how will the left spin this

[manu1959]

http://news.bbc.co.uk/2/hi/business/4955092.stm

"Gross domestic product grew at a 4.8% annual rate, more than twice the 1.7% recorded in the last quarter of 2005. "

guess the tax cuts worked :teeth:

 

[Mr.Conley]

The cuts alone aren't responsible for that. Do you have any proof that tax cuts enacted in 2003 (I believe) suddenly jump started the economy 3 years after their creation?

The tax cuts probably helped, but there are many more factors involved when one deals with the economy.

 

[manu1959]

The cuts alone aren't responsible for that. Do you have any proof that tax cuts enacted in 2003 (I believe) suddenly jump started the economy 3 years after their creation?

The tax cuts probably helped, but there are many more factors involved when one deals with the economy.

gee ya think?

 

[Huckleburry]

I have long argued on this board that these particular tax cuts were misplaced. Aimed at the demographics with the highest marginal propensity to save (MPS) these taxes were a very expensive impetus to the economy.

Worse, these tax cuts have put downward pressure on bond prices by making them more expensive relative to alternative equity vehicles, principally, Stock and Real Estate.

In the Real Estate market this appears to have helped fuel the creation of a bubble in some (but not all) markets ushering in the return of irrational exuberance. Of course other factors have contributed to Real Estates appreciation but these tax cuts are, none the less, a factor.

To argue that these tax cuts have significantly contributed to recent economic performance seems a bit silly. First, Katrina necessitated huge domestic government expenditures. These expenditures have a direct impact on GDP growth.

Second, the continued globalization of equity markets has made capital increasingly easy to come by while simultaneously reducing transaction costs, thereby lowering the cost of capital on a global scale. This benefits the United States directly because we are a capital intensive information economy.

Finally, the continued success of the Asian economies has continued to benefit US firms while putting downward pressure on inflation. Additionally, these economies (especially china) have been willing to purchase American debt thereby funding our deficit and permitting further (though modest) growth.

 

[dmp]

There's your answer...(sigh).

Some people live to find bad-news...some people simply cannot fathom that Conservatives, especially conservative Republicans simply KNOW BETTER how to run this nation.

 

[PsuedoGhost]

There's your answer...(sigh).

Some people live to find bad-news...some people simply cannot fathom that Conservatives, especially conservative Republicans simply KNOW BETTER how to run this nation.

There's a difference between recognizing the immense complexity of the economy, and pandering to your party in order to make your position better. Anyone who claims that "tax cuts" alone are solely responsible for economic growth of any sort, are full of shiate. I'm not saying that because I'm a liberal or conservative, that's just the truth of the matter.

 

[manu1959]

interesting.....do you all hold bush responsible for the high price of gas?

 

[Adam's Apple]

http://news.bbc.co.uk/2/hi/business/4955092.stm

"Gross domestic product grew at a 4.8% annual rate, more than twice the 1.7% recorded in the last quarter of 2005. "

guess the tax cuts worked :teeth:

Well, we could turn the tables on them and hurl their famous Clinton slogan ("It's the economy, stupid!") back at them.

http://www.washtimes.com/commentary/20060423-091905-8200r.htm

 

[KarlMarx]

The cuts alone aren't responsible for that. Do you have any proof that tax cuts enacted in 2003 (I believe) suddenly jump started the economy 3 years after their creation?

The tax cuts probably helped, but there are many more factors involved when one deals with the economy.

Uh... yeah... our economy is so big, it takes about 18 months for any change to be fully felt. And oh, by the way, the economy wasn't "suddenly" jump started. It has been good for quite some time.

Considering that Dubya inherited a recession in 2000, he's done quite well. At least the Left can no longer make the claim that Bush screwed up the economy.

Now, if Bush and his band of puss gutted Republicans can start acting like conservatives and getting Uncle Sam's finances in order....

