Another Liberal myth exposed: Bush tax cuts increased revenue to the treasurey

[Toro]

The budgets under Clinton were in surplus in his last years. This is not debatable.

A deficit is not defined as an increase in debt. A deficit is defined as expenditures exceeding revenues. Extrapolating a deficit because debt increases is flat out wrong.

How can debt increase without expenditures exceeding revenues?

In the accounting for the federal government, SS receipts are credited to the US Treasury and debited to the SS accounts. They offset. If one is viewing gross debt, all one will see is the rise in debt owed by the US Treasury. That's what you are seeing when you see an increase in US debt above. But this is misleading when looking at the fiscal balance of the entire government because the assets of the SS trusts also rise. Netting the two out - total debt less total assets - gives a truer picture of government indebtedness. Total net debt - liabilities less assets - declined at the end of the 90s.

If the value of your house rises by X and you take out a HELOC worth 0.5X to pay off 0.5X in credit card debt, your net balance has not deteriorated. Your total net debt has not worsened. But if you judge your fiscal balance based solely on your mortgage debt, it looks like you are in worse shape. That's wrong. Looking solely at total US debt is like looking at only at your mortgage debt without considering anything else.

 

[Toro]

National Debt continued to rise under Clinton from 4.4 trillion to 5.8 trillion

The Myth of the Clinton Surplus

This is written by a software engineer, not an accountant or an economist.

I wouldn't ask an economist to explain, say, the software code for an iPhone because I know he would almost certainly be wrong. Likewise, I would also not ask a software engineer how government accounting works because the software engineer almost certainly does not understand how the government keeps its books.

 

[Flopper]

The problem with trickle down economics is there are so many if's involved. The wealthy may use the money from a tax cut to invest either at home or abroad. If they invest in the US, they may investment in treasuries, which does nothing to expand the economy, or they may pay down debt which provides little economic growth, or they may just put the money in the bank waiting for a better investment climate.

But one thing is certain, cutting taxes reduces government revenue. It may be offset by economic expansion or it may not.

1. As President Warren Harding's secretary of the treasury, Andrew Mellon, a Pittsburgh multimillionaire, molded the relationship between government and business during the 1920s, a relationship that influenced politics throughout the decade. Committed to retrenchment and economy in government, Secretary of the Treasury Mellon reduced federal spending vigorously. He consistently opposed the veterans' bonus bill and the McNary-Haugen farm bills. But even more central to Mellon's financial vision than spending reduction was tax reduction, especially for the rich. Mellon rejected the progressive philosophy of taxation that insisted those Americans most able to pay should pay more taxes. Instead the he articulated a philosophy later known as "trickle-down economics." Taxing the rich, Mellon argued, inhibited their investment ability, thus impeding job growth and the entire economy. Without a heavy tax burden, the wealthy would invest, create jobs, and ultimately all participants in the economy would become beneficiaries of investors' tax-free profits as prosperity filtered down to workers and farmers, Mellon argued. Republicans eagerly returned America to a peacetime budget, dramatically reducing government spending that had grown substantially during World War I. Congress did, however, approve substantial tax cuts in 1921. This was the first of many tax reductions enacted during the decade at Mellon's instigation, as he was reappointed secretary of the treasury during both Coolidge's and Hoover's administrations. http://www.encyclopedia.com/doc/1G2-3468300843.html

a. Oprah only lives in her Ca. mansion for the requisite number of days so that she doesn’t have to pay Ca. resident taxes.

b. U2 moved their company hq to Netherlands when Ireland raised income tax

c. Michael Moore got a tax credit from Michigan for filming in that state. Michael Moore, Michigan Film Incentive [Mackinac Center]

2. As tax rates rise, taxpayers reduce taxable income by working less, retiring earlier, scaling back plans to start or expand businesses, moving activities to the underground economy, restructuring companies, and spending more time and money on accountants to minimize taxes. Tax rate cuts reduce such distortions and cause the tax base to expand as tax avoidance falls and the economy grows.

