Trillion$ For Years To Come

January 15, 2009

I too did the math and came up with the approximate figure of $2500 when they first announced this bailout. My initial reaction was also to just cut everyone a check. Then I recalled the advertisements in the last couple sets of free checks the government sent out (2001 and 2008). While we sensible people would either invest the money or pay down existing debt, too many people took that $300 check and...ready?...put it as a down payment on a $1500 TV thus creating even MORE consumer debt. If they had simply pissed the money away on some trinket that cost exactly $300, it would've been great. Money in motion is indeed stimulating to the economy, but when millions of people use it to increase existing consumer debt, more defaults are a mathematical certainty, and the securities wrapped up in that debt are sure to crash.
So, what to do with the money? Man, I don't know. If you just let people keep it by not collecting taxes, I don't know that it would be all that great for the economy either. If the wealthy with 90% of the tax money just kept it, I don't believe the so-called trickle down economic theory takes place in reality. I think a lot of that money just gets holed up somewhere safe and never sees the light of day.
I never know which side of the fiscal fence to sit on. You go to the left side, collect a bunch of money from the wealthy, redistribute it to the poor in the form of entitlement programs, and you deincentivize both rich and poor from ever being productive. Remember that back in the days of Eisenhower through Johnson, the top tap bracket was 90%. Where's my incentive to work harder with that? I sit home eating cheetos, making babies and watching Jerry Springer? For free? And you pay me? Why the hell would I look for a job?
On the other hand, you go all invisible hand of the free market, and it's only a matter of time before the 98% of the foolish population and their money are soon parted by the 2% not so foolish segment of the population. You think that 2% is gonna just hit the reset button and give it all back? Then what happens to the "fools"? No safety net. Just let them roll over and die?
For me, I just keep chugging right along and hope to God that I've got enough to feed myself a pittance of stale grits and an occasional boiled egg when I'm too old to work and social security is long since dead.

The tax codes that maxed out at 90% had so many brackets, that only the EXTREMELY wealthy ever fell into the highest.

http://en.wikipedia.org/wiki/Internal_Revenue_Code_of_1954

Think about how much money $8,000 was back then.. NFL players only made that type of money. Those tax rates fall pretty much into what we have now.. If you are a driven person, you wouldn't be 'deincentivized' by the normal tax brackets.

David Frum has said that tax rates in the 1950s were at "quite bearable levels," with generous "personal exemptions for a family man."[18]Corporations could take advantage of generous loopholes for salaries and benefits paid to employees, which meant that the ones who often faced the brunt of the tax burden at that time were "the high-earning self-employed: lawyers, dentists" and those in the entertainment industry, such as then-actor Ronald Reagan.[18]
The Tax Foundation has made the claim that the tax cuts signed by U.S. Presidents Reagan and George W. Bush, contrary to popular belief, actually made the U.S. tax code more progressive, not less. They state that in 1980, before Reagan's tax cuts, the richest 1% paid 19.05% of all federal income taxes, and by 1988, after Reagan's tax cuts, their share had increased to 27.58%. Likewise, in 2001, before Bush's tax cuts, the richest 1% paid 33.89% of all federal income taxes, and by 2006, after Bush's tax cuts, their share had increased to 39.89%.[19] However, someone earning a higher income, but paying a lower tax rate still might pay more in taxes than they did before the tax code was changed.