NeoCon-Artist Economic Delusions

[unlawflcombatnt]

The NeoCon-Artists are claiming that Friday's economic report indicates the overwhelming success of their economic policies. As such, they are using today's report to justify extending the tax cuts on the wealthy. Some are begrudgingly acknowledging that our huge national debt is a major problem. I completely agree that our $8 trillion national debt is a huge problem. However, the Republican "solution" is the same illogical economic mythology that they are famous for. As expected, extending the tax cuts on the most affluent is the key to their plans. And it still makes absolutely no economic sense. However, that's never stopped them in the past.

At present, cutting taxes on the affluent has no benefit whatsoever. The justification given is that if we increase the take-home pay of the affluent, they'll have more money to "invest." However, there is simply no need for increased investment capital at present.

The markets are already glutted with capital, because there are few investment opportunities. In other words, the amount of investment capital exceeds investment opportunities. (The Wall Street Journal states that the markets are "glutted with capital at present.") Capital does our economy no good sitting in Corporate cash-on-hand accounts, or being invested in foreign production facilities.

Why don't we role back the tax cuts on the top 2%, and use that money to pay down our debt? The capital created by those tax cuts is in excess of that which can be productively invested, so eliminating those tax cuts would NOT hurt our economy. In fact, reducing excessive investment capital might reduce the amount invested in foreign production facilities, which would reduce outsourcing and increase demand for American workers, increase aggregate American labor income, and in turn, increase wage-financed consumer spending.

Such changes would increase utilization of our current over-sized, under-utilized production capacity. A capacity utilization rate of 79.% indicates underutilization. And that indicates that our industrial capacity exceeds the demand for the production it provides. The goal should be to increase the utilization of capacity. It should NOT be to increase investment in an already over-sized, under-utilized capacity.

Why don't we stop listening to supply-side propaganda that maintains that economic growth is related exclusively to the availability of investment capital, and its corollary that tax cuts for the rich ALWAYS help the economy? This is simply self-serving economic fantasy. Economic expansion is related to the PRODUCTIVE investment of capital, which is related to demand for the production that capital facilitates. There is no capital investment without anticipated returns. And those returns are created by consumer spending, and the production demand it creates.

We need to put more money in the hands of consumers, not Corporate America. Only then will we have true economic "growth."


_________________
The economy needs balance between the "means of production" & "means of consumption."

 

[BaronVonBigmeat]

If we ever paid off our debt, there wouldn't be any dollars in circulation unfortunately.

 

[unlawflcombatnt]

If we ever paid off our debt, there wouldn't be any dollars in circulation unfortunately.

That's right. And as our debt mounts, the ability to pay it off continues to worsen.

 

[LuvRPgrl]

That's right. And as our debt mounts, the ability to pay it off continues to worsen.

WRong,,,the percentage that the debt represents to the GDP isnt the highest in history.

The economy is doing great, has been under Bush, partially because of the tax cuts.

As one becomes richer, one gains more debts. Same goes for govt.s You do realize Bill Gates owes millions and millions of dollars...since YOU DONT, I guess you must be running your own little personal economy much better than Bill does.

Debt is not a bad thing, as long as you are working and producing. Capitalism is based on debt, the stock market, home ownership, etc, etc.

Go read some basic economic books, then get back to us.

 

[KarlMarx]

The NeoCon-Artists are claiming that Friday's economic report indicates the overwhelming success of their economic policies. As such, they are using today's report to justify extending the tax cuts on the wealthy. Some are begrudgingly acknowledging that our huge national debt is a major problem. I completely agree that our $8 trillion national debt is a huge problem. However, the Republican "solution" is the same illogical economic mythology that they are famous for. As expected, extending the tax cuts on the most affluent is the key to their plans. And it still makes absolutely no economic sense. However, that's never stopped them in the past.

What is the matter with you people? You perseverate about a tax cut for the rich! Don't you realize that is simply DNC propaganda? More specifically, propaganda started by politicians trying to keep the tax spigot open as much as possible?

The tax cut for the rich as you call it was a tax cut for everybody, including the Middle Class. We have a graduated income tax system. The top income earners pay a larger percentage of their income, hence, any cut in taxes will translate into a larger percentage of income made available to them.

You aren’t taxing people, you tax economic activity unless you pass a law that has a list of names on it (which you can’t because there is an equal protection clause in the Constitution)….

I know what it is…. You just want to punish the wealthy for being wealthy, isn’t that what it is? So rather than say, rounding them up and executing them you want to do the next best thing, tax them to death or just confiscate their property.

At present, cutting taxes on the affluent has no benefit whatsoever. The justification given is that if we increase the take-home pay of the affluent, they'll have more money to "invest." However, there is simply no need for increased investment capital at present.

There always is a need for capital investment…. How would you like if it some government bureaucrat told you that you can’t buy a car or a computer because there is no need for capital investment….

Tax cuts do have a benefit. Many affluent people are business owners.

