DOGE Receipts Update
Just a quick update to my post from yesterday. NPR reports DOGE released data about federal contract savings. It doesn’t add up.
FOWLER: Here’s three big things I found. One – more than half of the contracts listed haven’t actually been canceled yet. Two – a third of the entries don’t actually result in any savings, by DOGE’s own accounting. These are contracts that were already maxed out and couldn’t see any more spending in the future. Three – determinations I could verify only add up to about $2 billion saved, mainly through cuts that accompany the attempted dismantling of the Education Department, Consumer Financial Protection Bureau and USAID.
So, to recap. DOGE claimed $55 billion which then was seen to be a $16 billion claim which shrank to $8 billion after a glaring typo was corrected. Now, further digging shows that that number is maybe $2 billion.
So, to update yesterday’s figures as to pertain to how much closer we are to a balanced budget, we are now at 0.1% of the way!
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I’ve seen several estimates of the wealth held by US billionaires. they go from $2.7 trillion for the top 20 to $6.72 trillion for all nominal billionaires.
So, a 0.1% tax on wealth for $1 billion and up, would net between $2.7 and $6.72 billion.
It’s almost as though capital doesn’t get taxed…
I think that spending on DOGE, which has soared to $40 million so far, needs to be subtracted from any hypothetical “savings.”
@Kathy: No “almost as if” about it. Capital doesn’t get taxed except to the extent that owners pay fees and licencing for putting it to work. Growth of capital gets taxed but only when called “income.”
@Kathy:
And a wealth tax would lock up the capital markets and holy hell would ensue. Check out the history.
@just nutha:
That’s because for capital to become “capital” it was saved out of income. And taxed at that level. The gain in capital is taxed at lower rates in recognition of putting it at risk.
@Connor: Yes, I understood that when I made the comment. I disagree with the argument for taxing capital gains at a lower rate, but I got no dog in the fight on the issue.
@Connor:
This is true. Doesn’t mean that it is a moral imperative, however. Or that any given rate is an immutably correct one.
BTW, income is often earned by people putting their lives at risk. Or their health. Or their precious time. The list, in fact, is long. I know that the investor class thinks that they are special, but that is just myth-making.
@Steven L. Taylor:
And yet, their Gollum-like squeals of “my precious” as they’re dragged to their fate is sweet music to the hungry masses*.
ETA
*I’m noting a significant difference between the former middle class scrambling for a crust and the uber-wealthy playing the market to stay at the top .05% of humanity.
It will be a pyrrhic victory to watch the rich re-learn that the vast majority of their wealth depends on a smoothly functioning society — and not the libertarian paradise that pilled-up Silicon Valley techbros convinced themselves would happen by the process of Question Mark after eliminating government.
So I don’t think that taxing capital as is would really yield very much, in some real sense, because it isn’t real money. Real money is flows and transfers; that’s what causes real work to happen in the world. Saved money and spent money are very different things.
That said, I think it’s also obvious that having such concentrated wealth right now is a very bad thing, and reducing that concentration would be a good in and of itself, and should be done. I’d start by confiscating all wealth over 1 billion dollars. And maybe go down from there if the attractive force of the money was still causing a problem. There’s no need for anyone to have that much money, and, as Elizabeth Warren said 15 years ago, they didn’t build it themselves.
And it should be noted that for the really rich, capital gains taxes and estate taxes and the like aren’t working to reduce their wealth. They can use the “Buy, Borrow, Die” strategy to get access to money without having to sell any assets, and assuming their assets continue to grow faster than their debts, when they die, their heirs won’t pay any capital gains on the money they inherit.
@Connor: That’s the theory, yes. Is it still the reality? As far as I can tell, no.
Money used to build something for productive for society (ie, a new factory, housing, etc) is fundamentally different than money that’s used to build more money (leveraged buyouts, for example.) Lower capital gains taxes are supposed to encourage the former, and now they reward the latter.
Reading some of the comments, I just want to say don’t confuse wealth/worth with capital gains. Capital gains can only be realized by selling the asset.
Worth is completely speculative and subject to change by the minute. Look no further than Trump’s conviction in NYC, can anyone say for sure just what Mar A Largo is worth until it is sold?
These billionaires gain and lose hundreds of millions sometimes overnight in the stock market…how do you tax that?
@Steven L. Taylor:
I substantially agree with most of your initial comment.
The lower rate on cap gains is certainly not a moral imperative, or a law of physics, it’s more an empirical observation that capital formation is the lifeblood of growth. And taxation results in less of things. Just look around the globe, and over time. So as an empirical matter it appears that capgains rate in a 17%~23% rate works out best. As a side note, the US tax yield appears to cap out at about 20% of GDP, sometimes temporarily higher. Again, not a moral number, a law of physics, but just the real world.
As far as risks and sacrifices to wage earners vs capital, I see no evidence of feelings of superiority. In fact, I think you errantly conflate the issues. Wage earners negotiate with employers given the prevailing environment. A cushy desk job or working in a coal mine. I happen to think K-12 teachers should make more. But markets say differently.
Capital is a different, but not somehow a superior negotiation. It’s just a different market. And very liquid. Repeat: very liquid. If capital doesn’t receive its perceived risk adjusted return. It’s gone. And fast. It’s not ego. It’s business. If you disrupt capital formation and flow wage earners will suffer the most.
You may not like that. I may not like that. But ignoring it is economic suicide.
@John:
You make a point most miss. Taxing on a “mark to market” basis is just plain stupid.
@Kevin:
Your example is ludicrous. Almost all LBOs are designed to create growth. It’s how value is created. They come with the attendant human and dollar capital spending plan.
I think it is unfortunate that so many share your ignorance.