Our economic mess, the direct result of...

[wihosa]

Our 28 year experiment in radical right economic theory is complete, the results are in; Trickle down economics DOES NOT WORK. The Laffer curve is a laugh. Cutting taxes does not result in more tax revenue (who could have guessed?), instead, predictably tax revenue goes down and deficits go up. Only after Bill Clinton raised taxes on the wealthy did we have a reversal in the borrowing binge of the Repubs. Not to worry, W undid that "problem" in spades and now the evidence shows that the last three Repub Admin have borrowed ten times more money that all other Administrations in US history combined.

Supply side economics is a disproved economic theory. It is demand that creates economic vitality and demand is created by rising wages.

Transferring wealth upward has nearly destoyed the middle class, the real driver of the economy.

Trickle-down, Supply side, Neo-Conism all into the ash bin of history.

 

[wihosa]

What? No answer by the people who bought into this folly?

 

[BaronVonBigmeat]

The main thing proved during the Reagan and then Bush administrations is that cutting taxes while raising spending is just a shell game. It doesn't matter if you get revenue by taxing, borrowing, or inflating--in the end, you're still diverting scarce resources towards government (which grew during those two administrations more than they did during Clinton or Carter's administrations).

Also demand doesn't drive the economy. You can kick and scream and demand (X) all you want, but that doesn't mean it will be supplied. People demanded dirt cheap radios in the 1920's, but they didn't exist until transistors were researched and invented.

 

[Kevin_Kennedy]

If you're going to cut taxes you've got to cut government spending. It's a win win situation, if done correctly.

 

[AVG-JOE]

Our 28 year experiment in radical right economic theory is complete, the results are in; Trickle down economics DOES NOT WORK. The Laffer curve is a laugh. Cutting taxes does not result in more tax revenue (who could have guessed?), instead, predictably tax revenue goes down and deficits go up. Only after Bill Clinton raised taxes on the wealthy did we have a reversal in the borrowing binge of the Repubs. Not to worry, W undid that "problem" in spades and now the evidence shows that the last three Repub Admin have borrowed ten times more money that all other Administrations in US history combined.

Supply side economics is a disproved economic theory. It is demand that creates economic vitality and demand is created by rising wages.

Transferring wealth upward has nearly destoyed the middle class, the real driver of the economy.

Trickle-down, Supply side, Neo-Conism all into the ash bin of history.

The best thing coming out of the Bush 2 Administration is proof positive that his father was right about Regans trickle down 'Voodoo Economics'.

If I had everything I wanted except more money and I got a few thousand back in the form of lower taxes the last thing I would want to do with it is build a factory and deal with the red tape, unions, hassles, risk, etc.

I would sit on my yacht and be happy with 6%.

If you want me to create jobs, give the money to the middle class so I have to make something that they want in order to separate them from it.

-Joe

 

[Missourian]

Our 28 year experiment in radical right economic theory is complete, the results are in; Trickle down economics DOES NOT WORK. The Laffer curve is a laugh. Cutting taxes does not result in more tax revenue (who could have guessed?), instead, predictably tax revenue goes down and deficits go up. Only after Bill Clinton raised taxes on the wealthy did we have a reversal in the borrowing binge of the Repubs. Not to worry, W undid that "problem" in spades and now the evidence shows that the last three Repub Admin have borrowed ten times more money that all other Administrations in US history combined.

Supply side economics is a disproved economic theory. It is demand that creates economic vitality and demand is created by rising wages.

Transferring wealth upward has nearly destoyed the middle class, the real driver of the economy.

Trickle-down, Supply side, Neo-Conism all into the ash bin of history.

On what are you basing this? People, both rich and middle class did invest. Credit was cheap. The stock market boomed. People were flipping houses. Unemployment at a historic low.

And a bubble, like the housing bubble, isn't created when everyone is poor.

Take of your ideological blinders for a second and look around...this crisis wasn't caused by too little, it was caused by too much. People got greedy because it looked like the market and housing prices wold never stop going up.