A review of tax data for high-income earners in the 1920s shows that as top tax rates were cut, tax revenues and the share of taxes paid by high-income taxpayers soared. Secretary Mellon knew that high tax rates caused the tax base to contract and that lower rates would boost economic growth. In 1924, Mellon noted: "The history of taxation shows that taxes which are inherently excessive are not paid. The high rates inevitably put pressure upon the taxpayer to withdraw his capital from productive business." He received strong support from President Coolidge, who argued that "the wise and correct course to follow in taxation and all other economic legislation is not to destroy those who have already secured success but to create conditions under which every one will have a better chance to be successful."

Internal Revenue Service data show that the across-the-board rate cuts of the early 1920s-including large cuts at the top end-resulted in greater tax payments and a larger tax share paid by those with high incomes. As tax rates were cut in the mid-1920s, total tax revenues initially fell. But as the economy responded and began growing quickly, revenues soared as incomes rose. By 1928, revenues had surpassed the 1920 level even though tax rates had been dramatically cut. 1920s Income Tax Cuts Sparked Economic Growth and Raised Federal Revenues | Veronique de Rugy | Cato Institute: Daily Commentary

3. The criticism that the tax payments of the rich would fall under ERTA was based on a static conception of human behavior. As a 1982 JEC study pointed out,[1] similar across-the-board tax cuts had been implemented in the 1920s as the Mellon tax cuts, and in the 1960s as the Kennedy tax cuts. In both cases the reduction of high marginal tax rates actually increased tax payments by "the rich," also increasing their share of total individual income taxes paid. Unfortunately, estimates of ERTA by the Democrat-controlled CBO continued to show falling tax payment by upper income taxpayers, even after actual IRS data had become available showing a surge of income tax payments by affluent taxpayers.
The 1993 Clinton tax increase appears to having the opposite effect on the willingness of wealthy taxpayers to expose income to taxation. According to IRS data, the income generated by the top one percent of income earners actually declined in 1993. This decline is especially significant since the retroactivity of the Clinton tax increase in that year limited the ability of taxpayers to deploy tax avoidance strategies, temporarily resulting in an increase in their tax burden. The Reagan Tax Cuts: Lessons for Tax Reform

4. One study of the United States between 1959 and 1991 placed the revenue-maximizing tax rate (the point at which another marginal tax rate increase would decrease tax revenue) between 32.67% and 35.21% Hsing, Y. (1996), "Estimating the Laffer curve and policy implications", Journal of Socio-Economics 25 (3): 395–401, doi:10.1016/S1053-5357(96)90013-X, ScienceDirect - Journal of Socio-Economics : Estimating the laffer curve and policy implications*1

5. . A headline in this morning’s Baltimore Sun — “Maryland lost nearly 30% of millionaires last year” — is sure to revive a debate over the higher tax rates that Free State legislators imposed on millionaires in 2008. At least eight other states this year followed Maryland’s lead and raised income taxes on the wealthy.

As The Sun reports, the Maryland state comptroller found that the number of state residents with net taxable income of $1 million or more declined from 7,067 in 2007 to 4,910 last year — the lowest number in four years. Maryland Republicans who opposed hiking taxes on millionaires in 2008 predicted that the higher rates would drive the wealthy to move to other states with lower income taxes. Democrats refuted that notion.Md. 'millionaire's tax' debate is back

Cutting taxes will stimulate the economy. However, there is no way of knowing if the stimulus will be sufficient to overcome events that are pulling the economy down. A tax cut in itself has a negative influence on the deficit, however it may generate enough economic activity to overcome this. If it doesn't then we end up with a higher deficit without economic expansion.

