ya hillary is great at not giving clear answers. if people keep on ragging her about that statement she'll talk to bill over the weekend and change her mind.

personally im in one of those "upper-class" families and ok with a tax increase. can someone inform me if theres anything that wouldnt help a tax increase? wouldnt it help with the national debt, social security, education, green energy, etc.?

Every post-debate analysis by the incompetent, malicious Beltway Media centers on who 'won' the debate. The majority of these self-appointed pundits think Hillary 'won.'

They're asking the wrong question.

Debates aren't about winners or losers, but rather who can make the soundest conclusion.

How is she still the frontrunner? I don't get it. Every thing I read or see about her is pretty negative.

She's still the front runner Andy because when CNN etc reports on the debate they focus on the wrong things. For instance relating to this clip I saw them show only part last night and frame it as the audience complaining about Obama comparing her to Romney etc. So they used it to cast Obama in a bad light and Hillary in a good light by stating she was not taking part in Republican like character assassination whereas Obama and Edwards were.

I think it worthwhile to be more careful about the numbers:

About 16% of household incomes are over $100,000 per year; about 6% of household incomes are over $150K per year. It is very unclear in this clip whether Hillary is talking about individual earners or households and Barack is also quite unclear. Obama may be correct if he is referring to individual earners but he's off by quite a bit if they're talking about household incomes.

It is also worthwhile noting that, expressed in current dollars, it is not unreasonable to include someone making $100 K or so only in their peak earning years (e.g., 50 - 65 years old) as "middle class". I, for example, spent the first 14 years of my adult life (18-32) making far below the median income: I was an undergraduate, graduate student, and postdoctoral associate during those years. At 32 years old old, my net worth was less than $1,000 - no car, and shitty furniture that I should have thrown in the dump instead of moving it! So it wasn't until I reached my mid-thirties that I even achieved the median income - at which time other people of my age had already had the opportunity to accumulate significant home equity, to name one wealth-building activity as an example.

I'm willing to look at taxes - and I don't mind paying more taxes if I really believe that a fair attempt has been made to find money elsewhere has been made. Obama's analysis is far too simplistic.

this whole format seems disgusting to me. It seems like who would lead america in the best direction isnt even an issue, it's just become a celebrity competition. Maybe im just disgusted with politics in general. But the way our media covers these "debates" where u never really get any new information, is gross. They cut people off and dont let them answer when we're interviewing for president. I dunno how to explain exactly how i feel about it but something about it feels wrong.

"It is very unclear in this clip whether Hillary is talking about individual earners or households and Barack is also quite unclear. Obama may be correct if he is referring to individual earners but he's off by quite a bit if they're talking about household incomes."

They're talking about payroll taxes, so it's probably individual income (you can file income taxes as a household but social security is calculated individually).

But it really doesn't matter whether you think $100,000 for a household is middle class or not. If you raised the cap on payroll taxes, say to $120,000 or $200,000, you'd just have those individuals contributing more, but also getting more when they actually do retire. But it would put the system in the black for longer, since you'd have a wave of higher contributions at the same time the baby boomers are taking their sweet time dying off.

Why do you think that Obama has not made a fair attempt to find money elsewhere? Since we're talking about the social security system, it's not as if the government can simply cut your least favorite program and slide those funds over to the social security system. The money is going to have to come from increased contributions or decreased benefits. It actually is pretty simple, relatively speaking.

You could raise the retirement age modestly, slow the growth of benefits modestly, raise the cap on contributions, etc. The only problem with these fairly easy solutions is that seniors tend to oppose any change at all, and Republicans are continually finding ways to raid the system. As soon as you do manage to shore up the system, the Republicans (if they have power) pass measures that undermine it.

Hillary uses fuzzy math.

...it's not as if the government can simply cut your least favorite program and slide those funds over to the social security system..