I'm no economist, but I don't think it was supply-side economics that caused this crisis, it created the environment where prepetual gains caused greed to take root.

JMHO, YMMV.

 

[AVG-JOE]

On what are you basing this? People, both rich and middle class did invest. Credit was cheap. The stock market boomed. People were flipping houses. Unemployment at a historic low.

And a bubble, like the housing bubble, isn't created when everyone is poor.

Take of your ideological blinders for a second and look around...this crisis wasn't caused by too little, it was caused by too much. People got greedy because it looked like the market and housing prices wold never stop going up.

I'm no economist, but I don't think it was supply-side economics that caused this crisis, it created the environment where prepetual gains caused greed to take root.

JMHO, YMMV.

I disagree, MO... Trickle down economics is a historic transfer of wealth from the middle class to the rich. Even though times were relatively good, the gap between 'haves' and 'have nots' widened, and few will deny that fact. Supply side economics has also been directly responsible for the cancerous attitudes of greed and 'personal over community' that has permeated our politics. If Obama does nothing but rid us of Trickle-down, voodoo Reganomics, his presidency will be a success, in my opinion.

-Joe

 

[Gord]

President Kennedy deeply cut taxes in the early sixties and government revenue continued to grow each year. Ronald Reagan severely cut taxes in the early eighties and government revenues almost doubled by the end of the eighties. The deficit was caused by enormous spending increases, on the military by President Reagan to defeat the USSR, and by the Democrats on social programs (the trade-off Reagan had to make with them even though they initially promised to cut spending). But revenues increased, not decreased. The economy eventually grew out of the deficit in the mid nineties with help from the Republican Contract with America which held back government spending, again reduced taxes, and defeated HillariousCare. President Bush again seriously cut taxes early in his first term and government revenues continued to increase each year (except the first - until the effect of the cuts kicked in), even though Bush inherited a recession from the Clinton administration, and the impact of 9/11 on the economy alone was almost two trillion dollars (and don't forget the stock bubble crash of /00, and the Enron, Tyco, Worldcom, Global Crossing, etc. fiascoes - all included in President Clinton's legacy I might add). Additional spending on the war on terror and increases in entitlement spending (a new drug program had been added, and Katrina) and a general expansion of government account for the deficits of the Bush 43 administration (which had been coming down).

Tax reductions on a national level increase government revenues through economic stimulation. Only stopping deficit spending stops deficits.

 

[BaronVonBigmeat]

I disagree, MO... Trickle down economics is a historic transfer of wealth from the middle class to the rich. Even though times were relatively good, the gap between 'haves' and 'have nots' widened, and few will deny that fact. Supply side economics has also been directly responsible for the cancerous attitudes of greed and 'personal over community' that has permeated our politics. If Obama does nothing but rid us of Trickle-down, voodoo Reganomics, his presidency will be a success, in my opinion.

-Joe

Obama is a puppet of Wall Street, so don't hold your breath waiting.

 

[xsited1]

The data proves you wrong. There are many other factors involved and you're choosing to single out Supply-side economics and blaming it on that. Obviously, you're doing this for political reasons and not fact. It's like saying that a company's profits went down because they lowered the price of some of their high-end products. It's not that simple.

Here is a Harvard study on Supply-side economics complete with data for 18 large economies. It works. Just read the paper:

http://escholarship.bc.edu/cgi/viewcontent.cgi?article=1135&context=econ_papers

 

[Toro]

This is not a crisis of American capitalism. This is a crisis of American financial capitalism.

The financial system was based on a faulty set of assumptions about how asset markets and human behavior works. These faulty assumptions were used to argue that the financial system could regulate itself and take on more debt than it ever had in the past, which turned out to be catastrophically incorrect.

Deregulation is usually but not always good. It was disastrous this decade for the financial system.

