McCain's Tax Cuts Would Cause the Deficit to Explode

[Dogger]

Because it is socialist to suggest that government spending is more efficient and produces more economic activity than does spending by individuals and businesses. It is absurd because it is an idea whose enactment has repeatedly failed ever since Engels brought it up. Do you need a list of failed socialist experiments? What is the motivation for efficiency when you are spending someone else's resources? Capacity you did not earn? Ear mark that.

I never said government spending is more efficient. I've said it's necessary. I can't cover everything without writing a textbook, so stop putting words into my mouth. I was talking about stimulus, and even waste can create stimulus.

RGS made a salient point (atypical for him, I might add) about spending to meet a budget. This does not happen in small business, but it happens in many goverenment agencies and big corporations, which tend to be bureaucratic. I believe we need to eliminate the perverse incentives that RGS described, but that is another textbook.

Some economic activities produce stimulus, e.g. purchasing a car. Other activities, such as transferring funds from one investment to a similar investment, produce little or none. Different activities produce different levels of stimulus.

Tax cuts for the poor and working class go almost completely into activities that stimulate the economy. But tax cuts have been concentrated to benefit the wealthy, who put a large chunk of it into activities that generate meager or no economic stimulus. When you compare the net simulative effect of the tax cuts, you begin to understand why the economy falters when the supply-siders say it will soar.

Supply side economics is a hoax. It is the economic equivalent of a fad diet. People who will reap millions in savings are selling it to the rest of us for their own gain. We get a few hundred dollars in illusory savings, while every man, woman and child winds up owing almost $30,000 each on our national debt, and annual interest of roughly $1,000 each.

 

[TheGoodShepherd]

Tax cuts have, and continue to maintain a record of stimulating world economies. Conversley, history has shown government intervention and tax raises have helped ignite vigor into economies as well. Remember, the US bailout of Mexico some years ago? Its a great example of how tax raises (by the Mexican government) and U.S. government intervention helped stave off an economic calamity.

However, such a broad question in no way answers a very specific question. Will tax cuts help stimulate the current U.S. economy?

I think thats the question that has to be answered. I do not think anyone can answer this question fully and appropriately without first discussing the state of the U.S. economy.

 

[Dogger]

Tax cuts have, and continue to maintain a record of stimulating world economies. However, such a broad question in no way answers a very specific question.

Will tax cuts help stimulate the current U.S. economy?

I think, thats the question that has to be answered. I do not think anyone can answer this question fully and appropriately without first discussing the state of the US economy.

That may be true if the cuts are not accompanied by spending cuts, but that model is not sustainable. It's hard to isolate the effect of tax cuts alone, because they do not happen alone. When you control for other factors, tax cuts have little stimulus effect unless they are concentrated at the lower bracket instead of the top.

 

[onedomino]

I never said government spending is more efficient. I've said it's necessary. I can't cover everything without writing a textbook, so stop putting words into my mouth. I was talking about stimulus, and even waste can create stimulus.

You've got a real short memory. I did not need to put "words in your mouth" because you wrote these socialist sentences: "Tax cuts do not stimulate the economy, especially if they are coupled with spending cuts. There is a stimulus, but it is offset by the greater loss of stimulus from spending cuts." What can the second sentence possibly mean other than government spending provides a greater (more efficient) economic stimulus than private spending? That is precisely what you wrote. And it is false. It is socialism, and it has repeatedly failed wherever it has been enacted. Moreover, using government spending to provide an economic stimulus reduces the prerogative of the individual or business and places the choice of how to spend in the hands of the Collective. I realize that it is a foreign concept to you, but there are individuals and businesses that want the freedom of choice as to how their resources are spent.

We should discuss applying taxes and spending cuts to definitively balance the budget, and reduce the national debt. Reduced taxes without corresponding (or even deeper) government spending cuts is like a short-term fix for a junkie. The effect quickly wears off, and all the old problems still remain. The Bush Administration has been the worst offender, but ultimately the Congress signed off on the horrendous deficits produced during the past seven years. The tax rebate "stimulus" recently agreed to by the Congress and the President is something a junkie could appreciate. In fact, the rebate borrows (steals is a more accurate term) the unearned money from future generations, while simultaneously fueling inflation, reducing the credit supply, and suppressing the value of the dollar thereby increasing the price of imported oil.

 

[TheGoodShepherd]

You've got a real short memory. I did not need to put "words in your mouth" because you wrote these socialist sentences: "Tax cuts do not stimulate the economy, especially if they are coupled with spending cuts. There is a stimulus, but it is offset by the greater loss of stimulus from spending cuts." What can the second sentence possibly mean other than government spending provides a greater (more efficient) economic stimulus than private spending? That is precisely what you wrote. And it is false. It is socialism, and it has repeatedly failed wherever it has been enacted. Moreover, using government spending to provide an economic stimulus reduces the prerogative of the individual or business and places the choice of how to spend in the hands of the Collective. I realize that it is a foreign concept to you, but there are individuals and businesses that want the freedom of choice as to how their resources are spent.

