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Income Gap Between The Rich And Poor


trymahjong

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IMHO I would define "wasteful spending" as unnecessary spending, which is why I used the words "necessary" and "unnecessary".

"The Federal Government should be able to protect our nation, most everything else should be handled by the States." - But protect how and from what?

"The best thing the Tax Reform Act advocates is a flat tax, which I also support." - Are you meaning a flat federal income tax? If there is nothing else to the tax code than a flat federal income tax, I don't think a flat tax would be feasible today, especially with such a large disparity in incomes existing today.

If your asking me to list every bit of wasteful spending ( unnecessary if you will) then it's not going to happen. Look at sites like Pork Barrel Spending or check the many reports of wasteful spending by the many federal agencies like FEMA, NASA, etc.

Protect us from foreign invaders. Protect our borders. Etc.

A flat tax would eliminate the tax loopholes that the rich use so there wouldn't be as large disparity as there is today. I would be just as happy with the Fair tax. Anything would be better then what we have now.

Edited by Fringe
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Congratulations! You just saved the government $140 Billion, less than 10% of the deficit! You should be on the super committee.

Of course, you just kicked 9 million kids out of college who rely on the $17 Billion in Pell Grants administered by the Dept of Ed. No matter, once the minimum wage job creator, Rick Perry, becomes president, they'll be taken care of.

You also just ditched the Coast Guard, so I hope you have made plans to protect our coasts. Immigration? Customs? We should rename the ports and borders 'Welcome Centers', because since you just eliminated ICE, we have no Border Patrol, and no one to inspect cargo for terrorist bombs. We also have no legal immigrants, since you took away INS.

FEMA? Gone. Stock up on bottled water and ice. You're gonna need it.

Secret Service? Nada. Let the president hire his own bodyguards.

Good job. What else you gonna get rid of?

No problem. The states can take car of all of that except the secret service and coast guard. Just like they did before all these departments and agencies existed. If we didn't have to live under the same government agencies that people want in NY and CA we'd probably be a much more united country. Let NY and CA have their big government.

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Well, not *every* one - maybe the most significant ones. You already mention pork as a broad category - But the big question is how to give disincentives against politicians and voting blocs spending on and supporting pork. Constituents want their representatives to fatten up their territories; that's why Alaskans like Ted Stevens. In order to stop pork one needs to find a way to put disincentives against pork.

"wasteful spending by the many federal agencies like FEMA, NASA, etc." - From my understanding "wasteful spending" from a particular agency could be a product of simply bad management rather than a need to pare down the scope of a particular agency or the federal government in general.

For instance the US government approved commercial space ventures in 1998. A CEO of a space venture company argued that NASA could remain in existence, but that it ought to focus on ventures that for profit companies would not do: http://news.cnet.com/Do-we-need-NASA/2009-11397_3-6211308.html - That is a possible argument for the scope of the federal government to change

About "Protect us from foreign invaders. Protect our borders. Etc. "

Well, there's also "protect us from fraudulent products," "protect us from prejudiced juries in state trials" (that's why the feds have federal civil rights violation trials), "protect our financial health at retirement age" (Social security)...

If your asking me to list every bit of wasteful spending ( unnecessary if you will) then it's not going to happen. Look at sites like Pork Barrel Spending or check the many reports of wasteful spending by the many federal agencies like FEMA, NASA, etc.

Protect us from foreign invaders. Protect our borders. Etc.

A flat tax would eliminate the tax loopholes that the rich use so there wouldn't be as large disparity as there is today. I would be just as happy with the Fair tax. Anything would be better then what we have now.

Edited by VicMan
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No problem. The states can take car of all of that except the secret service and coast guard. Just like they did before all these departments and agencies existed. If we didn't have to live under the same government agencies that people want in NY and CA we'd probably be a much more united country. Let NY and CA have their big government.

Ah, yes. Let's just ignore the US Constitution, shall we? Let the states protect the borders. Let the states handle immigration. Let the states duke it out over interstate commerce (this is actually my favorite, seeing staunch capitalists push for 'state's rights', that would create a gauntlet for trucking goods cross country).

I rather suspect that you and other 'state's righters' didn't pay too close attention to the 10 year period PRIOR to the adoption of the Constitution. You should look into it. It may be enlightening. The US was broke and in gridlock, as the states would neither work together, nor pay their debts to the US. And the US was virtually powerless to stop it. The US Constitution was the solution to the motley crew of individual states that you pine for. If you are looking to hasten the demise of US exceptionalism, this is the quickest way to do it...completely neuter the greatest country in the world...oh, and then blame Obama for it.

