Supply Side Economics

[qazplm]

At what point do the republicans admit that "trickle down" and supply side economics have been proven wrong?

The author of the Laffer Curve (who even he said the Laffer Curve wasn't meant to be taken the way republicans have taken it) had this prediction/article in 2009:

http://www.wsj.com/articles/SB124458888993599879

"With U.S. GDP and federal tax receipts at about $14 trillion and $2.4
trillion respectively, such a debt all but guarantees higher interest
rates, massive tax increases, and partial default on government
promises."

Of course, that was wrong.

"We can expect rapidly rising prices and much, much higher interest rates
over the next four or five years, and a concomitant deleterious impact
on output and employment not unlike the late 1970s."

Wrong.

He wrote this book in 2008, undoubtedly as an argument against Obama's then plan to cancel some of the Bush tax cuts:
"The End of Prosperity: How Higher Taxes Will Doom the Economy -- If We Let It Happen"

Economy...not doomed.

Trickle down has never worked, supply side has never worked, none of the predictions have come to pass, at some point, how many times does it have to be wrong before folks start to discredit it? I'm not even talking about those that want balanced budgets (not workable for a large, modern nation by the way but there's nothing economically crazy about the idea), or about disagreements on where the exact tax rates should be (IMO tax rates should vary at least a little bit depending on the health of the economy, but reasonable minds can differ).

 

[Purdue85]

Originally posted by qazplm:
At what point do the republicans admit that "trickle down" and supply side economics have been proven wrong?

The author of the Laffer Curve (who even he said the Laffer Curve wasn't meant to be taken the way republicans have taken it) had this prediction/article in 2009:

http://www.wsj.com/articles/SB124458888993599879

"With U.S. GDP and federal tax receipts at about $14 trillion and $2.4
trillion respectively, such a debt all but guarantees higher interest
rates, massive tax increases, and partial default on government
promises."

Of course, that was wrong.

"We can expect rapidly rising prices and much, much higher interest rates
over the next four or five years, and a concomitant deleterious impact
on output and employment not unlike the late 1970s."

Wrong.

He wrote this book in 2008, undoubtedly as an argument against Obama's then plan to cancel some of the Bush tax cuts:
"The End of Prosperity: How Higher Taxes Will Doom the Economy -- If We Let It Happen"

Economy...not doomed.

Trickle down has never worked, supply side has never worked, none of the predictions have come to pass, at some point, how many times does it have to be wrong before folks start to discredit it? I'm not even talking about those that want balanced budgets (not workable for a large, modern nation by the way but there's nothing economically crazy about the idea), or about disagreements on where the exact tax rates should be (IMO tax rates should vary at least a little bit depending on the health of the economy, but reasonable minds can differ).

When will the liberal democrats ever admit socialism has been proven wrong? How many societies have to crumble? How many have to starve to death?

The reality is, most leftists run to the right to get elected, then abandon it at first opportunity.

Even Obama claimed you don't raise taxes during an economic downturn. One of the few rational statements he's made.

Raising taxes cripples an economy. The radical leftists can never admit this. Otherwise, they'd lose their power.

 

[ecouch]

Proven wrong for whom? Horse and sparrow economies are working wonders for those on the horse end. Records are being set daily.

ALEC thinks it is working well.

 

[Purdue85]

?

Originally posted by ecouch:
Proven wrong for whom? Horse and sparrow economies are working wonders for those on the horse end. Records are being set daily.

A link to a left-wing hit job for an argument for a higher minimum wage?

Yep... that's supply side economics.

 

[Boiler20]

Question: Would you tell your children, or a close family member, who is employed part time or not at all, who is struggling to make ends meet, to continuously tap into any and all available credit resources they have until they simply cannot even dream of making the interest payments, let alone the principal payments? Or, would you tell them to aggressively look for a job that makes them enough income to support their lifestyle, plus some extra to tuck away for retirement?

The United States has been purchasing its own Treasury debt instruments (they even came up with one that has a 100 year maturity...holy sh!t, can we say 'little to no intention of paying it back'?), to the tune of $85 B, a MONTH, since the economic meltdown.

The only reason we have not seen interest rates skyrocket is that the rest of the world's economies are so down the $hitter that almost no one will buy their debt, or really that of their major corporations, and yet institutional investors have to find some place to put their cash, so they look to their investment of last resort, the U.S.

Once this slows down significantly, all hell will break loose.

It may not be today, or tomorrow, but it will come to roost, one way or the other, regardless of one's political views.

And btw, probably the least credible source to quote when making any sort of argument, is an economist. Yet, they are considered 'experts' in predictions. They have an accuracy of LESS than simply flipping a coin- and that is a fact, not a prediction.

//////////////////////////////////////////////////////////////

"An economist is an expert who will know tomorrow why the things he predicted yesterday didn't happen today. "--Evan Esar[/B]


-"He who lives by the crystal ball soon learns to eat ground glass."
-Edgar R. Fiedler in The Three Rs of Economic Forecasting-Irrational, Irrelevant and Irreverent , June 1977.[/B]A cautionary career note based on past experience.

