Reply With Quote
Yeah, the wealthy put their $s in shoe boxes and stick it under their beds.
I understand what you are saying. But i never posted that the economy is based on a lower or higher standard of living(ofcourse you decide to try to enlighten me on how a low standard of living is a bad thing, as if i didnt already know.). I have been saying all along that it is based on productivity. so i guess your cut and paste was useless.(sighs) Alright, this is where I stop being halfway nice.
For the 4th-10th times:
Tax cuts DO provide a boost to the economy.
Tax cuts DO provide a boost to the economy.
Tax cuts DO provide a boost to the economy.
Tax cuts DO provide a boost to the economy.
Tax cuts DO provide a boost to the economy.
Tax cuts DO provide a boost to the economy.
Tax cuts DO provide a boost to the economy.
BUT
Since federal spending has gone UP and taxes have gone DOWN, that means that the government has had to borrow A LOT to pay for the spending.
SO:
Borrowing too much is bad.
Borrowing too much is bad.
Borrowing too much is bad.
Borrowing too much is bad.
Borrowing too much is bad.
Borrowing too much is bad.
Borrowing too much is bad.
Hopefully somewhere in there, you finally pick up on what I am trying to say.
And that doctor's chances of being right are 20 times the chances that yours are.
If I had to bet money 100 times on a doctor's diagnosis versus your diagnosis, I would bet on the doctor every time. That is what makes him an expert.
You say that deficits don't matter, because we can always grow the economy fast enough to pay the increased interest payments.
No, we can't. The debt has been growing at a rate many times that of the economy, AND SO HAVE THE INTEREST PAYMENTS.
THAT IS EXACTLY WHAT I HAVE BEEN SAYING.
It seems as if your saying that the economy is and isnt based on standard of living
When the economy expands but people are paid less, that is a bad thing.
Try to understand this, if you can:
Economic growth does not mean a greater standard of living.
I realize this is a very advanced concept, so let me repeat it a few times so you can understand it.
Economic growth does not mean a greater standard of living.
Economic growth does not mean a greater standard of living.
Economic growth does not mean a greater standard of living.
Economic growth does not mean a greater standard of living.
Economic growth does not mean a greater standard of living.
Economic growth does not mean a greater standard of living.
Economic growth does not mean a greater standard of living.
Economic growth does not mean a greater standard of living.
I will try something else that's really advanced, so please try to follow this:
The debt left over from the Reagan era is dragging the economy down, making this recovery much less strong than it should be.
The debt left over from the Reagan era is dragging the economy down, making this recovery much less strong than it should be.
The debt left over from the Reagan era is dragging the economy down, making this recovery much less strong than it should be.
The debt left over from the Reagan era is dragging the economy down, making this recovery much less strong than it should be.
The debt left over from the Reagan era is dragging the economy down, making this recovery much less strong than it should be.
Do you have it yet?
Has it sunk in?
There is much more than simple government debt at play here, but given your poor track record at understanding what you are reading, I am not even going to bother to go there.
1.WHere have i said deficits or debts dont matter? YOu have this whole thread to prove where i said so.
2.I have proposed that we should cut spending. you followed by providing a bull equation out of nowhere to prove that the govt is expanding at an exponentioal rate and saying that govt cuts wont decrease the spending enough. Then you shift your argument to that tax cuts are not good enough because we have to pay interest when we borrow. WHich i have not dissented to that. My point is. Tell me why tax cuts are not neceessary if we do trim govt spending enough. If we eliminate useless programs we wont have to borrow for their growth or for that matter the tax cuts since they do provide more revenue.
3. I know you know more than me about economic isssues. But as the saying goes " IF the weatherman says the sky is green, must it be so?". RG get a grip. Your the king. But i am still gonna call you when your wrong. I have heard many theories from many economist on the advantages and disadvantages of tax cuts.
4. We were in a recession. We needed the tax cuts. Bush hasnt cut spending growth and eliminated useless programs, nor reagan. Democrats will not let them do that, and the media will not let them get away with cutting social spending. We have had a need to expand the military and the FBI,CIa, and many other agencies and we've done so. We needed some of that expansion and some of it not. Bush and Reagan are guilty of raising spending.