As for the Laffer curve, the mainstream Republican party has to get off this fairy tale that cutting taxes is a good thing at all costs. If you are going to cut taxes, cut spending. But the GOP doesn't want to do that and instead would rather believe the nonsense that tax cuts pay for themselves. They say they want to but they did not when they had the chance, and in fact, accelerated spending at a rate faster than it ever rose under Clinton.

 

[Gord]

This is not a crisis of American capitalism. This is a crisis of American financial capitalism.

The financial system was based on a faulty set of assumptions about how asset markets and human behavior works. These faulty assumptions were used to argue that the financial system could regulate itself and take on more debt than it ever had in the past, which turned out to be catastrophically incorrect.

Deregulation is usually but not always good. It was disastrous this decade for the financial system.

As for the Laffer curve, the mainstream Republican party has to get off this fairy tale that cutting taxes is a good thing at all costs. If you are going to cut taxes, cut spending. But the GOP doesn't want to do that and instead would rather believe the nonsense that tax cuts pay for themselves. They say they want to but they did not when they had the chance, and in fact, accelerated spending at a rate faster than it ever rose under Clinton.

What deregulation exactly?

And why did you contradict the evidence I presented in my last post without refuting it?

 

[Toro]

What deregulation exactly?

Basel II for starters, which provided a framework for bank regulations on risk-based assets.

The SEC voted to allow the five investment banks to increase the amount of debt to equity above the then 12-15:1. The investment banks promptly raised their debt/equity ratios to 30-40:1. That was in 2004. Now Wall Street has ceased to exist as we know it.

And why did you contradict the evidence I presented in my last post without refuting it?

You haven't presented any evidence. You have presented false causalities, at least in the assumption that

Tax reductions on a national level increase government revenues through economic stimulation.

You are assuming that the higher revenue is caused by the lower taxes. That is zero evidence that this is true for the broad US economy.

It makes as much sense as saying that you are going to increase your wealth simply by paying less of your own debt each month.

Let's say you pay your credit card every month in full. Then, you decide you want to only pay half of it off because that way, you'll have more money. So you do. Voila! You're richer, right? Now, you can go and buy the big screen TV or build that deck.

But you've forgotten about the liability side of your balance sheet.

If you are competent at your job, you will earn raises over time. (Americans are very competent at their jobs and thus the US economy is very good at generating economic growth, no matter what the tax rate has been historically.) The Laffer curve people make the incorrect connection that paying less of your bills over time leads to higher income as the Laffer curve people blur the causes of income growth, i.e. not paying your bills seems like higher income and that you are getting a raise because you have decided to let your Amex bill run up.

Running up your credit card bill is probably a good idea when you've lost your job. But once you've regained your job - and your income is rising again - you have to start paying down your debt. The Laffer curve people essentially argue that you don't need to increase the amount you need to allocate to pay down on your credit card.

In fact, Arthur Laffer himself said that he was unsure that the Bush tax cuts generated more revenues.

If there's one thing that Republican politicians agree on, it's that slashing taxes brings the government more money. "You cut taxes, and the tax revenues increase," President Bush said in a speech last year. Keeping taxes low, Vice President Dick Cheney explained in a recent interview, "does produce more revenue for the Federal Government." Presidential candidate John McCain declared in March that "tax cuts ... as we all know, increase revenues." His rival Rudy Giuliani couldn't agree more. "I know that reducing taxes produces more revenues," he intones in a new TV ad.

If there's one thing that economists agree on, it's that these claims are false. We're not talking just ivory-tower lefties. Virtually every economics Ph.D. who has worked in a prominent role in the Bush Administration acknowledges that the tax cuts enacted during the past six years have not paid for themselves--and were never intended to. Harvard professor Greg Mankiw, chairman of Bush's Council of Economic Advisers from 2003 to 2005, even devotes a section of his best-selling economics textbook to debunking the claim that tax cuts increase revenues.

