OK, I'm all ears.

[ajwps]

Bush gave me $600 back last year.

But he increased the national debt by a trillion dollars in the past 4 years.

I believe the national interest payment for that debt is ~$300 billion, or $1000 dollars for each American. For my family of three, that's ~$3000 per annum. Increasing it by a sixth adds $500 to the portion of my taxes that buys me nothing. So he gives me $600 and wastes $500. Less bang for my tax buck. Every Bush tax cut that raises the deficit will be associated with this sort of drag. I'd love to get the figures and do the calculation accurately--what if we're not getting a real tax cut at all?

By the way, I've enjoyed reading the Wall Street Journal in the past two weeks. They're becoming increasingly harsh in their assessments of Bush's tax and spend policies.

From today’s editorial page: “Republicans have been patting themselves on the back since election day, but maybe they should pay some attention to the pummeling they’ve been taking in the past two weeks. Democrats have been scoring by attacking the majority GOP as the party of big, intrusive government... Individual earmarks... total 18,000 this year and add up to $22 billion.” The editorial refers to the “Appropriations Committee—aka, the College of Cardinals or the Lords of Lard,” and concludes, “With control of the House, Senate, and White House, Republicans are now going to be held accountable for Congress’s decisions. If they talk like conservatives but spend like Democrats, voters may decide to elect the real thing.”

WSJ columnist Christopher Wood asks on the same page, “For how much longer will American have the luxury of running its own independent monetary policy?” His article notes that without the willingness of foreign countries, in particular Asian countries, to buy up our debt (which he says totals “77% of the world’s total current-account deficits,” we risk losing our financial independence to the whims of the global marketplace and our creditors. “This is an administration driven by ideological supply-siders, not by fiscal conservatives,” he says.

A lead article on the Money and Investing page notes that higher gas prices mean that “Energy Costs Could Damp Holiday Sales,” and fears “a lump of coal for an economy largely driven by consumer spending...”

So if you don't believe it from me, a Cambridge liberal, maybe you'll believe it from the conservative press. Supply-side economics was tried in the early 80s. It failed. Why are we doint it again?

Mariner.

(By the way, you can't say that the Clinton economic boom was solely due to tech stock bubble. I've never read that anywhere but here. The Dow was far higher at the end of the boom than it was when Clinton took office, so even after the correction, there was a real boom. Look at the jobs added--same thing--there were still more jobs after the boom than before. Were you better off in 1992 or 2000? Are you better off now than 2000? For most people the answer to question one is yes, and for many the answer to question two is no.)

Your posted summed up: ZERO SUM GAIN

Bush raised national debt 1 trillion and so interest on the national debt is 300 million dollars a day or $1000 for each person. Ergo a large deficit. END OF STORY

Forget about

1) 1 trillion dollars spent to American companies creating new jobs

2) New jobs create new American spenders who buy things and good for their families.

3) New jobs for Americans who now pay real IRS taxes back into the government coffers

4) That 1 trillion dollars plus the remainder of the national debt is about 4.5% of the GDP. Not a lot when you look at the whole picture. Take a look at the GDP of most of the socialist European governments including Canada.

You know you have a great idea. To end the US national debt, let all the Democrats pay a proportionately greater share of hard earned income so that those who create prosperity for all can live on your Democratic backs.

 

[rtwngAvngr]

Bush gave me $600 back last year.

But he increased the national debt by a trillion dollars in the past 4 years.

I believe the national interest payment for that debt is ~$300 billion, or $1000 dollars for each American. For my family of three, that's ~$3000 per annum. Increasing it by a sixth adds $500 to the portion of my taxes that buys me nothing. So he gives me $600 and wastes $500. Less bang for my tax buck. Every Bush tax cut that raises the deficit will be associated with this sort of drag. I'd love to get the figures and do the calculation accurately--what if we're not getting a real tax cut at all?

By the way, I've enjoyed reading the Wall Street Journal in the past two weeks. They're becoming increasingly harsh in their assessments of Bush's tax and spend policies.

From today’s editorial page: “Republicans have been patting themselves on the back since election day, but maybe they should pay some attention to the pummeling they’ve been taking in the past two weeks. Democrats have been scoring by attacking the majority GOP as the party of big, intrusive government... Individual earmarks... total 18,000 this year and add up to $22 billion.” The editorial refers to the “Appropriations Committee—aka, the College of Cardinals or the Lords of Lard,” and concludes, “With control of the House, Senate, and White House, Republicans are now going to be held accountable for Congress’s decisions. If they talk like conservatives but spend like Democrats, voters may decide to elect the real thing.”

