Was it Chomsky who called for increasing taxes somewhat on the very rich, precisely because they are so adept at growing their principal?
My stepbrother many decades ago made about $15mn overseas, and parked his cash in the Channel Islands (offshore tax haven). Later he became a devout Born Again Christian, and full of zeal went to his accountant on Jersey, and asked that it be determined whatever tax was due to Caesar (IRS) from his unearned income and capital gains.
The accountant said, "You're joking, of course?!" When my stepbrother said he was perfectly serious, the accountant said, "I'm sorry, but if you actually want to pay your taxes, you'll need to hire a specialist."
While your comment is funny, I think I see a deeper point. Many people outcry how the government should do something here and something there, but you’re right, they themselves don’t do more.
I also wonder why we don’t look at our local communities as important enough to do something our selves and take the federal government out of it. Our states have become too dependent on the federal government and I fear this “realigning” (not sure what to call it lol) is part of the process of cutting the umbilical cord to states that have chosen to absolve themselves of responsibilities to their residents and depend on the federal government. I saw daily when I worked in government.
People want to help the lesser fortunate, and I for one do what I can here in Maryland, by donating money and time to organizations that help our community, but it’s interesting that many people look to government as a source to do something in their town.
I say think locally and act locally. I’m not sure what all this tax stuff and changes will do in the next year or two but I’m sure that our ability to make better decisions for our communities will remain.
Yes I see that. And I think you are right in the diagnosis. Many states can’t handle that. I wonder why this is the case? Most states became dependent on the federal government for far too long. It seems that at some point the states need to figure out what to do for their residents so their residents are incentivized to stick around and support their neighbors.
I also suppose this leads to the age old conversation on everyone’s belief on the role of government in a society. Is it Apollonian, or Dionysian? Both? What the balance?
In America, this “freedom” term has always been something to work towards over generations and generations is why my parents brought me here. Other countries, while having safety nets, are not as large, or culturally diverse as America. The wild and crazy problem is that people come to the “Wild Wild West” that is America on a global scale because they are willing to become individuals that build something for their families thanks to that “freedom.”
I wonder if the more appropriate route to take is to help people here WANT to help their neighbors again. Sure we’ll have to redefine our culture but if we start there I hope more compassionate capitalists will emerge.
I always approach your writing and ideas, they make me better, and smarter. Thank you!
This is the actual answer to the problem. Giving more money to the government is generally about as effective as piling it all up and setting fire to it. And in some cases the pile it up and burn it strategy is actually preferable. At least it reduces inflation.
In theory the government should be able to help people, in practice it helps people for a while, until the program gets so co-opted and overrun by grifters, freeloaders and special interest groups that most of the funding is basically being stolen, or diverted to paying for things that are actually making things worse, but any attempt to rein in the havoc gets framed as an attack on the initial aims of the program by all the people that are using it to steal money.
The idea that we should be letting the government extract more of the productive output of the economy is premised on the assumption that they will redirect it in a helpful, constructive way. That is the assumption that most conservatives reject, not the strawman 'greedy rich people need more money' that it gets framed as on the left.
A case in point is the dept. of Ed. Everyone admits that education standards have collapsed since it came into existence, yet the left behaves as if cutting it's funding would be terrible, even citing the fact that education standards are so low to justify their position. So it seems that to the left, the only possible answer to anything is to increase government funding until the perfect outcome is achieved. Logically that would eventually mean confiscating everything from everyone, regardless of the actual outcomes that any of these programs have. So if we're looking at revealed preferences, what does that tell us?
Or just keep on voting in Republicans. Dems'll raise your taxes and possibly come close to balancing the budget. While those crafty Republicans will borrow the money instead.
So given that people not getting sick and dying is the goal, are you sure that the government pumping more and more funding into the present health system is going to achieve that?
I’m not trying to lead you toward some solution that I secretly hold to be right because I don’t know what the answer is, but I’m skeptical of your assumptions here.
The reason is that I live in Australia and I’ve witnessed first hand the gradual worsening of our publicly funded healthcare system, as access to doctors becomes more difficult, as less and less (in terms of tests and procedures and doctor’s visits) is actually funded by the public system while costs continue to grow exponentially, with the federal government adding more levies to income tax on top of the large cut of federal funding that the medicare system already took in. Now we have have special levies for wealthier people to drive them out of the public system and force them to take on private insurance, and in fact it’s starting to become normal for middle class people to hold medical insurance to deal with the costs of the ‘publicly funded’ system.
If you look at a rough breakdown of publicly funded medical costs in Australia since the program was introduced you would first notice the absolutely staggering overall growth, then you would notice the growth in the portion going to pharmaceutical companies. Going from zero at the end of the 90’s to around ¼ of expenditure (this is just from memory, the exact figures are going to be different but I just want to give you an idea).
This is not to mention the medical services providers (pathology labs, GP services networks etc.) that are growing ludicrously wealthy from this system as the actual patient experience somehow both degrades and simultaneously becomes more expensive. (Expensive both in terms of federal taxes and direct payments at the point of using the service). Australia really did have the ‘free medical’ that all the leftys talk about, but that was 20 years ago. We’re rapidly approaching the point of having a system that you pay for twice, once through your taxes, then again when you turn up to actually use it.
