http://ap.google.com/article/ALeqM5iDN-xMIqKO_HWhozgVSUdkNtLzPQD92B73SO0

The rich are sharing your financial pain — and contributing to it.

-snip-

That news may produce a shrug from many people who have lost their jobs or homes in this economy. The problem is that when the wealthy get stingy, it trickles down to the rest of us.

-snip-

To be sure, the poor and middle-class are being hurt more, but upper crust thriftiness could reverberate across the rest of the economy.

The 10 percent of households with the highest incomes account for nearly a quarter of all spending, according to data compiled by research firm Moody's Economy.com from a 2006 federal survey.

"That does suggest those folks are important for the spending outlook, and the overall economic outlook," said Scott Hoyt, Moody's director of consumer economics.

Other government data show households in the top one-fifth of the U.S. population ranked by income earn about half of all total personal income before taxes — an imbalance that gives the wealthy immense economic clout, said Sara Johnson, an economist at the research firm Global Insight.

"Consumer spending makes up 70 percent of gross domestic product, and when one group accounts for a very substantial share of consumer spending, they also account for a large share of the economic activity that creates jobs," Johnson said.

1. Obama wants to raise taxes on the wealthy, thus lowering their spending.
2. The AP story says that lower spending by the wealthy is hurting the middle and lower classes.

Assuming that the AP has not suddenly embraced "trickle down" economics and the story is credible, how does Obama plan to make everyone's life easier by causing the wealthy to spend less? And doesn't this implicitly boost the idea that lowering taxes on everyone, even the wealthy, help the total economy?

Assuming that the AP has not suddenly embraced "trickle down" economics and the story is credible, how does Obama plan to make everyone's life easier by causing the wealthy to spend less? And doesn't this implicitly boost the idea that lowering taxes on everyone, even the wealthy, help the total economy?

Well, since neither the Repubs nor the Dems have any plans in the offing to actually cut government spending, presumably an increase in taxes will at least go some way towards matching receipts and expenditures, rather than continuing the insane policies of having current spending underwritten by international borrowing. The Republican idea of "starving the beast" has been shown to be utter rubbish; tax cuts do nothing to curtail spending.

Not that Obama actually has any interest in matching receipts to expenses, of course. It is just that the Republican party of 2008 is no position to offer any credible criticism.

1) Can you show the extent -- in percent or absolute terms -- to which increased taxes on the "rich" targeted by Obama will actually reduce their consumer spending?

2) Can you prove that tax cuts for the "rich" increase their consumer spending? How did Bush's tax cuts for the rich help the country's finances overall?

The Administration has repeatedly defended its tax cuts as a needed stimulus during the recent economic downturn. But the downturn is behind us, and the cost of the tax cuts is scheduled to increase in the years ahead. Indeed, some of the tax cuts enacted in 2001 that benefit only high-income households have not even started to take effect yet. The repeal of the “personal exemption phase-out” for high-income taxpayers, as well as repeal of the limitation on itemized deductions for high-income taxpayers, do not start to phase in until 2006 and do not take full effect until 2010. Estate tax repeal also does not take effect until 2010.

A growing number of studies from highly respected institutions and economists have concluded that the negative effect on long-term growth of the increased deficits that the tax cuts are generating is likely to cancel out — and quite possibly to outweigh — any positive effects on long-term growth from reductions in marginal tax rates and other tax incentives in the 2001 and 2003 tax-cut packages. Stated simply, the tax cuts are more likely to reduce long-term growth than to increase it.

http://www.cbpp.org/1-25-05bud-f1.jpg

http://www.cbpp.org/1-25-05bud.htm

Don't the increased interest rates associated with deficits hurt the economy and the little guy too?

The AP story says that lower spending by the wealthy is hurting the middle and lower classes.


Really? Since the only job machine around for the last couple of decades has been:

Home construction; overwhelmingly dominated by illegal alien labor in three of the largest state economies in the U.S., Cali, Texas, and Florida, not many Americans employed there, relative to the size of the industry, and ..

Retail chains, Walmart, Home Depot, big box stores, etc., part time, low wages, mostly revolving around peddling Chinese and Central American sweatshop and slave labor produced products to low income people; not many Jags and Lexuses in their parking lots around here ...

So, I would say the AP story is just another crock of bullshlit, just like the Welfare Street Journal, and Ospama's 'plans for change'. But, I understand how nervous the upper 5%'ers can get about the unwashed masses figuring out how utterly useless the rich are to the American economy these days; they might lose all the massive Federal subsidies for their favorite no risk investment gravy trains.

1) Can you show the extent -- in percent or absolute terms -- to which increased taxes on the "rich" targeted by Obama will actually reduce their consumer spending?

2) Can you prove that tax cuts for the "rich" increase their consumer spending? How did Bush's tax cuts for the rich help the country's finances overall?

