how will the left spin this

[theHawk]

What if they simply accumulate the money and don't spend? How does that help the economy?

Let me get this straight, if someone accumulates wealth and doesn't go out and spend it, it is somehow bad? People shouldn't strive to live their lives debt free, or to save their money for the future of their family, or a rainy day? Even if money sits in a bank it is still being loaned out by that bank hence interest rates...

 

[Huckleburry]

We are talking about tax cuts as a economic stimulator. If the goal is to use tax policy to encourage economic activity then you want people to spend the money they recieve from tax cuts. So in this scenario a high MPS is infact a bad thing

 

[KarlMarx]

April Tax Revenue 2nd-Highest in History


http://www.breitbart.com/news/2006/05/10/D8HH2QCO3.html

 

[Diuretic]

Let me get this straight, if someone accumulates wealth and doesn't go out and spend it, it is somehow bad? People shouldn't strive to live their lives debt free, or to save their money for the future of their family, or a rainy day? Even if money sits in a bank it is still being loaned out by that bank hence interest rates...

I was asking a question, not making a statement. I'd read somewhere that too much accumulation of money without putting it back into the ecoonomy was a bad thing. My question was answered.

 

[rtwngAvngr]

We are talking about tax cuts as a economic stimulator. If the goal is to use tax policy to encourage economic activity then you want people to spend the money they recieve from tax cuts. So in this scenario a high MPS is infact a bad thing

Don't forget how low taxes encourage businesses to build and staff up for the long term, if taxes are targetted to them and made permanent.

 

[Huckleburry]

To be quite honest I think too much time and energy is devoted to taxes. Interest rates, liquidity, and institutional stability are far more important to economic growth than tax cuts.

From a theory perspective, Tax cuts can only provide temporary shifts off of the natural equilibrium. These other drives can actually shift the demand, supply curves thereby permantly moving the natural equilibrum permantly.

If economic growth is really what we are after than we should focus on infastructure, enlightend regulation, TRADE LIBERALIZATION and long term demand drivers as these are the real drivers of economic growth. Tax cuts are a nice injection but do not do the trick over long periods of time.

 

[dilloduck]

To be quite honest I think too much time and energy is devoted to taxes. Interest rates, liquidity, and institutional stability are far more important to economic growth than tax cuts.

From a theory perspective, Tax cuts can only provide temporary shifts off of the natural equilibrium. These other drives can actually shift the demand, supply curves thereby permantly moving the natural equilibrum permantly.

If economic growth is really what we are after than we should focus on infastructure, enlightend regulation, TRADE LIBERALIZATION and long term demand drivers as these are the real drivers of economic growth. Tax cuts are a nice injection but do not do the trick over long periods of time.

Long term demand drivers---such as?

 

[Mariner]

after all, we're engaged in massive deficit spending year after year, which stimulates the economy, and we're receiving nearly $2 billion per day in foreign money to keep us afloat.

Unfortunately, there's never been the slightest evidence (that I've seen--enlighten me, please if you know some) that the ideology of "trickle down" actually works. It didn't work in Reagan's years, and it's not working now. The average worker is more productive than at any point in history--but a larger percentage of his/her salary is owned by the employer than ever before--and most of those dollars are going to top management--the same people making enormous contributions to the Republican Party to ensure that all their $$ go untaxed. Workers are squeezed by competition from abroad, and are losing their benefits, from pensions to health care, wholesale. The number of uninsured continues to rise--why isn't this booming economy taking care of them?

So, that's the liberal argument against the current pattern of growth: it's not going to those who are making it happen.

My perspective is that most conservatives here have a terribly hard time wrapping their minds around the unfortunate fact that unbridled capitalism--which is far and away the most efficient and productive economic system--doesn't distribute wealth effectively. In our early history, this was balanced by handouts from the gov't in the form of land grants. Later, tariffs protected American manufacturers from cheaper foreign goods. Unions and anti-trust legislation protected worker income, created the weekend, and kept the earlier generation of robber barons in check. Finally, things like the Social Security, the GI bill and especially redistributive taxation--high rates on wealthy people and low on poorer people--made sure that the middle class stayed afloat. As Bush et al disassemble this redistribution, economic disparities increase. It's simply too easy to make more money if you already have some.