WSJ columnist Christopher Wood asks on the same page, “For how much longer will American have the luxury of running its own independent monetary policy?” His article notes that without the willingness of foreign countries, in particular Asian countries, to buy up our debt (which he says totals “77% of the world’s total current-account deficits,” we risk losing our financial independence to the whims of the global marketplace and our creditors. “This is an administration driven by ideological supply-siders, not by fiscal conservatives,” he says.

A lead article on the Money and Investing page notes that higher gas prices mean that “Energy Costs Could Damp Holiday Sales,” and fears “a lump of coal for an economy largely driven by consumer spending...”

So if you don't believe it from me, a Cambridge liberal, maybe you'll believe it from the conservative press. Supply-side economics was tried in the early 80s. It failed. Why are we doint it again?

Mariner.

(By the way, you can't say that the Clinton economic boom was solely due to tech stock bubble. I've never read that anywhere but here. The Dow was far higher at the end of the boom than it was when Clinton took office, so even after the correction, there was a real boom. Look at the jobs added--same thing--there were still more jobs after the boom than before. Were you better off in 1992 or 2000? Are you better off now than 2000? For most people the answer to question one is yes, and for many the answer to question two is no.)

Everyone knows tax cuts work. Everyone knows that clinton's good numbers were due to a tech bubble. The people don't want the socialism the left has to offer, the truth of it's stagnating effects has been spread.

Democrats are not scoring points as you assert; they seem to specialize lately in looking foolish and frantic on tv and the internet.

 

[Mariner]

Right Wing. The Wall Street Journal portrays Bush's strategy as pulling out all the stops for growth. Tax cuts are a limited-time intervention that can be used during a recession (as are temporary spending increases). Long-term, Bush is going to add another $5 trillion to the U.S. deficit. People here keep quoting how his deficits aren't large as percentages of GDP while ignoring that we pay nearly as much for interest as we spend on defense--money down the drain. The Journal, and several other conservative publications I've looked at lately, are getting increasingly worried about Bush's head-in-the-sand strategy. His projections for jobs and deficit cutting have been wildly off the mark so far, and his ongoing projections all assume the rosiest possible scenarios (including the end of his own tax cuts!) He doesn't even want to show us how things would look if his tax cuts were kept in place.

I'm waiting for Bush to be forced to eat his words and raise taxes. He's simply not going to be able to find enough discretionary spending to cut to match his tax cuts. 40% of our debt is owned by foreigners, who are going to get tired of the falling dollar eventually, since it eats their profits. They'll choose to invest their money elsewhere. The business community here, which is enjoying the short-term decrease in taxes, will begin to balk when interest rates are forced to rise. I'm guessing Bush is going to have a very lame duck second term in which he can't advance his economic agenda and may even need to retreat.

Clinton's boom wasn't a bubble, Right Wing. Check the stock market before Clinton and then after the bubble burst: it still gained money. Compare that with the first few years under Reagan, when he tried "supply side" economics--he was forced to raise taxes in 1986 as you recall, because supply side was killing us with its high deficits and lack of growth.

The whole theory of supply-side is that wealthy people create jobs, so if you give them more money they'll re-invest it in their companies and create even more jobs. It sounds really good. But when you look at what wealthy people actually do when you cut their taxes, you find that they don't reinvest enough to make the tax cuts work: they keep too much for themselves, and the deficit rises in the meantime. Plenty of studies show that it's far more effective to reduce taxes on poorer people, who actually spend it right away. Bush made token reductions in taxes on lower-income people--the bulk was to high-income people. That's why the recovery has been so anemic despite his high-risk "pull out all the stops" approach. And as the Journal points out, if there's another attack, or we need to start a third war, we don't now have the surpluses of money to do that, and the economy could tank. His strategy is not prudent, and many, many economists (including an impressive list of Nobel prize winners) have said so.

Mariner.

 

[freeandfun1]

Right Wing. The Wall Street Journal portrays Bush's strategy as pulling out all the stops for growth. Tax cuts are a limited-time intervention that can be used during a recession (as are temporary spending increases). Long-term, Bush is going to add another $5 trillion to the U.S. deficit. People here keep quoting how his deficits aren't large as percentages of GDP while ignoring that we pay nearly as much for interest as we spend on defense--money down the drain. The Journal, and several other conservative publications I've looked at lately, are getting increasingly worried about Bush's head-in-the-sand strategy. His projections for jobs and deficit cutting have been wildly off the mark so far, and his ongoing projections all assume the rosiest possible scenarios (including the end of his own tax cuts!) He doesn't even want to show us how things would look if his tax cuts were kept in place.

I'm waiting for Bush to be forced to eat his words and raise taxes. He's simply not going to be able to find enough discretionary spending to cut to match his tax cuts. 40% of our debt is owned by foreigners, who are going to get tired of the falling dollar eventually, since it eats their profits. They'll choose to invest their money elsewhere. The business community here, which is enjoying the short-term decrease in taxes, will begin to balk when interest rates are forced to rise. I'm guessing Bush is going to have a very lame duck second term in which he can't advance his economic agenda and may even need to retreat.