Really? The government has been 'sliding funds' in the opposite direction for every one of the 72 years that the social security system has been in existence! Federal deficits have been made to look smaller by offsetting them with social security surpluses throughout the working lives of everyone in the country. Some time around 2018 that surplus will stop flowing toward the rest of the budget and will start flowing the other direction - it is currently projected (with all the attendant uncertainties that you might imagine) that the social security "loans" to the rest of the government will not be repaid to the social security system until about 2042 (http://zfacts.com/p/784.html).

The social security system is NOT in any danger of collapse unless the public buys into GOP lies that hold otherwise. Some increase in taxes or shift in COLAs may be necessary to make it balance indefinitely and I'm not opposed to the relatively minor adjustments necessary in social security taxes needed to achieve that. But the "crisis" is completely phony. The "crisis" is in the rest of the budget. The "crisis" was created by the Bush tax cuts and the STUPID return to supply-side economic fantasy that the Clinton administration's better comparative performance (vs. GOP administration before and after) had already shown to be total bullshit. It was abetted by corporate welfare state expenditures that have been even expensive than social welfare expenditures.

Medicare is in much more serious trouble than social security - and that trouble is more a result of the general health-care ripoff that Americans of all ages have allowed the insurance industry and the corporate health-care lobby to foist on them.

obama seems desperate to me. Call hillary what you want but comparing her to Mitt Romney smacks of desperation.

I'd tend to agree, sam-YF. Barack had a strong and compelling point without bringing GOPers into it. He rhetorically didn't need to do it, and it cost him I think.

Record Tax Revenue

What is the Laffer Curve?

I love the fact that this was posted --- thanks, OGM!

But it should be "Barack" in the title, not "Barrack".

Pay particular attention to Tim's point above, and also consider that statistics can be easily manipulated. The point I'd add in that respect is this: we're a largely urban culture today, and those of us who live in big cities like NYC can tell you that $90K or so is definitely middle class income here. I'm right around, maybe a little below that (I'm a consultant, so it changes year to year depending on where and how much I'm working), and I can tell you that here it's a paycheck-to-paycheck lifestyle, with no luxuries and no insurance either. And if you're single like me, the tax burden is brutal, in the 'hood of 40%.

Summary: I'm no fan of Hillary. She has a place in gov't, but probably an administrative rather than a top leadership role (see my endorsements here). But Obama used stats here to make a political point, and as someone else noted above, he smeared Clinton and himself by conflating her with the worst of the GOP monsters.

Syngas, Oh my, the laugher curve - there are true believers of all kinds, I guess.

I've seen the plot on your page before too - what a joke. Why don't you put up a comparison plot for the 1990s - and for good measure stick in a dateline for the enactment of the Clinton tax increases. Then we can consider how his tax increases "caused" the increases in tax revenues - and "caused" the average rate of US economic growth that anually exceeded the rate of growth for the 12 years before and the 7 years after.

Oh, and while your considering tax revenue increases, let's not forget that the Reagan-Bush-Bush collective presidencies have added 45% of GDP to the Federal debt (even after absorbing all the social security surpluses in the same period). The national debt stands at about 70% of GDP, and therefore about two-thirds is due to supply-side policies. The only fair accounting of the "supply-side" ledger should therefore include the fact that 2/3rds of debt interest payments are due to supply-side policies - more than $250 billion annually (and growing). That should be subtracted from the total revenue since it comes right off the top.

97K?

Very sad! I guess I will never make it into the Middle Class!

I'm flattered you even looked Tim! If you'll scroll down a little farther, you'll see a chart going back to 1962.

If you'll scroll down a little farther, you'll see a chart going back to 1962.

Touché! But you'll have to grant my points, don't you think?

Hey, you gotta prime the pump every once in a while! A liberal wouldn't dare laff off Keynes would you ;-?