[/QUOTE]
"Forecasting is the art of saying what will happen, and then explaining why it didn't! "
--Anonymous (communicated by Balaji Rajagopalan) The converse is also true: saying what WON'T happen, and then explaining why it DID happen ! See the large El Nino of 1997 for a recent example.



"The only function of economic forecasting is to make astrology look respectable."
--John Kenneth Galbraith, Economist and presidential advisor


[/B]So, are the predictions of Market experts and forecasters usually right? Or are we picking on them by displaying a handful of rare and unusual misfires?
Not according to a study reported on by the Wall Street Journal in October of 2010.
Professor Phillip Tetlock, of the University of Pennsylvania, studied 20 years of
predictions from 284 experts in the fields of politics and finance (which, of
course, includes the Stock Market), and carefully catalogued the outcomes
of a staggering 82,361 predictions.
He concluded that experts are more often wrong than right, … and would have done better flipping a coin!
He further found that the more degrees experts have, the more likely their predictions are to be wrong - and even worse, to stay wrong - evidently because they think so much of their own opinions, that they refuse to change them, even in the face of facts to the contrary!

So, sadly, misfires in predicting - even from highly-paid experts - seem to be the rule,
not the exception.

Qazpalm, I appreciate your passion for the lefty view of things, but on this one, you are nothing but wrong, and the FACTS back it up. Maybe not now, but they will. Just like in cards, its not IF, but WHEN. The world map is littered with failed liberal economies / systems.

[/QUOTE]





This post was edited on 2/21 9:57 AM by Boiler20

 

[qazplm]

there was a fact in there?

Because if there was I missed it.

"you are nothing but wrong, and the FACTS back it up. Maybe not now, but they will."

I mean, seriously?

 

[qazplm]

Yeah I remember

when the Clinton tax raise led to the 90s being one of the worst economic decades in history.

And when Obama got rid of the Bush tax cuts on the top folks, boy stuff just kept getting worse and worse for the economy.

 

[Boiler20]

Re: there was a fact in there?

You missed the point, and I guess that's my fault.

The point is that, be it an individual or a country, one cannot spend "future money" to oblivion. I guarantee you can't do it. In small, tactical situations, yes. However, as a strategy, which is what you are implying we should do, and which you claim is working, it cannot now or ever be the solution.

I asked if you'd give that advice to a loved one, and you haven't responded yet.

Just because the economic fall-out is yet to come ashore, doesn't mean a tsunami is not coming.

 

[Purdue97]

Re: Yeah I remember

-As for the 90's it was great to have a huge technological revolution going on along with a time of peace. Unfortunately with the peace part, we had a President that largely kicked the bucket down the road to future leaders to let them attempt to fix it.(In case you forget, 9/11 was not the first time radicals tried to blow up the twin towers. The issue was largely ignored for eight years)

-As for this current economy getting better that is a real debate. I mean we are largely purchasing $80bln per month on our own debt. I do not get how people do not see this is an issue that will evantually have to be addressed. If the workforce was the same size as it was in 07-08 and not subsidized to sit on its butt, and employment numbers not calculated in a way that counted underemployed and part time work as employed people, the unemployment rate is in double figures. Higher than under Bush Presidency.

 

[qazplm]

no one is remotely implying

spend future money to oblivion...whatever that means.

I mean what policy are you pointing that even remotely has the potential to "spend future money to oblivion?"

What does that even mean?

Last time I checked, the annual budget was moving towards more balanced, not less. Last time I checked, raising taxes a modest amount results in increased revenues...and last time I checked massive tax cuts for the rich have never "trickled down" to anyone.

 

[qazplm]

couple of responses

1. I love how when someone points out that we've repeatedly raised taxes without the economy tanking (and oh by the way Reagan raised taxes three time), folks always have a reason why it should have done so but didn't.

2. Can you point me to the last time we did massive tax cuts and that helped the deficit, or the poor or even the middle class? You can maybe point to some of the tax cuts that took us out of 90 percent tax brackets. Those were way too high.

3. The United States ran a bigger relative debt/deficit during the boom years right after WWII. Running a debt in and of itself is not a problem. The best economy in the world is Germany, and our debt/GDP ratio is fairly favorably comparable to theirs.

4. The workforce is NEVER going to be the same size as long as we gain in population. And, we have a whole lot of baby boomers retiring. That's part of the reason why SS will eventually need work, because of the baby boomers retiring.

5. I've attached a copy of the U6. How has that trended? When did it go up? When did it start going down again? Is it steadily going down? Before you look at the chart, let's make a deal...

If shot up right around the time Obama took over, it's probably not his fault. Yes?
If it's steadily going down, then probably to his credit, yes? EVEN if still higher than during the Bush presidency. Unless you think the moment Obama stepped in the WH, he magically was able to affect the U6?
If it has plateaued then he gets the blame, yes?
If it has gone up, then he really gets the blame, yes?

I'm guessing you can figure out the answers to those questions before you even click the link.

