Republican policy failure #1: supply side economics fails

[Th'Pusher]

he's saying you should resort to supply side economics in cases where you have established that the barrier is too high. if you have not established that the barrier is too high, then cutting taxes isn't helping anybody (except the folks making money)

Thanks. Was completely reading that wrong.

[ElNono]

Confused. Low barriers to providing goods to the market is a fundamental principle of supply side, no?

"high barrier to entry to providing goods and services."

examples of in an industrial economy?

Supply side is based on the principle that consumers benefit when many people can provide goods and services. Someone is going to have to explain this high barrier to entry augment.

I'll provide an current example: Due to the cheap gas prices, some State with a vibrant economy might be tempted to ins ute (or raise, if they already have it) a gas tax, in order to increase revenues. Now, six months from now, gas es back up to $3.50/gallon or whatever, and the local economy is showing signs of stagnation due to, among other things, transportation costs. The way to know if that's primarily the issue, is to look at the efficiency of revenues coming in from that tax. In theory, if the tax is, at a given point, too punitive, you will have diminishing revenue: people will simply drive less and try to cut corners to avoid the tax. That's what the Laffer curve attempts to illustrate: there's a point in the curve where the tax rate provides the maximum efficiency, revenue-wise. That point isn't a fixed point, it's moving target that relies on variables at a given point in time (ie: cheap gas vs expensive gas). When you've established that you're on the wrong side of the curve, the supply-side solution is to reduce the rate until you're closer to the "efficient" range (or roll back the tax altogether).

Now, that's a taxing example, but supply-side includes other barriers to entry. For example, Google has found that there's a lot of bureaucracy (for good or bad) when it comes to installing fiber to home on different cities, from permits, to access to posts. That's a barrier to entry, and something that supply-side economics recommends getting rid of. (IOW: over-regulation is as bad as lack of regulation).

[Th'Pusher]

I'll provide an current example: Due to the cheap gas prices, some State with a vibrant economy might be tempted to ins ute (or raise, if they already have it) a gas tax, in order to increase revenues. Now, six months from now, gas es back up to $3.50/gallon or whatever, and the local economy is showing signs of stagnation due to, among other things, transportation costs. The way to know if that's primarily the issue, is to look at the efficiency of revenues coming in from that tax. In theory, if the tax is, at a given point, too punitive, you will have diminishing revenue: people will simply drive less and try to cut corners to avoid the tax. That's what the Laffer curve attempts to illustrate: there's a point in the curve where the tax rate provides the maximum efficiency, revenue-wise. That point isn't a fixed point, it's moving target that relies on variables at a given point in time (ie: cheap gas vs expensive gas). When you've established that you're on the wrong side of the curve, the supply-side solution is to reduce the rate until you're closer to the "efficient" range (or roll back the tax altogether).

Now, that's a taxing example, but supply-side includes other barriers to entry. For example, Google has found that there's a lot of bureaucracy (for good or bad) when it comes to installing fiber to home on different cities, from permits, to access to posts. That's a barrier to entry, and something that supply-side economics recommends getting rid of. (IOW: over-regulation is as bad as lack of regulation).

Got it. The way I read your original post was that a high barrier to entry is required for supply side to work, whereas you were suggesting SS requires the barrier be removed.

[spurraider21]

Got it. The way I read your original post was that a high barrier to entry is required for supply side to work, whereas you were suggesting SS requires the barrier be removed.

well yeah. supply side works when you have a high barrier to entry... the aim of ss is to decrease or remove the barrier

[RandomGuy]

I think you know what I'm talking about.

http://cacs.org/research/unsustainab...-wall-of-debt/

Sorry don't live in california, and don't study its debt.

After reading your link, I don't feel any enlightened. Article is rather poorly written, and even with the cites at the bottom not really overly clear about the support for the statements it makes. A bit hard to evaluate.

Again, you will have to flesh it out. Not sure how the link you posted is relevant to the failure of supply-side economics to deliver growth after massive tax cuts.

I'm smart, but I'm not a mind reader, sorry.

[DarrinS]

[ElNono]

^ As I said earlier, that stuff happens a lot more at the Federal level. Didn't Barry extend the Bush tax cuts for a long ass time?

