That's absolute nonsense. Government borrowing drives interest rates up by increasing the demand for borrowed money; perhaps you'd care to explain how increasing interest rates boosts the economy? And government spending never provides as much of a boost to the economy as the same amount of private spending -- they can spend only what they take from us, but far less efficiently.
Republicans: fighting to produce even more prosperity to all; all of those who already have it. Along with giving prosperity to those already rich goes the corollary of preventing prosperity for everyone else. It works every time republicans are in power.
Hawke
Then why are the republicans borrowing and spending like there is no tomorrow? Take away the economic activity due to the government buying goods and services and the economy stinks. I'd like to see the percentage of the GDP that comes from military and defense spending alone. That is pure wasted money. If it was used by the private sector instead of the government we'd actually have a good economy instead of a fake one that only looks good on paper.
Hawke
It doesn't really work that way. Government and business are different. In business it's a simple matter of figuring out the equilibrium point between price and how many units will be sold. At some point lowering the price of a product produces more sales and more revenue and at some lower price it just produces lower revenues. Business only wants to get at the right price point to achieve the maximum revenue. Government doesn't work that way. When it needs more money it either raises taxes or prints more money. I'd say that makes it wildly different than Wal-Mart. Which is why you can't compare the two and is also why the idea that businessmen make good government leaders is usually unsound.
Hawke
You need to check the facts, pal. Supply side economic theory has been discredited by the historical facts. The criticisms of it from the experts when it was proposed have now been proven. The supposed benefits from it have been illusionary. In truth it did what the real experts said it would, end in less tax revenue coming in than before implementation. Check Wikipedia if you don't believe me. The main change from changing to supply side economics has been a reduction in taxes for the rich and for business. As always when republicans are in charge.
Hawke
Gee, I dunno, Hawke. The government has spent a ton of money on the war so far. It should start showing a profit any day now! :-)
Is anyone besides me curious how spending money on overhead is expected to show a profit? Isn't that a whole lot like a free lunch? Someone, somewhere, gets the honor of paying the tab. Taxpayers, perhaps? Raise taxes endlessly, until we're all prosperous?
Harold
Because many of them, including -- perhaps especially -- the President think that they can buy friendship.
Perhaps you should check the facts yourself. Tax revenue has increased substantially -- but the deficit has increased even faster because spending is completely out of control, due in large part to a president who took seven years to figure out that he could actually veto legislation once in a while.
Hush now, he's in his happy place. Don't disturb him with reality, he doesn't like it.
On this we agree.
If that were true, I wouldn't have said otherwise. However, if it were true, there would be evidence other than "Because Rush told me so."
Just because someone makes you feel smart doesn't mean they aren't filling your head with lies. Engage your skepticism the most when you most *want* to believe.
I'm not defending the democrats, because they have their share of problems; but yeah, the repubs have been corporate stooges since *at least* the Reagan era. The end result of unregulated capitalism is obvious.
Confused? I'll dumb it down for you.
Therefore, lowering taxes will result in less money going into the US economy and more of it going overseas.
It's simple reasoning.
The feds set the interest rate. Government borrowing doesn't do anything to the interest rate. Most of the money the US government borrows is borrowed from China.
Sigh. It doesn't matter how inefficiently the government spends the money. The government spends money almost exclusively within the US. If they spend a dollar, a good 95% of it goes to US businesses. If they give that dollar to Joe Blow, he goes and spends half of it at Wal-Mart or other merchandise sellers, and most of that goes to foreign countries. Makes a car payment, mostly the same thing. Etc.
Tax breaks might create a few jobs at places like Wal-Mart and Sears, but government spending is creating thousands of engineering jobs, middle and upper management jobs, etc--jobs that make people thrive, not just keep them alive.
If what you're saying is true, there should be a graph or chart based on cited data which proves that lowering taxes is always followed by increased tax money coming in. If you can find one I would be grateful and will recant, because I *want* to believe that lowering taxes is good for the economy. I don't like paying taxes any more than you do! And for the record, I'm NOT in favor of increasing taxes to stimulate the economy. I'm in favor of the government sharply curtailing spending, and paying off the national debt. The US is rich in resources, we can support ourselves rather than needing handouts (loans) from China and other countries. In that way, I'm actually fiscally conservative--much more so than the borrow-and-spend Reagan/Bush/Rush neocons, who are for practical purposes less so than the democrats!
