Tax receipts are on pace to drop 18 percent this year

[Dr.Phool]

Source: AP via Cleveland Plain Dealer.

WASHINGTON -- The recession is starving the government of tax revenue, just as the president and Congress are piling a major expansion of health care and other programs on the nation's plate and struggling to find money to pay the tab.

The numbers could hardly be more stark: Tax receipts are on pace to drop 18 percent this year, the biggest single-year decline since the Great Depression, while the federal deficit balloons to a record $1.8 trillion.

Other figures in an Associated Press analysis underscore the recession's impact: Individual income tax receipts are down 22 percent from a year ago. Corporate income taxes are down 57 percent. Social Security tax receipts could drop for only the second time since 1940, and Medicare taxes are on pace to drop for only the third time ever.

The last time the government's revenues were this bleak, the year was 1932 in the midst of the Depression.

(more at link)

Read more: http://www.cleveland.com/business/index.ssf/2009/08/tax_receipts_are_on_pace_to_dr.html

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Translation: We and the economy are totally fucked.

[DJ13]

1. We need to get money into the hands of consumers to improve the economy

Im not seeing that being a serious priority among anyone in DC, from Congress to the President.

Sure they nip at the edges with clunker plans and one time puny payouts to SS recipients, but they seem to think that the serious coin needs to go straight to the banks and large corporations, bypassing the consumer, which is assbackwards since the consumer would spend on goods and services those corporations make if they could, stimulating them in the process.

[timeforpeace]

2. What money? There's nothing to hand out to anyone now.

[Vincardog]

8. We don't need handouts, we need JOBS.

[Oregone]

3. If you want to put money into the hands of the consumer, use goods and service vouchers

To make sure they buy goods and services, rather than pay off debt and purchase porn (which only stimulates the end-user).

Food stamps, zero interest home improvement/efficiency loans, cash for clunker type programs....

You don't just give them money to blow at Walmart to stimulate China.

BTW, another great way is to stimulate the economy with infrastructure projects so they get a paycheck

[Juche]

4. Who pays for porn

Even in boom times it is still free.

Infrastructure programs are better. I don't have the site offhand but they compared what a million dollars in middle class tax cuts, supply side tax cuts, infrastructure, healthcare, aid for states, etc. would do as far as job creation. Infrastructure programs, aid for state programs, assistance for the poor (food stamps, unemployment) and healthcare spending were best, creating something like 20k jobs per million spent.

[Oregone]

6. "Infrastructure programs are better."

Not better than food stamps. It was the Moody Study. They never look at stuff like the Cash for Clunkers program (which uses the same method of delivery as food stamps, but encourages private spending too).

But yes, the government controlling the spending to make sure it multiplies out has a much better effect than giving it straight to the consumer.

[DJ13]

5. To make sure they buy goods and services, rather than pay off debt

See, that notion that consumers spending to pay off debt is a bad thing was brilliant GOP propaganda during the runup to the vote on a stimulus bill.

But.....theres absolutely nothing wrong with paying off debt with stimulus money, as the US is underwater in debt.

Getting out from underneath debt would do as much (if not more) to stimulate consumer spending as just buying stuff with the money as it would increase the long term disposable income of consumers.

[Oregone]

7. Saving and paying down debt is a bad thing in these times, yes

Or rather, most certainly not a stimulative thing, and the country needs stimulus. When you save money or pay down debt, the money is not inserted into the economy in a stimulative manner (it goes to banks, who, well, lets just say are keeping a tight grip on it right now). This whole recession is actually caused by the upper class/investors not spending (it causes deflation). The last thing you need is everyone else following suite. If the government is going the intervene to combat deficient demand and increase production, they sure as hell better do it in ways that inject a positive amount of money into the economy, rather than a negative amount.

BTW, what you suggest basically says that diminishing consumer debt at the price of increasing national debt is a "good" thing. There is no stimulative effect from transfering debt from consumers to the nation, especially at the cost the nation will pay in the long run from such a transfer. That solves nothing and does little if anything to restart the economy.

[cascadiance]

13. The stimulus that IS needed is flattening the weatlh gap! FDR understood this...

Obama and congress need to as well!

The rich hoarding their money so that they only spend additionally on:
1) buying off more power from the likes of congress or other entities worth bribing to get more power.
2) throwing more money into very speculative investments "because they can" and don't feel the threat of consequences of losing that money, which screws up the subjects of those investments price-wise, etc. for everyone else, especially in the case of real estate that everyone wants to count on as a relatively conservative investment as they grow older.

Get money in to the hands of those who are more likely to spend it as REAL MONEY and long term salary increases, and not just added debt or some other funky one time grab bag of cash. By stabilizing or lower upper class's income, you reduce the demand for higher cost items, lowering the costs of many of these and other items so that other people's money also buys more in a marketplace that can meet the needs more of the average person, and not just cater to the wims of people who want to buy another yacht or something equally as useless to most people and our economy.

[Amos Moses]

18. That would mean taking "bold action"

instead of just talking about it in campaign speeches.

[Amos Moses]

16. Have faith, DJ.

Those hundreds of billions are gonna start tricklin' down any day now.

[DJ13]

20. sigh.... been waiting ever since Reagan to feel the trickle

So far not even a light sprinkle.

[cascadiance]

9. Sounds like a good reason to move to the pre-Reagan tax schedules...

... and start taxing more on the rich again, since they've succeeded in moving more of that taxable money into THEIR hands over the last decade (the trickle UP effect!). If they now have that money, then the taxes should be adjusted to get more of that money from then instead to keep paying our bills.

FOLLOW THE MONEY!!!

[WriteDown]

10. Bingo....

And if you're rich and try to flee the country. Everything over 100K in assets is taxed at 95%. If you try to flee a state to another state with lower taxes than you're also left with only 100K of assets and the rest is taxed at 95%. Let's keep the money in the US!

[Abq_Sarah]

14. Punished for leaving a state?

Doesn't that suggest that the state owns you?

[WriteDown]

15. Not exactly...

It just prevents the rich from ever leaving California, Massachusetts, New Jersey, or New York.

[bemildred]

19. Well, it owns your money anyway.

Nobody is saying you can't leave, you just can't take all your money with you.

[hughee99]

21. Not you, just your money.

The Nazis did this with the Jews in the 30's, "encouraging" them to leave but imposing it an ever increasing "emigration tax" when they did so.

[bemildred]

11. Gee, who could have predicted this?

Could the job losses have anything to do with it?

"Individual income tax receipts are down 22 percent from a year ago. Corporate income taxes are down 57 percent. Social Security tax receipts could drop for only the second time since 1940, and Medicare taxes are on pace to drop for only the third time ever."

[RUMMYisFROSTED]

12. 25% of nuthin' equals nuthin'.

[davidwparker]

17. Is that due to the outsourcing of American jobs? If people aren't working,

well I guess they also aren't paying taxes on purchases and income.