Obama vows to let Bush tax cuts expire

[Scuzz]

Virgina apparently is doing something right - they announced a $450 million surplus for the last fiscal year. The governor poked a bit at the feds:

Now, I'm not expert in Virginian finances, so I don't know if this is a numbers-manipulating thing or not, but it sure sounds good. Perhaps this is a case of states being small enough to get past the gridlock?

What is Virginia's annual budget? In California the Parks Dept. "discovered" some $50+/- million that had never been spent from prior budgets. This discovery cost several people their jobs. I have the feeling Virginia's entire budget is less than the California Parks Dept., okay, maybe the Cal Trans budget.

[Tin Wisdom]

Now, I'm not expert in Virginian finances, so I don't know if this is a numbers-manipulating thing or not, but it sure sounds good. Perhaps this is a case of states being small enough to get past the gridlock?

I don't know the full story behind the surplus, but bear in mind that Virginia is very atypical. It has one of the lowest unemployment rates in the nation (just over 5%) and a HUGE proportion of US Federal money is either spent on Virginia sites (e.g., the Pentagon, Quantico, Norfolk Naval Bases, etc.) or earned by Virginia residents. Three counties in Northern Virginia supply a good third of the state's tax income, and the majority of the people living in those three counties either are government workers or government contractors (like yours truly).

As such, Virginia was one of the least affected of all the 50 states, so it shouldn't be too surprising that we're one of the first to recover. And without the Federal Government paying the bills the state would be doing about as well as Tennessee or Kentucky, I imagine. The GOP governor crowing about how how his small-government reforms have turned Virginia's fortunes around is a bunch of hogwash.

[Papageno]

That's about in line with the ironic fact that most "donor" states are blue and most of the others are red.

[ineffablebob]

....without the Federal Government paying the bills the state would be doing about as well as Tennessee or Kentucky, I imagine. The GOP governor crowing about how how his small-government reforms have turned Virginia's fortunes around is a bunch of hogwash.

Isn't that interesting. Makes you wonder if maybe there's something to this notion of the government spending money to prop up the economy after all!

[Tortilla]

Isn't that interesting. Makes you wonder if maybe there's something to this notion of the government spending money to prop up the economy after all!

According to this, Virginia is accomplishing the surplus with bookkeeping tricks. They are financing necessary infrastructure work with long term debt instead of spending out of immediate tax revenues. So despite multiple years of "surplus" their overall state government debt is rising every year.

The argument is fairly complicated and in theory some of those debts are borrowing against federal payments in future years that will theoretically fund some of these projects. I can't really tell if Virginia is really in a surplus, even with extra debt taken on, or not.

[ineffablebob]

I suspect every major government, from large cities/counties to states to countries, has finances so complicated that there's no way to tell for sure if they're in the red or the black. It all depends on your assumptions around future interest rates, inflation, growth, etc.

Back to the original topic of the Bush tax cuts. Romney's plan is to extend the cuts, make them even larger, and close loopholes to pay for it all. (Not that this is politically feasible, but let's pretend it is.) Obama's plan is to extend the cuts for all but the most wealthy, with no significant additional tax changes. Is it just me, or do both plans seem like weak sauce? Neither one is going to solve the basic problem of "we spend more than we take in" since they're aiming for very low (or zero) change in revenues. Maybe that's just the reality of politics today - you can't even get the weak sauce through Congress, so you don't even bother talking about anything that would actually solve a problem.

[ineffablebob]

Rich Americans Aren't the Real Job Creators. The gist: the rich aren't job creators, but rather are idea creators. If you're already rich, and public policy (including the tax code) protects your wealth, you have no incentive to create new ideas. So there's no reason to give tax breaks and other incentives to anyone who is already successful, but rather use policy to promote competition among new ideas.

Seems like a good argument to me. Doesn't seem like either political party is buying into it, though.

[ydejin]

Rich Americans Aren't the Real Job Creators. The gist: the rich aren't job creators, but rather are idea creators. If you're already rich, and public policy (including the tax code) protects your wealth, you have no incentive to create new ideas. So there's no reason to give tax breaks and other incentives to anyone who is already successful, but rather use policy to promote competition among new ideas.

Seems like a good argument to me. Doesn't seem like either political party is buying into it, though.

Agreed, sounds spot on to me. Although perhaps my perspective is shaded by being around Silicon Valley all the time. But a system in which all sorts of idea creators get more or less equal opportunity to create the next big thing seems inherently more likely to continue creating innovation than a system in which people that came up with a good idea once are given an advantage over new comers.

From the article:

The crony capitalism that we have allowed to infect the U.S. economic system shares weaknesses with communism. A tax system that amplifies compounding advantages for business-people and corporations the higher up the food chain they go and compounds disadvantages for people at the bottom is bad for business. It slows the rate at which ideas are generated and problems are solved. The healthiest ecosystem or economy is one with the most diverse, able competitors, not one overrun with one or two dominant species.

[Spam]

2/10 see me after class. focus on the idea lifecycle and explore ways to alter corporate shepherd incrementalism from a means to delay decline