Defense Spending rose in the 80's and during the War on terror.
Defense Spending rose in the 80's and during the War on terror.
Defense Spending rose in the 80's and during the War on terror.
It is increased spending in GOvt defense and social programs that have caused debts and deficits not TAX CUTS. Change the stupid le to this thread and then it'd make sense.
Yeah, the wealthy put their $s in shoe boxes and stick it under their beds.
Anyways, the basic problem with the deficit is the rate of growth in federal spending. I don't know about you guys, but I'd prefer that growth rate low and I'd like to see tax rates low across the board. If you're into a little retribution against the "rich" who provide risk capital, more power to your hate.
I agree. But MB, we still have to reduce social spending in order to make up for military spending. Not doing so is what caused the deficits. People on this board have blamed tax cuts solely for the debt. Which seems like they are misallocating the blame to prove their point.
We agree on more than you think.
The tax cuts have been coupled with spending and THAT is the problem.
No small portion of the spending is interest payments on built-up debt left over from Reagan.
You want an across the board cut on federal income taxes by 10% for everybody?
Get rid of a large portion of our national debt.
I place the blame for all this debt solely on the GOP. They control both houses of Congress AND the White House.
IF they were truly committed to fiscal responsibility, they have had YEARS to do something about it. That betrayal of their ideals has made me into a lifelong enemy.
gtownspur vs. RandomGuy is not a fair fight intellectually. gtownspur is the proverbial knife in a gunfight.
Now, gtownspur has correctly spouted the theoretical conservative ideology, i.e. smaller government coupled with lower taxes. However, that is not the modus operandi of the current Republican Party.
What the GOP has been doing since 2000 is simultaneously cut taxes and increase domestic spending at the fastest rate since LBJ's Great Society, even before taking into account military spending for the GWOT.
That course is not sustainable, and the GOP has done considerable long-term damage to the U.S. economy with these fiscal policies.*
If the Democrats are tax-and-spend, then the Republicans are borrow-and-spend-even-more.
*There are a few theories behind why the GOP Congress is behaving this way:
1) Any politican who suggests raising taxes or cutting spending loses elections
2) The leadership is looking out for its own narrow interests and doesn't give a about what happens to their children and grandchildren
3) Since an expansive welfare state is politically popular, they are trying to create a financial crisis in order to force austerity measures.
4) Our elites realize that due to changes in the world beyond our control, we are ed no matter what we do, so we might as well party it up now.
To with our children's children, kids shouldn't be having kids anyway.4) Our elites realize that due to changes in the world beyond our control, we are ed no matter what we do, so we might as well party it up now.
So what you're saying is that debt is a bad thing? Mmmmm, I'm sorry. Not buying it.(sighs) Alright, this is where I stop being halfway nice.
For the 4th-10th times:
Tax cuts DO provide a boost to the economy.
Tax cuts DO provide a boost to the economy.
Tax cuts DO provide a boost to the economy.
Tax cuts DO provide a boost to the economy.
Tax cuts DO provide a boost to the economy.
Tax cuts DO provide a boost to the economy.
Tax cuts DO provide a boost to the economy.
BUT
Since federal spending has gone UP and taxes have gone DOWN, that means that the government has had to borrow A LOT to pay for the spending.
SO:
Borrowing too much is bad.
Borrowing too much is bad.
Borrowing too much is bad.
Borrowing too much is bad.
Borrowing too much is bad.
Borrowing too much is bad.
Borrowing too much is bad.
Hopefully somewhere in there, you finally pick up on what I am trying to say.
And that doctor's chances of being right are 20 times the chances that yours are.
If I had to bet money 100 times on a doctor's diagnosis versus your diagnosis, I would bet on the doctor every time. That is what makes him an expert.
You say that deficits don't matter, because we can always grow the economy fast enough to pay the increased interest payments.
No, we can't. The debt has been growing at a rate many times that of the economy, AND SO HAVE THE INTEREST PAYMENTS.
THAT IS EXACTLY WHAT I HAVE BEEN SAYING.
When the economy expands but people are paid less, that is a bad thing.
Try to understand this, if you can:
Economic growth does not mean a greater standard of living.