This is what I’m saying. As soon as the government puts out a bucket of money, everyone goes into a feeding frenzy. The program will work at first but it’s efficacy steadily drops off as everyone works out how to get their free lunch. And because the program is ‘obviously good’ it is ridiculously hard to do anything about it, and because the government has infinite money, the easiest thing to do is to just keep tipping it into the hole.
But all that aside, if your goal is simply making people more healthy, less sick, less chronic illness etc. then i would suggest that the first thing to do would be to divert a huge portion of medical funding into eliminating garbage foods and toxic industrial food production processes, getting people active and happy rather than paying to dose them up with pharmaceuticals.
I'm sure Australia has its own uniques set of issues. I don't know anything about the Australian healthcare system so I really can't comment. I agree that prevention has far greater impact than any other health intervention. I am working on a project right now to increase nutritional information in an impoverished, mostly Spanish speaking neighborhood in NYC. I'll be paying for translation into Spanish because the AI translation is not good enough yet.
People all over the world live generally better, healthier, safer, longer lives because they choose through government to organize their societies to as much mutual benefit as they can muster out of human imperfection. Among those imperfections is the antihistorical and counterfactual fantasy among some that we'd all be better off flailing about on our own while feudal and corporate lords extract our lifeblood. We can't all be masters of the universe, but we can delude yourselves we are.
That’s why I started my community based local 501d nonprofit- LiterRIZZy. My hope is to provide internet librarians with luxury cars, the theory being that if kids see someone like, say, me behind the wheel of a new Bentley, they’ll think reading is cool. It’s about time someone thought of the children.
I’m a big fan of the perspective that you share. Thank you. Since moving back to the US after 27 years in the UK & France, I repeatedly ask Republicans, Conservatives and those who identify as ‘Libertarians’…
To please tell me - in this Capitalist system - who looks after the people who simply cannot look after themselves? Long or short term. It’s too easy to point to ‘lazy’ or ‘work ethic’ and ‘let the free markets decide’. Only when we recognise that the world is made up of many, many varieties of people & circumstances. Some born without physical or mental means, some living in circumstances beyond their control,
The role of government is so much more than just an economic one. Thank you for sharing, explaining & offering suggestions too. Oh, and not blaming. It’s rare.
The vast majority of government expenditure goes to entitlement spending and pointless wars. The former is something a large constituency wants to profit from but not pay for, while the latter is something a small constituency wants to profit from and not pay for. Hence all the borrowing. Unless those two impulses are tamed by someone willing to challenge a fundamental principle of democracy- voting your grandchildren into debt peonage- nothing will change. It's heartening to me that at the Trump administration is at least committed to winding down the pointless wars; perhaps a Vance administration will follow through on entitlements, which will be far easier in a future devoid of the huge expense that boomers represent (not faulting them for existing- it's just a fact).
I would support Medicare being means tested. As for Social Security, it's a pension plan so whoever is enrolled and has paid into it should not have their money taken away.
I think it would be great if we could spend less money on the military and maintain our safety and the global order of the West that's made us so prosperous.
Social Security is NOT an entitlement for 98% of beneficiaries, who have often paid into it their entire working lives. You might want to reexamine your assumption on this.
The rate of return on that investment is probably inferior to what probably all of the folks who post on this Substack could achieve, but it's a fairly equable system that serves the less business-savvy portion of our population quite ably.
Social Security was passed in 1935; the first social security checks went out in 1940. Current workers pay for retirees. If a private business was run like social security it would be rightly considered a Ponzi scheme.
That money was spent on the people who came before you. When you retire and collect (obviously theoretically) it will be the current workers paying for you. It’s unsustainable because there are increasingly proportionally fewer people paying in than collecting, due to longer lifespans and the bulge in retirees represented by the boomers. Part of the reason for mass immigration is the hope that imported workers will generate some revenue to offset the shortfall.
There’s almost $3 trillion in the Social Security trust fund. Some of that is what I paid in. It will be depleted in about ten years. At that point the govt. will have to contribute part of its revenues to meet its obligations unless the social security law is changed. It’s not a Ponzi scheme; it’s a pension plan that has too many retirees and not enough workers. When that happens to pension plans, adjustments need to be made to hold down benefits.
So this is what makes it ‘like’ a Ponzi scheme rather than one as such- despite the fact the the old investors get paid with the new investors’ money, the government has implicitly promised to cover the payouts. I’m lying into it now, but by the time I’m meant to collect- around 2045- nothing will be there unless the state kicks in. Thus, it will inevitably become an entitlement rather than a pension plan paid for by workers. It really already is. That looming threat of massive tax increases will be dealt with as it has before. People will punt on something so politically unpopular and borrow more instead. That’s why there need to be some kind of cuts or means testing.
The ‘Leopards Eating Faces’ party is always happy to vote for their own benefits being taken away, because they don’t realize that they get the same benefits that ‘others’ do. Back in the day someone (maybe The Daily Show) interviewed people who hated Obamacare (because they were told it was bad) but like the Affordable Care Act, not knowing it was the same thing. Kind of like how Blue states economically support Red states, but they don’t understand that. The problem is that people will suffer for the ignorance of others.