Keynes would have had nothing to do with this:

But the Bush administration had its own ideas. The first major economic initiative pursued by the president was a massive tax cut for the rich, enacted in June of 2001. Those with incomes over a million got a tax cut of $18,000—more than 30 times larger than the cut received by the average American. The inequities were compounded by a second tax cut, in 2003, this one skewed even more heavily toward the rich. Together these tax cuts, when fully implemented and if made permanent, mean that in 2012 the average reduction for an American in the bottom 20 percent will be a scant $45, while those with incomes of more than $1 million will see their tax bills reduced by an average of $162,000.

http://www.vanityfair.com/politics/features/2007/12/bush200712

Ah yes, the inequality problem. That's really what taxes are for right? Who cares if tax revenue is up? Who cares if the rich are paying a higher percentage of taxes today than they were before the 'tax cuts'? Dag nabbit, there are still rich people out there and somebody has got to put an end to it!

Since I'm not an American, I have much less interest in this whole electoral issue than most of you, but it is interesting to watch.

Although I haven't fully investigated the candidates, I must say that Hillary seems like more of a nightmare each passing day. It seems perplexing that the media would portray her so positively when she seems so unwilling to make a stand. Can't help but wonder if she paid for that privilege.

Obama seems like a better choice -- a good choice, in fact. He seems stand up and fairly un-swayed by pressure from all sides, which is good to see. He's also fairly charismatic which I think would be a good asset in any politician. Still, I'm not sold on him... not yet, at least.

The only candidate who's consistently impressed me would have to be Kucinich. Particularly, his statement that was posted a few days ago 'Wouldn't it be nice to have a president who was right the first time?' was bold, but well played. He clearly seems to have some sort of insight and a level head. Is that enough? And will it prevail for another four years?

I suppose we'll find out.

I'm curious though; if Hillary gets the Democratic nomination (which seems likely) does that mean that the other democratic candidates are unable to run for president as a democrat? (Ie: only as an independent?)

Who cares if tax revenue is up?

But they aren't up - not really. As a percentage of GDP, revenues remain well below where they were in 2000, having moved up only slightly in the past 2-3 years. Meanwhile, expenditures have remained at about the same, ~20% of GDP. The point of taxes is to pay for expenditures - so that you don't shift the resposibility to generations that didn't have the opportunity to vote for the assholes who racked up the expenditures (the ultimate in taxation without representation). Furthermore, the share of total taxes that are payroll taxes has increased - a fact not included in the "income tax information" your link discussed. Finally, since both the information that your link provided (income taxes only) and the information I provided is correct, the reason the richest taxpayers are paying a higher share of income taxes is because their share of total income is rising even faster. It would be of little concern that the rich were getting richer, if other segments of society were also getting richer, but for people at the median and below, they're not.

Balloning the Federal debt is a policy that amounts to redistribution from the middle class to the rich simply because the wealth distribution of the people who own the debt is much higher than the wealth distribution of the people who are paying the interest on the debt, because even as the wealthy pay more taxes - they also own almost all of the debt instruments which are grabbing an ever increasing share of tax revenue - which comes, like I said, right off the top.

Just wanted to say that the comments in this post are stellar. I think I've heard a better debate about our nation's economics right here than I have from any other "legit" main stream source in a while. Thanks.

"But they aren't up - not really. As a percentage of GDP, revenues remain well below where they were in 2000, having moved up only slightly in the past 2-3 years."

You are complaining that GDP is rising faster than tax revenue! Do you complain when your salary goes up faster than your mortgage payment? I'm sorry Tim, but I see that as a good thing. I agree government spending is growing faster than it should (I don't know any conservative that would argue with you on that point), but I really don't think raising tax rates will translate into increased tax revenue over the long term.

I agree there are consequences for overspending by the government and I don't look forward to them. I think we're seeing one of them right now in the falling dollar. Inflation is a likely result which will bring your tax revenue vs. GDP back where you would be happy. On the bright side, inflation can be devastating to people with a whole lot of money in the bank and no debt (rich people), and trigger wage inflation which is good for people who have little or no money in the bank and owe lots of money (in today's dollars) to lenders (that would be most home owners and government), because tomorrow's dollars are cheaper than yesterday's dollars.