The markets are already glutted with capital, because there are few investment opportunities. In other words, the amount of investment capital exceeds investment opportunities. (The Wall Street Journal states that the markets are "glutted with capital at present.") Capital does our economy no good sitting in Corporate cash-on-hand accounts, or being invested in foreign production facilities.

Why don't we role back the tax cuts on the top 2%, and use that money to pay down our debt? The capital created by those tax cuts is in excess of that which can be productively invested, so eliminating those tax cuts would NOT hurt our economy. In fact, reducing excessive investment capital might reduce the amount invested in foreign production facilities, which would reduce outsourcing and increase demand for American workers, increase aggregate American labor income, and in turn, increase wage-financed consumer spending.

Silly, tax cuts encourage economic activity and thus, increase revenue to the government.
I have a better idea, in addition to cutting taxes, why don’t we cut government spending in real terms? Let’s start with many useless social programs, the NEA (National Endowment for the Arts) and Public Broadcasting. Let’s end farm subsidies and abolish the Department of Education. Let’s privatize Amtrak and the Post Office. Let’s reform Social Security so that people can put that money into 401(k) like investment accounts.

Here are a few more examples of government tax dollars at work….

$100,000 for the Punxsutawney Weather Museum in Pennsylvania."
$450,000 for the Baseball Hall of Fame,
$200,000 for the Dennison Railroad Depot Museum in Ohio
$350,000 for the Rock and Roll Hall of Fame,
$1.5 million for the Anchorage Museum/Transit intermodal depot in Alaska,
$250,000 for the Country Music Hall of Fame
$100,000 for the Municipal Swimming Pool in Ottawa, Kan.
$35,000 for the Alabama Sports Hall of Fame
$1.5 million for departing Congressman Richard Gephardt's archive at the Missouri Historical Society

We need to put more money in the hands of consumers, not Corporate America. Only then will we have true economic "growth."

OK… give them a bigger tax cut!!!!!!!

I noticed you signature. You’re not fooling me, you’re a Marxist and want to see a Soviet Style command economy imposed on the rest of us…. Free market economies aren’t perfect, but they’re much better than command economies…

 

[Hobbit]

"Corporate America" does not pay taxes. They collect them. For more information, please see the "Corporations do not pay taxes" thread in the economy forum. If you want more money in the hands of the consumers, abolish corporate tax so everyone can actually see what they're paying. In fact, let's just abolish all income tax. It's a crappy system.

 

[unlawflcombatnt]

WRong,,,the percentage that the debt represents to the GDP isnt the highest in history.

Wrong, the dollar value of our total public debt is increasing faster than our GDP. This year's increase in total public debt was $539 billion. Using a 3.3% inflation rate, that would make the public debt $521 billion in 2003 dollars. That makes the increase 5.0% of our 2003 real GDP. The 2004 real GDP increased $435 billion. Thus, total public debt increased $86 billion more than GDP.

Our debt is increasing faster than our production. The economy is doing poorly, except for Corporations and the top 2% income earners. Debt growth continues to outpace GDP growth. The ratio of our debt to GDP is increasing rapidly.

The economy is doing great, has been under Bush, partially because of the tax cuts.

Wrong again. Our economy is sinking rapidly, largely as a result of Bush's misguided tax cuts. Debt definitely is a problem, if it continues to outstrip GDP growth.


_________________
The economy needs balance between the "means of production" & "means of consumption."

 

[dilloduck]

Wrong, the dollar value of our total public debt is increasing faster than our GDP. This year's increase in total public debt was $539 billion. Using a 3.3% inflation rate, that would make the public debt $521 billion in 2003 dollars. That makes the increase 5.0% of our 2003 real GDP. The 2004 real GDP increased $435 billion. Thus, total public debt increased $86 billion more than GDP.

Our debt is increasing faster than our production. The economy is doing poorly, except for Corporations and the top 2% income earners. Debt growth continues to outpace GDP growth. The ratio of our debt to GDP is increasing rapidly.



Wrong again. Our economy is sinking rapidly, largely as a result of Bush's misguided tax cuts. Debt definitely is a problem, if it continues to outstrip GDP growth.


_________________
The economy needs balance between the "means of production" & "means of consumption."

Explain how Bushs' tax cuts have hurt the economy and lets hear why else it's "failing" .

 

[BaronVonBigmeat]

The problem isn't the meager tax cuts. All taxes are bad for the economy, to some extent or another. You can argue that the harm they cause is a necessary evil, and worth it for government expenditures that the private sector can't provide (that list of things is exceedingly slim). But taxes in and of themselves do not help the economy.

Cutting taxes on one hand, while printing money to cover expenses on the other hand, means you haven't really changed the burden on the private economy. You've traded a lower income tax rate for a higher stealth-tax (inflation) rate. Really, the only thing that matters in the end is the size of government--which has grown wildly out of control in the last 4 years. A leviathan state can only draw it's massive resources from the private sector in one way or another, there is no way you can get around that without the general population feeling some economic pain.