Sorry, David, but you are missing the point. The tax bill, or any other Trump initiative for that matter, cannot be view solely--or at all--on its economic or even in many cases its political impact. What Trump is trying to do is more sociological, to return the nation to the good old days of the McKinley administration, when there were no restrictions on businesses, no social safety net, no government regulations, no Federal Reserve--which, if you remember, he wanted to abolish--no workplace protections, no right to unionize, no civil rights legislation, no FDA, etc, etc. He conveniently forgets that there were devastating economic swings during that period and that all the federal controls he loathes so much were put into place because the private sector failed. When you couple a flawed vision with limited intelligence and healthy dose of megalomania, you definitely are creating a highly combustible brew, and one in which applying logic will not really help you to understand.
I was not trying to understand the psychology of Trump or MAGA but rather focus on a highly consequential policy initiative that is part of the Trump/MAGA design. I think it's crucial that people intent on opposition arm themselves with knowledge. If somehow this bill can be derailed, it will hurt Trump's power and it will prevent suffering. So I don't think I'm missing the point, just focusing on one really important point.
There is no question that your point SHOULD matter. The problem is that the opposition is powerless and bringing the sort of expert analysis that you do to the problem is, sadly, irrelevant. It doesn't take much to recognize that, at least for the moment, those who rubber-stamp these hare-brained initiatives do so with the full knowledge of their potential negative impact. Their prime motivation is also sociological--to keep their cushy jobs. So, your use of "somehow" is apt.
There is a strategy to negotiate the bill. If the Democrats vote against a continuing resolution past March 14th, the government shuts down. That is a powerful chip to play and I think they should play it.
Also it's possible that a few Republican reps may vote against a bill anyway. The margins are so tight in the House.
Hope you're right. Dems can only stop the CR with Rep defections. Here's the bottom line for both of us...the key is whether some Reps come to realize that their jobs are in equal or greater jeopardy backing Trump. If that happens, the scenario changes drastically. Hoping they will do so because of reason or even patriotism is, I think, wrong-headed.
In theory, yes, but there are any number of gimmicks they could employ to make it budgetary and require only a majority. I think we've seen that the actual rules are not actual rules.
Voting against your party for GOP members now also includes death threats. Against them and their entire families. Not just the risk of losing a job. Something to keep in mind.
Thankyou David for this insightful article. You write so clearly about complex topics. I’ll be re-reading this. 🙏🏼
For the simpletons out there - like myself, is there one takeaway of “what we should we do?” Or “what we should know?” …going forward.
I know it’s too complex issue to reduce like this but I always find myself asking this question, after reading complex political issues. What would your message be if it was written on a bumper sticker?
Thank-you! I was anxious to ask you to reduce your article to a couple points but I find it refreshing to grasp a couple concrete actionable steps. I'm a millennial :) Blind hot rage has a way of derailing most of our rational thinking. On a total side note: I am also Canadian. Is writing about tariffs or Canada's relationship with America within your interests on this Substack? I'd be curious...
Thanks for this great breakdown David. I think the Medicaid and SNAP cuts will end up being removed from this bill. Even with the republican control of both the House and Senate, many republicans know these cuts directly affect their constituents and they will get major pushback on this.
Me too David! There typically a treat, an initial vote, another threat, some discussion, constituent push back, adjustment to the Bill in question, and then eventually these cuts are removed.
As a NYC resident, your marginal tax rate on W-2 income is presumably 51%. You also pay 8.875% sales tax on most consumption expenditures. You also pay meaningful real estate taxes on your coop. And a mansion tax on the future sale of that coop. And, your estate will be assessed 16% by NY State upon your death.
What do you think your tax rate should be?
And, why did you laugh off another commenter’s suggestion that you, and other wealthy individuals who feel similarly, should make voluntary tax payments over and above what you owe? It seems like a very reasonable way for the wealthy to fund the government programs they support, whether or not Bezos et al do the same.
My reply was not to laugh. I wrote "I choose to direct my money to effective grass roots organizations that help the vulnerable. I would do this with or without a higher tax rate."
Marginal rates are different than effective rates. So right now the 37% top Federal rate only kicks in on income above $750k for a married couple. So if a married couple earns $750k the effective rate is probably around 30%.
As for what my tax rate should be, I'd be okay if the pre-2017 tax rates kicked back in. I'd also be ok if the 2017 rates stayed the same for families earning $200k or less and then pay for that by whatever rates balance it out on incomes above $200k, on a graduated scale. I don't think the tax rates on the higher income would be very much higher than the pre-2017 rates, especially if there were a few higher marginal brackets, like over $1 mm and over $5 million.
Very well laid out David. To your point in footnote #5, I don't see any Republican 'breaking' with the majority and voting against anything Trump wants. At this point, the fear of losing their seat in the primaries is almost moot when faced with the pariah type wrath they (and their families) would receive from this very well oiled bully machine in the wider world and web.
Who (R) will be brave enough to vote against it? Someone that knows their constituents stand to lose so much, they would reward that politician and vote for them in the primaries regardless of the political machinations behind the scenes to replace them? They are in a bit of a conundrum.
The Democrats seem just as flummoxed as to what to do. I hope they find their higher purpose soon. Right now, it seems no one wants to stand in front of the runaway train and I don't blame them. Perhaps the best strategy is to let the Republicans flame out on themselves? (As suggested by James Carville in NYT piece a few weeks ago.)