The yawning chasm between Republican rhetoric on taxes and even informed conservative opinion is maddening to those of wonkish bent. Pointing it out has become an opinion-column staple. But none of these screeds seem to have altered the political debate. So rather than write yet another, I decided to find out what Arthur Laffer thought.

Laffer is a bona fide economist with a doctorate from Stanford. He's also largely responsible for the Republican belief that tax cuts pay for themselves. Now 67, Laffer runs economic-consulting and money-management firms in Nashville. About the best I could get out of him on the question of whether the Bush tax cuts have paid for themselves was "I don't know." But that's only part of the story. ...

Laffer is convinced that the reduction of the top tax rate from 70% to 28% during the Reagan years paid for itself--in part by encouraging the rich to stop finagling--and the evidence mostly backs him up. "You find these enormous responses in the upper brackets," Laffer says. "These guys fire their lawyers and accountants and actually pay their taxes. Yay! Isn't that what we want them to do?"

But Reagan's tax cuts for the nonrich were big money losers, and it took the fiscal discipline of Bill Clinton to mop up the resulting red ink. Laffer gushes with praise for Clinton, but he's also a fan of Clinton's successor. "What Clinton did was, he gave Bush the fiscal flexibility to do what was right," Laffer says. In the face of the recession and terrorist attacks of 2001, Bush "needed to stimulate the economy and spend for defense, and Clinton gave him the ability to do that."

In other words, the Bush tax cuts were meant to create big deficits. But Laffer's O.K. with that. "The Laffer Curve should not be the reason you raise or lower taxes," he says. Perhaps not, but it does make for great campaign promises.

http://www.usmessageboard.com/econo...know-if-bush-tax-cuts-pay-for-themselves.html

More

Think about a simple numerical example: Assume you've got a $10 trillion economy and an average tax rate of 30 percent. So the government takes $3 trillion.

Let's cut the average tax rate to 25 percent and, for the sake of example, assume that it generates $1 trillion in new economic growth (a Herculean assumption, by the way). So now, what does Uncle Sam get? One quarter of $11 trillion is only $2.75 trillion. The economy grows, government revenues shrink.

That's basically what happened with the large Reagan and George W. Bush tax cuts, both of which were followed by large budget deficits. Yes, spending has a lot to do with that, but the bottom line is unequivocal: In both cases, government revenue was lower than it would have been without the tax cuts.

Can't Lose Weight by Eating More

Neither the Reagan nor the George W. Bush tax cuts were "self-financing," as the Laffer disciples like to argue. According to The Economist -- my former employer and no bastion of left-wing thought -- the current Bush Administration's top economist, Gregory Mankiw, estimated that decreasing taxes on labor would generate enough growth to recoup only about 17 cents for each lost dollar; a tax cut on capital is better, paying for more than half of itself. Still, the bottom line from the Bush Administration itself is that tax cuts reduce Uncle Sam's take.

So why does Laffer's sketch on Dick Cheney's cocktail napkin rank near the top of my list of bad economic ideas? Because, when applied to the U.S., it's intellectually dishonest. The Laffer Curve offers the false promise that we can cut taxes without making any sacrifice on the spending side, and that's simply not true. It's the economic equivalent of arguing that you can lose weight by eating more.

Let me be perfectly clear: I'm not arguing that tax cuts are bad. I'm simply pointing out that we can't pretend that tax cuts won't require reductions on the spending side to balance the budget. In fact, you can disregard every other argument in this column and think about one thing: If Laffer were right, lower taxes would never require any spending sacrifice. We could pay a mere one percent of our income in taxes and still fund all of our government spending -- and maybe more! Do you think that's really possible?

http://finance.yahoo.com/expert/article/economist/4065

 

[Gord]

Actually the Bush administration tried to have Fannie and Freddie (the two original culprits in all this) regulated more, but were outmaneuvered by Democrats on oversight committees.

I don't care what Laffer has said. The facts of the matter are that presidents Kennedy, Reagan and Bush, and the Republican Contract with America all proved that lowering taxes stimulates the economy. That's the evidence...