But at the State level, it's a completely different ball game, especially if you don't deal with the obvious revenue shortfall.

The lesson that should be learned here is that you can't issue economic policy on faith alone. You have to do your research, or you're going to end up looking like an idiot.

[boutons_deux]

boy born with silver spoon in mouth cuts taxes on his own class of 1%ers

[boutons_deux]

^ As I said earlier, that stuff happens a lot more at the Federal level. Didn't Barry extend the Bush tax cuts for a long ass time?

But at the State level, it's a completely different ball game, especially if you don't deal with the obvious revenue shortfall.

The lesson that should be learned here is that you can't issue economic policy on faith alone. You have to do your research, or you're going to end up looking like an idiot.

the madness of the GOP means they deny all facts from research (eg, "trickle down" is a bad joke )

[DarrinS]

^ As I said earlier, that stuff happens a lot more at the Federal level. Didn't Barry extend the Bush tax cuts for a long ass time?

But at the State level, it's a completely different ball game, especially if you don't deal with the obvious revenue shortfall.

The lesson that should be learned here is that you can't issue economic policy on faith alone. You have to do your research, or you're going to end up looking like an idiot.

I don't disagree with that.

[DarrinS]

the madness of the GOP means they deny all facts from research (eg, "trickle down" is a bad joke )

A rising tide lifts all boats.

[boutons_deux]

A rising tide lifts all boats.

yes, that's another lie. it lifts all super-yachts.

[DarrinS]

yes, that's another lie. it lifts all super-yachts.

Some of us have great stories, pretty stories that take place at lakes, with boats, and friends, and noodle salad. Just no one in this car. But, a lot of people, that's their story; good times, noodle salad. What makes it so hard is not that you had it bad, but that you're that pissed that so many others had it good.

[TeyshaBlue]

Noodle salad cannot conceivably be good.

[boutons_deux]

not that you had it bad, but that you're that pissed that so many others had it good.

You Lie

[tlongII]

Sorry don't live in california, and don't study its debt.

After reading your link, I don't feel any enlightened. Article is rather poorly written, and even with the cites at the bottom not really overly clear about the support for the statements it makes. A bit hard to evaluate.

Again, you will have to flesh it out. Not sure how the link you posted is relevant to the failure of supply-side economics to deliver growth after massive tax cuts.

I'm smart, but I'm not a mind reader, sorry.

It's really meant to show you that bigger government DOES NOT WORK. That is all. The typical liberal position is to provide more government assistance. Thus requiring more taxes. It doesn't work. It never has.

[FuzzyLumpkins]

The lesson here is that policy cannot be reduced to memes and cliche. Oh and negative reinforcement works.

[tlongII]

The lesson here is that policy cannot be reduced to memes and cliche. Oh and negative reinforcement works.

This is true.

[ElNono]

It's really meant to show you that bigger government DOES NOT WORK. That is all. The typical liberal position is to provide more government assistance. Thus requiring more taxes. It doesn't work. It never has.

Talking about memes and clichés...

[RandomGuy]

It's really meant to show you that bigger government DOES NOT WORK. That is all. The typical liberal position is to provide more government assistance. Thus requiring more taxes. It doesn't work. It never has.

The link you posted doesn't really say that. It says that one state is, according to the author, not accounting for their overall debts properly, most likely because it isn't really reflective of actuarial shortfalls in pension funding for public sector employees.

I would agree on that point. Most states don't really account properly, in my opinion such things, including, I might add, Texas, and I have read the ERS annual report for years, front to back. Frankly, if you live in Texas, you should be a bit appalled at the amount of risk the managers are taking with their investments, but that is a different topic altogether.

As for "big government" not working, I will call bull . Big government does work, and does what it is supposed to do. Without that big bad federal government, the US of A would be a squabbling bunch of ninny-states, not unlike Europe.

Having a mostly unified legal and tax framework for 50 states allows businesses and individuals to move from place to place, and expand. That government is the framework and bones on which the meat of our economy is hung.

