The Last 10 Years

[DarrinS]

The economy grew massively after the Clinton tax increase that was passed in the early nineties, before the mild recession that was a function of normal business cycles. I assume that your point is that tax breaks lead to economic growth. However, the economic growth of the nineties followed tax increases under both the GHW Bush presidency and the Clinton presidency.

The business cycle has much more to do with economic growth than does the 'trickle down' tax theory.

Post hoc ergo propter hoc

[Wild Cobra]

Good grief, he was the only MBA president we ever had! If he didn't know about that kind of thing, his Treasury Secretary should have. If the Treasury Secretary appointed by the President was wrong, who is responsible for that? Who appointed him????

Well, unless you are an elitist, you know a degree doesn't matter. Nobody knows enough about all topics, and yes, I agree he had bad advice.

Still, tell me this. If a president doesn't feel absolutely right for a veto, should he veto what congress gives him?

[EVAY]

Yes, cycles will happen. The recession from increased taxes would have happened sooner if it wasn't for the tech boom, and Y2K.

When the federal government takes in more than 18.5% of the GDP, a recession follows shortly!

Please don't get me wrong. I am a huge deficit hawk. I hate them now...I hated them also, though, when we spent money like drunken sailors for two wars (the costs of which were never included in a budget, so their cost to the 'budget deficit' didn't show up as high as it would have been), medicare 'reform' ( supported by republicans and democrats alike), and No Child Left Behind, while simulteneously lowering taxes.

Now, c'mon W.C. your own internal logic has to acknowledge that the arithmetic of cutting revenues while increasing expenditures is gonna increase the deficit. This all happened under Republican control of the White House, the House of Representatives, and the Senate. Based on your own argument, that will eventually lead to a recession. The recession started in December of 2007. Sooo...how is it that Obama and the Democrats are responsible for the recession that we are in now?

[EVAY]

Well, unless you are an elitist, you know a degree doesn't matter. Nobody knows enough about all topics, and yes, I agree he had bad advice.

Still, tell me this. If a president doesn't feel absolutely right for a veto, should he veto what congress gives him?

I'm not sure what your question means. I'm not being obnoxious, I just don't quite understand it.

Moreover, my point about Bush having an MBA was that he SHOULD have known, or he should be held responsible for appointing someone who would know and would advise him properly in the field of monetary policy.

I don't honestly think that Bush wanted to veto the Paulson bailout bill. I honestly believe that he (Bush) did what he thought was the right thing to do. I think he was as convinced by Paulson and Bernanke that it was right as were the members of Congress whom you are so much more willing to blame than the president.

The bailout may have been a mistake. It may not have been. I believe that everyone involved acted on what they thought was the best thing to do. As you have pointed out, both presidential candidates supported it. The only opposition to it came from the Republicans in Congress who didn't believe it was the right thing to do. I remember being shocked, literally, that such massive intervention was being proposed and supported by the Republican administration. But since it WAS proposed and supported by the people who were theoretically the MOST knowledgeable about this topic, why do you blame some politicians for taking their advice and not others?

[ElNono]

Now, c'mon W.C. your own internal logic has to acknowledge that the arithmetic of cutting revenues while increasing expenditures is gonna increase the deficit. This all happened under Republican control of the White House, the House of Representatives, and the Senate. Based on your own argument, that will eventually lead to a recession. The recession started in December of 2007. Sooo...how is it that Obama and the Democrats are responsible for the recession that we are in now?

He's full of and he knows it, that's how.

[Wild Cobra]

Now, c'mon W.C. your own internal logic has to acknowledge that the arithmetic of cutting revenues while increasing expenditures is gonna increase the deficit.

No, can you prove that?

I am a firm believe in the "Laffer Curve."

As you raise taxes, you reduce the economy. The GDP reduces as tax burdens increase. We have data since before the 40's that shows the federal government gets about 18% to 18.5% of the GDP in tax revenue, regardless of the tax rate. Therefore, when you increase taxes, you reduce revenue, and vise-versa... to a reasonable limit. We have not yet seen how low of a tax rate is too low, because we have never been there.

This all happened under Republican control of the White House, the House of Representatives, and the Senate. Based on your own argument, that will eventually lead to a recession. The recession started in December of 2007. Sooo...how is it that Obama and the Democrats are responsible for the recession that we are in now?

The democrats are responsible for our current recession. They took congress in the 2006 election, and started their bull in January of 2007. Now if I were president Bush, I would have vetoed the bailout. We have an entire congress and president now that have bad economic ideas.

[LnGrrrR]

I am a firm believe in the "Laffer Curve."