 

[Gunny]

What? No answer by the people who bought into this folly?

Sure. You're as ignorant in this topic as you were the last one. How's that?

 

[Neubarth]

If you're going to cut taxes you've got to cut government spending. It's a win win situation, if done correctly.

What you say seems to make sense. BUT, which representative is going to vote to cut the spending allocation for his district? Is there a built in flaw in the system?

 

[Kevin_Kennedy]

What you say seems to make sense. BUT, which representative is going to vote to cut the spending allocation for his district? Is there a built in flaw in the system?

That's certainly part of it, and the President could veto any legislation with pork in it. However, that's not the only way to cut spending.

The first, for me, would be to reign in the American empire around the world. Do we need troops in over 130 countries? No. They all come home, including Iraq and Afghanistan. No policing the world, no nation building, and no preemptive war. No foreign aid to nations such as Israel that are far too dependent on it.

Then I'd start cutting unnecessary parts of the government itself. Dept. of Education would be one of them, off the top of my head. The IRS would be abolished as well, while I'd work very hard to have the 16th Amendment repealed.

 

[chloe]

Cut income tax completely.

 

[editec]

Our prolbems are, at the heart of the matter, not caused by taxes that are too high, or too low.

Neither are they really caused by government overspending.

They are really caused by the fact that our population continues to grow faster than our overall productivity.

Why?

Because we outsourced millions of high paying jobs, that's why.

This is not rocket science, neither does it take a degree in ECON to get it.

Apparently having a degree in Econ actually prevents most economists from getting it.

Piss-down-on-the-working class economics has never worked. It didn't work in the 20's and it didn't work this time either.

The very concept is an affront to common sense in a consumer driven economy.

That concept MIGHT have made sense if we lived in a supplyside deficient society on the gold standard but thanks to the specious Bank of England inventing the bond market back in the late 18th century we don't.

We haven't lived in a scarcity-driven economy since at least the industrial revolution, now, have we?

So, between fiat finance and increases in productivity it isn't like we're especially short of things to buy now are we?.

But what we're short of is ways of getting money into the hands of the masses so they can buy those things from the supply side which has all the fucking money in the universe, and which has granted itself the right to print more, whenever they need it, too.

We had a way to get money into the hands of the working class, for about 100 years and that worked out okay.

That reponse to industrialism was called unions.

Since unions served to balance the inherently unequal advesarial relationship between companies and workers, they served to make sure that the gross profits pie was divided more equitably between workers and owners.

So for a time we had some sane balance between the monied class and the working class.

Those days are done.

When elected to destroy that system by oursourcing jobs to third world economies, the wealthy in this nation could get even more wealthy, but they did so by paying workers who contribute NOTHING to this society with THEIR paychecks, and who do not buy enough from our nation to offset the damage that does to OUR working class, either.

Hard as this for a PhD in economics to understand, one does not make a nation's economy healthier by making 30-60% of the population work harder for less money.

duh!

 

[indago]

Kevin_Kennedy wrote:
----------------------------------------------------------------
The first, for me, would be to reign in the American empire around the world. Do we need troops in over 130 countries? No. They all come home, including Iraq and Afghanistan. No policing the world, no nation building, and no preemptive war. No foreign aid to nations such as Israel that are far too dependent on it. Then I'd start cutting unnecessary parts of the government itself. Dept. of Education would be one of them, off the top of my head. The IRS would be abolished as well, while I'd work very hard to have the 16th Amendment repealed.
----------------------------------------------------------------

Now, weren't some of those things recommended by Ralph Nader and Ron Paul. But the people weren't interested in that; they have consistently voted for economic devastation instead.

And there will always be an internal revenue service, whether named IRS, or whatever. There is a taxing system inherent in the Constitution, and collection of taxes is inherent within the taxing system.

Also, what is your complaint concerning the "16th Amendment" that you would have it repealed?