The Administration has repeatedly defended its tax cuts as a needed stimulus during the recent economic downturn. But the downturn is behind us, and the cost of the tax cuts is scheduled to increase in the years ahead. Indeed, some of the tax cuts enacted in 2001 that benefit only high-income households have not even started to take effect yet. The repeal of the “personal exemption phase-out” for high-income taxpayers, as well as repeal of the limitation on itemized deductions for high-income taxpayers, do not start to phase in until 2006 and do not take full effect until 2010. Estate tax repeal also does not take effect until 2010.

A growing number of studies from highly respected institutions and economists have concluded that the negative effect on long-term growth of the increased deficits that the tax cuts are generating is likely to cancel out — and quite possibly to outweigh — any positive effects on long-term growth from reductions in marginal tax rates and other tax incentives in the 2001 and 2003 tax-cut packages. Stated simply, the tax cuts are more likely to reduce long-term growth than to increase it.

http://www.cbpp.org/1-25-05bud-f1.jpg

http://www.cbpp.org/1-25-05bud.htm

Don't the increased interest rates associated with deficits hurt the economy and the little guy too?

Yes, well, the 'little guy' is just lazy. The 'little guy' is supposed to work 18 hours a day, at third world wages, to keep the CEO's benefit packages and 'performance ratings' up, and keep the myth going that common stocks are actually worth something. It's blasphemy to even hint that the upper 5% should work at all, much less work longer days, if they want to earn more money ... 'everybody else' is supposed to earn them their money.

1) Can you show the extent -- in percent or absolute terms -- to which increased taxes on the "rich" targeted by Obama will actually reduce their consumer spending?

2) Can you prove that tax cuts for the "rich" increase their consumer spending? How did Bush's tax cuts for the rich help the country's finances overall?

The Administration has repeatedly defended its tax cuts as a needed stimulus during the recent economic downturn. But the downturn is behind us, and the cost of the tax cuts is scheduled to increase in the years ahead. Indeed, some of the tax cuts enacted in 2001 that benefit only high-income households have not even started to take effect yet. The repeal of the “personal exemption phase-out” for high-income taxpayers, as well as repeal of the limitation on itemized deductions for high-income taxpayers, do not start to phase in until 2006 and do not take full effect until 2010. Estate tax repeal also does not take effect until 2010.

A growing number of studies from highly respected institutions and economists have concluded that the negative effect on long-term growth of the increased deficits that the tax cuts are generating is likely to cancel out — and quite possibly to outweigh — any positive effects on long-term growth from reductions in marginal tax rates and other tax incentives in the 2001 and 2003 tax-cut packages. Stated simply, the tax cuts are more likely to reduce long-term growth than to increase it.

http://www.cbpp.org/1-25-05bud-f1.jpg

http://www.cbpp.org/1-25-05bud.htm

Don't the increased interest rates associated with deficits hurt the economy and the little guy too?

Like Ironweed said, spending cuts are vital. Unfortunately, Obama promises both increased taxes AND increased spending.

Like Ironweed said, spending cuts are vital. Unfortunately, Obama promises both increased taxes AND increased spending.

And we'll be paying far more under McCain, your point?

the slow down will come out of their investments not consumer expenditures-the rich's consumer expenses arent any big deal anyway

1) Can you show the extent -- in percent or absolute terms -- to which increased taxes on the "rich" targeted by Obama will actually reduce their consumer spending?

2) Can you prove that tax cuts for the "rich" increase their consumer spending? How did Bush's tax cuts for the rich help the country's finances overall?

The Administration has repeatedly defended its tax cuts as a needed stimulus during the recent economic downturn. But the downturn is behind us, and the cost of the tax cuts is scheduled to increase in the years ahead. Indeed, some of the tax cuts enacted in 2001 that benefit only high-income households have not even started to take effect yet. The repeal of the “personal exemption phase-out” for high-income taxpayers, as well as repeal of the limitation on itemized deductions for high-income taxpayers, do not start to phase in until 2006 and do not take full effect until 2010. Estate tax repeal also does not take effect until 2010.

A growing number of studies from highly respected institutions and economists have concluded that the negative effect on long-term growth of the increased deficits that the tax cuts are generating is likely to cancel out — and quite possibly to outweigh — any positive effects on long-term growth from reductions in marginal tax rates and other tax incentives in the 2001 and 2003 tax-cut packages. Stated simply, the tax cuts are more likely to reduce long-term growth than to increase it.

http://www.cbpp.org/1-25-05bud-f1.jpg

http://www.cbpp.org/1-25-05bud.htm

Don't the increased interest rates associated with deficits hurt the economy and the little guy too?

Those tax cuts have helped me tremendously, and I'm certainly not rich. In fact, I had my worst year in about 20 years in 07' (got laid off for a while last summer), and made less than 37 grand. I have an ex who doesn't work and 2 kids to take care of, not to mention all the expenses of getting by day to day and pay to pay.