Shot up thanks to Bush, then steadily down

 

[Purdue97]

Well pretty big changes of topic on each response

1,2,3) I never recall saying higher taxes would tank the economy. Whether it is or was the right thing to do is a different issue. Whether you like it, or comprehend it or not, there are a lot of other issues that play into the economy rather than taxes, which was the main point of my post.

I actually think post world war II a ninety percent top end tax rate was doable. Why? Look where the money was invested-largely infrastructure. I have no issue with debt being spent on infrastructure. One can argue that more spending should go on for that while interest rates are 0. Also, the USA was the only game in town. Europe was rubble, Japan got atom bombed, and Russia and China had some serious rebuilding to do. Globalization was not around yet. So a higher tax rate can work if you are the only game in town.

Also, I would say you are mixing tax revenue and deficits. Tax revenue is the amount brought in. Deficit is the amount spent after that revenue total. I think there is plenty of evidence through the Bush years that a lower tax rate raised tax revenue. Last time I looked he had 7 of the top 12 years for government receipts(adjusted). Now what the heck the government spends it all on is what impacts the deficit. They are two separate things.

4) I do not disagree. But if that number is now much smaller, unemployments should be down way more.

As for the U6-I notice you want you exceptions. That is fine. I can easily say that Bush inherited a tech bubble that was correcting itself and had to deal with the aftermath of 9-11. Both largely inherited issues. It is easy to play that game.

If anything that U6 supports my point that people harping about how well the economy is doing need a correction or at least need to reanalyze their own assessment. If anything that shows a steady mild recession at that level.

And Obama has been in office six years now. To me this is mind boggling. Every time I hear someone question the economy, strategy on economy or anything else for that matter, six years later people want to talk about Bush. I have news for a lot of people, one's own record stands or falls on its own. That is a lesson Obama is just now learning largely because he never did of anything with a record much before running for President.

 

[Purdue85]

Re: Yeah I remember

Originally posted by qazplm:
when the Clinton tax raise led to the 90s being one of the worst economic decades in history.

And when Obama got rid of the Bush tax cuts on the top folks, boy stuff just kept getting worse and worse for the economy.

So, just to be on the record, it's your opinion that tax INCREASES lead to economic advances???

Just to be clear... in the warped world of qaz, tax increases = economic prosperity. Correct?

 

[Purdue85]

oh, horse crap!

Originally posted by qazplm:
spend future money to oblivion...whatever that means.

I mean what policy are you pointing that even remotely has the potential to "spend future money to oblivion?"

What does that even mean?

Last time I checked, the annual budget was moving towards more balanced, not less. Last time I checked, raising taxes a modest amount results in increased revenues...and last time I checked massive tax cuts for the rich have never "trickled down" to anyone.

This joke of a "leader" continues to saddle this country with debt that will someday become debilitating!

Argue that if you're that economically ignorant, but that's a fact!

And the only "budget" that is "moving towards more balanced, not less" is years in the future, for congresses and presidents who are yet to be elected! And they are not bound by the cooked books that make your claim. And, to state such a thing is moronic!

Tax cuts create economic vitality. They allow for private enterprise to create jobs and opportunities. NEVER has a government "created" jobs. To claim such a thing only serves to show your economic ignorance. The government doesn't create anything it doesn't destroy by confiscating.

 

[tantalum]

To use your argument that what we should be looking at is the unemployment rate then if you go down and click on Ronald Reagan you will also so a bump in the unemployment rate at the start of his presidency due to factors that he inherited and a nice decline in the unemployment rate for the next 6 years and also 2 years into Bush 1. So since you are using the unemloyment rate as the measuring scale how can you disparage the king of supply side economics? Did you see that button for Ronald Reagan in the linked web site? It isn't hard to press. Those results look good to me.
It is interesting that the very lowest unemployment was under Truman. I would agree with Purdue97 that the US was resupplying the whole world after WWII as we were about the only ones with factories that were not bombed into oblivion.
In generat, I think trying to use the unemployment rate while each president is in office as a gauge to how effective their economic policies are is foolishness. There are many other factors involved. Energy costs are a big factor, interest rates are a big factor as well as what are the requirements to get a loan. Quite often a president is not even able to implement many of his intended policies. How can you judge policies that are never implemented a la Reagan? That is craziness. Another issue is that there is a lag between when policies are implemented and results of those policies.
If you really analyze the situation, one thing is very true, socialists and communists get good results initially by confiscating private wealth or renouncing debt. That works for a limited time but when you exhaust all the private wealth around, then everyone is screwed. Venezuela is a good example of that. Their policies have been like Obama policies on steroids. They have been at it for 15 or 20 years, long enough to see the results. Some of their problems are due to low oil prices but it is still true that they confiscated all the private wealth they could get their hands on and their economy is spiraling down, down, down. I wouldn't want to live there, would you? How about cuba?
Some of the predictions have not yet come true and some of the costs of those policies are just hidden. Retirees that were going to live on the interest on their savings have gotten badly mauled. There is a lot of pain and misery there that the media ignores but would be trumpeting if a republican was in office. The risks that the whole system goes belly up keep increasing.

 

[Boiler20]

Re: no one is remotely implying

"Spend future money", as in 'to spend NOW, money we haven't made yet, but can reasonably expect that we will in the future.'