A growing population, with a diverse, specialized economy, as ours is, will always require "more taxes", even if you hold the relative size of government static to the population.

If you want to say how exactly it doesn't work, and provide evidence that is fine, but big government "never" working is not really a workable theory, and easy to reject.

That is which asserted without evidence can be dismissed without evidence.

[RandomGuy]

A rising tide lifts all boats.

Vacuous pla udes are vacuous.

[RandomGuy]

I'll provide an current example: Due to the cheap gas prices, some State with a vibrant economy might be tempted to ins ute (or raise, if they already have it) a gas tax, in order to increase revenues. Now, six months from now, gas es back up to $3.50/gallon or whatever, and the local economy is showing signs of stagnation due to, among other things, transportation costs. The way to know if that's primarily the issue, is to look at the efficiency of revenues coming in from that tax. In theory, if the tax is, at a given point, too punitive, you will have diminishing revenue: people will simply drive less and try to cut corners to avoid the tax. That's what the Laffer curve attempts to illustrate: there's a point in the curve where the tax rate provides the maximum efficiency, revenue-wise. That point isn't a fixed point, it's moving target that relies on variables at a given point in time (ie: cheap gas vs expensive gas). When you've established that you're on the wrong side of the curve, the supply-side solution is to reduce the rate until you're closer to the "efficient" range (or roll back the tax altogether).

Now, that's a taxing example, but supply-side includes other barriers to entry. For example, Google has found that there's a lot of bureaucracy (for good or bad) when it comes to installing fiber to home on different cities, from permits, to access to posts. That's a barrier to entry, and something that supply-side economics recommends getting rid of. (IOW: over-regulation is as bad as lack of regulation).

That effectively illustrates the theory, including the Laffer curve.

The problem though, is that most people in the right wing of this country seem to think we are much, much farther along that curve that the evidence says we actually are.

When they act on the theory that we are on the other side of the curve that diminishes government revenue, they are, invariably, wrong, as Sam Brownback is discovering, much to the chagrin of his presidential ambitions, and GOP wonks everywhere.

[Winehole23]

A rising tide lifts all boats.

Between 2003 and 2012, the companies that make up the S&P 500 spent an astounding 54 percent of profits on stock buybacks. Last year alone, U.S. corporations spent about $700 billion, roughly 4 percent of GDP, simply propping up their share prices by repurchasing their own stock. And much of the rest of these profits has been paid to shareholders in the form of dividends.


Over the past 10 years, according to data compiled from its public filings, Wal-Mart has spent more than $65.4 billion on stock buybacks — about 47 percent of its profits. That’s an average of more than $6.5 billion a year in stock buybacks, enough to give each of its 1.4 million U.S. workers a $4,670-a-year raise.


In the past, this money flowed through the broader economy in the form of higher wages or increased investments in plants and equipment or in public investment. But today, trillions of dollars of windfall profits are being sucked out of the real economy and into a paper asset bubble, inflating share prices while producing nothing of tangible value.

http://www.pbs.org/newshour/making-s...-middle-class/

[RandomGuy]

and the failure continues...

http://www.theatlantic.com/politics/...riment/389874/

Brownback is trying to walk some of it back, without admitted he royally ed up. Shocker, there is less money in the coffers than they thought there was.

$600M in the hole for this year alone and still no end in sight.

Kansas's budget has for months resembled a wallet with a hole in it—every time the state's bookkeepers peek inside, they find less money than the government thought would be there. Just a few days after the November election, the Kansas budget office revealed that revenue projections were off by more than $200 million, bringing the budget gap facing Brownback to $600 million in all.

The yawning deficit is widely blamed on the deep income tax cuts that Brownback, along with a Republican legislature, enacted during his first two years in office. They not only slashed rates, but more importantly, they created a huge exemption for business owners who file their taxes as individuals. By Brownback's own description, the tax plan was a "real live experiment" in supply-side economics, with the idea being that lower taxes would spur investment, create jobs, and refill Kansas's coffers through faster growth. Yet even under the most charitable analysis, revenue has plummeted much faster than the economy has expanded.

[boutons_deux]

but stupid in redneck and Christian Taliban just re-elected Brownback