If the Dems shut down the govt for anything longer than a few days or a week FOX News and RW media will run 24/7 on that and effectively crucify them. Especially since MSM tends to reinforce any RW lede, effectively amplifying it. And any subsequent economic downturns--like a devaluation of the equities market--will be blamed on them.
RW media consumers are right now insanely delighted at everything Trump/GOP has done since January. While Dem voters are just as solidly horrified.
The ONLY thing that will shake GOP voters up at this point, is if consumer inflation continues to rise, and/or the economy tanks. If Dems have ANY part in that, it will hinder not help them in 2026.
Rep. Thomas Massie, Kentucky, is independently wealthy and already withstood Trump in a primary (I think). So he voted No last month. Senator Murkowski has also stood up against Trump and survived so she can vote No too. I cannot name 5 Republicans total with such autonomy.
BTW- I live in the red state of Arkansas. The female Governor has said ”You’re either Republican or you’re crazy.” She has also said of her critics, women are the worst. (I won’t summarize her lousy policies.) See how state rule can be problematic?
You do a very good job of explaining very difficult things. I don’t know much about any of this, but I love everything you write and this was no exception - the way you articulate the way your mind works is extraordinary.
Thanks for this, David. I'll make a non-budgetary point. You write:
Reconciliation is used because most Bills in the Senate require 60 votes (60%) to be passed. It’s been a long time since either party had 60 of the 100 Senate seats (2010-11). We’re a closely divided country between our two major parties.
Of course, this is because of misuse of the fillbuster. Senate voting wasn't designed to require 60 votes. Further, a democratic design isn't one that would require either a majority or super majority to come from only one party. That is a condition created as standard in Congress first by Newt Gingrich and then in the Senate by Mitch McConnell .
This is the history of the filibuster below per senate.gov. I like the 60 vote requirement because the Senate has not become the restraining force on the House that the Founders hoped for.
“In 1917, the Senate passed the filibuster or the cloture rule, which made it possible to break a filibuster with a two-thirds majority. In 1975, the Senate reduced the requirement to 60 votes, which has effectively become the minimum needed to pass a law."
Right. But for most of its history, filibusters were extraordinary events. It has been only over the past 3 decades or so, gradually, that it became standardized to the point of being implied without even being invoked or literally employed, so that the 60-vote margin seems standard. Under the more normal environment pre-Gingrich (who radicalized Senate Republicans as well), I might agree about a positive role for a 60-vote majority, but combined with extreme partisanship, rather than serving as a restraining force, it has contributed instead to rendering the Senate and Congress generally dysfunctional.
Wow, you really did nerd out. Imagine that they keep such records. (Maybe government can do some things well after all. :) Anyway, they tell the tale, don't they?
I didn’t bother to read your windy argument to give more of my already taxed money to the government which Elon has already shown can’t be trusted not to either waste it or give it to my enemies both foreign and domestic (of which I consider you ), including the grift the CIA illegally doled out under the cover of USAID.
I am quite sure that you neglected to mention that Trump’s tax RATE cuts resulted in an increase in actual tax collections.
Before instituting any of the tax RATE hikes that you suggest (which will result in an actual decrease in tax revenues, as rate increases lead to decreased private economic activity as there is less reward for work and risk. (Typical oversight of leftists like you)), we should claw back all the CIA grift from the ‘NGOs’ they were given to, no matter how many times they were laundered. The CIA’s charter does not include domestic programs & so it is all illegitimate (no matter what some Clinton/Obama/Biden leftists judge says.
Balanced budgets need to come from cuts to spending period. Most federal spending is not on activity that has constitutional warrant or mandate.
I just read a stack today that argues for consumption taxes and against income taxes (which made a lot of sense to me. Tariffs which most of the world uses (against us) would be a good idea in that vein.
Cutting the government workforce & pay rate (2X on average what the private sector pays).
If people suffer from these changes, let the states pick up the slack, they will likely do it more efficiently.
Great article. It never stopped blowing my mind that the working American voted for a man who would f*k them over
You are free to pay more money to Treasury than you are required to by law.
Yes, I’m sure Bezos, Musk and Zuckerberg are running their with their checkbooks open as we speak🙄
Was it Chomsky who called for increasing taxes somewhat on the very rich, precisely because they are so adept at growing their principal?
My stepbrother many decades ago made about $15mn overseas, and parked his cash in the Channel Islands (offshore tax haven). Later he became a devout Born Again Christian, and full of zeal went to his accountant on Jersey, and asked that it be determined whatever tax was due to Caesar (IRS) from his unearned income and capital gains.
The accountant said, "You're joking, of course?!" When my stepbrother said he was perfectly serious, the accountant said, "I'm sorry, but if you actually want to pay your taxes, you'll need to hire a specialist."
While your comment is funny, I think I see a deeper point. Many people outcry how the government should do something here and something there, but you’re right, they themselves don’t do more.
I also wonder why we don’t look at our local communities as important enough to do something our selves and take the federal government out of it. Our states have become too dependent on the federal government and I fear this “realigning” (not sure what to call it lol) is part of the process of cutting the umbilical cord to states that have chosen to absolve themselves of responsibilities to their residents and depend on the federal government. I saw daily when I worked in government.