I realize this is a very advanced concept, so let me repeat it a few times so you can understand it.
Economic growth does not mean a greater standard of living.
Economic growth does not mean a greater standard of living.
Economic growth does not mean a greater standard of living.
Economic growth does not mean a greater standard of living.
Economic growth does not mean a greater standard of living.
Economic growth does not mean a greater standard of living.
Economic growth does not mean a greater standard of living.
Economic growth does not mean a greater standard of living.
I will try something else that's really advanced, so please try to follow this:
The debt left over from the Reagan era is dragging the economy down, making this recovery much less strong than it should be.
The debt left over from the Reagan era is dragging the economy down, making this recovery much less strong than it should be.
The debt left over from the Reagan era is dragging the economy down, making this recovery much less strong than it should be.
The debt left over from the Reagan era is dragging the economy down, making this recovery much less strong than it should be.
The debt left over from the Reagan era is dragging the economy down, making this recovery much less strong than it should be.
Do you have it yet?
Has it sunk in?
There is much more than simple government debt at play here, but given your poor track record at understanding what you are reading, I am not even going to bother to go there.
________
spanish girl Webcam
Last edited by Mr. Peabody; 08-23-2011 at 06:39 PM.
I assume that isn't sarcasm. If so:
Debt in and of itself isn't a bad thing.
Too much debt IS.
So, RG, which country do have in mind for relocation once the U.S. goes to ? I'm thinking Chile -- it's sort of like the West Coast, but upside-down. The Andes are nice. And, it's more stable than Argentina.
I'll take that as a compliment. Thank you.
I have honestly considered that very question.
Since I have a degree in German and an accounting background, Switzerland (they will always have money and banking there) or possbily Austria (net exporter of electricity-not to be scoffed at when oil starts getting expensive)
Worst case scenario, I might just chuck western life altogether, and live in an Iron-Age fishing village in Madagascar. I woulnd't have to work so hard to survive. Contrary to popular belief, hunter/gathers in the tropics don't really work that hard.
Chile would work too. Good wines.
I might just buy a plot of land in the US and live as a farmer here. It is fairly easy to grow enough food for a few people. A good simple, honest life.
I just hope I have another 10 years or so to build the off-the-grid house I want.
Until, of course, it's decided to condemn your land for economic development reasons.
True. It is, also, a cornerstone of GOP philosophy post-1970s. Reagan v Bush in 1980 cemented that. The other, of course, is a limited government, which means little or no regulation and a low rate of spending growth.
Absolutely. I'd also add that the behavior of the White House isn't hard to understand. The GOP is a party today that is driven by social issues moreso than economic ones. It's a lot easier keeping the blue collar voters in the fold when you continue to give them the government programs they want. Also, that mandate is driven by the White House. Congressional conservative Republicans are having a difficult time acting like, well, conservative Republicans when they would have to say no to a popular (in the party) GOP president.2) The leadership is looking out for its own narrow interests and doesn't give a about what happens to their children and grandchildren
Nah, I don't think anyone has thought that far ahead. Bush's 1st term was all about spending whatever it took to get his ass re-elected.3) Since an expansive welfare state is politically popular, they are trying to create a financial crisis in order to force austerity measures.
Well, at some point the general populace is to blame. We want it all. We want ever increasing growth federal spending while at the same time desiring a low tax burden and of course, all of the cheap ass foreign goods and services we can enjoy. There's no real political penalty on such prolifigacy, so long as there isn't to pay.4) Our elites realize that due to changes in the world beyond our control, we are ed no matter what we do, so we might as well party it up now.
Extra stout. i have said that bush is responsible for not limiting social spending. ANd i have said everything you basically have spouted that i was lacking.
I know i'm not the best here at economic issues. I have given RG his credit. But i also think that the le of this thread is bogus. And i dare you to defend it for RG because he has not done so. He hasnt even proved that the Debt is dragging the economy that is his only theory. THe only thing he has are data charts on how big the debt is and basic tenents of economy. aNd with all his theory is not that the tax cuts are dragging the economy, but the the debt has, according to him.
So for one:
1. His begining argument as well as the le to this thread have not been proven.
2. HE only has a peice of paper to back him up, but no facts that the debt is eroding our standard of living, only assumptions.