What people do with tax cuts depends on consumer and investor confidence. Currently most economists are expecting at best a slow down in the domestic and international economy, at worst another recession. Consumer confidence is falling. This is not an environment that encourages consumers to spend nor investors to provide capital for economic expansion. If tax cuts are used to build cash reserves in banks, treasuries and short term notes or to take defensive positions such as investments in gold, hedge funds, and defensive stocks, the tax cut will provide little if any economic stimulus. In other words, tax cuts are most likely to provide stimulus to the economy if confidence is reasonable high which it is not.

 

[GWV5903]

1. Wrong, there are numerous credible opinions to prove this point

I prefer facts, thanks.
http://www.nber.org/cycles.html

2. Wrong again, no real surprise, here you go

/sigh You really need to work on your reading skills.

I never said Clinton did not have a chance to take out Bin Laden. Obviously he did. But to blame Clinton for the 2001 attacks because of unsuccessful missions in 1998 is just ludicrous. It assumes absolutely nothing happened in the intervening 3 years, and we all know Bush had intel that was ignored very, very close to the attack. I mean, this is like blaming Bush for the state of the economy today! Who would do that?

3. Your statements say otherwise....

Only to you, because you refuse to think about them.

I answered your question several times, that you can't understand is not surprising....

Ok then. So, you're opinion is that the dot com bubble burst and slow down in the economy coupled with the 9/11 attacks had a 3 year impact on tax receipts, such that receipts dropped three years straight, something that has never happened in modern history. Additionally, you believe that all these negative affects were focused solely on tax receipts and not the economy as a whole, as you believe that in 2002 the economy was growing again.

Oh, and you can provide zero evidence supporting this opinion.

Well, at least now I know the type of person I'm dealing with.

You have no idea who you are dealing with....

We do not agree at all on this, I wouldn't guess what or were you where during this time in history, but let me assure you we did not see spending turn around until 2Q 2003...

You can continue to stay in denial, the Perfect Financial Storm occurred, DotCom, Enron, 9/11, Arthur Andersen, Adelphia Communications, AOL Time Warner, Bristol-Myers Squibb, CMS Energy, Duke Energy, Dynegy, El Paso, Global Crossing, Halliburton, Homestore.com, Kmart, Merck, Mirant, Nicor Energy, Peregrine Systems, Qwest Communications International, Reliant Energy, Tyco, WorldCom and who can forget Richard Schrusy at HealthSouth, all of these corporate scandals where the outcome of the '90's....

The corporate corruption of the '90's is second to none, and the culmination of this deceit started crashing down 2Q 2000, so if you want to believe this is nothing more than a simple coincidence, go ahead....

 

[bripat9643]

In the accounting for the federal government, SS receipts are credited to the US Treasury and debited to the SS accounts. They offset. If one is viewing gross debt, all one will see is the rise in debt owed by the US Treasury. That's what you are seeing when you see an increase in US debt above. But this is misleading when looking at the fiscal balance of the entire government because the assets of the SS trusts also rise. Netting the two out - total debt less total assets - gives a truer picture of government indebtedness. Total net debt - liabilities less assets - declined at the end of the 90s.

That's your first error: Social Security has no assets.

If the value of your house rises by X and you take out a HELOC worth 0.5X to pay off 0.5X in credit card debt, your net balance has not deteriorated. Your total net debt has not worsened. But if you judge your fiscal balance based solely on your mortgage debt, it looks like you are in worse shape. That's wrong. Looking solely at total US debt is like looking at only at your mortgage debt without considering anything else.

Unfortunately for your analogy, that isn't what the government does. Social Security payments are not debt payments. Social Security confers no financial obligations on the government whatsoever. The government would be cating perfectly legally if it cut off SS payments tomorrow.

 

[bripat9643]

As I understand it, the excess SS funds must be used to buy government bonds, which as we all know, are debt. So, even if Clinton had revenues of $1T over expenditures, by law, the national debt would go up due to SS buying bonds. This is why your choice of definition is so funny, as it would make it virtually impossible for any president to ever run a "surplus".