People want to help the lesser fortunate, and I for one do what I can here in Maryland, by donating money and time to organizations that help our community, but it’s interesting that many people look to government as a source to do something in their town.
I say think locally and act locally. I’m not sure what all this tax stuff and changes will do in the next year or two but I’m sure that our ability to make better decisions for our communities will remain.
If you go to the end of my post, before the footnotes, you'll read why the states are not ready to take this on.
Yes I see that. And I think you are right in the diagnosis. Many states can’t handle that. I wonder why this is the case? Most states became dependent on the federal government for far too long. It seems that at some point the states need to figure out what to do for their residents so their residents are incentivized to stick around and support their neighbors.
I also suppose this leads to the age old conversation on everyone’s belief on the role of government in a society. Is it Apollonian, or Dionysian? Both? What the balance?
In America, this “freedom” term has always been something to work towards over generations and generations is why my parents brought me here. Other countries, while having safety nets, are not as large, or culturally diverse as America. The wild and crazy problem is that people come to the “Wild Wild West” that is America on a global scale because they are willing to become individuals that build something for their families thanks to that “freedom.”
I wonder if the more appropriate route to take is to help people here WANT to help their neighbors again. Sure we’ll have to redefine our culture but if we start there I hope more compassionate capitalists will emerge.
I always approach your writing and ideas, they make me better, and smarter. Thank you!
Thanks Ivan,
I enjoy your comments as well.
I choose to direct my money to effective grass roots organizations that help the vulnerable. I would do this with or without a higher tax rate.
This is the actual answer to the problem. Giving more money to the government is generally about as effective as piling it all up and setting fire to it. And in some cases the pile it up and burn it strategy is actually preferable. At least it reduces inflation.
In theory the government should be able to help people, in practice it helps people for a while, until the program gets so co-opted and overrun by grifters, freeloaders and special interest groups that most of the funding is basically being stolen, or diverted to paying for things that are actually making things worse, but any attempt to rein in the havoc gets framed as an attack on the initial aims of the program by all the people that are using it to steal money.
The idea that we should be letting the government extract more of the productive output of the economy is premised on the assumption that they will redirect it in a helpful, constructive way. That is the assumption that most conservatives reject, not the strawman 'greedy rich people need more money' that it gets framed as on the left.
A case in point is the dept. of Ed. Everyone admits that education standards have collapsed since it came into existence, yet the left behaves as if cutting it's funding would be terrible, even citing the fact that education standards are so low to justify their position. So it seems that to the left, the only possible answer to anything is to increase government funding until the perfect outcome is achieved. Logically that would eventually mean confiscating everything from everyone, regardless of the actual outcomes that any of these programs have. So if we're looking at revealed preferences, what does that tell us?
I just don’t want more people to get sick and die.
Medicare and Medicaid are far more efficient than private insurance. Facts are stubborn things.
Or just keep on voting in Republicans. Dems'll raise your taxes and possibly come close to balancing the budget. While those crafty Republicans will borrow the money instead.
So given that people not getting sick and dying is the goal, are you sure that the government pumping more and more funding into the present health system is going to achieve that?
I’m not trying to lead you toward some solution that I secretly hold to be right because I don’t know what the answer is, but I’m skeptical of your assumptions here.
The reason is that I live in Australia and I’ve witnessed first hand the gradual worsening of our publicly funded healthcare system, as access to doctors becomes more difficult, as less and less (in terms of tests and procedures and doctor’s visits) is actually funded by the public system while costs continue to grow exponentially, with the federal government adding more levies to income tax on top of the large cut of federal funding that the medicare system already took in. Now we have have special levies for wealthier people to drive them out of the public system and force them to take on private insurance, and in fact it’s starting to become normal for middle class people to hold medical insurance to deal with the costs of the ‘publicly funded’ system.
If you look at a rough breakdown of publicly funded medical costs in Australia since the program was introduced you would first notice the absolutely staggering overall growth, then you would notice the growth in the portion going to pharmaceutical companies. Going from zero at the end of the 90’s to around ¼ of expenditure (this is just from memory, the exact figures are going to be different but I just want to give you an idea).
This is not to mention the medical services providers (pathology labs, GP services networks etc.) that are growing ludicrously wealthy from this system as the actual patient experience somehow both degrades and simultaneously becomes more expensive. (Expensive both in terms of federal taxes and direct payments at the point of using the service). Australia really did have the ‘free medical’ that all the leftys talk about, but that was 20 years ago. We’re rapidly approaching the point of having a system that you pay for twice, once through your taxes, then again when you turn up to actually use it.
This is what I’m saying. As soon as the government puts out a bucket of money, everyone goes into a feeding frenzy. The program will work at first but it’s efficacy steadily drops off as everyone works out how to get their free lunch. And because the program is ‘obviously good’ it is ridiculously hard to do anything about it, and because the government has infinite money, the easiest thing to do is to just keep tipping it into the hole.
But all that aside, if your goal is simply making people more healthy, less sick, less chronic illness etc. then i would suggest that the first thing to do would be to divert a huge portion of medical funding into eliminating garbage foods and toxic industrial food production processes, getting people active and happy rather than paying to dose them up with pharmaceuticals.