It's worth looking at other countries that have paid off massive debts though. After defeating Napoleon, Britain had a debt that was possibly the highest per-capita debt in the history of the world. They did the unthinkable and cut their high wartime taxes (and stopped inflating their currency). Within a few years they were running surpluses, and eventually paid off the debt.

 

[Hobbit]

The problem isn't the meager tax cuts. All taxes are bad for the economy, to some extent or another. You can argue that the harm they cause is a necessary evil, and worth it for government expenditures that the private sector can't provide (that list of things is exceedingly slim). But taxes in and of themselves do not help the economy.

Cutting taxes on one hand, while printing money to cover expenses on the other hand, means you haven't really changed the burden on the private economy. You've traded a lower income tax rate for a higher stealth-tax (inflation) rate. Really, the only thing that matters in the end is the size of government--which has grown wildly out of control in the last 4 years. A leviathan state can only draw it's massive resources from the private sector in one way or another, there is no way you can get around that without the general population feeling some economic pain.

It's worth looking at other countries that have paid off massive debts though. After defeating Napoleon, Britain had a debt that was possibly the highest per-capita debt in the history of the world. They did the unthinkable and cut their high wartime taxes (and stopped inflating their currency). Within a few years they were running surpluses, and eventually paid off the debt.

Agree with most of it, but commenting on the bolded portion. The number is actually more like 70 years. Roosevelt's "New Deal," while effective at keeping the recession under control, were unconsitutional (and found to be so later) and grew the government considerably. During WWII, 'patriotic' propaganda, including a cartoon starring Donald Duck, coupled with a false promise of a tax amnesty for the previous year, got income tax witholding passed. The tax amnesty was a ruse. People still paid taxes that year, it's just that they paid for the current rather than the previous year. Now that nobody actually sees how much they pay in taxes, the government spend and spends and spend and spends, knowing they could raise your taxes in an instant and you'd probably never notice.

Edit: And if you think it's big now, go back to the plans Clinton made between '92 and '94, before Newt Gingrich's "Contract With America." It will scare any self-respecting conservative sh*tless.

 

[KarlMarx]

Agree with most of it, but commenting on the bolded portion. The number is actually more like 70 years. Roosevelt's "New Deal," while effective at keeping the recession under control, were unconsitutional (and found to be so later) and grew the government considerably. During WWII, 'patriotic' propaganda, including a cartoon starring Donald Duck, coupled with a false promise of a tax amnesty for the previous year, got income tax witholding passed. The tax amnesty was a ruse. People still paid taxes that year, it's just that they paid for the current rather than the previous year. Now that nobody actually sees how much they pay in taxes, the government spend and spends and spend and spends, knowing they could raise your taxes in an instant and you'd probably never notice.

Edit: And if you think it's big now, go back to the plans Clinton made between '92 and '94, before Newt Gingrich's "Contract With America." It will scare any self-respecting conservative sh*tless.

Correct. Under FDR, taxes tripled. And the size of the federal government ballooned. Yet, for all of his programs, the Great Depression was no better, why?

The answer is that FDR and many top members of his administration were not interested in recovery of the economy but in "reforming" it. That is, they envisioned transforming America into socialist economy much like the Soviet Union's. In fact, FDR's labor secretary, Frances Perkins, was a member of the Socialist Party. Some of his aids took trips to the Soviet Union to study the Soviet economic system and were admirers of central economic planning.

FDR and his administration held fast to the notion that government spending, not private investment, would lift America out of the Depression. In fact, many in FDR's administration believed that big business and the wealthy were the cause of the Depression (does any of this sound familiar?).

However, FDR's programs did not end the Depression. In fact, many of his programs drove up the cost of labor, choked off the availability of capital to businesses and banks and made America less competitive on world markets.

Some of his New Deal programs were found to be unconstitutional by the Supreme Court. Which is why FDR attempted to pack the Supreme Court with 3 extra justices.

The Depression finally ended with World War II. In fact, it is a fair statement to say that Hitler and Hirohito did more to end the Depression than FDR and his misguided social programs. Frankly, FDR and his merry band of Brahmins were nothing more than Socialists who tried to recreate the American economic system in their image.

Many of his prgrams, unfortunately, still are with us today. The most troublesome is Social Security.

Speaking of Social Security.... isn't that a tax? Yes, it is. So why are we paying taxes on that part of our incomes?

 

[Avatar4321]

The answer is that FDR and many top members of his administration were not interested in recovery of the economy but in "reforming" it. That is, they envisioned transforming America into socialist economy much like the Soviet Union's. In fact, FDR's labor secretary, FrancesSome of his New Deal programs were found to be unconstitutional by the Supreme Court. Which is why FDR attempted to pack the Supreme Court with 3 extra justices.

you mean 6 extra justices

 

[KarlMarx]

you mean 6 extra justices

You're right... I stand corrected....