This is also why the SS funds are typically NOT counted when looking at the budgets, and that is when you see the surplus.

What the Social Security administration does is issue I.O.U's to itself. These are absolutely worthless from the taxpayer's perspective because they can only be paid by getting the money from taxpayers. All the cash that comes in from FICA is spent the minute the government gets it. There is no SS trust fund.

 

[Political Junky]

FactCheck.org: Supply-side Spin

Thanks for the fact check.

 

[Political Junky]

As I understand it, the excess SS funds must be used to buy government bonds, which as we all know, are debt. So, even if Clinton had revenues of $1T over expenditures, by law, the national debt would go up due to SS buying bonds. This is why your choice of definition is so funny, as it would make it virtually impossible for any president to ever run a "surplus".

This is also why the SS funds are typically NOT counted when looking at the budgets, and that is when you see the surplus.

What the Social Security administration does is issue I.O.U's to itself. These are absolutely worthless from the taxpayer's perspective because they can only be paid by getting the money from taxpayers. All the cash that comes in from FICA is spent the minute the government gets it. There is no SS trust fund.

Social Security Trust Fund Worth $1.6 Trillion - Politics | Republican Party | Democratic Party | Political Spectrum - FOXNews.com

http://www.nber.org/papers/w9845
With over $1 trillion in assets, the U.S. Social Security trust fund is the largest pension reserve in the world, and potentially a model for other developed countries facing future financing problems.

 

[bripat9643]

Social Security Trust Fund Worth $1.6 Trillion - Politics | Republican Party | Democratic Party | Political Spectrum - FOXNews.com

Is the Social Security Trust Fund Worth Anything?
With over $1 trillion in assets, the U.S. Social Security trust fund is the largest pension reserve in the world, and potentially a model for other developed countries facing future financing problems.

The S.S. trust fund is absolutely worthless. Only the truly gullible believe otherwise.

 

[Political Junky]

Social Security Trust Fund Worth $1.6 Trillion - Politics | Republican Party | Democratic Party | Political Spectrum - FOXNews.com

Is the Social Security Trust Fund Worth Anything?
With over $1 trillion in assets, the U.S. Social Security trust fund is the largest pension reserve in the world, and potentially a model for other developed countries facing future financing problems.

The S.S. trust fund is absolutely worthless. Only the truly gullible believe otherwise.

Fox disagrees with you ... see above.

 

[Toro]

In the accounting for the federal government, SS receipts are credited to the US Treasury and debited to the SS accounts. They offset. If one is viewing gross debt, all one will see is the rise in debt owed by the US Treasury. That's what you are seeing when you see an increase in US debt above. But this is misleading when looking at the fiscal balance of the entire government because the assets of the SS trusts also rise. Netting the two out - total debt less total assets - gives a truer picture of government indebtedness. Total net debt - liabilities less assets - declined at the end of the 90s.

That's your first error: Social Security has no assets.

If the value of your house rises by X and you take out a HELOC worth 0.5X to pay off 0.5X in credit card debt, your net balance has not deteriorated. Your total net debt has not worsened. But if you judge your fiscal balance based solely on your mortgage debt, it looks like you are in worse shape. That's wrong. Looking solely at total US debt is like looking at only at your mortgage debt without considering anything else.

Unfortunately for your analogy, that isn't what the government does. Social Security payments are not debt payments. Social Security confers no financial obligations on the government whatsoever. The government would be cating perfectly legally if it cut off SS payments tomorrow.

The SS trusts are comprised of nonmarketable government liabilities, which are assets. If you own a Treasury bond issued by the US government, that is a liability of the US government and an asset to you. Likewise, the government issues liabilities to the SS trusts, which are assets of the trusts. In government accounting, they net out.

If you are saving for a house, and you pledge to put $1000 a month away but miss a month and promise to deposit $2000 next month, you have created a liability of $1000 payable next month, which is an asset to your deposit account since you owe the account $1000. However, your net balance has not changed. Net debt of the US government fell at the end of the 90s because of this netting effect.

