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The week's question
In March 2025, in the thread "Re: OT, out", Umm asked the members: "Do you think it is because America is made up of magical soil that makes businesses based in America magically profitable?" This week it is put to everyone again. The button below opens the small thread re-asking it - read what others have said so far, then give your own answer as an ordinary reply.
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Author: albaby1 ✶❂🐝 GOLD
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Number: of 86252 
Subject: Re: JediPunishment France
Date: 09/30/26 3:09 PM
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The point is it was popular until it wasn't and the sell-by date on how popular it was happened to be the day all these people felt the impact on their daily lives.

It wasn't popular. It might have had some purchase among left-leaning intellectuals, but it was unpopular among the electorate from jump. Nothing like the current public support for Medicare and Social Security. Not all things are the same - you can't compare the degree, depth, and extent of Medicare's and Social Security's popularity with that of something as tenuous as Defund the Police.

2. What would theoretical tax brackets look like to close the deficit all the way to zero? Or something "acceptable" like $200B per year?

You don't need to get the deficit down to zero, and we don't have to get down to $200B per year. The most acute fiscal problems arise when the deficit is more than 3-3.5% of GDP annually, which means that the size of the debt is growing relative to the size of the economy. If the deficit is lower than 3-3.5% of GDP, then the debt will shrink relative to the economy over time. You may completely disapprove of running even that much deficit, but it would ameliorate the crisis aspect of the situation.

According to our future AI Overlords (Blessed be their glittering server racks), this can be done by adjusting tax rates thusly:

Lowest 10% --> 12.7%

Middle 12/22/24% --> 15/27/30%

Upper 32/35% --> 40%/44%

Top 37% --> 47%

Non-trivial increases, to be sure. This would be quite unpopular! But still less unpopular than major reductions in Social Security and Medicare benefits.

So let's put that in context. The above shift would result in an increase in the effective tax rate (not the marginal rate) for the median household income earner moving from 7.0% to 8.9% (or from 12% to 15% for single filing jointly). Another 2% or 3% in tax payments, or about $1,600. Again, real unpopular! But if you were to try to get the same savings from cutting Social Security and Medicare benefits, you'd need to slash both programs by about 23%. Much, much more unpopular!

This is the math. After you've done this and you've pulled 10% of the US GDP out of the economy, smashed small businesses and radically reduced consumer spending, how "popular" is everything going to be?

Not very.


Right. But that same analysis applies to both tax increase and spending cuts. They're the same order of magnitude. You need about $700 billion per year, more or less, to get the deficit out of absolute crisis levels. Once you've taken the same amount of money out of the economy, smashed the health care system and radically reduced consumer spending, how popular are those spending cuts going to be? Not very.

Which will be less popular? Cutting SS and Medicare. Thus, we're raising taxes rather than doing that.

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This community has written 86,214 posts about US Policy. The article-length ones it recommended most:
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