We should discuss applying taxes and spending cuts to definitively balance the budget, and reduce the national debt. Reduced taxes without corresponding (or even deeper) government spending cuts is like a short-term fix for a junkie. The effect quickly wears off, and all the old problems still remain. The Bush Administration has been the worst offender, but ultimately the Congress signed off on the horrendous deficits produced during the past seven years. The tax rebate "stimulus" recently agreed to by the Congress and the President is something a junkie could appreciate. In fact, the rebate borrows (steals is a more accurate term) the unearned money from future generations, while simultaneously fueling inflation, reducing the credit supply, and suppressing the value of the dollar thereby increasing the price of imported oil.

Wow. This is one stupid post.

 

[Dogger]

You've got a real short memory. I did not need to put "words in your mouth" because you wrote these socialist sentences: "Tax cuts do not stimulate the economy, especially if they are coupled with spending cuts. There is a stimulus, but it is offset by the greater loss of stimulus from spending cuts." What can the second sentence possibly mean other than government spending provides a greater (more efficient) economic stimulus than private spending? That is precisely what you wrote. And it is false. It is socialism, and it has repeatedly failed wherever it has been enacted. Moreover, using government spending to provide an economic stimulus reduces the prerogative of the individual or business and places the choice of how to spend in the hands of the Collective.

**** pointless rant deleted ****

You are quoting me out of context, and distorting my meaning.

You were talking about efficiency in terms of private v. public spending. You said, "Why do you think the government would be better at spending our money than we are? Why not stimulate the economy with what we spend rather than the government? Post #20

Whether that is accurate is not relevant, and a separate question from what I was discussing. Like I said, I'm not writing a text book.

The efficiency of private v. public spending doesn't matter to my point because I was talking about bang for the buck in terms of stimulus. Even wasteful, inefficient spending can create stimulus.

When you asked, "Why not stimulate the economy with what we spend rather than the government?", you hit on my reasoning tangentially. As I explained elsewhere in this thread, tax cuts for the wealthy have less "bang" because "the wealthy . . . put a large chunk of it into activities that generate meager or no economic stimulus." Post #41.

That means that the government is no longer spending "X" number of dollars, the wealthy get a large portion, and they only spend a fraction of it.

 

[onedomino]

Wow. This is one stupid post.

Now there is a brilliant remark. Learn that in economics? You know the paucity of intellect of someone who would post a vacuous drive-by like that is staggering. Obviously the immature little boy has done it for effect. And the effect is to demonstrate the Leftist nature of his one tiny brain cell. But it is hardly surprising because the intellectual bankruptcy of the extreme Left is often accompanied by name calling. Just like the very little boy above.

 

[ReillyT]

Now there is a brilliant remark. Learn that in economics? You know the paucity of intellect of someone who would post an vacuous drive-by like that is staggering. Obviously the immature little boy has done it for effect. And the effect is to demonstrate the Leftist nature of his one tiny brain cell. But it is hardly surprising because the intellectual bankruptcy of the extreme Left is often accompanied by name calling. Just like the very little boy above.

Well, it was a stupid post... and technically, that doesn't qualify as name calling.

 

[Ravi]

I'm still scratching my head over the existence of socialist sentences.

 

[ReillyT]

I'm still scratching my head over the existence of socialist sentences.

I missed that. That is pretty funny. Good catch.

 

[onedomino]

I'm still scratching my head over the existence of socialist sentences.

Hard time grasping that? I am not surprised. Nice cheap shot.

 

[Ravi]

Hard time grasping that? I am not surprised. Nice cheap shot.

Sorry, I didn't mean to push your button.

 

[onedomino]

You are quoting me out of context, and distorting my meaning.

You were talking about efficiency in terms of private v. public spending. You said, "Why do you think the government would be better at spending our money than we are? Why not stimulate the economy with what we spend rather than the government? Post #20

Whether that is accurate is not relevant, and a separate question from what I was discussing. Like I said, I'm not writing a text book.

The efficiency of private v. public spending doesn't matter to my point because I was talking about bang for the buck in terms of stimulus. Even wasteful, inefficient spending can create stimulus.

When you asked, "Why not stimulate the economy with what we spend rather than the government?", you hit on my reasoning tangentially. As I explained elsewhere in this thread, tax cuts for the wealthy have less "bang" because "the wealthy . . . put a large chunk of it into activities that generate meager or no economic stimulus." Post #41.

That means that the government is no longer spending "X" number of dollars, the wealthy get a large portion, and they only spend a fraction of it.

Your context was post 13, and I had not even made a post in the thread then. By hey, if you did not mean it, then you are not really the Leftist that I have read in your other posts. You'll have to excuse me for a moment because I want to read the rabid pack of extremists that have much to offer the thread. It's a risk though. Because if we are unfortunate, ReillyT will start to again talk about his "shit" theory of economics. The one with which he earlier graced the thread.