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Your solution is to let the States handle everything other than the secret service and coast guard?

Yeah, that's going to work out well. You do realize that we have no money either, right?

Texas also happens to be a state that generates more in federal tax revenue than it takes back by way of government spending. If we handled more programs in-state, it'd change who we send our taxes to, who spends them, and would probably work out better for our state economy.

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Department of Education,

Yeah, the problem with that is that drop-outs in West Virginia don't just stay in West Virginia. They wind up here and become our problem. Of course, the obvious solution is secession. Then it becomes an immigration matter handled by Texas for Texas. (We'd probably suck at doing that, however.)

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Texas also happens to be a state that generates more in federal tax revenue than it takes back by way of government spending. If we handled more programs in-state, it'd change who we send our taxes to, who spends them, and would probably work out better for our state economy.

That hasn't been true in about 10 years. Texas went negative around 2002, and it has increased drastically since then, mostly due to military spending. With the current level of deficit spending, almost no states pay more than they get.

http://www.politifact.com/texas/statements/2011/apr/22/rachel-maddow/msnbc-host-rachel-maddow-says-texas-routinely-rece/

And, I would have guessed you to be a bit more intelligent regarding the gains and losses of secession. Texas would have to fund its own military, navy (gotta protect those oil wells), and borders, as well as a whole host of other national reponsibilities it now takes for granted. Now, if the Republic of Texas were more of a nuetral state, like Switzerland or Norway, it might get away with a smaller military. But, since it is a loud and arrogant republic, it will spend dearly to protect itself from those it pisses off. Bullyism is expensive. The US spends more than the rest of the world combined.

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That hasn't been true in about 10 years. Texas went negative around 2002, and it has increased drastically since then, mostly due to military spending. With the current level of deficit spending, almost no states pay more than they get.

http://www.politifact.com/texas/statements/2011/apr/22/rachel-maddow/msnbc-host-rachel-maddow-says-texas-routinely-rece/

And, I would have guessed you to be a bit more intelligent regarding the gains and losses of secession. Texas would have to fund its own military, navy (gotta protect those oil wells), and borders, as well as a whole host of other national reponsibilities it now takes for granted. Now, if the Republic of Texas were more of a nuetral state, like Switzerland or Norway, it might get away with a smaller military. But, since it is a loud and arrogant republic, it will spend dearly to protect itself from those it pisses off. Bullyism is expensive. The US spends more than the rest of the world combined.

BINGO.

And this doesn't even mention that if Texas had compele control over all of the things listed above, 3 out of 4 kids would likely live in poverty as opposed to the 1 out of 4 that do today.

The Exurbs would need bigger gates and more armed guards...

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That hasn't been true in about 10 years. Texas went negative around 2002, and it has increased drastically since then, mostly due to military spending. With the current level of deficit spending, almost no states pay more than they get.

http://www.politifact.com/texas/statements/2011/apr/22/rachel-maddow/msnbc-host-rachel-maddow-says-texas-routinely-rece/

And, I would have guessed you to be a bit more intelligent regarding the gains and losses of secession. Texas would have to fund its own military, navy (gotta protect those oil wells), and borders, as well as a whole host of other national reponsibilities it now takes for granted. Now, if the Republic of Texas were more of a nuetral state, like Switzerland or Norway, it might get away with a smaller military. But, since it is a loud and arrogant republic, it will spend dearly to protect itself from those it pisses off. Bullyism is expensive. The US spends more than the rest of the world combined.

The article lost credibility at the mention that 45 states pay in more than they receive. Something is skewing the stats. I'm thinking that it probably is not accounting for all forms of federal revenue. I might suspect that corporate taxation is being improperly allocated (if it is being considered at all) as well as that there had been deficit spending. Properly adjusted, I still think that Texas is a net fiscal outflow state. And the system is set up to be like that. We only get two senators with whom to curry favor; places like Rhode Island or Hawaii get the same leverage.

As for military spending, I'd argue that the U.S. only spends so much to prevent what might be considered 'excessive' casualties and political backlash against warfare and the military industrial complex on the part of wussified moderates. As a nation, we've lost the will to die for a cause (en masse). We also pick our causes very poorly, regardless of party affiliation or anything like that.

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You lost credibility when you failed to read the article correctly. Let me post the exact quote...