Otherwise known as buying on credit.


"Oblivion", meaning until and after we or our economy is extinct.

These are not difficult concepts to grasp.

And, to my knowledge, the country now has doubled the national debt (amount spent that we don't have, so we issue and sell treasury bonds) under Bush II, and then almost tripled it under Obama, and it now stands at over $18 Trillion....and unfunded liabilities (that we have committed to covering in the future, such as Medicare, Medicaid and Social Security) over the next 20 years are 6x that much, at over $120 TRILLION.

What you may have heard was that the RATE of INCREASE of the growing debt has reduced. The RATE, not the debt. In the time its taken you to read this post, its increased by $2.4 MILLION. A rate that is equivalent to $ 2.1 BILLION per day. And that is just the INTEREST.

I can't believe you haven't seen this 'US Debt Clock'....see the link. We are basically spending our children's money, and that of our grandchildren. Something like $250,000 per household in the US., or about $85,000 for every man, woman and child, including infants and newborns, in the United States. Young or old, conservative or liberal, we should be ashamed of ourselves for letting this happen to our kids and grand kids. Unacceptable by any measure, for any reason.

And this is the financial picture of the world's currency of last resort? Looks more like a house of cards to me.

Amount of debt we are handing future generations

 

[qazplm]

again

it's interesting, when I bring up tax raises and the economy it's "a lot of other issues play into the economy"

then you say, but you know lot of evidence that the Bush tax cuts raised revenue.

First, no, there isn't. In 2000, tax revenue was 20.9 percent of GDP, the highest since WWII. By 2004, it was 16.3 percent, the lowest level since 1959.

Second, which is it? Tax policy gives you "pretty clear evidence" or is there "plenty of other things" which discount the impact of tax policy. Pretty clear bias on your part towards tax cuts, you don't have near the same "yeah but there's other stuff" attitude towards tax cuts.

And you wanna talk abrupt change of topic?? 9/11 is on line one, says it's urgent.

9/11 did not tank employment or the economy. 1+ trillion dollars in unpaid for war spending most of it for a war in Iraq that should have never happened, 1+ trillion dollars over ten years in tax cuts (again unpaid for because "tax cuts pay for themselves"), not to mention Medicare Part D which was also, wait for it, unpaid for. Combine that with lax regs for banks (which both parties are responsible for) and you have a setup for what came next.

It's amazing...I show you clear evidence that the U6 skyrocketed at the end of Bush's term, and right around the time you'd expect Obama's policies to take affect, it has steadily gone downward every since. And instead of an honest, yep, looks like Obama has improved that, nope, can't bring yourself to do it because you are invested in supply side economics.

Just like another poster who literally said someday it will prove itself...over the rainbow one guesses.

Yes, one's record does stand or fall on it's own. Unless of course you inherit a "tech bubble" and "9/11" then it doesn't. But if you inherit the worst economic downturn since the Great Depression, well, deal with it.

Of course, even as the unemployment rate drops (BOTH of them), stock market hits record highs, GDP/Debt ratio drops, GDP is clearly on the upswing, the number of uninsured plummet, employment participation rate starts going back up, and literally every economic indicator is positive even as almost the entire rest of the world is still struggling economically to recover from the global recession...the critique switches to...not fast enough.

Because goodness knows, if we had a supply side policy (that led to this mess in the first place) we'd clearly have come out of it much, much quicker...like a couple of years. I mean, sure, it took us almost a generation to come out of the GD, and it's taken us about 5 years to come out the second worst collapse. I'm sure a Republican would have done it much better, and much faster because...tax cuts and getting rid of regulations solve everything.

 

[qazplm]

my opinion?

I have direct evidence that two separate tax increase (three actually if you count the multiple times Reagan did it) were followed by periods of improved economic activity.

So yes, tax increases CAN lead to economic advances, PARTICULARLY as part of a package to deal with deficits, and targeted...because, they actually have.

Of course, the idiotic presentation you attempt to make is that all tax increases of any kind always lead to economic advances.
I.E. the flip side of "tax cuts pay for themselves."

Sometimes tax cuts are necessary depending on the situation, and sometimes tax increases are necessary depending on the situation. Individual income taxes right now are lower than the vast majority of where taxes were during American history since we started the income tax. Lower than the 40s, or 50s, or 60s, or 70s, or almost half the 80s.

 

[qazplm]

so you don't like credit

even though the number of years this country hasn't been in debt can be counted almost on one hand.

See the chart attached, look at "how much it's gone up" as a percentage of GDP.

You talk about the national debt being at 18 trillion. GDP is at almost 17 trillion. You switch between talking about rates then raw numbers in big all caps. The rate as a percentage of GDP is is just over 90%, which in contemporary and historical terms is not "a house of cards." Germany is humming along in the mid 80s. We've had more debt as a percentage of GDP with a great economy, and we've had much less debt as a percentage of GDP and had a pathetic economy.

Look where it was lowest in the modern era. The 70s. How was the economy doing then? Carter had a drop in the rate, yet the economy was horrid.