SS definitely confers financial obligations on the government. It is the law. The good news (bad news?) is that the government can wipe out those liabilities with a stroke of a pen.

It is important to note that in terms of this debate on the surpluses, no Republican economist makes this argument. If it were true, there would be hundreds of economists making this point. But there aren't. Why? Because there were surpluses.

 

[Toro]

Social Security Trust Fund Worth $1.6 Trillion - Politics | Republican Party | Democratic Party | Political Spectrum - FOXNews.com

Is the Social Security Trust Fund Worth Anything?
With over $1 trillion in assets, the U.S. Social Security trust fund is the largest pension reserve in the world, and potentially a model for other developed countries facing future financing problems.

The S.S. trust fund is absolutely worthless. Only the truly gullible believe otherwise.

Fox disagrees with you ... see above.

SS is a contractual obligation of the government, just like tradable government bonds. That doesn't mean all obligations will be paid since governments can default on their obligations, but the liabilities come from the same source.

 

[Truthmatters]

Why dont the republicans run as their main issue being the end of SS.

That will work out very well for them dont you think?

 

[Toronado3800]

Why dont the republicans run as their main issue being the end of SS.

That will work out very well for them dont you think?

Complaining about social security is a favorite republican talking point. Like democrats and gun control or republicans and abortion.

Wins some votes from non political voters and they offer only lip service.

 

[DontBeStupid]

Why dont the republicans run as their main issue being the end of SS.

That will work out very well for them dont you think?

They were trying it for a while with Medicare, and might try more of it next year.

 

[PLYMCO_PILGRIM]

Ryan Dwyer is a Washington lawyer and a fellow with the National Review Institute.

1. $15 trillion of new wealth was created. The U.S. economy added 8 million new jobs from mid-2003 to early 2007,

2. median household increased its wealth by $20,000 in real terms.

3. Bush tax cuts also generated a massive increase in federal tax receipts

4. tax revenues increased by $785 billion, the largest four-year increase in American history.

5. income tax receipts were up 40 percent in the three years following the Bush tax cuts.

6. the rich paid an even higher percentage of the total tax

So....you don't like the messenger, but have found no error in the message?


Sounds kind of intellectually lazy at best.
Is that the methodology taught to Liberals?

TM you made 4 or 5 responses to this post by PC and none of them adressed any of the facts listed.

 

[JRK]

The intent of the thread was has been a success so far

Lets also add to this debate that we have got to cut spending

Why cannot we go back to 07 or 08 spending levels?

And why did GWB sign into law an unfunded Medicare program?

His biggest mistake by far, as much as I support him, a huge mistake
fund it thru Medicare tax increase that never is allowed to b used for other


That one I will never understand. We where close in 2007 to being balanced
Obama has killed any chance of that ever happening again

 

[DontBeStupid]

Ryan Dwyer is a Washington lawyer and a fellow with the National Review Institute.

1. $15 trillion of new wealth was created. The U.S. economy added 8 million new jobs from mid-2003 to early 2007,

2. median household increased its wealth by $20,000 in real terms.

3. Bush tax cuts also generated a massive increase in federal tax receipts

4. tax revenues increased by $785 billion, the largest four-year increase in American history.

5. income tax receipts were up 40 percent in the three years following the Bush tax cuts.

6. the rich paid an even higher percentage of the total tax

So....you don't like the messenger, but have found no error in the message?


Sounds kind of intellectually lazy at best.
Is that the methodology taught to Liberals?

TM you made 4 or 5 responses to this post by PC and none of them adressed any of the facts listed.

I'll address them. And I'll start by asking, how do we know these are facts? I don't see a source cited.