Clinton's boom wasn't a bubble, Right Wing. Check the stock market before Clinton and then after the bubble burst: it still gained money. Compare that with the first few years under Reagan, when he tried "supply side" economics--he was forced to raise taxes in 1986 as you recall, because supply side was killing us with its high deficits and lack of growth.

Mariner.

another idiotic and uneducated statement.

President's don't have the power to raise taxes. Only the Congress can levy taxes. It was the democratic Houses that raised taxes in 1986.

Are you cutting and pasting from editorials of the 80's? Cuz you rhetoric sounds the same. During that time, everybody said the Japanese were going to "own" us. This is all part of the economic cycle.

Lastly, the bubble was a bubble. How much of the "gains" were lost between 1998 and 2001? A shitload.

 

[Mariner]

that was the bubble. Compare 1992 to 2001, and you'll see your mutual funds did quite well--mine did.

In 1986 everyone admitted taxes needed to be raised, and supply-side thinking was roundly criticized. Reagan let it happen because it needed to happen, just as Bush I let a small tax increase happen during his term (against his "read my lips" pledge, because it needed to happen).

Now that the whole shebang is Republican, I look forward to seeing how they'll rationalize the eventual need to raise taxes again--since they obviously don't have the guts actually to reduce the size of gov't. They've talked big for years, and first chance they get they squeeze all the lard into their spending bill that they can fit--and then some.

Presidents propose budgets, and have plenty of power to influence Congress--even a hostile congress. Please don't call me uneducated: I've had more years of education than I care to admit.

By the way, not all conservatives are supply-siders. How did the Republicans get hijacked by this particular economic viewpoint? There are plenty of pay-as-you-go, deficit-hawk, conservatives, but they've been quiet as Bush's federal gov't and the deficit have both ballooned.

Mariner.

 

[freeandfun1]

you ignored my question. How much of the gains were lost between 1998 and 2001? A lot. And you cannot put all the credit in Clinton's lap. He even admits he DID NOTHING to stimulate the economy. Therefore, it must have been Reagan and Bush I's policies that drove the economy. It surely was the technology developed for the military under them that spurned the 90's growth.

Don't ignore the questions. Just answer them. Layoffs started in 1998, just two years AFTER Clinton's tax increases. About the time needed for policy to take effect.

Not all of the 90's was bubble, but when things started to get out of control, Clinton implemented NO policies to try and curb it and he totally ignored all the corporate corruption. Hell, why not? He, Terry McAuliffe and Hillary were all making a bang of a buck off the scandals. They knew it was collapsing and they didn't do anything to stop it because he knew he couldnt get elected again and he had run out his luck.

If you are as educated as you claim, why can't you address and recognize FACTS? They are as clear as can be, yet you ignore them to support your claims.

 

[Mariner]

your question at all--I said that not ALL of the gains were due to bubble. The economy grew superbly under Clinton, whether that fact agrees with your die-hard Republicanism or not. Perhaps you're having difficulty facing the fact that Bush's tax cuts did not work as advertised--the economy is now gaining steam, two years after the tax cuts were supposed to have shown their effects, and it's not gaining steam fast. Bush has had one or two months that look as good as a dozen or more Clinton months.

An analysis I saw a couple of weeks ago showed that in the past 50 years the economy has been stronger on average under a Democratic President than under a Republican one on several measures key measures. The economy is much to complicated to simply ascribe to one theory or another, and I'm not an economist, but the basic story line that I have read repeatedly in both conservative and liberal business pages is that Clinton was fiscally moderate, which made everyone feel comfortable--consumers could spend and businesses could grow. Gov't grew modestly (much more slowly than under Bush II) and deficicts shrank (because of a balanced program of modest tax increases and modest program growth).

Under Bush, on the other hand, the national debt has risen by 30% because tax revenues are now at 1999 levels while gov't has grown immensely. Fiscal conservatives have been silenced by "ideological supply-siders," as the Journal puts it. That word "ideological" means they'll continue to believe their theory in the face of contrary facts.

That's how it looks to me--be of course I'm just Joe citizen/non-economist, and I may be missing things--I'm certainly willing to hear facts and arguments that look different from these.

Mariner.

 

[rtwngAvngr]

your question at all--I said that not ALL of the gains were due to bubble. The economy grew superbly under Clinton, whether that fact agrees with your die-hard Republicanism or not. Perhaps you're having difficulty facing the fact that Bush's tax cuts did not work as advertised--the economy is now gaining steam, two years after the tax cuts were supposed to have shown their effects, and it's not gaining steam fast. Bush has had one or two months that look as good as a dozen or more Clinton months.