"It would be of little concern that the rich were getting richer, if other segments of society were also getting richer, but for people at the median and below, they're not."

Median income graph

Sorry for the disgustingly long sentence back there. I'd fix it, but I've got to get ready for .... uh .... well... nevermind ;-)

Oh, good. And if you get two more A+ students in your class, the average grade will rise significantly, and you can stop worrying about the F- students! And you'll make the average students work even harder for the same credit! Success!

Anyway.. Did anyone see what Barack just did? He said "this point is too important". "That is why this is important". "This issue is about crunching numbers, because..".

Instead of saying: "Unlike Hillary, I will not obfuscate everything I say within this electoral cycle of such many difficult and problematic issues we must trust in our brave leaders (that is myself) to navigate through with bombastic(!) and clear rhetoric, in order to steer clear of the iceberg of facts and analysis. 9/11.

A real frickin' feat right there. Outstanding, in fact. Well done Obama.

I’m not sure why everyone is so worried about social security (just another scare tactic or a bait and switch move?). If they stop dipping into social security and remove the cap on taxation, we would be fine. Plus, how can we have money for an unplanned war, but not have money to “save” social security? Obviously, money is available for any project that is deemed valuable. Let’s just make sure Congress deems social security as valuable.

Someone commented earlier that this post has generated some very intelligent responses. It's great to see!

It would be of little concern that the rich were getting richer, if other segments of society were also getting richer, but for people at the median and below, they're not.

Since 1996, real median household incomes have increased by 2.3% for the lowest-earning 10% of Americans, 6% for the lowest-earning 20%, 6.3% for the 40th percentile, and 6.7% for the 50th percentile (the middle class).

Since 1970, household income growth for those groups (in the same order) was 28%, 20%, 18%, and 23%. Nobody's income is stagnating.

Source: US Census Bureau http://www.census.gov/hhes/www/income/histinc/h01ar.html http://www.census.gov/hhes/www/income/histinc/p05ar.html

Fleinn, look up the words 'average' and 'median'. They are not the same thing.

You are complaining that GDP is rising faster than tax revenue!

No, silly. I’m complaining that since expenditures are rising as fast as GDP, tax revenues must also rise as fast as GDP, or you get deficits – obviously.

Do you complain when your salary goes up faster than your mortgage payment?

Of course not. But you have used a revealingly inappropriate analogy. I’ve paid my mortgage off because it was the source of an interest expense (Note: I opted to buy a modestly priced home and the mortgage deduction wasn’t there anymore either). A mortgage is a much more apt analogy for the national debt, not for tax revenue. The nation pays down the debt, and the nation (i.e., taxpayers) will reduce its interest obligation. Reagan-Bush-Bush supply-side policies tripled the national debt as a percentage of GDP, and hence tripled the mortgage as percentage of tax revenue and tripled the percentage of all our taxes that must be devoted to interest payments.

Inflation is a likely result which will bring your tax revenue vs. GDP back where you would be happy.

Incorrect on both counts. Since tax brackets are indexed, inflation no longer increases tax revenue. Inflation won’t make me happy – I’m a saver – the kind of person you’ve described.

And regarding the median income graph: I was responding to the information in your post that derived from the townhall.com link. In that link, the columnist made tax comparisons between 1999 and 2005 – thus, my comment concerning median incomes was correct: from 1999 to 2005 median incomes went down a little while GDP increased by 16%. During the Bush presidency, almost all income gains, even in percentage terms have been made by the rich, so bragging that they’re paying a bigger percentage of income taxes doesn’t impress me since they have gotten just about all the increased income. By the way, the annual GWB economic growth rate of ~2.5% is also far lower than the average rate of 3.75% of the Clinton years.

The gist of your entire post is absolutely amazing. From it I gather: you’d like to see the rate of US economic growth exceed the rate of growth of government; you’d like to see tax revenue that balances government expenditures and still declines as a percentage of GDP; you’d like a strong stable dollar and a low long-term rate of inflation that accompanies a strong stable dollar. Sounds great, who could complain? Curious thing though, the last president we had that delivered all those things was hounded relentlessly and finally impeached by conservatives.