The constant ideologic argument that wealthy people are business owners who will reinvest their money in expanding their businesses simply doesn't have real-world support. Many wealthy people inherited their money, or made it and are now sitting back and enjoying it. They're not contributing to society. I've given the example of my uncle before. He's a self-made multimillionaire businessman. Bush's tax cuts didn't make him expand his business one bit or pay his workers any more. They simply made him wealthier than he already was. The same would hold true for many a small businessperson who would prefer more time with family to running a larger company.

Do we really want an aristocratic class in the U.S., 4 or 5 % of the population who sit by the pool making more money in a week than those who hold towels for them make in a year? (Or in the case of Larry Ellison of Oracle, it would take 7000 years for the average worker's salary to catch up to his annual one.)

It may be depressing to conservatives to realize that the middle class can't support itself without some form of social engineering, but it simply seems to be true. Ideology can't trump reality.

Mariner.

 

[Huckleburry]

Mariner,

Your assesment is unfortunatly correct. What most folks do not understand (especially on this board) is that we live in an engineerd society. Yes, we have a free market framework but there are tons of exceptions. Yes we are free, but there are ton's of exceptions. Trickle down was a clever way to disguise handouts to republican supporters as smart economic development. It is not, and there is not a credible economist out that supports it.

Now many people argue that the Regan tax cuts followed by Bush 1 spending caps were responsible for Clinton's economic success. They are wrong. The economy is on a 5-8 year cycle. The major upswing came in Clinton's second term, just as some of his economic policies were taking effect and well after the legacy of Regan and Bush expired.

Our current economic policy is disasterous. At the moment the effects of it show up in the strength of the dollar v. other major economies. Currency is valued by way of very technical analysis. The technique cares very little for the politics of any particular nation. This is not a liberal conspiracy to take down Bush by undervaluing the dollar. Bush ruined the dollar all by himself.

 

[MtnBiker]

Well Manu1959 , there is some spin for you.

 

[Huckleburry]

It's not spin it's the truth. Spin is what began this thread. Our economy should be expanding, if it is not then we are serious serious trouble. This palce is increadible...the right could walk you guys off a cliff and you would blame the left for inventing gravity. Take the time to understand what it is you are talking about here. About all I get is half assed trickledown and austrian model which is Neo Classical redux. Both models stink and the former has been so widely discredited that people who know what they are talking about don't let it enter a conversation.

Please, defend these tax cuts, defend this administrations economic record but do so with empirical evidence from someplace other than the Heritage Foundation.

 

[manu1959]

Well Manu1959 , there is some spin for you.

moths to the flame.....moths to the flame

 

[BaronVonBigmeat]

People on all sides of the political spectrum get Reagan wrong. During the 1980's, taxes were cut; but then later on SS taxes were raised. Government spending went up--dramatically--as did the money supply. So you've got the income tax which was cut, but two regressive taxes which went up. You can't really say that A, B, or C were the cause of growth or stagnant incomes or whatever, just by looking at historical data. It's not like a lab experiment where you can re-run it and change just one factor.

Having said that, the key issue is small government. You can shift taxes from one segment of society to another, but it's just a shell game. A government that siphons off large portions of the economy is going to cause widespread economic pain, regardless of how they get their money. Taxes on the rich, taxes on the middle class, high inflation, high borrowing (crowds out private investment)...there's no free lunch, and these will all create misery. You'd have better luck trying to invent a perpetual motion machine. Socialism doesn't work. Want to help the common man? Then advocate what labor unions used to: sound money.

 

[Diuretic]

Questions. Is it possible in advanced capitalist economies like the US or Canada or the UK or Europe not to have "big government"? Is it that reality will triumph over ideology and government will be exactly the size it needs to be?

Please don't let this deteriorate into another round of mindless liberal/socialist bashing by the von Mises adherents. I'm really looking for an answer. Mariner made an excellent post explaining the reality of managing a capitalist economy. It seems to me that government must be "big" enough to manage a capitalist economy because if government isn't "big" - ie influential, powerful - enough to do so then the economy itself will cease to exist as a structure identifiable with the nation that seeks to run it on behalf of its citizens. Perhaps the "small is beautiful" mantra is fine in a textbook but in a real economy with the supercharged power of an advanced capitalist economy a government that was too "small" would be wiped out.