An analysis I saw a couple of weeks ago showed that in the past 50 years the economy has been stronger on average under a Democratic President than under a Republican one on several measures key measures. The economy is much to complicated to simply ascribe to one theory or another, and I'm not an economist, but the basic story line that I have read repeatedly in both conservative and liberal business pages is that Clinton was fiscally moderate, which made everyone feel comfortable--consumers could spend and businesses could grow. Gov't grew modestly (much more slowly than under Bush II) and deficicts shrank (because of a balanced program of modest tax increases and modest program growth).

Under Bush, on the other hand, the national debt has risen by 30% because tax revenues are now at 1999 levels while gov't has grown immensely. Fiscal conservatives have been silenced by "ideological supply-siders," as the Journal puts it. That word "ideological" means they'll continue to believe their theory in the face of contrary facts.

That's how it looks to me--be of course I'm just Joe citizen/non-economist, and I may be missing things--I'm certainly willing to hear facts and arguments that look different from these.

Mariner.

It's gaining steam now because of Bush's tax cuts. That's why they're going to be made permanent.

 

[freeandfun1]

It's gaining steam now because of Bush's tax cuts. That's why they're going to be made permanent.

Mariner claims to be so educated, yet he doesn't understand the fundamentals of implementing any kind of financial plan. Rarely do you do one thing today, and it has an impact tomorrow. There is always a lag in the passage of programs and their net effect on the economy. Anybody with half a brain knows that and any economist will tell you that it generally takes 2 - 4 years for a President's programs to have an effect. The reason Clinton's second term was so bad, was the policies of the first two years of that term. The reason his first term was so good, was that Bush I's policies took effect under Clinton.

Just as if Bush had not been re-elected, Kerry would be reaping the benefits of Bush's policies.

The economy seriously began to tank in 1998 with the collapse of the Asian economies and our having to bail them out through the IMF. That, and Clinton's neglect, led to the Euroweenies gaining a strategic and economic advantage in Asia as the Euro was much more weaker than the USD and therefore, our products were TOO expensive. As Asia was the "hot" market at the time, we lost a lot of income from not being able to compete there.

Now that the tables are being turned, Europe is facing very difficult economic times. So difficult a matter-of-fact, that MANY European countries are following Bush's lead and cutting taxes.

 

[Huckleburry]

Actually most economists disagree with the Bush's fiscal policy because it is based on a set of assumptions that have been tried and failed. Supply side economics does not work. Also, of course Bush's tax cuts are having an effect on the economy. Any tax cut will increase consumer spending, and there are very few respected economists out there would argue otherwise. However, what they will argue is that the Bush Tax cuts are misguided because they target a group of people whose MPC's (marginal propensity to consume: increase in spending over increase in income) are low as compared to the middle and lower class. So while Bush is foregoing billions of dollars in tax cuts he has targeted these tax cuts at the group with the smallest expansionary effect. Moreover his policy of increased government spending does little to help the national economy. While it is true that the dollars being spent will have an expansionary effect, that effect will be mitigated by governments increased consumption of the money supply. In the long run deficit spending hinders investment because the government gobbles up the money supply. Companies then looking to expand have to compete with the government (a pretty safe investment) for a scarce amount of capital. You can argue (as the regonites did) that such programs will shift out the market supply curve. Unfortunately, as many economists correctly argued during the Regan years, such programs are subject to an inherent flaw because they assume that consumers do not drive the economy (a rather silly assumption). My problem with Bush's fiscal policy is that his tax cuts are aimed at a group bound to have the smallest expansionary effect, while simultaneously, robbing the economy of much needed capital through increased government spending programs. Such acts are not conservative, or republican, quite the contrary they are (in an economic sense) incredibly liberal.

 

[rtwngAvngr]

Actually most economists disagree with the Bush's fiscal policy because it is based on a set of assumptions that have been tried and failed. Supply side economics does not work. Also, of course Bush's tax cuts are having an effect on the economy. Any tax cut will increase consumer spending, and there are very few respected economists out there would argue otherwise. However, what they will argue is that the Bush Tax cuts are misguided because they target a group of people whose MPC's (marginal propensity to consume: increase in spending over increase in income) are low as compared to the middle and lower class. So while Bush is foregoing billions of dollars in tax cuts he has targeted these tax cuts at the group with the smallest expansionary effect. Moreover his policy of increased government spending does little to help the national economy. While it is true that the dollars being spent will have an expansionary effect, that effect will be mitigated by governments increased consumption of the money supply. In the long run deficit spending hinders investment because the government gobbles up the money supply. Companies then looking to expand have to compete with the government (a pretty safe investment) for a scarce amount of capital. You can argue (as the regonites did) that such programs will shift out the market supply curve. Unfortunately, as many economists correctly argued during the Regan years, such programs are subject to an inherent flaw because they assume that consumers do not drive the economy (a rather silly assumption). My problem with Bush's fiscal policy is that his tax cuts are aimed at a group bound to have the smallest expansionary effect, while simultaneously, robbing the economy of much needed capital through increased government spending programs. Such acts are not conservative, or republican, quite the contrary they are (in an economic sense) incredibly liberal.