Mortgage rates have been proven to paralyze inflation and not increase in GOvt debt. My sources the libertarian Cato insitute's senior fellow Alan Reynolds.
So what if Rg is the grander intellect. RG is just a student of economics and not the source. He deserves to be questioned and not blindly followed.
YAYAYAY!!!
I agree with this 100%
Blindly following anybody is a bad thing.
In Fiscal Year 2005, the U. S. Government spent $352 Billion of your money on interest payments* to the holders of the National Debt. Compare that to NASA at $15 Billion, Education at $61 Billion, and Department of Transportation at $56 Billion.
Here is a happpy fun graph for you.
For the amount of money we spent on interest payments this year ALONE, we could have a colony on Mars.
Be careful what you wish for...
Part One
Since 2001 President Bush and congressional leaders have promised that enacting each of a series of tax cuts would strengthen the economy by bringing faster growth, more jobs, and greater investment. With Congress again debating whether to extend past tax cuts and enact new ones, it's time to review how much the last four years of tax cuts have affected the U.S. economy and budget outlook. Unfortunately for most Americans, the tax cuts since 2001 have not made today's economy stronger. Over the last five fiscal years, the tax cuts have had a direct cost of $860 billion and (with interest costs) a total effect on the deficit of $929 billion.1 By creating excessive permanent deficits, they have lowered our future standard of living.
A pivotal debate over the last four years has concerned whether tax cuts should emphasize stimulus or long-term restructuring of the tax code. For purposes of stimulus, tax cuts should focus on moderate-income, liquidity-constrained taxpayers, and they should expire after a limited period. But the winners of the legislative process pushed for tax cuts that do not expire and that focus on those taxpayers with high income and wealth. If their tax cuts had truly strengthened the economy, we would be observing it in the data by now.
The longer it takes to restore the revenue base and reduce the deficit, the higher the price that Americans must ultimately pay. The "rebate" checks of mid-2001 did provide stimulus that reduced the depth of the 2001 recession by putting tens of billions of dollars into the hands of liquidity-constrained households just before the terrorist attacks of September 11 shook consumers' confidence.2 But the enduring tax cuts passed that year have not enhanced the economy's performance, and have in fact caused a permanent boost in the federal budget deficit. Foreign lenders have largely financed that deficit, and they will have to be repaid by Americans in the future.
The fact that all major economic indicators are higher today than in early 2001 does not mean that the tax cuts have been beneficial. Since the Great Depression, the resilient U.S. economy has always had gains over such four-year periods. The appropriate question to ask is: How well has the economy performed compared to similar periods in the past? If the last four years of tax cuts had worked as promised, the economy should have done better than in previous cycles, when taxes were either not cut or cut much less.
By virtually every measure, the economy has performed worse in this business cycle than was typical of past ones, including that of the early 1990s, which saw major tax increases. The single area that has excelled in the current cycle, housing, has actually done so despite reduced tax incentives since 2001. And the tax cuts certainly didn't boost investment levels: the expiration of over $60 billion a year in business tax cuts at the end of 2004 had virtually no observable negative effect on investment.
In fact, over the last four years, nearly every indicatorfrom job gains to economic output to spendinghave fallen far short when stacked against comparable periods in past cycles.
Comparing economic performance between business cycles
The economy was in recession from March to November 2001. The first major tax cuts were enacted in May 2001. A second round of tax cuts focused on businesses in March 2002. With jobs still shrinking in the spring of 2003, Congress passed sizeable additional tax cuts in May 2003.
To assess the economic contribution of these tax cuts, this report compares roughly the last four-and-a-half years (17 quarters) to similar stages of past business cycles. The economy had entered a recession not long before the first tax cuts were enacted. After the shallowest recession on record, economic output entered an expansionary phase in November 2001, almost four years ago. We now have monthly data for 54 months and quarterly data for 17 quarters since the last business cycle peak. For comparison purposes, we look at data from previous cycles that lasted as long as the current cycle. Because the recessions varied in depth, the standard procedure is to compare cyclical patterns by starting at the peak of the cycle.