In 2009, most states — there were 45, including Texas — received more than residents paid in taxes. Though no data is yet available, DeLuna Castro said Texas will again receive more than residents paid in taxes in 2010.
(emphasis mine)

As for what went into the calculation, again I will refer you to the article. Here is that quote...

The paid taxes included employment, estate and trust income taxes, among others. Federal spending in Texas includes funding for retirement and disability, grants (such as for research and construction), wages of federal employees and direct payments for programs such as Medicare.

Now the military spending, that's a different story. Sure, we spend a lot to limit casualties, and probably should. But, the biggest waste is for Cold War era weapons systems that Congress insists on paying for. Both sides are at fault, with the edge going to Republicans. However, the military industrial complex long ago figured that decentralizing these programs so that they are in as many congressional districts as possible, is a great program saving move. Just watch the super committee save most defense spending when their proposal comes out.

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I'm not sure why an income gap is a bad thing.

There are always going to be rich and always going to be poor. By comparison, the poor in our country (for the most part) would be considered wealthy in quite a bit of the rest of the world. They might be eating Top Ramen and living in cruddy apartments, as I was 20 years ago, but that was something my family was thankful for. That isn't to say there aren't others who are worse off, homeless, etc. The difference is, here, they have far more of a chance to change that circumstance. Having worked with the homeless for going on a decade now, I was surprised how many of them actively make the choice to maintain their circumstances.

I also feel as if the constant discussion of an income gap is meant to shame the wealthy. Why shame those who determined their own circumstances? For most, they built their wealth themselves. That isn't something to discourage. To tell someone who did not allow the circumstances of their life determine or limit their reach that they should feel bad or they don't carry enough of the load is insulting to them. We really do live in one of the few places on the planet where someone has the ability to go from being homeless to being a millionaire with the right attitude and the willingness to make opportunities.

I've been poor, I've been well off, I've been poor again. I just don't see, as someone who has seen both sides of the coin, how it is anyone else's responsibility.

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I'm not sure why an income gap is a bad thing.

We really do live in one of the few places on the planet where someone has the ability to go from being homeless to being a millionaire with the right attitude and the willingness to make opportunities.

The problem though is that upward mobility in the US has declined a good bit over time. Apologies for not having the link handy, but I read about a study recently that made the point that American social mobility lagged that in a number of European countries.

Here is an interesting post from the Big Picture blog. Long, but the point is that it will be difficult for the economy to pick up a lot of speed until consumer spending increases, and consumer spending isn't likely to increase unless middle class incomes do. The issue is perhaps less one of social equity and more what would be better for the economy as a whole.

While Labor Share has recently plummeted to all-time lows since record keeping began, Median Household Income has stagnated for the past 12 years. In the last recession (2001), incomes had only begun to decline. I’m sure back then no one contemplated the possibility that the decline would last (certainly not for a decade), credit was still widely available and, as we know now, being freely tapped (see the PCE chart above for evidence of how normal consumer spending remained during that period). One decade later, Labor Share has collapsed, incomes have gone nowhere, and credit availability — to say nothing of consumers’ attitudes toward it — has all but vanished except for the most creditworthy.

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I'm not sure why an income gap is a bad thing.

There are always going to be rich and always going to be poor. By comparison, the poor in our country (for the most part) would be considered wealthy in quite a bit of the rest of the world. They might be eating Top Ramen and living in cruddy apartments, as I was 20 years ago, but that was something my family was thankful for. That isn't to say there aren't others who are worse off, homeless, etc. The difference is, here, they have far more of a chance to change that circumstance. Having worked with the homeless for going on a decade now, I was surprised how many of them actively make the choice to maintain their circumstances.

I also feel as if the constant discussion of an income gap is meant to shame the wealthy. Why shame those who determined their own circumstances? For most, they built their wealth themselves. That isn't something to discourage. To tell someone who did not allow the circumstances of their life determine or limit their reach that they should feel bad or they don't carry enough of the load is insulting to them. We really do live in one of the few places on the planet where someone has the ability to go from being homeless to being a millionaire with the right attitude and the willingness to make opportunities.

I've been poor, I've been well off, I've been poor again. I just don't see, as someone who has seen both sides of the coin, how it is anyone else's responsibility.