The CBO said so.
Care to dispute it?
You really really need to take your own advise.
Gunner
"[L]iberals are afraid to state what they truly believe in, for to do so would result in even less votes than they currently receive. Their methodology is to lie about their real agenda in the hopes of regaining power, at which point they will do whatever they damn well please. The problem is they have concealed and obfuscated for so long that, as a group, they themselves are no longer sure of their goals. They are a collection of wild-eyed splinter groups, all holding a grab-bag of dreams and wishes. Some want a Socialist, secular-humanist state, others the repeal of the Second Amendment. Some want same sex/different species marriage, others want voting rights for trees, fish, coal and bugs. Some want cradle to grave care and complete subservience to the government nanny state, others want a culture that walks in lockstep and speaks only with intonations of political correctness. I view the American liberals in much the same way I view the competing factions of Islamic fundamentalists. The latter hate each other to the core, and only join forces to attack the US or Israel. The former hate themselves to the core, and only join forces to attack George Bush and conservatives." --Ron Marr
I hate to interfere with a good fight, but maybe it would be a better fight if it were fought on a little higher plane. Gunner, what the CBO has said is that tax revenue increases amount to roughly 17% (labor) and 50% (capital) of the tax revenues LOST through lower tax rates. In other words, cutting taxes cuts revenues, but not by the full amount of tax cuts. And this is exactly what most sophisticated supply-siders have been saying for some time now. If you looked at the Wikipedia entry for supply-side economics (one of their better efforts), you see the "left-side, right-side" issue that's the core of intelligent analysis of tax-cutting effects today.
An easier way to see what's going on in this debate is to start with Bruce Bartlett's op-ed article in the NYT earlier this year. Bartlett was one of the original supply-siders and arguably its strongest proponent. He was an advisor to Reagan and an author of the Kemp-Roth bill that was the roadmap for Reaganomics. You can view NYT articles for free now but I don't know if you'll have to sign in:
Here's about as much of it as I can paste without worrying about copyright:
============================================== AS one who was present at the creation of "supply-side economics" back in the 1970s, I think it is long past time that the phrase be put to rest. It did its job, creating a new consensus among economists on how to look at the national economy. But today it has become a frequently misleading and meaningless buzzword that gets in the way of good economic policy.
Today, supply-side economics has become associated with an obsession for cutting taxes under any and all circumstances. No longer do its advocates in Congress and elsewhere confine themselves to cutting marginal tax rates - the tax on each additional dollar earned - as the original supply-siders did. Rather, they support even the most gimmicky, economically dubious tax cuts with the same intensity.
The original supply-siders suggested that some tax cuts, under very special circumstances, might actually raise federal revenues. For example, cutting the capital gains tax rate might induce an unlocking effect that would cause more gains to be realized, thus causing more taxes to be paid on such gains even at a lower rate.
But today it is common to hear tax cutters claim, implausibly, that all tax cuts raise revenue. Last year, President Bush said, "You cut taxes and the tax revenues increase." Senator John McCain told National Review magazine last month that "tax cuts, starting with Kennedy, as we all know, increase revenues." Last week, Steve Forbes endorsed Rudolph Giuliani for the White House, saying, "He's seen the results of supply-side economics firsthand - higher revenues from lower taxes."
===============================================
The rest of it is worth reading. It's pretty short and will give you a good idea of what smart and knowledgeable supply-siders have to say for themselves today.
OK, what's the CBO?
Cool, that's pretty much in line with what I'm saying. Tax cuts result in increased spending but the bulk of that spending is on foreign goods and services, meaning that while tax cuts do stimulate the US economy, they are an inefficient way to do so and result in significantly less money being spent in the US economy than if that money were kept by and spent buy the government. Therefore tax cuts would not result in increased revenue. It just doesn't make sense if you think about it.
Once again, if someone can point me directly to a reliable source that shows tax cuts consistently resulting in increased revenues, I'll happily admit I'm wrong. Surely, with all the right-wing web sites out there, there must be thousands of links to reliable sources of this information?
It's a typical neocon tactic. Repeat a lie often (Democrats are big spenders!) then speak as though the lie is common knowledge ("Why would anyone vote for a Democrat--we need to DEcrease spending!") and no one seems to check the facts to find out it's a lie.