Supply side does work. while increased consumption is part of how tax cuts grow the economy, it only accounts for part of the effect. Tax cuts targetted at the investment class, rich people, incentivize them to grow their business, because they will get to keep more of their profits, through personal and corporate tax cuts. You have not addressed this aspect. Is that because you can't? You've called it silly, but that's hardly an argument.

 

[Huckleburry]

Right wing,
Your right silly hardly constitutes an argument; please allow me to explain further why supply side does not work.

A business does not grow because the owners and investors want them too. If this was true than our economy would never go through a recession. A business grows only when there is an increased demand for the product or service which they provide. Too stimulate business growth we must focus on shifting the market demand curve outward. This will cause an increase in both quantity supplied and price. On a micro level the increase in production translates into the creation of jobs and the addition of new actors to the market. Importantly though the pecuniary signal for firms to increase output, or enter the market, comes from demand not supply. Corporate tax cuts will certainly increase the accounting profit of the firm and depending on the structure of the company this may be returned to investors in the form of higher dividends. That last line is where supply side economics has its foundations and is also why it was an attractive theory for a time, unfortunately this is also where supply side economics stops. An examination of the investors now becomes important to the greater economic debate.
Investors are typically wealthier Americans (probably because they invest their savings). As I said in my last post, and explained in the post before that (it is in this thread but may be kind of buried) the MPC for this group is comparatively small (Another likely reason for their advantageous position). Thus the expansionary effect of the tax cut, that is the additional outward shift in the demand curve, is limited by the spending behavior of this group. Logically this makes sense. If you give a poor person 200 dollars they are going to spend it. Give the same 200 dollars to a rich person and they are probably not going to spend it. Moreover groups with a higher MPC tend to consume more locally produced goods like food, while the groups with a higher MPC consume goods that are produced abroad, like Ferraris.
Arguing that tax cuts for the rich provides incentive to grow a business does not hold water because the wants of business owners have little to do with the expansion of a firm.

Also the drastic increase in governmental spending is detrimental to the economy because the government gobbles up all of the money. This makes it difficult for firms that wish to expand to do so, because capital becomes scarce. Moreover using government spending programs to boost the economy can only last for so long. When the government stops spending the economy stops growing. This is to say that any expansionary effect as a result of government spending stops when the source of the expansion is eliminated. For a group of folks who argue so fervently against a welfare state the fiscal policy you have chosen to endorse seems an odd choice because it makes the economy more, not less, dependent upon government spending programs. Unless of course you all are secretly communists
:happy2:

 

[Mariner]

Bush himself predicted a much quicker response to his tax cuts, as did supply-siders at the time. What's the reason for the delay? In fact, all of Bush's economic projections have been unbelievably wrong. Take a look at what he predicted for jobs growth and the deficits back in 2001, 2002, and 2003. Every projection was bogus. And you're going to convince me what he's doing is right? Show me a Bush projection that actually corresponds to reality, and I might start to believe you.

Right Wing--these types of tax cuts can only be temporary, unless spending is cut commensurately. Otherwise we continue to bleed. The current rate of bleeding is $2 billion per DAY. At a certain point our dollar drops far enough that we're forced to raise interest rates in order to persuade foreigners to continue to subsidize our deficit spending. The business community and the true fiscal conservatives will then rebel against the supply-siders.

C'mon you guys--no one is all bad. Tell me a few good things Clinton did, to convince me that you're not simply in love with Bush and unable to see anything more complicated than that.

Mariner.

 

[Huckleburry]

F and F,
You are right. Clinton had absolutely nothing to do with the economic boom of the 90's. The fact that his presidency coincided with the most impressive economic boom the world has ever seen has absolutely nothing to do with any of his policies.

 

[rtwngAvngr]

F and F,
You are right. Clinton had absolutely nothing to do with the economic boom of the 90's. The fact that his presidency coincided with the most impressive economic boom the world has ever seen has absolutely nothing to do with any of his policies.

Right and remember, sometimes sarcasm doesn't work in print.

 

[rtwngAvngr]

Bush himself predicted a much quicker response to his tax cuts, as did supply-siders at the time. What's the reason for the delay? In fact, all of Bush's economic projections have been unbelievably wrong. Take a look at what he predicted for jobs growth and the deficits back in 2001, 2002, and 2003. Every projection was bogus. And you're going to convince me what he's doing is right? Show me a Bush projection that actually corresponds to reality, and I might start to believe you.