I'm sure Australia has its own uniques set of issues. I don't know anything about the Australian healthcare system so I really can't comment. I agree that prevention has far greater impact than any other health intervention. I am working on a project right now to increase nutritional information in an impoverished, mostly Spanish speaking neighborhood in NYC. I'll be paying for translation into Spanish because the AI translation is not good enough yet.
People all over the world live generally better, healthier, safer, longer lives because they choose through government to organize their societies to as much mutual benefit as they can muster out of human imperfection. Among those imperfections is the antihistorical and counterfactual fantasy among some that we'd all be better off flailing about on our own while feudal and corporate lords extract our lifeblood. We can't all be masters of the universe, but we can delude yourselves we are.
That’s why I started my community based local 501d nonprofit- LiterRIZZy. My hope is to provide internet librarians with luxury cars, the theory being that if kids see someone like, say, me behind the wheel of a new Bentley, they’ll think reading is cool. It’s about time someone thought of the children.
You can give more to the treasury and effective grass roots orgs. The two are not mutually exclusive.
True, but I have limits.
I’m a big fan of the perspective that you share. Thank you. Since moving back to the US after 27 years in the UK & France, I repeatedly ask Republicans, Conservatives and those who identify as ‘Libertarians’…
To please tell me - in this Capitalist system - who looks after the people who simply cannot look after themselves? Long or short term. It’s too easy to point to ‘lazy’ or ‘work ethic’ and ‘let the free markets decide’. Only when we recognise that the world is made up of many, many varieties of people & circumstances. Some born without physical or mental means, some living in circumstances beyond their control,
The role of government is so much more than just an economic one. Thank you for sharing, explaining & offering suggestions too. Oh, and not blaming. It’s rare.
Thanks Abby for the comment.
This is such a sad statement: Among our wealthy peer nations, we stand out as a low tax, low social safety net, high poverty country.
And now America will be poorer and the rest of the world will be less safe.
Alice, succinctly put. I think you could largely say this before Trump was reelected. To your neat list perhaps now add immoral and autocratic.
The vast majority of government expenditure goes to entitlement spending and pointless wars. The former is something a large constituency wants to profit from but not pay for, while the latter is something a small constituency wants to profit from and not pay for. Hence all the borrowing. Unless those two impulses are tamed by someone willing to challenge a fundamental principle of democracy- voting your grandchildren into debt peonage- nothing will change. It's heartening to me that at the Trump administration is at least committed to winding down the pointless wars; perhaps a Vance administration will follow through on entitlements, which will be far easier in a future devoid of the huge expense that boomers represent (not faulting them for existing- it's just a fact).
I would support Medicare being means tested. As for Social Security, it's a pension plan so whoever is enrolled and has paid into it should not have their money taken away.
I think it would be great if we could spend less money on the military and maintain our safety and the global order of the West that's made us so prosperous.
Social Security is NOT an entitlement for 98% of beneficiaries, who have often paid into it their entire working lives. You might want to reexamine your assumption on this.
The rate of return on that investment is probably inferior to what probably all of the folks who post on this Substack could achieve, but it's a fairly equable system that serves the less business-savvy portion of our population quite ably.
Social Security was passed in 1935; the first social security checks went out in 1940. Current workers pay for retirees. If a private business was run like social security it would be rightly considered a Ponzi scheme.
Over decades I've paid a lot into Social Security as has my employer. What should happen to that money?
That money was spent on the people who came before you. When you retire and collect (obviously theoretically) it will be the current workers paying for you. It’s unsustainable because there are increasingly proportionally fewer people paying in than collecting, due to longer lifespans and the bulge in retirees represented by the boomers. Part of the reason for mass immigration is the hope that imported workers will generate some revenue to offset the shortfall.
There’s almost $3 trillion in the Social Security trust fund. Some of that is what I paid in. It will be depleted in about ten years. At that point the govt. will have to contribute part of its revenues to meet its obligations unless the social security law is changed. It’s not a Ponzi scheme; it’s a pension plan that has too many retirees and not enough workers. When that happens to pension plans, adjustments need to be made to hold down benefits.
So this is what makes it ‘like’ a Ponzi scheme rather than one as such- despite the fact the the old investors get paid with the new investors’ money, the government has implicitly promised to cover the payouts. I’m lying into it now, but by the time I’m meant to collect- around 2045- nothing will be there unless the state kicks in. Thus, it will inevitably become an entitlement rather than a pension plan paid for by workers. It really already is. That looming threat of massive tax increases will be dealt with as it has before. People will punt on something so politically unpopular and borrow more instead. That’s why there need to be some kind of cuts or means testing.
The ‘Leopards Eating Faces’ party is always happy to vote for their own benefits being taken away, because they don’t realize that they get the same benefits that ‘others’ do. Back in the day someone (maybe The Daily Show) interviewed people who hated Obamacare (because they were told it was bad) but like the Affordable Care Act, not knowing it was the same thing. Kind of like how Blue states economically support Red states, but they don’t understand that. The problem is that people will suffer for the ignorance of others.
Thanks for the comment Pam. There will be a pretty even divide between voters as who is hurt if this bill is passed.