Once again, and there is no possible way to stress this enough:
"FROM 1948 to 1981, THE NATIONAL DEBT REMAINED VIRTUALLY UNCHANGED EVEN THROUGH THE VIETNAM WAR. FROM 1982 (Reagan's first budget) THROUGH 1989 THE NATIONAL DEBT MORE THAN DOUBLED from its 1981 VALUE. (All values are adjusted for inflation.)
Since I wouldn't ask you to take my word for it, check the US treasury department's info to confirm, and use an inflation calc such as the one found here:
Here's the graph:
AGAIN, look at the national debt chart please, during the Vietnam years--barely a ripple--then starting with Reagan's first budget a sudden, drastic leap up every year since then except for the PC boom during Clinton's era. How were we able to support ourselves during the Vietnam war with nearly imperceptible additions to the national debt, but not during the peacetime years that followed?
That's the basic theory behind supply-side economics, that if you stimulate businesses by buying, the investment trickles down to the workforce and everyone is better off. However, the neocons want you to think that the economic stimulation came from cutting taxes, which is blatant nonsense in light of the facts. In reality, the tax cuts helped very little and were mainly for buying lots and lots of rich friends for the neocons by appealing to their avarice.
The skyrocketing debt that Reagan created and that Bushes perpetuated will have to be paid off eventually. The only practical way to do that is with a severely deflated dollar. If the dollar deflates to one hundredth of its value, then the trillions owed currently drop to tens of billions.
Reagan and the neocons are the big spenders--they spend more than they take in and borrow the difference. They are the true "liberals" in the worst sense of the word--liberally spending (wasting, mostly) money that has been borrowed from America's future generations. They have set the US on a course for economic catastrophe. Within the next five to twenty years, look for continuing loss of the petrodollar's exclusivity, devastating inflation and the economic collapse of the US. This much seems obvious. What follows is more along the lines of speculation.
During this time, Americans will be confused, disoriented and terrified. The US government will, if staying true to form, blame some scapegoat such as terrorists, Mexicans or "liberals" for this collapse. In their panicked state, Americans will look naturally for comfort from the strongest leaders, much the way Germany did in the years after world war 1. And history repeats...
I am not going to get into this, if you're addressing it to me. Gross imports are only about 13% of our GDP, so your point would take some work to prove, but I see where you're going with it. You'd have to cover the amount of the tax cuts that went into investment as well. Because the bulk of the tax cuts go to the wealthy and to corporations, I think you'll have a hard case to make.
To the best of my knowledge, there are none, because it's never happened. Maybe in 1964, although I'm not sure even then. That would fit with the more sophisticated supply-side argument because marginal tax rates then were sky-high.
And it's complicated by the fact that tax cuts since 1980 generally are accompanied by phenomenal deficit spending. So sorting out which economic factors are at work is all but impossible, even if there had been any increased revenues.
I don't think that George Bush is lying about it. I think he's too ignorant about economics to have an opinion worthy of the name. McCain is dissembling. Forbes is blinded by ideology. Giuliani probably knows better.
Oh, now there's a big-spending program. Dem' basketballs cost like hell. And turning on the lights after midnight probably bankrupted the state of Illinois, at least.
Gunner, will you PLEASE start reading those long articles that you point people to, which you claim say one thing, but which actually say the opposite? You'll save everyone some time and yourself some ...oh, never mind, you probably don't care.
Here's what Laffer says in that article. First, it was mostly about capital gains taxes (his favorite subject, for a reason that would be obvious if you thought about it -- cut tax rates on capital gains and people cash in to get the lower rates, which increases tax revenues, temporarily), not income taxes or total taxes, and he pointed out that the capital gains tax was increased from 20% to 28% in 1986. Then he says this:
"Reducing the capital gains tax rate from 28 percent back to 20 percent in
1997 was an unqualified success, and every claim made by the critics was wrong. The tax cut, which went into effect in May 1997, increased asset values and contributed to the largest gain in productivity and private sector capital investment in a decade. It did not lose revenue for the federal Treasury."Now, let's see if you remember who was president in 1997, hmm?
BTW, that is not to say Laffer is right -- he engages in some tricky slight-of-hand, as he often does. Only that your reference says the opposite of what you claim.
-- Ed Huntress
Yeah, I did. And you might find it interesting and quite surprising, too, if you ever actually read it. d8-)
-- Ed Huntress
PolyTech Forum website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.