"Tax Cuts Don't Pay for Themselves" - GOP Economists

Discussion in 'Economy' started by Toro, Dec 8, 2007.

  1. Toro
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    Toro Diamond Member

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    One of the truly most bizarre and surreal aspects of the American political landscape is that, no matter what the fiscal situation may be, so many Republicans believe that cutting taxes increases revenues.

    Rudy looks like an idiot when he says stuff like this. The problem is that so many of the base believe it to be the case.

    http://www.washingtonpost.com/wp-dyn/content/article/2007/11/30/AR2007113002190.html
     
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  2. pegwinn
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    pegwinn Top of the Food Chain

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    I am not an expert by any means, but I think a combination of tax cuts and a reduction in .gov spending will spur economic growth.

    Better than tax cuts of course is replacement of the current system with HR25 and the repeal of the 16th amendment.

    Rudy opposes HR25 and one of his talking points is that it loses the home mortgage interest deduction. What a maroon.
     
  3. Paulie
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    Paulie Platinum Member

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    The only way a tax cut is going to help the economy in the long term is to keep the spending low.

    The problem with the Bush tax cuts, is that his administration is spending money like it isn't lent and sold to us at interest or something. So how the hell is the economy going to strengthen, the budget stay balanced, and our debt stay low, if you're going to lessen revenue, but increase spending? It doesn't make any sense, does it?
     
  4. Mr.Conley
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    Mr.Conley Senior Member

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    Government spending increases economic output by raising GDP. Whether this is the best means of increasing GDP, best for the economy, best for the taxpayer, what's the opportunity cost etc. etc. is a more complicated question, but without question, government spending has a positive effect on GDP.
     
  5. BaronVonBigmeat
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    BaronVonBigmeat Senior Member

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    If that were true, socialism would have been a happy success. There's a reason why so many former socialist nations are abandoning it. Government spending is inherently unproductive.

    Also, there is some bit of truth in the tax cuts = revenue gains bit, at least in the long run, at some rates. If Taiwan had set their taxes as high as Europe, it's unlikely they would have gone from african-levels of poverty to a first world nation in 50 years, and their tax base would be lower than it is today as a result. Of course there's a lot of other factors too--a transparent legal system, minimal red tape for economic activity, property rights, etc.

    Plus there's the whole "were taxes really cut?" angle. Reagan signed off on income tax cuts, yes. But he also raised SS taxes. Were net taxes cut? I don't know. The whole point is to leave more resources in the hands of the private sector where it can be productive. If spending remains bloated, then those resources are still being gobbled up by government. You can borrow the money or inflate the money, but you're still drawing gasoline, steel, concrete, manpower, lumber, energy, etc. away from better uses.
     
  6. Mr.Conley
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    Mr.Conley Senior Member

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    I'm arguing a more technical point. The money that government spends encourages economic growth through the Keynesian multiplier, increasing GDP; it doesn't just disappear. Take a look at the wealthy suburbs around DC for a good example. Now whether this is the most efficient use of the cash is another story.
     
  7. Toro
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    Toro Diamond Member

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    Governments are institutions. Corporations are institutions. Sometimes governments do dumb things, but sometimes corporations do dumb things. It is more likely that corporations will contribute to economic growth because there is greater incentive to allocate resources more efficiently, but it is utterly false - both philosophically and historically - to say that the private sector always is better at generating growth than governments.

    Markets create the most wealth for the most people most of the time, but they do not create all the wealth for all the people all the time. Markets fail occasionally, and there are losers in markets, which requires government intervention in the economy when markets do fail or when society deems certain aspects too important to be left to market mechanisms.
     
  8. BaronVonBigmeat
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    BaronVonBigmeat Senior Member

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    I think it depends on what you mean by "generating growth". If you mean military, police, courts, a system of property rights, contract enforcement, etc. then yes I would agree. These are the things which private companies probably cannot do (or if they did, they would resemble mini-governments, like homeowner's associations).

    If you mean that government needs to provide goods and services and engage in economic planning, then no. Besides, most of the market failures are either not failures at all (high gas prices), an unforseen side-effect of government intervention elsewhere, or better addressed by private charity.
     
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  9. Bern80
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    Bern80 Gold Member

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    You do know what the 'P' in GDP stands for don't you? What exactley does the government produce that spurs the economy?
     
  10. Shogun
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    Shogun Free: Mudholes Stomped

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    postal service, police service, fire protection, emergency service, prisons, and monopoly busting regulations just to mention?



    What has free market capitolism done for nursing homes?
     

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