Right Wing--these types of tax cuts can only be temporary, unless spending is cut commensurately. Otherwise we continue to bleed. The current rate of bleeding is $2 billion per DAY. At a certain point our dollar drops far enough that we're forced to raise interest rates in order to persuade foreigners to continue to subsidize our deficit spending. The business community and the true fiscal conservatives will then rebel against the supply-siders.

C'mon you guys--no one is all bad. Tell me a few good things Clinton did, to convince me that you're not simply in love with Bush and unable to see anything more complicated than that.

Mariner.

Spending does need to be curtailed, that I agree with. Oh and the fiscal conservatives are the supply siders, due to the irrefutable fact that lower taxes incentivizes every individual and corporation to grow, growing the overall economy and creating new jobs for young families to flourish. young red state families who still believe in life.

 

[ajwps]

A business does not grow because the owners and investors want them too. If this was true than our economy would never go through a recession. A business grows only when there is an increased demand for the product or service which they provide.

Nice thought but the reality is that a business cannot grow if there are not enough people with disposable income to demand a product or service. Business grows when a product or service is in demand because of innovative tech or needs drives demand. If the government has the income and the populace does not work (lack of jobs) because of government hoarding a balanced budget, then you get a RECESSION.

Too stimulate business growth we must focus on shifting the market demand curve outward. This will cause an increase in both quantity supplied and price. On a micro level the increase in production translates into the creation of jobs and the addition of new actors to the market.

Flawed thought process again! Shifting 'market demand curve outward' or micro increasing production translates into jobs only if their is capital in the public sector. Goverment created jobs creates zero GDP and government controlled funded government giveaway programs benefits no one but the politician who wants to be re-elected. Jobs in the private sector and income from non-government industry creates new actors to the market. The history of the 40 year run of a Democrat government has proven economic recessions.

Importantly though the pecuniary signal for firms to increase output, or enter the market, comes from demand not supply.

Demand makes supply increase in both amount and quality. If the public wants to buy products or services, taxes cuts into their disposable income and demand (no matter how great) drops and supply and quality drop as less jobs are created with the government having the income. Russia, a prime example of this concept. During Communist Russia, there were hundreds of millions who worked only for the government with no private jobs, disposable income was non-existant with resultant lower production, poor quality products and increase in alcohol consumption to ease the pain of government induced poverty of the population.

Corporate tax cuts will certainly increase the accounting profit of the firm and depending on the structure of the company this may be returned to investors in the form of higher dividends. That last line is where supply side economics has its foundations and is also why it was an attractive theory for a time, unfortunately this is also where supply side economics stops. An examination of the investors now becomes important to the greater economic debate.

Your trickle-up theory is the one that has proven to be a failure. For there to be investors or working people who desire to improve their lot in life, every citizen must have the ability to jump from salaried employee to entreprenuer by each person's desire to stay in his poverty or try to create a business or product that will allow him to keep the products of his labor instead of it being stolen in the form of unnessary federal, state and local taxes. Government spending (deficit) increases the individuals ability to grow financially, create more jobs and more people to pay more taxes so that the government can provide the functions of government. 1. Protect the US from foreign invaders 2) Print Money 3) Settle disputes between States. The rest of government functions are not sanctioned by the Constitution.

Investors are typically wealthier Americans (probably because they invest their savings). As I said in my last post, and explained in the post before that (it is in this thread but may be kind of buried) the MPC for this group is comparatively small (Another likely reason for their advantageous position).

Yes the typical American is not wealthier because of government taxation and control of each person's habits by the tax codes. True freedom from government creates wealth for the majority of the population unless individuals have no drive to improve their lot in life. The Democratic controlled government of the past have created poverty in the USA as a result of faulty increased tax and spend policies. George Bush's projections are now beginning to be seen and this fact frightens libs. Loss of control of the people is not compatabile with liberalism. Read Orwell's 1984 again.

Thus the expansionary effect of the tax cut, that is the additional outward shift in the demand curve, is limited by the spending behavior of this group. Logically this makes sense. If you give a poor person 200 dollars they are going to spend it. Give the same 200 dollars to a rich person and they are probably not going to spend it. Moreover groups with a higher MPC tend to consume more locally produced goods like food, while the groups with a higher MPC consume goods that are produced abroad, like Ferraris.
Arguing that tax cuts for the rich provides incentive to grow a business does not hold water because the wants of business owners have little to do with the expansion of a firm.

Flawed thinking again. Give 200 hundred dollars to the rich person and they may not spend it but they will invest it creating more wealth for everyone. The rich do not bury that 200 hundred dollars in the ground.