Look where it started to rise again. Reagan.

Now, who had a larger rate change in the debt income/GDP ratio over their time in office, Reagan or Obama? (Reagan, by a lot) Heck, Reagan or Bush? (ok technically it's Bush, but it's fairly close). Bush II or Obama? (Bush, by a lot). Yet the economy at the end of Reagan's time in office was a lot better than Bush (or Carter).

Where was the rate after WWII? HIGHER than Obama, yet we had a boom. How can that be?!

Yes, at some point, if the debt/GDP ratio is too high for too long, things can be a problem. Of course, tax cuts and a host of republican tax policies led to a higher increase in the ratio (the last three Presidents) than under Obama (or Clinton where the ratio dropped even after, wait for it, a tax increase).

So no, we are not "spending our way to oblivion" unless you count the economic booms of the 50s, 60s, and late 80s as "oblivion." And having national debt is not the end all to whether your economy is a "house of cards" or not.

simple chart

 

[qazplm]

yes

FDR sure didn't create any jobs.

And those Bush tax cuts led to economic nirvana.

And boy those Clinton tax raises killed us....and look how much worse things have gotten since we rescinded part of the Bush tax cuts.

And look at how horrible those tax raises under FDR and Truman killed the economy in the 50s and 60s, and all that government spending during that time.

Totally proved me wrong.

 

[qazplm]

Reagan

actually raised taxes multiple times during his time in office and he was the king of government spending (just happened to be defense spending). He also didn't do the whole "tax cuts pay for themselves" thing.

The link money.cnn shows that government spending was up and tax revenue down (by a tiny margin) during Reagan's time in office.

Here's another link to show the actual tax policies of Reagan. http://www.thedailybeast.com/articles/2012/12/05/reagan-s-deal-with-democrats-for-tax-increases-paired-with-spending-cuts-is-a-myth.html

We had a recession in 82. Reagan cut taxes in 81. A LOT! Now, I'd agree that taxes needed some cutting at that time, but the magnitude he did it was pretty large. The top rate dropped all the way to 28 percent. Almost immediately, the economy went into recession. Now, you can claim that's not his fault, but the public didn't. He was forced into a deal with the Dems.

He raised them in 82 (and again in 84). It was, at the time, and possible still I haven't checked, the largest tax increase in peacetime history (combined).

After that "largest tax increase in peacetime history", like literally months after, the recession ended and the economy roared to life.

In fact, the day the first tax increase was signed, the Dow Jones gained 5 percent in that day.

So tax increases (of various sorts) played a role in the economy and unemployment booming. Government spending played a role. Reagan increased corporate taxes, and capital gains taxes. That played a role. In fact, Reagan today would likely be called a RINO for agreeing to even one tax increase, so it's a little humorous to see him cited so favorably today.

So, no, Reagan may have wanted to be the "supply side king" and goodness knows he started off that way, but quickly realized, IMO to his credit, that it wasn't working as intended, and altered course.

As for your lag argument. Sure, totally agree. There's a lag. Maybe a year, maybe two, depends on the depth of the policy.
Reagan's huge tax cut was a pretty significant policy, it wasn't going to have much of a lag. Other policies by him or other Presidents that are more subtle, might have a bit of a lag. Of course, not for Obama...he was responsible for the economic collapse the moment he stepped foot in the WH.

What "private wealth" has Obama "confiscated?" The top tax rate went up a few percentage points. Hyperbole gets you nowhere.







Reagan and tax cuts/raises

 

[Boiler20]

The disconnect is that chart only shows current debt...its about the future

What your chart ignores, if I'm not mistaken, is the future liabilities. The chart only takes into account current debt.

Watch this video of David Walker, former Comptroller General of the United States from 1998-2008. He was appointed by Clinton and obviously served both Democratic as well as Republican administrations. Simply put, he served as America's CPA.
I hope that you will give it a look from start to end. While it's from 5 years ago, it still applies today with one exception: the situation is worse. A lot worse.

The problem is that the problem is MUCH bigger than anyone thinks right now. As Walker says 22 minutes into it, the old saying from Washington used to be:

'Don't tax you, don't tax me, tax the guy that's behind the tree."

....and now it's:

"Don't tax you, don't tax me, don't tax the guy behind the tree, tax the baby bouncing on your knee, or better yet, the one that'
s not even born yet."

In short, he calls it what it is: Taxation without representation.


This post was edited on 2/22 1:55 PM by Boiler20

David Walker puts America's future in perspective

 

[Boiler20]

To be sure, Obama most definitely inherited a bad situation...

...but he's done as virtually all politicians before him have done and continue to do- pushed the problem into the future. And then he's added to it.

The David Walker speech I linked to above is pretty even handed and matter of fact in that regard.

 

[gr8indoorsman]

So, a writer makes a prediction in 2009, and it doesn't come true by 2015, thus it is disproven? There comes a time when debt becomes too big and everyone's got too much of it, and the house of cards collapses. Just because it hasn't happened yet doesn't "disprove" the theory.