Sorry, David, but you are missing the point. The tax bill, or any other Trump initiative for that matter, cannot be view solely--or at all--on its economic or even in many cases its political impact. What Trump is trying to do is more sociological, to return the nation to the good old days of the McKinley administration, when there were no restrictions on businesses, no social safety net, no government regulations, no Federal Reserve--which, if you remember, he wanted to abolish--no workplace protections, no right to unionize, no civil rights legislation, no FDA, etc, etc. He conveniently forgets that there were devastating economic swings during that period and that all the federal controls he loathes so much were put into place because the private sector failed. When you couple a flawed vision with limited intelligence and healthy dose of megalomania, you definitely are creating a highly combustible brew, and one in which applying logic will not really help you to understand.
I was not trying to understand the psychology of Trump or MAGA but rather focus on a highly consequential policy initiative that is part of the Trump/MAGA design. I think it's crucial that people intent on opposition arm themselves with knowledge. If somehow this bill can be derailed, it will hurt Trump's power and it will prevent suffering. So I don't think I'm missing the point, just focusing on one really important point.
There is no question that your point SHOULD matter. The problem is that the opposition is powerless and bringing the sort of expert analysis that you do to the problem is, sadly, irrelevant. It doesn't take much to recognize that, at least for the moment, those who rubber-stamp these hare-brained initiatives do so with the full knowledge of their potential negative impact. Their prime motivation is also sociological--to keep their cushy jobs. So, your use of "somehow" is apt.
There is a strategy to negotiate the bill. If the Democrats vote against a continuing resolution past March 14th, the government shuts down. That is a powerful chip to play and I think they should play it.
Also it's possible that a few Republican reps may vote against a bill anyway. The margins are so tight in the House.
We'll see.
Hope you're right. Dems can only stop the CR with Rep defections. Here's the bottom line for both of us...the key is whether some Reps come to realize that their jobs are in equal or greater jeopardy backing Trump. If that happens, the scenario changes drastically. Hoping they will do so because of reason or even patriotism is, I think, wrong-headed.
I believe CRs are regular order bills so would need 60 Senate votes.
In theory, yes, but there are any number of gimmicks they could employ to make it budgetary and require only a majority. I think we've seen that the actual rules are not actual rules.
Voting against your party for GOP members now also includes death threats. Against them and their entire families. Not just the risk of losing a job. Something to keep in mind.
Thankyou David for this insightful article. You write so clearly about complex topics. I’ll be re-reading this. 🙏🏼
For the simpletons out there - like myself, is there one takeaway of “what we should we do?” Or “what we should know?” …going forward.
I know it’s too complex issue to reduce like this but I always find myself asking this question, after reading complex political issues. What would your message be if it was written on a bumper sticker?
To do: to tell your Representative, if they are a republican, how much you dislike this bill.
One takeaway is don't put vulnerable Americans at risk by cutting Medicaid and SNAP.
Thank-you! I was anxious to ask you to reduce your article to a couple points but I find it refreshing to grasp a couple concrete actionable steps. I'm a millennial :) Blind hot rage has a way of derailing most of our rational thinking. On a total side note: I am also Canadian. Is writing about tariffs or Canada's relationship with America within your interests on this Substack? I'd be curious...
Thank you for challenging my thinking 🙂
Thanks for this great breakdown David. I think the Medicaid and SNAP cuts will end up being removed from this bill. Even with the republican control of both the House and Senate, many republicans know these cuts directly affect their constituents and they will get major pushback on this.
I hope so!
Me too David! There typically a treat, an initial vote, another threat, some discussion, constituent push back, adjustment to the Bill in question, and then eventually these cuts are removed.
You couldn't resist, ay, Pamela? :)
I guess not, Jay. I am doing a lot of sitting on my hands and thinking my skills might be going to waste when they are needed.
💪!
David,
As a NYC resident, your marginal tax rate on W-2 income is presumably 51%. You also pay 8.875% sales tax on most consumption expenditures. You also pay meaningful real estate taxes on your coop. And a mansion tax on the future sale of that coop. And, your estate will be assessed 16% by NY State upon your death.
What do you think your tax rate should be?
And, why did you laugh off another commenter’s suggestion that you, and other wealthy individuals who feel similarly, should make voluntary tax payments over and above what you owe? It seems like a very reasonable way for the wealthy to fund the government programs they support, whether or not Bezos et al do the same.
My reply was not to laugh. I wrote "I choose to direct my money to effective grass roots organizations that help the vulnerable. I would do this with or without a higher tax rate."
Marginal rates are different than effective rates. So right now the 37% top Federal rate only kicks in on income above $750k for a married couple. So if a married couple earns $750k the effective rate is probably around 30%.
As for what my tax rate should be, I'd be okay if the pre-2017 tax rates kicked back in. I'd also be ok if the 2017 rates stayed the same for families earning $200k or less and then pay for that by whatever rates balance it out on incomes above $200k, on a graduated scale. I don't think the tax rates on the higher income would be very much higher than the pre-2017 rates, especially if there were a few higher marginal brackets, like over $1 mm and over $5 million.
Higher marginal brackets were last created when? It seems like many decades, yes?
Wow, David! Thank you for this hard work to put this post together.
Thanks Kathleen.
Very well laid out David. To your point in footnote #5, I don't see any Republican 'breaking' with the majority and voting against anything Trump wants. At this point, the fear of losing their seat in the primaries is almost moot when faced with the pariah type wrath they (and their families) would receive from this very well oiled bully machine in the wider world and web.
