CBO: Federal Debt and the Risk of a Financial Crisis

[Dont Taz Me Bro]

Economic growth may have been slightly lower, but revenues would still have been far higher.

If economic growth would have been slower then revenues would have been lower. The whole point of enacting the tax cuts was to spur growth and increase revenue. Every time there have been cuts in the marginal tax rates, the economy has improved and Federal revenues improve. Every single time. Why you would deny this when it's easily shown makes no sense.

The idea that broad income tax cuts pay for themselves is discredited.

Even Arthur Laffer doesn't know if Bush's tax cuts paid for themselves, which is kind of like Jesus saying he doesn't know if God exists.

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

The Congress under Bush raised spending considerably after they cut taxes and that is what contributed to the deficit. If they had left spending at exactly the same level they would have had a deficit for the following year and then budget surpluses every year after, assuming ceteris paribus.

 

[Dont Taz Me Bro]

The country would be on sounder fiscal footing had the Bush tax cuts not occurred. That's not debatable. At least not debatable by anyone not blinded by ideology.

Look whose talking about being blinded by ideology.

The country's fiscal situation would have been worse off if the Congress still went on with their spending plan they way did without cutting taxes because we were in a recession and Federal revenues were down. It was cutting marginal tax rates that brought the economy back up and increased revenues, just like it did when Warren G Harding did it and when John F Kennedy did it and when Ronald Reagan did it.

I noticed you quoted Laffer earlier. Do you even understand the Laffer Curve?

 

[Oddball]

Tax cuts cost the US Treasury. Whom it belongs to is irrelevant when balancing the books of the federal government.

As for the OP, we cannot continue to run the deficits we are running forever. However, I would be able to take conservatives more seriously if they had decried the budget busting Bush tax cuts, which cost the US Treasury about $1.5 trillion, double the stimulus. But of course, to conservatives, all tax cuts are good, no matter what it does to the Federal budget.

Nonsense.

The only way that tax cuts "cost" anything is the presumption that all of your money belongs to the U.S. Treasury in the first place.

Moreover, if you spend nothing you'll never run a deficit...Ergo, it's profligate spending that is to blame for the deficits.

Yeah, yeah, yeah, I agree with you. Its not the government's money. But that's a philosophical argument, not an accounting one.

In accounting, when an entity - any entity, including the federal government - decreases revenue, then it faces increased funding requirements. That's a real-world accounting issue, not a philosophical one. If your primary concern is the federal deficit, then you should oppose any action which increases funding requirements.

The country would be on sounder fiscal footing had the Bush tax cuts not occurred. That's not debatable. At least not debatable by anyone not blinded by ideology.

It's both a philosophical and accounting argument.

The money belongs to those who earn it, not those who expropriate it.

Shrubbie and his neocongress spent more than Bubba did, not counting the stupid wars. Even so, the deficit as a percentage of GDP still fell.

The problem with deficits is, has been, and always will be a problem with spending.

 

[Neubarth]

The problem with deficits is, has been, and always will be a problem with spending.

Just erase the debt, and there is no problem. Gone! Poof! Ixnay!

 

[Toro]

If economic growth would have been slower then revenues would have been lower. The whole point of enacting the tax cuts was to spur growth and increase revenue. Every time there have been cuts in the marginal tax rates, the economy has improved and Federal revenues improve. Every single time. Why you would deny this when it's easily shown makes no sense.

What I am denying is that broad based income tax cuts in the United States pay for themselves. There is some evidence that corporate income tax cuts pay for themselves, and there is some evidence that cuts in tax royalties on mining and energy exploration pay for themselves, but there is no empirical evidence that lowering tax rates from, say, 39% to 33% cause a concurrent rise in income enough to offset the losses in revenue to the treasury. It is a discredited theory in economics that virtually no economist believes.

Here is growth in GDP per capita from 1870 to 2006. Except for the Depression, growth has been pretty constant.

And here is taxes to GDP.

As you can see, the rate of growth in the economy is pretty much the same as it was 100 years ago, even though the tax burden is 5 times higher. How can this be if cutting taxes is what causes economic growth? Yes, tax cuts may have caused the little squiggles above the trend line, but they are minor.

People who make this argument vastly underestimate the American people. Americans are hard-working, productive people. Raising or lowering tax rates by 5% isn't going to change that.

The Congress under Bush raised spending considerably after they cut taxes and that is what contributed to the deficit. If they had left spending at exactly the same level they would have had a deficit for the following year and then budget surpluses every year after, assuming ceteris paribus.

And had taxes not been cut, the national debt would be $1.5 trillion lower, give or take a few hundred billion. Because of that, the tax cuts were fiscally reckless.

I noticed you quoted Laffer earlier. Do you even understand the Laffer Curve?

Yes, very well. And so does the economics community, which has rejected it outright as it applies to the broad economy.

 

[william the wie]

If economic growth would have been slower then revenues would have been lower. The whole point of enacting the tax cuts was to spur growth and increase revenue. Every time there have been cuts in the marginal tax rates, the economy has improved and Federal revenues improve. Every single time. Why you would deny this when it's easily shown makes no sense.

What I am denying is that broad based income tax cuts in the United States pay for themselves. There is some evidence that corporate income tax cuts pay for themselves, and there is some evidence that cuts in tax royalties on mining and energy exploration pay for themselves, but there is no empirical evidence that lowering tax rates from, say, 39% to 33% cause a concurrent rise in income enough to offset the losses in revenue to the treasury. It is a discredited theory in economics that virtually no economist believes.

Here is growth in GDP per capita from 1870 to 2006. Except for the Depression, growth has been pretty constant.

And here is taxes to GDP.

As you can see, the rate of growth in the economy is pretty much the same as it was 100 years ago, even though the tax burden is 5 times higher. How can this be if cutting taxes is what causes economic growth? Yes, tax cuts may have caused the little squiggles above the trend line, but they are minor.

People who make this argument vastly underestimate the American people. Americans are hard-working, productive people. Raising or lowering tax rates by 5% isn't going to change that.

The Congress under Bush raised spending considerably after they cut taxes and that is what contributed to the deficit. If they had left spending at exactly the same level they would have had a deficit for the following year and then budget surpluses every year after, assuming ceteris paribus.

And had taxes not been cut, the national debt would be $1.5 trillion lower, give or take a few hundred billion. Because of that, the tax cuts were fiscally reckless.

I noticed you quoted Laffer earlier. Do you even understand the Laffer Curve?

Yes, very well. And so does the economics community, which has rejected it outright as it applies to the broad economy.

It has rejected Laffer's proposed inflection point. When the French marshal Vauban made the same point in the early 1700s and was put out of the court for doing so he had a higher inflection point at the lower end of the scale than the policy Mellon came up with the 1920s and that is now called the Laffer curve. A simple 10-20% total tax at the bottom end and no more than 25% higher at the top end as tax maximizing was and presumably still is used by military intelligence analysts in threat analyses. So either the economists at the CIA, DIA and so on are really good at fooling people who risk their lives based on their analysis of threat potential or they are pretty close to right.