Greece is a perfect example that government "investment" isn't the right answer. Cities across America continue to show the same thing. Small governments become insolvent before big ones, and the big ones are smart to learn from the lessons of the small ones. We are fortunate there are people in our government that care about debt and government spending and recognize this. Meanwhile, Greece has just doubled down on stupid.

 

[gr8indoorsman]

Re: yes

Originally posted by qazplm:
FDR sure didn't create any jobs.

Jobs created to serve the federal government to whom we must pay income tax are the proverbial "self-licking ice cream cone." The driver of economic growth is growth of private industry, and investment therein.

 

[BoilerTom90]

We are fortunate there are people in our government that care about debt and government spending and recognize this.

who pray tell are you referring to? Because at the federal level, neither party seems to be all that serious about spending less than they take in, and taking in more is not the answer. Everyone's afraid of the consequences showing up in the "next election"

 

[Purdue97]

Not even sure where to start

-Sure there are a lot of other things involved in economy never said there was not.

-Look at the tax revenue of the Bush years. Look at the link I provided. Tax revenue is measured in dollars. Hate to say it-but looks like lower taxes raise plenty of revenue.

-I would also add to this conversation that taxes need to be dropped a lot lower now. Not going to take the time to explain it to you but do some research on amount of money US Corporations keep overseas and how many major corporations moved their headquarters overseas last 20 years due to taxes. Like I said, we are not the only game in town anymore.

"1+ trillion dollars in unpaid for war spending most of it for a war in
Iraq that should have never happened, 1+ trillion dollars over ten years
in tax cuts (again unpaid for because "tax cuts pay for themselves"),
not to mention Medicare Part D which was also, wait for it, unpaid for.
Combine that with lax regs for banks (which both parties are
responsible for) and you have a setup for what came next."

I mean it is like you sort of get it but I think you are to blinded by political party to fully understand it. That was largely the spending part that leads to deficit/debt that I mentioned. That is not related to tax revenue. Two totally different things.

If that U6 is what you are using to say the economy is good God help us. Steadily has come down? Not raising as fast anymore-true, coming gradually down-true, but pretty damn high-not dropping fast. Pretty damn high. All I said if that is what you are using to say the economy is improved etc etc we are in real bad shape.

I have said many times on here that Obama inherited a really bad mess-not sure what else to say. Not sure anyone argues that. From this series of posts you seem to be the one discounting Bush inherited a bad situation.

"Of course, even as the unemployment rate drops (BOTH of them), stock
market hits record highs, GDP/Debt ratio drops, GDP is clearly on the
upswing, the number of uninsured plummet, employment participation rate
starts going back up, and literally every economic indicator is positive
even as almost the entire rest of the world is still struggling
economically to recover from the global recession...the critique
switches to...not fast enough.

Because goodness knows, if we had a
supply side policy (that led to this mess in the first place) we'd
clearly have come out of it much, much quicker...like a couple of
years. I mean, sure, it took us almost a generation to come out of the
GD, and it's taken us about 5 years to come out the second worst
collapse. I'm sure a Republican would have done it much better, and
much faster because...tax cuts and getting rid of regulations solve
everything."

Well, just my opinion, I would say the USA is struggling to recover. I come to that conclusion by looking at the numbers you give. Uninsured plummet? This board has beaten the ACA to death and not sure how it still can be supported. Also with some of the policies in place, the USA is kicking the can down the road right now.

Not even sure where to start. Yep, double checked, never mentioned a word about supply side economics. Think I even mentioned at times a higher tax rate was doable. Not to mention, if you would take a second to look at what some of Obama has done and wants to do, some of it would imo, qualify as supply side economics.(some tax breaks, open trade which he now might get more done with a Republican congress, QE while generally Keynesian, fits broad definition of supply side economics of lowering barriers to investment and participation by keeping interest rates low)

Sorry man, I never got on Bush's bandwagon and definitely not on Obama's. Do not really feel itis wrong to critique or think critically about the government and its policies.

Reality

 

[gr8indoorsman]

I think one party at least pays lip service to reducing debt. Ironically, the other party is the one that had the last president who didn't run a deficit... but they were in control in Congress. People like Tom Coburn care(d).

 

[tantalum]