Your statement is not only ludicrous but has been shown to be wrong for the past 40+ years of Democrat control of Congress and the White House.

The wants of business owners has everything to do with expansion of a firm as without the ability to sell the products or services he creates, forces that firm or business to fail and go bankrupt. There is no one to buy his products or services if the government keeps all the money in a 'balanced budget.'

Also the drastic increase in governmental spending is detrimental to the economy because the government gobbles up all of the money.

WHAT ARE YOU TALKING ABOUT? This statement makes 0 sense.

This makes it difficult for firms that wish to expand to do so, because capital becomes scarce. Moreover using government spending programs to boost the economy can only last for so long.

Can you back up this statement with any facts or common sense reality?

When the government stops spending the economy stops growing.

Right... You have just contradicted yourself.

This is to say that any expansionary effect as a result of government spending stops when the source of the expansion is eliminated. For a group of folks who argue so fervently against a welfare state the fiscal policy you have chosen to endorse seems an odd choice because it makes the economy more, not less, dependent upon government spending programs. Unless of course you all are secretly communists

Why do you think that government spending is limited to the WELFARE system or that the federal WELFARE system is in any way benevolent?

In short, your thinking is contradictory at best and totally in error at worst. Don't be frightened as our society is now moving in the right direction even if it doesn't agree with your UTOPIAN ideas of an all knowing and wise government who must control its citizens by monetary policies.

Orwell knew you very, very well.

 

[rtwngAvngr]

Also. Any business analyst will tell you that a business not using SOME available credit is missing out on opportunities and probably stagnating. Healthy levels of debt. Also wartime is the best time to use credit. Our lives are on the line here, folks. Was it wwI or II when our deficit was like 125% gdp?

 

[Huckleburry]

Awjps,
You completly misunderstood major componenets of my argument. To begin with my argument has its foundings in Keynisian economic theory (Standard classical economics). Economists the world over have used standard classical theory as the basic framework of their anaylisis since about Adam Smith. If you would (and Regan did) like to argue against Smith that is fine, but understand that from an economic standpoint your's is the upstart and liberal theory. This is not to say that it may not someday prove to be correct (in my view unlikely) but rather that it is a new theory whose first go around under Regan failed. These are not my views alone, these are also the views of the greater economic community, including the boys in Chicago and the boys in New York.

Nice thought but the reality is that a business cannot grow if there are not enough people with disposable income to demand a product or service..

A lefward/outward shift in the market demand curve reflects a real increase in disposable income! Read my argument.

Business grows when a product or service is in demand because of innovative tech or needs drives demand.

Innovative tech affects marginal production costs but has no (at least in a direct sense) effect on the demand curve.

If the government has the income and the populace does not work (lack of jobs) because of government hoarding a balanced budget, then you get a RECESSION.

Unlike a private firm the government retains no profits. All of its revenues, with the exception of foreign debt payments, are in some form (think government purchases and employee paychecks) returned to the economy.

Flawed thought process again! Shifting 'market demand curve outward' or micro increasing production translates into jobs only if their is capital in the public sector.

No, Shifting market demand outward (Macro) has implications on the Micro level. The two are not interchangable.

Goverment created jobs creates zero GDP and government controlled funded government giveaway programs benefits no one but the politician who wants to be re-elected.

While GDP is not a measure of jobs and technically an increase in jobs in any sector have equall potential to affect GDP, I think I know what you are trying to say and I agree moreover my argument agrees as well. Why then are you arguing for a fiscal policy that is contrary to that end.

Demand makes supply increase in both amount and quality.

Competition makes quality increase.

If the public wants to buy products or services, taxes cuts into their disposable income and demand (no matter how great) drops and supply and quality drop as less jobs are created with the government having the income. Russia, a prime example of this concept. During Communist Russia, there were hundreds of millions who worked only for the government with no private jobs, disposable income was non-existant with resultant lower production, poor quality products and increase in alcohol consumption to ease the pain of government induced poverty of the population.

I know that tax cuts increase spending. No one who knows what they are talking about has ever argued against that, we all know it to be true. The question is tax cuts for whom? In answering that you have to adress the marginal propensity to consume, and in turn the expansionary effect.
Also Russia is not a good example of anything when discussing american economic policy because their economic structre was not based on the standard classical model. Leave russia out of the debate because in the economic world (unlike the political) they are a useless comparision. Except to say that Marx's theory does not work as well as Smith's

Your trickle-up theory is the one that has proven to be a failure. For there to be investors or working people who desire to improve their lot in life, every citizen must have the ability to jump from salaried employee to entreprenuer by each person's desire to stay in his poverty or try to create a business or product that will allow him to keep the products of his labor instead of it being stolen in the form of unnessary federal, state and local taxes. Government spending (deficit) increases the individuals ability to grow financially, create more jobs and more people to pay more taxes so that the government can provide the functions of government. 1. Protect the US from foreign invaders 2) Print Money 3) Settle disputes between States. The rest of government functions are not sanctioned by the Constitution.