 

[Huckleburry]

DMP,
If your idea of "Knowing" how best to run the country includes bankrupting the treasury to pay for pork projects (see federal Budget) then yes your band of conservatives are doing quite a good job. However, I think that creating massive debts to fund pet projects in economically irrelevant states is not the "best" way to run the country. If anyone out there can explain the economics of a cut and spend balance sheet then please by all means show me the light. I am sure there are more than a few bankers out there who would also be interested in what you have to say.
Huck

 

[Bonnie]

There's your answer...(sigh).

Some people live to find bad-news...some people simply cannot fathom that Conservatives, especially conservative Republicans simply KNOW BETTER how to run this nation.

I can guarantee you if Kerry was president and had these numbers he would getting praise from all avenues liberal.
Although that would be compeltely hypothetical as Kerry would never give tax cuts......so moot point I guess :tng:

 

[Bonnie]

Well, we could turn the tables on them and hurl their famous Clinton slogan ("It's the economy, stupid!") back at them.

http://www.washtimes.com/commentary/20060423-091905-8200r.htm

Yes wouldn't that be a hoot???

 

[Bonnie]

Windfall for Washington

Friday, July 15, 2005 12:01 a.m. EDT

Let's see if we can get this straight: When tax revenues fall and budget deficits go up, it's bad news. But when tax revenues rise and deficits decline, it's still bad news.

At least that seems to be the way a sizable chunk of Washington is reacting to this week's report from the White House budget office that the federal deficit is down by nearly $100 billion this fiscal year, that the deficit as a share of GDP is down to 2.7% (very near its historical average), and that this is all happening because tax receipts are surging by more than 14%. Uncle Sam is having a better year so far than even Paris Hilton, but half of the Beltway is depressed.

John Spratt, the ranking Democrat on the House Budget Committee, seems especially upset that this revenue surge isn't coming from wage income, but rather from investment income--that is, the so-called non-withholding income tax collections, which have skyrocketed by some 30% this year. "These are typically taxes paid on one-time capital gains, bonuses, stock-options income that may not recur," he laments.

Well, sure, Congressman, the 2003 reductions in the tax rates on dividends and capital gains seem to be resulting in much higher tax revenues on . . . dividends and capital gains. This is called the Laffer Curve effect, and we thank Mr. Spratt for validating it. If he wants those revenues to "recur," maybe he'll even vote to make those tax cuts permanent.

This revenue surge from investment income also rebuts the mantra that the 2003 tax cuts were a giveaway to the rich. Nearly half of all Americans have some kind of stock ownership, and thus have shared in these gains in investment income. And if most of the extra tax income is coming from capital gains and dividend payments, that would have to mean that the rich in America are paying more taxes, not less, as a result of the 2003 tax cut.

By the way, we don't recall Mr. Spratt and other Democrats lamenting when a similar spike in taxes from investment income was boosting tax revenues to historic heights as a share of GDP during the dot-com bubble of the late 1990s, as per the nearby chart. Then it was all said to be an economic miracle; now it's a windfall for the wealthy. This selective budget criticism couldn't be related to who's sitting in the White House, could it?

There is a looming budget problem, but it has nothing to do with the Bush tax cuts or insufficient tax revenue. It is a government spending crisis, especially the liabilities that politicians have promised to retirees in Social Security and Medicare. The Congressional Budget Office predicts that spending as a share of our national output based solely on current promises will surge from about 20% today, to 25% in 2025 and to 34% by 2040.In order to balance the budget at those spending totals, we would have to double the highest income tax rate to 70%, raise payroll taxes to 30%, and the corporate income tax rate would rise to twice the average of U.S. trading partners. Or if we tried to borrow to finance all this spending, our debt ratings would slip to junk bond status, according to an analysis by Standard and Poor's.
Republicans share a hefty part of the blame for creating the most fiscally unaffordable new spending program in the past quarter century: the Medicare prescription drug bill, with an unfunded liability that is larger than the GDP of every other country in the world.