 

[Mariner]

when you ask people here (as I have, several times) exactly what parts of "big" gov't they are willing to live without, they tend to come up blank. They seem to like the Coast Guard, National Parks, highways, federal research that synergistically benefits private industry, the Army, etc. etc. The only thing they'll keep coming back to is "welfare" and "entitlements." They forget that welfare barely exists in its traditional form anymore. And when it comes to entitlements, they're too decent truly to let sick people die in the streets. Take them case by case, and they have difficulty figuring out how to cut entitlements fairly.

I'm as against gov't waste as anyone--but there are ways to attack gov't waste without attacking the concept of gov't. The Republican party has made a business out of bashing "big gov't," but since they have been the gov't for the past few years, you don't actually see them making it smaller, or offering a rational critique of where cuts could be made. Instead they keep beating the same dead horse--"liberals are bad because they want to raise your taxes." Sorry, Republicans--you ARE the gov't now, the biggest in world history, so show us how it should be done, and stop blaming Democrats and liberals for your problems actually doing it.

Mariner.

 

[rtwngAvngr]

Three psychopaths in a room telling each other they're right. This thread is like a microcoms of DU.

 

[Diuretic]

Got one for Free Republic?

 

[rtwngAvngr]

Got one for Free Republic?

You may find one or two if you look around!

 

[Diuretic]

Well I have to say this is forum is much less extreme than DU or FR. I prefer it.

 

[BaronVonBigmeat]

Questions. Is it possible in advanced capitalist economies like the US or Canada or the UK or Europe not to have "big government"? Is it that reality will triumph over ideology and government will be exactly the size it needs to be?

Please don't let this deteriorate into another round of mindless liberal/socialist bashing by the von Mises adherents. I'm really looking for an answer. Mariner made an excellent post explaining the reality of managing a capitalist economy. It seems to me that government must be "big" enough to manage a capitalist economy because if government isn't "big" - ie influential, powerful - enough to do so then the economy itself will cease to exist as a structure identifiable with the nation that seeks to run it on behalf of its citizens. Perhaps the "small is beautiful" mantra is fine in a textbook but in a real economy with the supercharged power of an advanced capitalist economy a government that was too "small" would be wiped out.

How is an advanced capitalist economy going to "wipe out" our government?

To answer your question, yes, you can have an advanced capitalist economy without big government. History shows us that big socialist governments tend to correlate with stagnant living standards, and you still have inequality, even in the most hardline socialist governments.

when you ask people here (as I have, several times) exactly what parts of "big" gov't they are willing to live without, they tend to come up blank. They seem to like the Coast Guard, National Parks, highways, federal research that synergistically benefits private industry, the Army, etc. etc. The only thing they'll keep coming back to is "welfare" and "entitlements." They forget that welfare barely exists in its traditional form anymore. And when it comes to entitlements, they're too decent truly to let sick people die in the streets. Take them case by case, and they have difficulty figuring out how to cut entitlements fairly.

I agree that "welfare", ie payments to the poor, are a relatively small portion of expenditures, and they would not be my #1 item to cut. The problems with welfare are not the money costs, but the human costs.

But, if you want a list, here's one for starters:

* Reduce the size of the military. We spend more than like...the next dozen or more countries combined. Bring our troops home, make huge cuts, focus on actual defense, and adopt a strictly swiss-like policy of neutrality. No more foreign aid either.

* Eliminate several departments entirely: Commerce (the dept. of corporate welfare), Education, Agriculture, Labor, HUD, and Energy just off the top of my head.

* Phase out social security, so that people can afford to retire.

* Eliminate medicare and medicaid, and severely curtail the FDA in order to cut medical costs. At the very most, they should be testing to see if drugs are safe (which they used to do, which was fairly easy), instead of safe and effective, which delays life saving drugs and drives up medical costs.

* Pay off the national debt. If there was no debt, we could entirely eliminate income taxes. We cannot do this under a debt-based fiat currency like we have now though. If all debts were paid off, there would be no dollars in circulation.

* Auction off national parks and all the other vast federal land holdings. Use that to pay off SS obligations and the debt. Ditto for the interstate highway system.

* No more war on drugs. No more bloated budgets for the police state, no more overflowing government prisons.