Tentative Deal Reached On Fiscal Cliff

[Iron Bridge]

They just pushed the real decision a few months or years down the road. Taxes don't matter; spending does. All spending will eventually be paid for by taxes. If the rate of taxation is lower than the rate of spending today, then it must be even higher than the rate of spending in the future. The middle class is going to have to pay most of this simply because they make most of the money; it won't be an ideological thing.

If Obama seriously wants to only raise taxes on the rich long term he needs to dramatically reduce spending back to something resembling the pre-crisis levels. But it is not politically in Obama's interests to think long term since he can get the benefits of deficit spending now while palming off the messy contraction on some future President, ideally a Republican President who would be forced to internalise the blowback of Obama's policies without getting any of the benefit.

[Grandmaster Jogurt]

The middle class is going to have to pay most of this simply because they make most of the money; it won't be an ideological thing.

How are you defining "middle class"?

Because three quarters of wealth in the US is held by the top 10%, with half of that held by the top 1%. So unless you extend the middle class up to the 99th percentile, most of the money is in fact held by the upper class.

[aerius]

There's a difference between wealth and income. For the most part we tax income and not wealth, wealth really only gets taxed with inheritance taxes or when it's cashed out and spent. You can tax the income from wealth, for instance if I have $10 million sitting in my bank account you can tax the interest I make from it but you can't tax the mother lode itself until I spend it on something or I die and pass it to my kids.

As for incomes, the share that goes to the top percent or quintile is still heavily skewed but it's not as lopsided as wealth.
http://www.cbo.gov/publication/42537
Could you sock it to the top 20-25%? Sure. But it's not enough, even if you start going after their wealth in addition to their income. The US has medical expenditures and various other spending programs that are growing at 8-9% per year, compounded, in other words, it doubles every 8-9 years. Given that the US has never been able to obtain revenues of more than 20% or so of its GDP, and even the Scandinavian countries top out at about 30%, you're gonna have to cut spending.

[Simon_Jester]

Aerius, I'd be curious to hear your take on why medical expenditures in the US are growing exponentially and basically out of control, compared to other developed nations.

[aerius]

The short version is there's a bunch of laws & exceptions that allow the healthcare & medical industries to engage in monopolistic practices, pricefixing, fraudulent billing, cost shifting, and a whole bunch of other such things. Then we add the profit motive via shareholders, insurance companies where they also have to make a profit for their shareholders, health care loans where the financial companies skim off a piece, lawyers & insurance for everyone, and god knows what else. The US basically built a system which is designed to suck as much money as it can out of everyone and then some, and it's allowed and encouraged to do so.

[madd0ct0r]

to put it another way. the American government spends MORE per capita on healthcare then the UK does, and only manages to cover a third of the population.
Price gouging is rampant, inefficiencies are huge and with nothing to gauge outcomes by, most people assume a more expensive doctor is a better one because FREE MARKET. It's a terrible fucking system.
American's overpay for health care. About 30% of the money is effectively wasted. :http://www.mckinsey.com/insights/mgi/re ... ealth_care