This report also examines two recent episodes when taxes rose: the tax increases in the early 1990s and the expiration of business tax cuts at the end of 2004. In both cases, the economy took the increases in stride and there is no convincing evidence of economy-wide harm.
Part 2
A NOTE ABOUT THE FIGURES
An explanation of the format used in Figures A-L is in order. These figures all compare the current business cycle (since March 2001) to comparable 17-quarter (and, in places, 54-month) periods for all previous business cycles dating back to the late 1940s (when these data first began to be collected). Except for Figures C, D, and E on labor indicators, these figures show changes in real (inflation-adjusted) dollars. The dashed line represents the average change for the six previous cycles; the gray area shows the high and low range in those six cycles. The solid line depicts the current cycle since March 2001.
The aggregate economy
Since the start of 2001, the economy has grown markedly slower than the average of the last six cycles that lasted 17 quarters. We have two measures of the overall economy that should, in theory, have exactly the same growth rate, but often do not because of measurement difficulties. The more commonly used yardstick, the gross domestic product (GDP), increased by 12.3% over the last 17 quarters, for an average annual rate of 2.8%. That performance falls well below the average 3.5% GDP growth rate of the previous six cycles (Figure A). The gap is even wider for the second, equally valid measure of overall activity, gross domestic income (GDI).3 By that measure, activity has expanded at only a 2.3% rate, more than a full percentage point slower than the 3.4% GDI rate of past cycles. No prior cycle has had such a low growth rate of GDI (Figure B).
Part 3
Employment
The prosperity of the typical American family depends on strong job growth, not only to provide job opportunities but also because a tighter labor market delivers faster pay gains. Despite several rounds of tax cuts, the labor market has seriously underperformed in the current cycle compared with previous ones. The United States has only 1.3% more jobs today (excluding the effects of Hurricane Katrina4) than at the last business-cycle peak 54 months ago in March 2001. At this stage of previous cycles, jobs had grown by an average of 8.8% and never less than 6.0% (Figure C).
Because tax cuts are touted as creating private-sector jobs, it is instructive to look at changes in this area of employment in isolation. Private-sector jobs would be only 0.8% higher than in March 2001 without the effects of Hurricane Katrina. The substantial rise in employment supported by increased defense spending more than accounts for this modest gain in private-sector jobs.5 In comparison, private-sector jobs rose by an average 8.6% in past cycles, and the lowest previous gain was 5.8% (Figure D).
Part 5
Keep in mind that the working-age population has been growing more than 1% per year. When researchers at the Cleveland Federal Reserve analyzed employment as a share of the working-age population, it found "the same sad story" as in the payroll figures above.6 As with payroll jobs, the gains of the last two years lag those of previous cycles. The employment rate remains 1.3 percentage points below March 2001 (Figure E). With a working-age population of 226.7 million, employment would be almost 3 million higher if the employment rate had recovered the level of the last peak. The unemployment rate has become a poor indicator of labor market conditions because so many people have withdrawn from the labor force.7 This unprecedented decline in labor force participation itself undermines a key argument made for the tax cuts: that lower marginal rates would substantially increase incentives to enter the labor force.
Part 6
In making the case for the tax cuts of 2003, the Bush Administration acknowledged that strong job growth should be expected without tax cuts. It projected that 4.1 million jobs would be created between mid-2003 and the end of 2004 without the 2003 tax cuts, and that 5.5 million jobs would be created with the tax cuts.8 In fact, Congress enacted even deeper tax cuts than those on which the Bush Administration's estimates were based. Even so, only 2.6 million jobs were created over that 18-month period. Thus, by the Bush Administration's own analysis, the 2003 tax cuts failed to create more jobs than would have been expected without the tax cuts.
Wage and salary income
Along with anemic job growth, the current cycle stands out for the stagnation of wage and salary income. Most people's standard of living depends on their wages and salaries. The 1.3% annual growth rate of wage and salary income in this cycle falls below the pace of all six past cycles and almost 2 percentage points below their 3.2% average growth rate (Figure F).
Personal income
Because other forms of income have been rising faster than wages and salaries, total personal income (including fringe benefits, rent, interest, dividends, proprietor's income and transfer payments, in addition to wages and salaries) has increased at a modestly faster 1.8% pace over the last four-and-a-quarter years. That is barely half the average pace of 3.4% of prior cycles. Moreover, as shown in Figure G, personal income grew faster in all previous cycles of this duration since 1948.
