Starve the Beast?

Discussion in 'Economy' started by Toro, Mar 13, 2011.

  1. Toro
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    Toro Diamond Member

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    In the last two major changes to the tax code - an increase in 1993 and a decrease in the early 00s - it had no affect on the level of spending.

    Tea Party to Orrin Hatch: Play It Our Way or You're Out | Capital Gains and Games

    IOW, when taxes went up, spending as a percentage of GDP went down. When taxes went down, it had no affect on spending.
     
  2. skeptic
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    skeptic BANNED

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    Toro, isn't that because the drivers of federal spending and taxation are entirely independent of one another? Meanwhile the deficit accounts for the differential?

    In a balanced budget world this might be meaningful.......?
     
  3. xsited1
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    Bruce Bartlett has been hanging around Washington for too long. He forgets that the economy grew modestly after Clinton raised taxes in 1993, but the economy grew even more after Clinton signed the tax cuts that were passed by the Republican-controlled Congress in 1997. I agree with him about GWB being an imposter, but now he's for a Value-Added Tax. What has this guy been smoking?
     
  4. Midnight Marauder
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    Midnight Marauder BANNED

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    There was a time in the 90s when we had a balanced budget or something very close to it. What changed?

    It was the law of the land, then, for there to be a balanced budget. It was required. And we will never have one again until we pass versions of Gramm-Rudmann and line-item veto which will pass SCOTUS muster.

    In fact, both laws would be upheld today, with the current SCOTUS makeup.
     
  5. Toro
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    Toro Diamond Member

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    How's that?

    [​IMG]

    Having said that, even if you are correct, that's not the point.

    The point is that some on the right argue that raising taxes to close the deficit is self-defeating because the government will just spend it. Conversely, if you cut taxes, that will restrain spending. But that hasn't been the case over the past 20 years. Taxes went up, spending to GDP went down. Taxes went down, spending to GDP was flat.

    edit - BTW, here's the Fed funds rate during that time.

    [​IMG]
     
    Last edited: Mar 13, 2011
  6. skeptic
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    skeptic BANNED

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    While that is true neither the argument you are presenting nor the one you are rejecting is causative.
     
  7. xsited1
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    You've got a percentage change in GDP chart and you say GDP was flat based on that? :lol:

    I know what you're trying to say. I just find it humorous the lengths you go to attempting to prove your point.

    And I agree to a point what Bartlett is trying to say, but I reject how he wants to achieve that. The first step should and must be to cut spending, but I think it's too late.
     
  8. william the wie
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    william the wie Gold Member

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    The argument for a VAT, that is the rebate for exports will ease the trade deficit and aid employment, has some major problems.

    The default US strategy that mercantilism in the rest of the world causes opponents to go under worked against the USSR and Japan and appears to be working against China (see the China threads here on USMB).

    Even if the VAT leads to massive relocation of manufacture to the US in the modern era that does translate into massive employment increase.

    I don't see how this solution makes political sense.
     
  9. Toro
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    Toro Diamond Member

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    I didn't say GDP was flat.
     
  10. editec
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    editec Mr. Forgot-it-All

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    EVery wasted government dollar is an affront to our economy.

    Nobody denies that fact.

    Naturally if the additional tax dollars that are collected are wasted then raising taxes is no solution.

    I think nobody would disagree with that, either, right?

    So ti seems to me that we have two avenues to explore.

    1. Cutting waste in government

    2. Finding the right mix of tax policies that pay for what spend.

    I suspect that all out debates are mostly (even if seldom noted as such) about WHAT TO CUT AND WHO TO TAX.

    And in my opinion, reasonable people can disagree about the right formula for balancing spending with taxation.
     

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