Syngas,

One more thing regarding median household incomes: personal income has remained relatively stagnant over the past few decades, household income has risen due to the rising percentage of households with two or more income earners. (http://en.wikipedia.org/wiki/HouseholdincomeintheUnited_States) Ironically, conservatives like yourself cite the rise in median incomes, without accounting for the fact that more hours were worked to earn those increasing hosehold incomes. Meanwhile, "family values" conservatives dump on feminists for going to work and abandoning their children.

A personal note: While I obviously disagree with you on a lot of things, I do want to thank you for conducting civilized debate on OGM just about all the time - I also appreaciate that you supply data in an attempt to support your position - in marked contrast with the kind of ranting that T4T commonly engaged in.

One more thing regarding median household incomes: personal income has remained relatively stagnant over the past few decades

Tim, I went through the US Census Bureau data on personal incomes for the past 30 years (to match your comment about the "past few decades"), and this is what I found:

A young male in his 30s today has an income, adjusted for inflation, that is 12 percent less than what his father was making 30 years ago.

However, for the same period, real incomes are up 15% for 20 year old males, up 34% for 20 year old females, up 41% for 30 year old females, down 4% for 40 year old males, up 69% for 40 year old females, up 3% for 50 year old males, up 63% for 50 year old females, up 20% for 60 year old males, and up 77% for 60 year old females. Overall, only two groups (30 year old males and 40 year old males) have shown declines in personal incomes over the last 30 years.

If you're curious about the last 20 or 40 years, let me know and I'll do those calculations.

Source: http://www.census.gov/hhes/www/income/histinc/p08ar.html

Thanks for the civility comment - I've been working on that one since Jo Ann and I had a knock-down drag-out over Lincoln's cabinet.

Congratulations on paying off your house!

Have a great week ;)

Inflation and Capital Gains Tax

Inflation and the AMT

I'm betting this one will hit you this year Tim!

Gary, No need to do more calculations - if one asks what I think is the most pertinent question of the data you've linked, one gets a very different answer than your analysis seems to imply. First of all, your analysis suggests that the gap between men's and women's income is closing and despite the fact that the data you provided isn't telling us how long men or women are working per year (so we don't know their comparitive incomes per hour worked) let's assume that even the hourly wage gap is closing too. That's a good thing if you're a woman hoping to get a fair shake vs. your male counterparts doing the same work.

But let's take the entire popuation of individual earners and rank them on the basis of income per hour worked and select Mr. or Ms. 50% and Mr. or Ms. 0.5%. Inequality is measured by dividing Mr/s 0.5 % income by Mr/s 50% income. That ratio has grown enormously as even you and Syngas must acknowledge. But there is more than that, in constant dollars, Mr/s 50%'s income is at best stagnant - and has probably declined. You don't need to get into the issue of why women make less - whether that reason is benign or malign - they still do. So, if 30-yr old and 40-yr-old men are making less than 30 years ago and 50-yr-old males are making barely more than 30 years ago (each at the median of males of their age) and they have been joined in the labor force by females with lower hourly incomes, What is the answer to this question: How does the real hourly income of Mr(s) 50% of today compare with the hourly income of Mr(s) 50% of thirty years ago? Answer: It has stagnated, at best.

Syngas, The AMT hit me? No, no - (once again :) you need to logically ponder the data I've already given you about my situation. I have no home mortgage deduction, so I'm taking the puny standard deduction. Even after the deducting my daughter's tuition and fees at college, I'm coughing up plenty, dude. The AMT hts people with lots of deductions.

[ :) or, perhaps it should be :( ]

Tim, your last message confused me.

I wasn't attempting to make a point about pay gaps between men and women. I was concerned only with the factual claim I thought you made that incomes had stagnated. I made two posts: one that showed inflation-adjusted (aka, constant) median household incomes (for a variety of percentiles) increasing over the last 30 years, and one that showed inflation-adjusted median personal incomes increasing for all age and gender groups besides 30 and 40 year old men.