There was atime when the wealthy understood that to continue (or increase) one's wealth, the consumer must be able to continue to purchase their products. In the last 30 years, the wealthy have forgotten this rule. It is not an act of generosity, but good business. Of course, along with the squeezing of the labor force through downsizing and wage stagnation, corporations took to short term outlooks, instead of long term stability. The government's wholesale elimination of regulations intended to stabilize the workforce also contributed to the general era of instant gratification and maximizing profit taking.

As the wages stagnated, bank lending standards were drastically lowered, enabling the consumer to at least keep up the appearance of staying afloat. Many even thought they were getting ahead, even though their debts outpaced their assets. They at least had houses and cars and TVs, even if they had no spending cash. The 2008 recession forced everyone to realize that it was an illusion. It is a slow painful process to come to grips with the fact that 99% of Americans will have a lower standard of living. It will take even longer for corporate mindsets to change to bring back the middle class. Frankly, until voters realize that they are voting against their self-interest, there is no incentive for it to happen.

What will happen in the meantime is that consumers will quietly adjust their consumption habits to match the new norm. While painful, it does occur, and surprisingly rapidly. As income drops, the consumer is forced each month to reassess what is necessary and what is a luxury. Each month, more "necessities" are jettisoned, and the budget drops. Eventually, the consumer is shocked at how little it takes to live a reasonably normal life. Of course, there are fewer homes built, sofas and televisions purchased and restaurant meals eaten, but that is the greedy business owner's problem, not the budget conscious consumer's. Meanwhile, the business owners will continue to blame the political party in power, or anything else except for their own greed...at least until a new equilibrium is established. In short, once the US has completed its transformation from British Empire to modern day Great Britain, we will calm down and trudge along, just as they do.

Another huge problem with the widely disparate incomes in the US is the tax base. There are constant political arguments about the share of taxes paid by the wealthy. What is generally left out of the argument is the fact that many in the US have little to no income. While it is true that nearly half of US adults pay no taxes, it is also true that 40% of US households make less than $35,000 per year. Half make less than $44,000. There simply is not much income to be taxed. And, if the wealthy refuse to support the government that allowed them to become wealthy, who suffers more of the consequences? I suppose that we are about to find out.

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There was atime when the wealthy understood that to continue (or increase) one's wealth, the consumer must be able to continue to purchase their products. In the last 30 years, the wealthy have forgotten this rule. It is not an act of generosity, but good business. Of course, along with the squeezing of the labor force through downsizing and wage stagnation, corporations took to short term outlooks, instead of long term stability. The government's wholesale elimination of regulations intended to stabilize the workforce also contributed to the general era of instant gratification and maximizing profit taking.

As the wages stagnated, bank lending standards were drastically lowered, enabling the consumer to at least keep up the appearance of staying afloat. Many even thought they were getting ahead, even though their debts outpaced their assets. They at least had houses and cars and TVs, even if they had no spending cash. The 2008 recession forced everyone to realize that it was an illusion. It is a slow painful process to come to grips with the fact that 99% of Americans will have a lower standard of living. It will take even longer for corporate mindsets to change to bring back the middle class. Frankly, until voters realize that they are voting against their self-interest, there is no incentive for it to happen.

What will happen in the meantime is that consumers will quietly adjust their consumption habits to match the new norm. While painful, it does occur, and surprisingly rapidly. As income drops, the consumer is forced each month to reassess what is necessary and what is a luxury. Each month, more "necessities" are jettisoned, and the budget drops. Eventually, the consumer is shocked at how little it takes to live a reasonably normal life. Of course, there are fewer homes built, sofas and televisions purchased and restaurant meals eaten, but that is the greedy business owner's problem, not the budget conscious consumer's. Meanwhile, the business owners will continue to blame the political party in power, or anything else except for their own greed...at least until a new equilibrium is established. In short, once the US has completed its transformation from British Empire to modern day Great Britain, we will calm down and trudge along, just as they do.

Another huge problem with the widely disparate incomes in the US is the tax base. There are constant political arguments about the share of taxes paid by the wealthy. What is generally left out of the argument is the fact that many in the US have little to no income. While it is true that nearly half of US adults pay no taxes, it is also true that 40% of US households make less than $35,000 per year. Half make less than $44,000. There simply is not much income to be taxed. And, if the wealthy refuse to support the government that allowed them to become wealthy, who suffers more of the consequences? I suppose that we are about to find out.

This is the best post I have ever read with regards to what is happening in America. I try to tell people this, but I lose them very fast because I talk to much. This post is perfect.

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  • The title was changed to Income Gap Between The Rich And Poor

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