Part 7
Spending
Spending has grown somewhat faster than GDP and income over the last four-and-a-half years, but it still trails the pace of earlier cycles. Total U.S. spending ("final sales to domestic purchasers" including households, businesses, and government) has grown at a 3.1% pace compared to the 2.8% pace of GDP. Spending has grown faster than output because imports have grown faster than exports (as foreign governments and investors have financed a growing trade deficit). U.S. spending gains have nonetheless lagged the 3.7% average gain of previous cycles.
The story is much the same for personal spending. Additional borrowing (and vanishing saving) has allowed households to boost their spending at a 3.2% growth rate, much faster than the 1.8% pace of their income gains. Even with the boost from borrowing, household spending has failed to keep pace with the 3.7% average of previous cycles.
Investment
With Congress again debating new tax cuts for business investment, a review of the effect of recent tax cuts on investment is in order. Over the last five fiscal years, the tax cuts tied to business investment have reduced revenue by an estimated $203 billion. This large revenue loss for government brought a large windfall to businesses, but it appears to have had a negligible effect on investment.
Proponents of cuts in individual taxesparticularly lower rates for dividends, capital gains, and the highest income levelshave argued that the cuts would spur investment generally. In addition, the justification of the business tax cuts of 2002 was based on the notion that they would boost investment. Here again, the results have been disappointing.
Business investment in structures, equipment, and software (so-called "non-residential investment") was only 3.6% higher in the second quarter of 2005 than it had been in the first quarter of 2001. That is less than half of the 8.2% growth found in the worst of the six prior cycles, and but one-eighth of the 27.5% growth rate in the strongest prior cycle (Figure H).
Skipping parts 8-12, I will go directly to the source material for the article.
Endnotes
1. The Joint Committee on Taxation is the source of all the numbers in this report on the direct cost of tax legislation. Numbers that also include interest costs come from the Center on Budget and Policy Priorities.
2. Mark Zandi, "Assessing President Bush's Fiscal Policy," The Dismal Scientist, July 2004.
3. The Bureau of Economic Analysis makes independent estimates of both GDP and GDI, with the former compiled from production side data sources and the latter from income side data sources. In theory, the two measures should be identical in value. In practice, there is always at least a modest "statistical discrepancy." GDP receives most of the attention, but in periods such as this when the two measures persistently diverge, GDI deserves equal attention.
4. To eliminate the effect of Katrina on the job market, September was assumed to have had the same gain as the average for the three months up to August.
5. Lee Price with David Ratner, "Without defense-related spending, private sector would still be in a jobs hole," August 3, 2005, http://www.epi.org/content.cfm/webfe...shots_20050803.
6. Mark Schweitzer and Guhan Venkatu, "The Employment Surveys Are Telling the Same (Sad) Story," Research Department, Federal Reserve Bank of Cleveland, May 15, 2004.
7. For an extended analysis of why the unemployment rate is not providing an accurate picture of labor market slack and an alternative measure of slack taking account of rising school attendance and employment of persons 55 and older, see Jared Bernstein and Lee Price, An Off-Kilter Expansion: Slack Job Market Continues to Hurt Wage Growth, EPI Briefing Paper, September 2, 2005, http://www.epi.org/content.cfm/bp164.
8. The Economic Policy Ins ute did a monthly analysis of the failure of the 2003 tax cuts to deliver the promised benefits on its jobwatch.org Web site. It also preserved Council of Economic Advisers, "Strengthening America's Economy: The President's Jobs and Growth Proposals," February 4, 2003 on its Web site after the CEA pulled it down (See http://www.jobwatch.org/creating/bkg...ro_effects.pdf).
9. Congressional Budget Office, "Monthly Budget Review," October 6, 2005.
10. Joint Committee on Taxation, Estimates of Federal Tax Expenditures for Fiscal Years 2005-2009, January 12, 2005, p. 33.
11. Max Sawicky, "Red Ink Rising," EPI Economic Snapshot, September 21, 2005, http://www.epi.org/content.cfm/webfe...shots_20050921.
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