Perhaps you are right that hourly wages have stagnated. I'd love to see some data on it, though. Do you have any?

Gary,

I found some data: http://www.epinet.org/content.cfm?id=2778

The growth in hourly incomes over various intervals depends on what year you start. If you choose 1973, as these authors did, for people at the 10% rank, real hourly incomes have increased by 8% in 34 years. For people at the median it is 9% in 34 years, for people at the 95% rank, real hourly incomes have increased by 38% in 34 years. (And I'll bet that people at the 0.5% rank have done even better.) For the two lower categories, most of the income gain came in one 4 year interval: 1996-2000 - though there is a fair amount of scatter. (In fact, if you choose 1979 as the first year, the 10% workers fell from a relative peak to which only now are they getting returning. In 1980, the income upper income workers' gains started to diverge from te two lower categories and the divergence really picked up speed in 1993.

It's your call - is that stagnation for the median and below? If it is not, it is pretty damned close. And only one group of people have seen real hourly incomes than cumulative productivity gains - the rich.

Hi Tim,

Thanks for clarifying. Personally, I don't think it is correct to say that an increase of 8% over 34 years (for the poorest 10%) is stagnation. Stagnation, to me, has a much stronger connotation: that of near-zero growth.

The real wage growth over this time period means that the standard of living for the typical and poorest Americans has improved, albeit slightly.

I think you and I may be able to agree on this statement: although wages and living standards have improved for most Americans, including America's poorest, it's not enough! We should always hope for more and better growth, particularly for the worst-off.

What do you think?

Gary, Actually, an 8% increase in median income is equivalent to a zero growth if you account for two more demographic facts: the median age of the US population in 1973 was 28.4 years old, by 2006 it was 36.4 years old. When my retirement plan representative discusses expected gains in real income on a year-over-year basis, he figures that one normally expect a one-percent rise in real income per year. Just to account for aging alone, the median hourly income of American should rise by at least 8%. (Go back and check out the age groups in the age-dependent data in the census data you linked - specifically compare the age groups closest to the median in 1973 and 2006. The increase in the 35-44 group over the 25-34 group is more than 8%, usually a lot more than 8% in every category.)

To put it another way, in 2006 the median hourly income for a 10%-rank person or a 50%-rank person was only 8-9% more than the corresponding persons in 1973. But the people we're talking about in 2006 are typically 8 years older and should be making at least 8-9% just by virtue of being older. That is stagnation.

And yes, we should be doing one hell of a lot better.

One more thing - I am, of course, aware that the median age of the labor force is not the same as that of the population - but it is older by several years - I just don't have the time or patience to find it.

Hi Tim,

Hmm, interesting point. I think you're saying that for any 25-34 age group, for example, there are more individuals in the upper end of that spectrum than there were in the same age group 30 years ago.

That may be true, given the increase in the median age of the population.

But keep in mind that an age group of 25-34 today is still comprised of 25-34 year-olds, just as it was 30 years ago. The age distribution within that group may be slightly older today than 30 years ago, but not a full 8 years older. If that were so, there would be no 25 year olds in the group, only 33 and 34 year olds (which is not the case).

If the age distributions are skewed upwards, then it seems reasonable to subtract from the 8% growth rate, but I see no particular reason to discount all of it. Without more precise data (wages for each age, from 15-70 year olds), an accurate calculation of the appropriate subtraction would be exceptionally difficult to come up with.

Fleinn, look up the words 'average' and 'median'. They are not the same thing.

No. And in that classroom I mentioned, the median grade would go up(if the teacher used that sort of grading system), the average would stay about the same or go down very quickly, since the middle range students would have to work harder for the same grade as before (which some "average" grade students might not be able to do without dropping their football- practice), etc.

(..anyway. Just wanted to echo the sentiment about the very good and interesting posts. Thanks.)