But, thankfully, those cuts and child tax credits saved me a bundle when I really needed it. I payed a grand total of ZERO to Uncle Sam last year and got a stimulus payment/earned income credit to boot. So much for "tax cuts for the rich" theory. And I don't feel guilty about it, because I've been paying taxes for the last 29 years, especially when I was self employed.

The rich are paying the way for most of us, but too many Americans have been brainwashed to believe that the government is financed by the poor and middle class. How on earth can people with little or no money finance anything?? How can people with no money pay for anything??

Tax cuts don't cause our "leaders" to spend more money, and anyone can make a pie chart claiming that they do. I could whip one up right now that says just the opposite.

They're very adept at doing it all by themselves (pork barrel spending, earmarks, lucrative government pensions and percs, etc.), no mater how much revenue they get their hands on (which is at an all time high BTW). It's never enough, especially when it's someone else's money that's being spent with no accountability.

They're worse than those televangelists who claim they're always on the verge of going off the air tomorrow if their faithful viewers don't rush to the phone and send in their "love gifts". Meanwhile, they're living in the lap of luxury and laughing all the way to the bank.

The government squanders our hard earned money like drunken sailors (no offense to any drunken sailors that may be reading this), and they can't stop themselves. They just don't have the will to do it, and frankly, if we're honest with ourselves and admit it, neither does the population. There's no uprising going on demanding that government reign in spending. In fact, just the opposite is true.

We the people expect way too much from government, the Congress (they decide how much will be spent; not the President or the judicial branch) knows this and uses it as the perfect excuse to keep spending more than they take in, year after year after year.

They're like money junkies; always looking for that next fix of spending our hard earned cash. It must be one hell of a rush.

Also, anyone who truly feels that they're under taxed can send more of their money in at any time. The government will gladly accept any donations, so if that makes anyone sleep better at night, or feel less guilty about themselves, it's always an option. No one forces anyone to keep their money.

the slow down will come out of their investments not consumer expenditures-the rich's consumer expenses arent any big deal anyway

According to the article I posted The 10 percent of households with the highest incomes account for nearly a quarter of all spending, according to data compiled by research firm Moody's Economy.com from a 2006 federal survey.
I think that's a pretty big deal.

Those tax cuts have helped me tremendously, and I'm certainly not rich. In fact, I had my worst year in about 20 years in 07' (got laid off for a while last summer), and made less than 37 grand. I have an ex who doesn't work and 2 kids to take care of, not to mention all the expenses of getting by day to day and pay to pay.

But, thankfully, those cuts and child tax credits saved me a bundle when I really needed it. I payed a grand total of ZERO to Uncle Sam last year and got a stimulus payment/earned income credit to boot. So much for "tax cuts for the rich" theory. And I don't feel guilty about it, because I've been paying taxes for the last 29 years, especially when I was self employed.

The rich are paying the way for most of us, but too many Americans have been brainwashed to believe that the government is financed by the poor and middle class. How on earth can people with little or no money finance anything?? How can people with no money pay for anything??

Tax cuts don't cause our "leaders" to spend more money, and anyone can make a pie chart claiming that they do. I could whip one up right now that says just the opposite.

They're very adept at doing it all by themselves (pork barrel spending, earmarks, lucrative government pensions and percs, etc.), no mater how much revenue they get their hands on (which is at an all time high BTW). It's never enough, especially when it's someone else's money that's being spent with no accountability.

They're worse than those televangelists who claim they're always on the verge of going off the air tomorrow if their faithful viewers don't rush to the phone and send in their "love gifts". Meanwhile, they're living in the lap of luxury and laughing all the way to the bank.

The government squanders our hard earned money like drunken sailors (no offense to any drunken sailors that may be reading this), and they can't stop themselves. They just don't have the will to do it, and frankly, if we're honest with ourselves and admit it, neither does the population. There's no uprising going on demanding that government reign in spending. In fact, just the opposite is true.

We the people expect way too much from government, the Congress (they decide how much will be spent; not the President or the judicial branch) knows this and uses it as the perfect excuse to keep spending more than they take in, year after year after year.

They're like money junkies; always looking for that next fix of spending our hard earned cash. It must be one hell of a rush.

Also, anyone who truly feels that they're under taxed can send more of their money in at any time. The government will gladly accept any donations, so if that makes anyone sleep better at night, or feel less guilty about themselves, it's always an option. No one forces anyone to keep their money.

Well said.

And we'll be paying far more under McCain, your point?

What new spending is McCain promising?

According to the article I posted
I think that's a pretty big deal.

ok its a little more than i thought but still the rich ARE the invstment class-besides i meant to say that the slwdown likely wouldnt effect their consumer spending-theyre not going to be investing in a lagging economy though...