Re: Reagan

When Reagan came into office, the maximum tax rate was 70%. In 1831 there was a 23% tax cut pretty much across the board and the top income tax rate was dropped to 50%. At the same time Paul Volcker who was the FED chaiman at the time raised interest rates to over 20%. He did that to prevent inflation from getting out of control. The inflation rate was over 13% at time and causing major. I do not think there is much doubt that the interest rate had a lot more to do with the early 1980s recession than the tax change. Think about trying to pay off a mortgage if you have to pay over 20% interest. That interest rate had a huge effect on the economy. The tax cut just did not cause that recession.
Reagan also badly wanted to increase defense spending and decrease domestic spending. He also had a democratic congress to deal with. Something had to give and at the end of the day he was willing to increase the deficit and pretty much leave domestic spending alone and curtail tax cuts to increase defense spending. Reagan made a deal with congress to drop the top tax rate to 28% and eliminate a lot of tax deductions in a more or less revenue neutral tax change. He did raise social security taxes to what they are now to keep the system solvent. Overall, Reagan was a big tax cutter and also oversaw a large economic growth over the last 6 years of his presidency and the first 2 years of Bush 1.
There is nothing in the data showing that tax cuts or supply side economics cause recessions. It is pretty clear to me that if you have tax rates of 100% of income you will have a depression and calamity and no government income. If you have 0% tax rates then the government goes broke. Somewhere in between 0% and 100%, all else being equal, there will be a tax rate the will bring in the maximum amount of income and a lower tax rate that will bring in the greatest economic growth. I think that was the essence of the Laffer Curve. Just common sense really. The bigger question is where those tax rates actually are. The left seems to want to deny the whole idea of higher tax rates bringing in less revenue. The right sometimes seems to get that wrong also. I would have to say a lower tax rate won't always bring in more revenue like some conservatives claim once you get below that peak tax rate. My own view is that anything over about 30% is confiscatory and I am against it.
I di not write that Obama was confiscating private wealth yet but that once Soclialist fever gets going it always happens. If you look at countries like Venezuela and Zimbabwe that is what they have done. I can add Russia, China, North Korea, VIetnam, Cuba, Argentina... China had the sense to alloy capitalism to take hold and look how they have grown. They were dirt poor and new they are the largest economy on earth.

 

[qazplm]

tax revenue in dollars

goes up almost every year. Why? Population growth. To understand whether a policy is actually increasing revenue vice population growth, you'd need to look at something other than just a dollar amount. So citing a link (that you actually didn't provide) that Bush had "7 of the top 12 years" for tax revenue means nothing.

Obama's last two years are the highest in history.
Bush before him had years that were the highest in history.
Clinton before him had years that were the highest in history.

EACH President has had record-breaking years in constant dollar tax receipts compared to what came before, because more people are paying taxes under each President.

Now, look at receipts as a percentage of GDP. That numbers rises and falls. It doesn't constantly rise.
And from 01-09, that number was actually above the historical average exactly once. 2007.

Furthermore, the WHEN of a rise matters when asking about tax cuts. After the 2001 tax cuts, revenues dropped for two years in a row.

But hey, don't listen to me, listen to the CBO which says that the tax cuts cost approximately 1.6 Trillion (kinda hard to have raised revenue if you actually cost money):

http://www.cbo.gov/sites/default/files/cbofiles/attachments/06-07-ChangesSince2001Baseline.pdf

As for corps moving overseas, so your answer is, make it even easier for them to avoid taxes instead of penalties and/or credits to keeping their money overseas/domestically? Wow.

When the CBO (and Treasury Department, and well, math) show that the tax cuts COST 1.6 trillion dollars, then yes, tax cuts are absolutely part of the debt/deficit. Spending is too for sure, of course, as usual, it's republicans who actually end doing it and not paying for it. Tax cuts weren't paired with spending cuts, the war funding wasn't pared with spending cuts, medicare part D wasn't paired with spending cuts. All unpaid for, all because republicans said the tax cuts would end up erasing the deficit and "pay for themselves." And folks like you believe it.

Cutting taxes is not "in and of itself" = "supply side economics." Most tax cuts were paired with spending cuts, no one in the Obama administration claimed that cutting taxes pay for themselves. Neither is lowering barriers to investment.





Gets higher almost every year

 

[qazplm]

when people get paid for a job

they spend that money in...private industry.

Private industry does not care that it's a "government" dollar being spent.

 

[qazplm]

So all politicians before him

have pushed this great problem you see into the future.

And yet, the future keeps coming, and no calamity.

Doesn't that suggest to you that perhaps the problem isn't what you think it is or as great as you think it is?

 

[gr8indoorsman]

Re: when people get paid for a job

Originally posted by qazplm:
they spend that money in...private industry.

Private industry does not care that it's a "government" dollar being spent.

Ummm... kinda they do, since private industry is also taxed to help support the pay of those people working government jobs. In the end, it's less money in the pockets of private individuals and more spent by bureaucracy. That bureaucracy gets bigger and bigger and becomes more and more wasteful, and you end up with the Mil-Industrial complex where we can piss away $632 million over five years on a single, useless project without blinking an eye.

 

[Purdue97]

Re: tax revenue in dollars

The link is there. You likely just do not want to look at it. Fact is, if the dollar revenue for taxes is up when taxes are actually lowered, it crushes your argument about lower taxes lowering revenue. Lwers it against some projection-I really do not deal in hypotheticals. Yes, if tax receipts still trend higher with a lower rate-guess what-Let all people keep more of their money.

"Now, look at receipts as a percentage of GDP. That numbers rises and falls. It doesn't constantly rise.
And from 01-09, that number was actually above the historical average exactly once. 2007."

Right but the dollar amount goes up.

Oh the CBO. All they do is analyze the numbers they are given from congress. That should be obvious from the wild fluctuations in the cost given per ACA.

"As for corps moving overseas, so your answer is, make it even easier for
them to avoid taxes instead of penalties and/or credits to keeping
their money overseas/domestically? Wow."