1) That job growth is about 166,000 per month, which as any good conservative will tell you , is terrible. Carter averaged over 210,000 per month, and as any good conservative will, he was terrible. As for $15T in new wealth, so what? How many people go that wealth? We don't know. Meaningless numbers are meaningless.

2) The median household is the household who just happened to be in the middle of the list. This means half the households in this country got less. And, since we weren't given the average or the total households counted or the upper limit, this number means nothing, as it could mean that half of all households got zero.

3) Historically false, proven false, shown to be false. Honestly, how many times does this have to be brought up before you guys accept it? I mean seriously, here are the numbers. The real numbers. Why don't you just look at them?
Historical Federal Receipt and Outlay Summary

4) Asked and answered. Not adjusting for inflation means most presidents set a 4-year record when they are in office. Clinton did it 3 times at least as did Reagan. Hell, I think Carter did too!

5) Now this is interesting. The OP has decided to start counting only after all three cuts were in place, as if that was Bush's plan all along, which we all know it was not. If you count the three years after each cut was put in place on its own, you will see a mere 20% increase over 6 years. That's a 3% increase per year, which is terrible.

6) Unsupported claims mean nothing. What do you consider "rich"? What are you using for "total tax"? Higher percentage than when?

 

[JRK]

1. $15 trillion of new wealth was created. The U.S. economy added 8 million new jobs from mid-2003 to early 2007,

2. median household increased its wealth by $20,000 in real terms.

3. Bush tax cuts also generated a massive increase in federal tax receipts

4. tax revenues increased by $785 billion, the largest four-year increase in American history.

5. income tax receipts were up 40 percent in the three years following the Bush tax cuts.

6. the rich paid an even higher percentage of the total tax

So....you don't like the messenger, but have found no error in the message?


Sounds kind of intellectually lazy at best.
Is that the methodology taught to Liberals?

TM you made 4 or 5 responses to this post by PC and none of them adressed any of the facts listed.

I'll address them. And I'll start by asking, how do we know these are facts? I don't see a source cited.

1) That job growth is about 166,000 per month, which as any good conservative will tell you , is terrible. Carter averaged over 210,000 per month, and as any good conservative will, he was terrible. As for $15T in new wealth, so what? How many people go that wealth? We don't know. Meaningless numbers are meaningless.

2) The median household is the household who just happened to be in the middle of the list. This means half the households in this country got less. And, since we weren't given the average or the total households counted or the upper limit, this number means nothing, as it could mean that half of all households got zero.

3) Historically false, proven false, shown to be false. Honestly, how many times does this have to be brought up before you guys accept it? I mean seriously, here are the numbers. The real numbers. Why don't you just look at them?
Historical Federal Receipt and Outlay Summary

4) Asked and answered. Not adjusting for inflation means most presidents set a 4-year record when they are in office. Clinton did it 3 times at least as did Reagan. Hell, I think Carter did too!

5) Now this is interesting. The OP has decided to start counting only after all three cuts were in place, as if that was Bush's plan all along, which we all know it was not. If you count the three years after each cut was put in place on its own, you will see a mere 20% increase over 6 years. That's a 3% increase per year, which is terrible.

6) Unsupported claims mean nothing. What do you consider "rich"? What are you using for "total tax"? Higher percentage than when?

Your rebuttle has little information within it and I really have no idea what some of it is about
Can we all agree that 9-11 and 2 wars may have had an impact on the debt?
Can we all agree that your taking 3 years in which we had 9-11, Enron, a recession, a stock market crash?
Rich people pay taxes, allot of taxes. Like me
I make 70,000 a year
i am rich, huh?
Can we agree that me paying 10,000 in income tax is better for the economy than me paying 13,000?
thats the diff from Clinton to GWB for me

 

[JRK]

Why dont the republicans run as their main issue being the end of SS.

That will work out very well for them dont you think?

They were trying it for a while with Medicare, and might try more of it next year.

what brings you to think the GOP is trying to destroy anything?
My paycheck has some missing every week for both Medicare and SS