Who (R) will be brave enough to vote against it? Someone that knows their constituents stand to lose so much, they would reward that politician and vote for them in the primaries regardless of the political machinations behind the scenes to replace them? They are in a bit of a conundrum.
Kim, I fear the same thing. Although it's interesting that one R. voted against the prelim. bill. But maybe he was "allowed."
The Democrats might have to use their ability to shut down the govt. to get negotiating leverage. Desperate times call for desperate measures.
The Democrats seem just as flummoxed as to what to do. I hope they find their higher purpose soon. Right now, it seems no one wants to stand in front of the runaway train and I don't blame them. Perhaps the best strategy is to let the Republicans flame out on themselves? (As suggested by James Carville in NYT piece a few weeks ago.)
i agree with this....they have more than enough rope to hang themselves with andcwe should conserve strength to dig the graves 👹
If the Dems shut down the govt for anything longer than a few days or a week FOX News and RW media will run 24/7 on that and effectively crucify them. Especially since MSM tends to reinforce any RW lede, effectively amplifying it. And any subsequent economic downturns--like a devaluation of the equities market--will be blamed on them.
RW media consumers are right now insanely delighted at everything Trump/GOP has done since January. While Dem voters are just as solidly horrified.
The ONLY thing that will shake GOP voters up at this point, is if consumer inflation continues to rise, and/or the economy tanks. If Dems have ANY part in that, it will hinder not help them in 2026.
Rep. Thomas Massie, Kentucky, is independently wealthy and already withstood Trump in a primary (I think). So he voted No last month. Senator Murkowski has also stood up against Trump and survived so she can vote No too. I cannot name 5 Republicans total with such autonomy.
BTW- I live in the red state of Arkansas. The female Governor has said ”You’re either Republican or you’re crazy.” She has also said of her critics, women are the worst. (I won’t summarize her lousy policies.) See how state rule can be problematic?
One more independent person in the House like Massie takes away the rubber stamp!
You do a very good job of explaining very difficult things. I don’t know much about any of this, but I love everything you write and this was no exception - the way you articulate the way your mind works is extraordinary.
Thanks Cici!
Thanks for this, David. I'll make a non-budgetary point. You write:
Reconciliation is used because most Bills in the Senate require 60 votes (60%) to be passed. It’s been a long time since either party had 60 of the 100 Senate seats (2010-11). We’re a closely divided country between our two major parties.
Of course, this is because of misuse of the fillbuster. Senate voting wasn't designed to require 60 votes. Further, a democratic design isn't one that would require either a majority or super majority to come from only one party. That is a condition created as standard in Congress first by Newt Gingrich and then in the Senate by Mitch McConnell .
This is the history of the filibuster below per senate.gov. I like the 60 vote requirement because the Senate has not become the restraining force on the House that the Founders hoped for.
“In 1917, the Senate passed the filibuster or the cloture rule, which made it possible to break a filibuster with a two-thirds majority. In 1975, the Senate reduced the requirement to 60 votes, which has effectively become the minimum needed to pass a law."
Right. But for most of its history, filibusters were extraordinary events. It has been only over the past 3 decades or so, gradually, that it became standardized to the point of being implied without even being invoked or literally employed, so that the 60-vote margin seems standard. Under the more normal environment pre-Gingrich (who radicalized Senate Republicans as well), I might agree about a positive role for a 60-vote majority, but combined with extreme partisanship, rather than serving as a restraining force, it has contributed instead to rendering the Senate and Congress generally dysfunctional.
I agree that the 60 votes become the standard because the Senate relinquished its role as the Saucer to cool the impulses of the House.
But Jay, you’ve done it again! You made me look up stuff so I become an even greater nerd!
https://www.senate.gov/legislative/cloture/clotureCounts.htm
Wow, you really did nerd out. Imagine that they keep such records. (Maybe government can do some things well after all. :) Anyway, they tell the tale, don't they?
I didn’t bother to read your windy argument to give more of my already taxed money to the government which Elon has already shown can’t be trusted not to either waste it or give it to my enemies both foreign and domestic (of which I consider you ), including the grift the CIA illegally doled out under the cover of USAID.
I am quite sure that you neglected to mention that Trump’s tax RATE cuts resulted in an increase in actual tax collections.
Before instituting any of the tax RATE hikes that you suggest (which will result in an actual decrease in tax revenues, as rate increases lead to decreased private economic activity as there is less reward for work and risk. (Typical oversight of leftists like you)), we should claw back all the CIA grift from the ‘NGOs’ they were given to, no matter how many times they were laundered. The CIA’s charter does not include domestic programs & so it is all illegitimate (no matter what some Clinton/Obama/Biden leftists judge says.
Balanced budgets need to come from cuts to spending period. Most federal spending is not on activity that has constitutional warrant or mandate.
I just read a stack today that argues for consumption taxes and against income taxes (which made a lot of sense to me. Tariffs which most of the world uses (against us) would be a good idea in that vein.
Cutting the government workforce & pay rate (2X on average what the private sector pays).
If people suffer from these changes, let the states pick up the slack, they will likely do it more efficiently.
You had me at “I didn’t read your article.”
So we’re both closed minded.