But the "deficit hawk" Democrats have been equally disingenuous. Most Democrats who voted against President Bush's prescription drug bill did so because the multi-trillion- dollar plan wasn't generous enough to seniors. They have also rejected every overture by Mr. Bush to shore up Social Security's long-term finances, even a proposal to trim future benefits for wealthier retirees. Every White House proposal to cut spending in this year's budget--agriculture subsidies to upper income farmers, slight cutbacks in Medicaid payments, reductions in Amtrak subsidies, a decline in pork barrel highway projects--has been rejected by the "deficit hawks" in Congress.

So thank heaven for the tax cuts that have helped to spur the economy that is now throwing off higher tax revenues. As the chart shows, those revenues are now rising back to their modern average as a share of GDP, just as supporters of the tax cuts predicted. And if the tax cuts are made permanent, and as the economy grows and incomes continue to rise, Americans will be paying even more in taxes as they move into higher tax brackets. The real windfall here isn't for the rich but for Washington. Instead of griping, Mr. Spratt ought to be doing cartwheels.

http://www.opinionjournal.com/editorial/feature.html?id=110006973

 

[PsuedoGhost]

interesting.....do you all hold bush responsible for the high price of gas?

Anyone who blaims Bush for the price of high gas is an idiot as well...

 

[Huckleburry]

That is what always seems to happen when I post on this subject. Folks either flame me or write me off as cynical. The economy is starting to heat up...that much is true. and tax cuts generally provide a medium term boost.

I am attacking the nuance of the cuts. That these cuts came at too high a price. Also...anyone who believes Bernake is going to stop raising interest rates has their head burried in the sand. With oil futures surpassing the 70 dollar mark, it is inconcievable that the fed will not continue to worry about inflation. We have serious challenges to adress. Challenges that go beyond democrat/republican. I am eager to engage in a discussion concerning the global economy and America's place in it. Anyone who wants to partake is more than welcome to join. But please lets check the partisan bullshit at the door, If I want to hear the partisan line I will check fox news or NYT and get it from the source.

Huck

 

[KarlMarx]

That is what always seems to happen when I post on this subject. Folks either flame me or write me off as cynical. The economy is starting to heat up...that much is true. and tax cuts generally provide a medium term boost.

I am attacking the nuance of the cuts. That these cuts came at too high a price. Also...anyone who believes Bernake is going to stop raising interest rates has their head burried in the sand. With oil futures surpassing the 70 dollar mark, it is inconcievable that the fed will not continue to worry about inflation. We have serious challenges to adress. Challenges that go beyond democrat/republican. I am eager to engage in a discussion concerning the global economy and America's place in it. Anyone who wants to partake is more than welcome to join. But please lets check the partisan bullshit at the door, If I want to hear the partisan line I will check fox news or NYT and get it from the source.

Huck

This is how tax cuts increase the amount of revenue coming into the government. First, it's not a tax cut, it's a tax RATE cut. When the White House announces a $300 billion dollar tax cut, that's just an estimate of the amount. In the past, tax cuts have raised revenue to the government, why? Because first, you don't tax people, you tax economic activity. Economic activity such as investing, earning an income, buying and selling a home and so forth. When the tax rate is lowered, the effect is similar to a sale at K-Mart or Target, people engage in more economic activity.

Part of the reason that the budget deficits went to zero during the Clinton years was because of the Capital Gains Tax. The Stock Market went into overdrive, people bought and sold more stocks, thus paid more in taxes and the government actually saw an increase in revenue.

The economy runs on money, that's obvious. So, to jump start a flagging one, the answer is to pump more money into the economy. The mean savings rate in this country is about 5% (maybe less), so that means that for every dollar earned by Americans, 95 cents goes back into the economy. On the other hand, only 40-60% of the money spent by the government reaches its intended recipients, because of bureaucracy and so on. Therefore, a tax cut rather than government intervention is much better at getting the economy running.

Now, what about those big deficits? Glad you asked. Yes, it seems ironic to me that the same party that brought us Medicare, Social Security, The Great Society, The War on Poverty, The Department of Education, and trillions of dollars in spending on failed social programs is suddenly the party of fiscal restraint. Frankly, I don't believe the Democrats are sincere about trimming government spending. They are just using it as a ploy to get re-elected so that they can start spending again.