As you raise taxes, you reduce the economy. The GDP reduces as tax burdens increase. We have data since before the 40's that shows the federal government gets about 18% to 18.5% of the GDP in tax revenue, regardless of the tax rate. Therefore, when you increase taxes, you reduce revenue, and vise-versa... to a reasonable limit. We have not yet seen how low of a tax rate is too low, because we have never been there.

Not exactly. If we're on the low side of the curve, then we should be raising rates. How do you determine where the "peak" of the curve is, WC?

[EVAY]

I assume that you intended to say that the Democrats took the house in 2006, not 1996. The republicans had congressional control from 1994 to 2006.

It is not my intention to argue that huge deficits are acceptable, or that we are not going to have to pay dearly for them in the long run. We are. My point is that the federal deficit doubled under the Reagan tax cuts, when 'trickle down' theory was telling us that the tax cuts would so stimulate the economy that we would have more than enough taxes from the increased business to produce enough revenues to balance the budget. But the federal deficit doubled.

Then both G.H.W. Bush and Bill Clinton increased taxes, and the economy still grew at a strong rate during the 90's, with revenues increasing enough that we actually had a budget surplus, which was being used to pay down the federal deficit. Now this is historical fact.

Then when G.W. Bush took office, he said that the fact that we were in a surplus mode meant that people were paying too much in taxes ( noone in the republican party was the least bit concerned about the debt that my grandschildren were gonna be saddled with at that moment), so we had to go back to reducing the taxes. With the help of the Republican Congress ( remember they had been in power since 1994), he reduced revenues to the gov't, and then sponsored No Child Left Behind (without paying for it) and Medicare Reform (without paying for it) and two wars (without paying for them). That doubled the federal deficit again. Again under Republican control.

Now we are faced with a democratically controlled White House and Congress who are about to triple the federal deficit.

My point in all of this is that the only difference between the two parties is the multiplier that will be used to increase the deficit.




Well, I believe that the Laffer Curve has been pretty well discredited.

[Wild Cobra]

Not exactly. If we're on the low side of the curve, then we should be raising rates. How do you determine where the "peak" of the curve is, WC?

We don't know where the peak is, but it's obvious to me we are on the wrong side of it to be raising taxes. As long as people believe we need higher taxes, we will never find that sweet spot.

[LnGrrrR]

We don't know where the peak is, but it's obvious to me we are on the wrong side of it to be raising taxes. As long as people believe we need higher taxes, we will never find that sweet spot.

Obvious to you perhaps, not so much to others.

[ElNono]

We don't know where the peak is, but it's obvious to me we are on the wrong side of it to be raising taxes.

How so? Last time we raised taxes, we increased revenue. I think that pretty much tells you where we are on the curve.

As long as people believe we need higher taxes, we will never find that sweet spot.

Believing we need higher taxes or not is not going to really help you find any spot. Actually lowering/raising the taxes is what does.

[Wild Cobra]

I assume that you intended to say that the Democrats took the house in 2006, not 1996. The republicans had congressional control from 1994 to 2006.

correct, I don't know what I was thinking. Must be my funny sleep pattern, I corrected the other post.

It is not my intention to argue that huge deficits are acceptable, or that we are not going to have to pay dearly for them in the long run. We are. My point is that the federal deficit doubled under the Reagan tax cuts, when 'trickle down' theory was telling us that the tax cuts would so stimulate the economy that we would have more than enough taxes from the increased business to produce enough revenues to balance the budget. But the federal deficit doubled.

I would argue the debt would have been even larger without the tax cuts of the 80's under Reagan. He inherited a double digit inflation on the current debt. There was no way in he could have kept it from ballooning. If you understand compound interest, you would appreciate just how well his administration managed the crisis.

Then both G.H.W. Bush and Bill Clinton increased taxes, and the economy still grew at a strong rate during the 90's, with revenues increasing enough that we actually had a budget surplus, which was being used to pay down the federal deficit. Now this is historical fact.

Yes, and when Clinton's taxes netted a couple years above 19% revenue of GDP, any historian of taxes would red flag that. The only reason those last few years were sustainable was technological breakthroughs in the semiconductor industry of the early 90's allowing faster and faster chips, i.e. the tech boom, until it hit a wall in about 2001. That along with the Y2K scare, with everyone needing new computer technologies, fueling the market farther. I was in the Semiconductor industry from 1994 to 2002, at the forefront of that new technology. Serial # 008 was being built when I started for this new, fast growing company. I think sn 004 was being prepped to ship to Intel. Every Intel Pentium chip made until at least 2000, was made on the equipment type I was a part of manufacturing. The very first Pentiums were made on prototype models the company I worked for had. Intel even had a 'skunkworks' at my job site.