 

[ReillyT]

Your context was post 13, and I had not even made a post in the thread then. By hey, if you did not mean it, then you are not really the Leftist that I have read in your other posts. You'll have to excuse me for a moment because I want to read the rabid pack of extremists that have much to offer the thread. It's a risk though. Because if we are unfortunate, ReillyT will start to again talk about his "shit" theory of economics. The one with which he earlier graced the thread.

Actually, it is the same concept that Dogger is trying to get you to understand (and the same one conveyed by the JM Keynes quote): Even inefficient or wasteful spending can stimulate the economy.

It isn't that difficult Dude.

 

[Ravi]

Nope. And there is no way that is a socialist statement. It's just reality.

 

[Dogger]

Your context was post 13, and I had not even made a post in the thread then.

You initiated a quibble over the word "efficiency", a word I did not use in post 13. You inferred from my discussion of one topic (stimulus) that I said something about the efficiency of "public v. private spending".

 

[BaronVonBigmeat]

It isn't my example. It is John Maynard Keyne's example. The point is not that digging holes is the optimal use of government spending. The point was that even inefficient government spending (in this case, digging holes) can put money into people's pockets, which will then be spent on goods and services, which will increase demand, which will stimulate production and job growth, which will increase wealth.

It is the idea that got us out of the Great Depression.

The hole-filling example solves one problem only--it lowers unemployment--at a cost of course. The cost is to other taxpayers, who must lower their living standards due to the taxes paid for work that is worthless.

This is the broken window fallacy of course. WWII did reduce unemployment for example, and it may have been something that needed to be done, but economic growth remained flat. People were fully employed, but had to endure sub-par living standards via high taxes, shortages, and rationing.

The truth is that neither WWII nor the New Deal got us out of the depression. The Depression had more government intervention than any previous, and therefore lasted the longest. In previous depressions (for example, 1921), the government did nothing, and things returned to normal within a year or so. We didn't really truly recover until 1947, when most of the worst parts of the New Deal were quietly scrapped.

 

[ReillyT]

The hole-filling example solves one problem only--it lowers unemployment--at a cost of course. The cost is to other taxpayers, who must lower their living standards due to the taxes paid for work that is worthless.

It lowers unemployment, stimulates the circulation of money and increasing demand. This might be offset by higher taxation (in which case earned money is taken in tax), but in the circumstances of the Great Depression, we are talking about deficit spending.

This is the broken window fallacy of course. WWII did reduce unemployment for example, and it may have been something that needed to be done, but economic growth remained flat. People were fully employed, but had to endure sub-par living standards via high taxes, shortages, and rationing.

The truth is that neither WWII nor the New Deal got us out of the depression. The Depression had more government intervention than any previous, and therefore lasted the longest. In previous depressions (for example, 1921), the government did nothing, and things returned to normal within a year or so. We didn't really truly recover until 1947, when most of the worst parts of the New Deal were quietly scrapped.

Economic growth was not flat during WWII; GDP grew from $112B to $130B. It also grew substantially between 1933 and 1940; $68B to $112B. This is because of the new deal legislation, which in essence had the same stimulus effects as a tax cut, except no one had any money to pay taxes anyway (deficit spending). I recognize that my interpretation is still debated, but I think it is today the conventional one.

http://www.huppi.com/kangaroo/GDPreal.htm

 

[TheGoodShepherd]

Now there is a brilliant remark. Learn that in economics? You know the paucity of intellect of someone who would post a vacuous drive-by like that is staggering. Obviously the immature little boy has done it for effect. And the effect is to demonstrate the Leftist nature of his one tiny brain cell. But it is hardly surprising because the intellectual bankruptcy of the extreme Left is often accompanied by name calling. Just like the very little boy above.

What the hell are you talking about?

 

[Zoomie1980]

I said no such thing. But there are services only government can provide, and they are not free. There are other services that people want, and those cost money.

I like roads, parks, schools, FDIC, mail, non-collapsing bridges, internet, safer food and drugs, building codes, lead-free toys, cops, fire protection, disaster assistance and relief, clean water and air, safe air travel, and even our military. Where will they come from if we don't pay for them?

"Taxation is the price we pay for living in a civilized society." - Holmes (O.W., not Sherlock)

Actually most, but not all, of those are viable and proper functions of a government. Problem is that represents only a small portion of what our gov't actually does.

As for the few that don't belong,

1) Internet. Private enterprise is far more efficient and able to provide infrastructure for this, as it is except for the Sonic backbone, most of it is under private control now anyway and much of that backbone is being privatized.

2) Mail -- obsolete service no longer needed. What is left can be much better handled by Fed-Ex, DHL, UPS, etc...mostly because their workers are cheaper and non-unionized (i.e. not gov't subsidized).

3) Disaster relief -- yes in so far as transportation and public service infrastructure is concerned. After that, the private property owner is on their own. Get insurance. If you can't afford it or don't want to pay for it...too bad, don't build, and if you do, you take your chances and if you loose...tough shit that's the rules of the game....

The rest....all viable and yes, we have to pay for them those of us in the top 10% already do...to the tune of over 70% of it!