The Republicans, too, are a big disappointment. Partly because they seem to lack the will to do what it takes to cut back government spending, party because they've acquired the Democrats' bad habits of winning elections using the taxpayers' money.

There are some things that things that can help reduce the deficit. Actually, a lot of things. One is cut spending. That's simple enough. But to do that will require things like a line item veto and limits on the Congress to spend money. Another is to privatize Social Security as President Bush originally intended. That would have the effect of increasing the savings rate of the American economy and generate wealth.

If Democrats are really serious about reducing the deficit, they can start by rescinding the Medicare Prescription Card Program. The program will be extremely costly, since it merely shifts the burden of costs for prescriptions from the consumer to the taxpayer. We already have too much debt, we can't pay for more, there isn't any money left, it should go. Of course, you'll have a lot of voters who are angry, but it's better than bankrupting the country.

By increasing the amount of its borrowing and spending, the government is effectively chasing investment out of this country. The private sector also needs money and there is a finite amount of it. Increased government borrowing "crowds out" private investment and thus decreases the ability of the economy to produce more wealth. Then people wonder why businesses are going overseas!

 

[dmp]

DMP:dmp as HUCK:Huck

 

[Huckleburry]

I am not arguing that a change in the tax rate will not affect people's spending. Nor have I ever argued that. What I have argued is that we have chosen to reduce the tax rate on the wrong type of economic activity. This is to say that those who benefit the most from the Bush tax cuts are the same folk expected to spend the least of any additional dollar they recieve. This is the Marginal Propensity to Consume (MPC) and it is not the same across demographics. You incoreectly used the median MPS of the country. This number changes dramatically depending on who you aim it on. For example the real savings rate of most of the lower class is actually negative, this is also true for swaths of the middle class as they extract equity from their homes and use it to buy boats and pools. I agree that we need to reduce government spending. True tax cuts have increased economic activity, but they should also have a sizeable multiplier effect. By targeting the upper class the Bush tax cuts have reduced the potentiall multiplier effect while also putting downward pressure on bonds. Thus, not only do we miss out on the full potential of these cuts (opportunity cost) but we have hinderd debt markets which is where the majority of new buisness capital comes from. To conclude, these cuts have cost us in two areas. First, it has an opportunity cost by inaproporietly targeting a demographic with a low MPC, Second, by surpressing the debt market thereby restricting needed capital to growing firms.

Cheers

Huck

 

[manu1959]

DMP,
If your idea of "Knowing" how best to run the country includes bankrupting the treasury to pay for pork projects (see federal Budget) then yes your band of conservatives are doing quite a good job. However, I think that creating massive debts to fund pet projects in economically irrelevant states is not the "best" way to run the country. If anyone out there can explain the economics of a cut and spend balance sheet then please by all means show me the light. I am sure there are more than a few bankers out there who would also be interested in what you have to say.
Huck

now i find this odd....all this money for these pet projects go to hire private companies that employe people, usually union people, so the government is esentally creating jobs through pork barel spending which gives people money for their work which they then return some to the govt in the form of taxes and spend the rest spend on "stuff" which creats demand and more jobs.... alternatively, no pork barel spending = no projects = no jobs = unemployment = government pays out welfare.....

 

[manu1959]

That is what always seems to happen when I post on this subject. Folks either flame me or write me off as cynical. The economy is starting to heat up...that much is true. and tax cuts generally provide a medium term boost.

I am attacking the nuance of the cuts. That these cuts came at too high a price. Also...anyone who believes Bernake is going to stop raising interest rates has their head burried in the sand. With oil futures surpassing the 70 dollar mark, it is inconcievable that the fed will not continue to worry about inflation. We have serious challenges to adress. Challenges that go beyond democrat/republican. I am eager to engage in a discussion concerning the global economy and America's place in it. Anyone who wants to partake is more than welcome to join. But please lets check the partisan bullshit at the door, If I want to hear the partisan line I will check fox news or NYT and get it from the source.

Huck

what was the price that was too high?