-four months of non-stop obstructionism, filibusters, grandstanding, and demagoguery while suckling off the lobbyist faucet followed by a few months of back-slapping about how government doesn't and can't work as well as the private sector when it comes to resource distribution, despite the glaringly obvious problem eight years of barely-mitigated privatization has left for us.

The Space Empress has new clothes.
 

So can we sum up the Lane Economic Theory as: "Let them eat [Pie]!"

Other Kendall
 

http://www.washingtonpost.com/wp-dyn/content/article/2010/12/08/AR2010120804224.html?hpid=opinionsbox1

See David Broder's column... Link above
 

Close. It's let "us" eat pie. I'm big on inclusiveness and solidarity.
 

Haiku Friday should be about pie.
 

Every post should in some way include pie. It brings us together as a people.
 

pies and snow.

And pandas with flamethrowers.
 

I was eating pie out in the snow until I was attacked by Tax Cut Panda and his flamethrower.
 

When do we pay our bills instead of going to Phil Rizutto in Beijing?
 

There's an "Other Kendall."
I feel so freakin' cool because of this. Almost as cool as when I got a copy of Osler's Christmas CD...