I know a little about the tech boom.

Oh... My avatar pic is of a later version of equipment we started producing in 1997. I went to the 1997 SemiCon convention with it.

Then when G.W. Bush took office, he said that the fact that we were in a surplus mode meant that people were paying too much in taxes ( noone in the republican party was the least bit concerned about the debt that my grandschildren were gonna be saddled with at that moment), so we had to go back to reducing the taxes.

Well, first of all, there was no real surplus. Second of all, I wonder if he said or even believed that.

With the help of the Republican Congress ( remember they had been in power since 1994), he reduced revenues to the gov't, and then sponsored No Child Left Behind (without paying for it) and Medicare Reform (without paying for it) and two wars (without paying for them). That doubled the federal deficit again. Again under Republican control.

Some bad policies were made, but his medicare reform has actually come in far under estimates for costs. I don't know if No Child Left Behind was a good or bad policy. Never looked into it, but I am for dismantling the Department of Education anyway. What ever happened to States Rights?

Now we are faced with a democratically controlled White House and Congress who are about to triple the federal deficit.

Only triple?

Figures I have heard is that this congress and president are about to spend more money than all previous congresses and presidents before them!

My point in all of this is that the only difference between the two parties is the multiplier that will be used to increase the deficit.

Parties, yes. That's why I am not belonging to either.

At least the republicans are not making policies that will definitely make things worse.

If we could get rid of the RINO's, I might join the republican party. I dislike them, but hate the democrats. I usually end up voting for the lesser of two evils, or a fictional character like Micky Mouse. I always make a choice, even if I simply check the "other" box and write in "none of the above" just so some election handler cannot use my ballot for additional votes.

Well, I believe that the Laffer Curve has been pretty well discredited.

Opinions go both ways, but it's not discredited. Just depends on who you listen to.

[Wild Cobra]

How so? Last time we raised taxes, we increased revenue. I think that pretty much tells you where we are on the curve.

There will always be a short term increase when you raise taxes or a short term decrease when you lower them. It take a couple of years for the market to completely adjust. The immediate feedback is not an indication of the long term trend.

[Winehole23]

Post hoc ergo propter hoc

Swing and a miss, profe.

EVAY was arguing for the de-linkage of tax policy and economic growth it seems to me.

[ElNono]

There will always be a short term increase when you raise taxes or a short term decrease when you lower them. It take a couple of years for the market to completely adjust. The immediate feedback is not an indication of the long term trend.

I gather that's your opinion? Because it's actually contrary to what the Laffer curve theory proposes.

[ChumpDumper]

Here is a chart of the last 10 years of the S&P 500 (blue) and the Dow (red) indicates.



Please notice that after the recession president Bush inherited, he turned it around with tax breaks. The stocks went up by over 80% over 3-12 years, regaining the ground of normal growth, yet the liberal pundits could only complain about the Bush economy.

So from your graph and logic, Obama is turning around the recession he inherited from Bush with a 30% increase in stocks in less than a year.

The Cylons helped you.

[ChumpDumper]

and @ "declaine."

[PixelPusher]

Another calculation since 1940 using the OMB numbers vs. population, adjusted to 2000 dollars gives this:



This is the wealth of the USA per person, not personal wealth.

I know the mountain peak on the far left is called "Mount Postwar Boom", and the last 2 peaks on the right are called "Mount DotCom" and "Mount Mortgage Securities", but I'm not sure what all the middle peaks are called.

[exstatic]

What does Obama have to do to be considered socialism? Please specific? When will it be a valid claim?

Wait...didn't you say he hadn't done anything? Wouldn't that be a requirement?

You're also the one throwing the term around. Shouldn't YOU define it?

[Wild Cobra]

Bump...

Would you all go back to the first graph I posted and consider...

How can we trust anything the demonrats in congress do?

[exstatic]

Bump...

Would you all go back to the first graph I posted and consider...

How can we trust anything the demonrats in congress do?

Because the two biggest peaks came at the end of multiple term Democratic presidencies?

[Wild Cobra]

Because the two biggest peaks came at the end of multiple term Democratic presidencies?

Which ones?

Clinton's economy started falling before 2000. That's null and void since it was riding the wane of the tech boom, not anything he did. In fact, I would argue high taxes were sustainable only because of the techs. Once that market started falling in 1999, high taxes drove the economy down.

[EmptyMan]

Who's debating that the rich did very well under Bush? The middle class got ed.

The real middle class, or that bull politically correct "middle class"?

The middle class I know owned during the last decade.

The majority of people can't do right financially. If you acted smart , it would have been hard not to rise during the last decade.