Oh really, my trickle up theory has guided our economic policy since the nations inception. Interesting.

Flawed thinking again. Give 200 hundred dollars to the rich person and they may not spend it but they will invest it creating more wealth for everyone. The rich do not bury that 200 hundred dollars in the ground.

Nope. Investment does not automatically translate into more wealth for everyone. That is not how the stock market works. Actaully the stock market is a function of our greater theoritical framework and is usefull becuse it is a robust and somewhat stable capital market. On the other hand increased consumer demand does automatically translate into increased supply, which may require firms to expand, which may be reflected in positive gains in the stock market as firms seek additional capital.

Your statement is not only ludicrous but has been shown to be wrong for the past 40+ years of Democrat control of Congress and the White House.

Your the one politicizing this. I am arguing for a sound fiscal policy, and my argument is one that most republicans agree with.

The wants of business owners has everything to do with expansion of a firm as without the ability to sell the products or services he creates, forces that firm or business to fail and go bankrupt. There is no one to buy his products or services if the government keeps all the money in a 'balanced budget.

Again this statement is entirely false. A buisness succeeds only when people consume their product. Without consumption there can be no revenues and without revenues a buisness can not suceed. All buisness owners want revenues yet buisness' still fail. The natural conclusion then is that developing an attractive product and successfully marketing that product is more important than the wants of the particular buisness owner. Of course I am an economist not a buisness man so I could be mistaken on the latter point.

WHAT ARE YOU TALKING ABOUT? This statement makes 0 sense.

That statement did not make sense because you do not understand how the fed interacts with the Government. Do a bit of reading (I recomend the economist) and you will see the correlation between government debt and scarcity of capital. What I will say now is that money like all things in our economy is a scare resource. When the government engages in huge spending programs they begin to consume large quantities of the availble money supplied (and no printing more does not allieviate the problem). When deficit spending begins the government litterally goes in to debt, that is what a treasury bond is, a piece of debt. Indviduals, institutions, and especially the central banks of other countries buy that debt, at a promised rate of return. As economists we assume that the people who invested in national debt would have invested else where had that option not been availible. Thus the damage to the economy is two fold. The government restricts the amount of capital availible to private enterprise, and limits the amount of additional capital that would have gone to private enterprise.

Why do you think that government spending is limited to the WELFARE system or that the federal WELFARE system is in any way benevolent?

I am talking about the welfare state not the welfare system. Know the difference if you want to argue about economics.

In short, your thinking is contradictory at best and totally in error at worst. Don't be frightened as our society is now moving in the right direction even if it doesn't agree with your UTOPIAN ideas of an all knowing and wise government who must control its citizens by monetary policies.
Orwell knew you very, very well.

In reading your argument a few things are pretty clear. The first is that you are not an economist. The second is that what little knowledge you do have of the economy comes from the popular media who in an effort to make things easier to understand skip over the more nuanced parts of economic debate. If you want to debate me fine. But in doing so you are going to need alot more than a hodge podge of economic catch phrases that you heard on the evening news. You should understand the MPC and what the GDP measures and why that measure is important, know how the money supply works and how the fed opperates. I am not spewing liberal sewage, quite the contrary my argument is increadibly conservative. And unlike your's argues for less government intervention not more. The propents of your fiscal plan have thus far refused to acknowledge reality, and the proof is in the pudding. For all of the boasting the "comeback" has been quite modest and has come at a abnormally high price. In the coming year we are going to witness the continued slide of the dollar against other world curriencies, this has nothing to do with muslims or terrorism, this is not because the EU is plotting against us or using dirty tricks. The demise of the dollar is a direct result of our own fiscal lunacy, lunacy which you support even though you can't articualte why. Our postion as the worlds reserve currency will continue to slide as investors seek higher rates of return and greater stablity else where. This will limit our ablitlity to carry on spending and will make deficit spending increasingly more expensive (through a rise in interest rates). Probably, you will answer this post with some witty remark about my intelligence, sexual orientation, or physical appearence. What you are far less likely to do is respond with a sound economic argument, beacuse that would require educating yourself, and if that is achieved you will not have any reason to post a response other than to say "oops my mistake, you are correct our fiscal policy is ludacris. Happy hunting
HUCK

 

[freeandfun1]

F and F,
You are right. Clinton had absolutely nothing to do with the economic boom of the 90's. The fact that his presidency coincided with the most impressive economic boom the world has ever seen has absolutely nothing to do with any of his policies.

Thanks! I knew I was right! I appreciate the confirmation.