No. I never said that was my answer. My answer is to be competitive in the world today make it advantageous to 1) Stay here 2) Bring money made overseas back to the USA. the answer is to lower the tax rate. The USA has a statutory tax rate of 39.1% for corporations. The average is near 15% less. So 0% of the trillions overseas and corporations leaving is 0%. Because money leaves and does not come back. Make it 10-12% of trillions and you got some money. Not hard to understand.

"Cutting taxes is not "in and of itself" = "supply side economics." Most
tax cuts were paired with spending cuts, no one in the Obama
administration claimed that cutting taxes pay for themselves. Neither
is lowering barriers to investment."

Well, you are blasting supplied side economics. The tenants of it are 1) Lower taxes 2) Private capital is best for growth 3) Lowering barriers to markets(pretty general and liberal definition of what that can be) Not really sure what you claim it to be.

 

[qazplm]

so

when I get paid by the federal government...

the rent I pay monthly is of no use to the landlord, because a tiny tiny chunk of the money I used to pay for that rent (less than a cent) is due to the landlord's taxes?

The 100s of dollars a month I spend on groceries? The supermarket loses more in taxes that go to pay for my income, then the 100s I spend on groceries?

Pick any industry, and I'm pretty sure the annual taxes that remotely go to "government jobs" is grossly outweighed by the amount spent by folks with government jobs in that industry.

 

[qazplm]

sigh

no, the fact that if gross dollars are up when taxes are lowered, it does not "crush my argument about lower taxes lowering revenue."

But hey, you don't want to listen to me, ok, what about the guy who was the Chief Economist on Bush's Council of Economic Advisers from 2003 to 2004, Andrew Samwick in 2007, in response to an article by President Bush that his tax cuts led to "record revenues:"

"You are smart people. You know that the tax cuts have not fueled record
revenues. You know what it takes to establish causality. You know that
the first order effect of cutting taxes is to lower tax revenues. We all
agree that the ultimate reduction in tax revenues can be less than this
first order effect, because lower tax rates encourage greater economic
activity and thus expand the tax base. No thoughtful person believes
that this possible offset more than compensated for the first effect for
these tax cuts. Not a single one.https://en.wikipedia.org/wiki/Supply-side_economics#cite_note-66"

The dollar amount goes up every single President. Doesn't matter if they raise taxes, lower taxes, or leave them alone, or do both. Do you understand that??

And yes, the CBO, what do they know. I guarantee you if the CBO supported your argument, you'd be citing them.

If taxes were 100 percent, I'd propose cutting them. Liberal economists would propose cutting them. That does not make us all "supply side economists" simply because we recognize a pretty obvious fact that at some point taxes are too high.
A policy that encourages investment is not, by itself, make one a supply side economist. You extremely oversimplify.

 

[Boiler20]

Re: So all politicians before him

Have you watched that clip I posted above?

To answer your question, it doesn't suggest to me that perhaps the problem isn't as big as I think, or as great as I think it is.

I thinks its MUCH larger.

Please watch the speech. I think you'll find it pretty matter of fact / neutral. He does not take sides, and speaks as an accountant would with a valued and trusted client, which in this case happens to be the people of the United States of America.

 

[qazplm]

the argument he makes

and the argument you make, is not some new argument.

"calamity is just around the corner because of debt" is an argument a certain portion of folks have been making for quite awhile now.

People were making it in the 00s, and the 90s, and the 80s, and in other eras as well.
They made it when SS was signed. They made it again when Medicare/Medicaid was signed. They are making it after the ACA was signed.

It's old, and one wonders how many times is wolf going to be cried?

 

[threeeputtt]

Re: Yeah I remember

Originally posted by qazplm:
when the Clinton tax raise led to the 90s being one of the worst economic decades in history.

And when Obama got rid of the Bush tax cuts on the top folks, boy stuff just kept getting worse and worse for the economy.

I sure hope you don't REALLY think things have gotten markedly better under Obama economically? BTW, not many remember Kennedy taking the marginal rate from 91% to 70% and Reagan from 70% to 50%.

 

[Purdue97]

Re: sigh

Sure I understand it goes up. Whether or not taxes were raised or lowered. Hey if revenue continues to go up and people are allowed to keep more of their money that is what I prefer. See the idea that taxes were raised always raises revenue is merely a projection then. You are proving your own point wrong. Goes up with lower taxes too-you are admitting that.

No, I think the CBO is the biggest joke going because of congress. They analyze the numbers congress gives them nothing more. That is why I did not quote the CBO when Obama used them to to show how cheap the ACA was nor do I use it now that the Republicans have more control of it and they say the ACA per person is now ridiculously expensive.

I never said that would make you supply side economists. I cited several things that Obama is doing or working to implement that can be construed or have elements of supply side theory. I do not over simplify things. It is you that seems to be arguing it black and white.

A perfect example of this is QE. QE can be shown to Keynesian in nature due to the government spending to be involved to help the private sector smooth out issues with the economy. Guess what? QE also is keeping interest rates at zero eliminating a barrier to investment. Either way I do not like it because I think it is largely kicking the can and the medicine we will all have to take down the road.