- This topic has 13 replies, 4 voices, and was last updated 14 years ago by Dave Hirsch.
-
AuthorPosts
-
December 14, 2010 4:37 am at 4:37 am #593471Dave HirschParticipant
The answer is: confidence. Recent reports state that companies are borrowing money not to be spent but to save. Fear is playing on our economy. What is the answer to this panic and what does it stem from?
Ramifications of the deficit:
Why Tax Cuts is Better than Spending
Tax Cuts and the Deficit
The Numbers:
The Outstanding Public Debt is approximately: $14,000,000,000,000.00.
The estimated population of the United States is 309,655,522, so each citizen’s share of this debt is $45,211.53
After Bush lowered the tax bracket in 2001, the tax revenues were 17.9% of the GDP (as opposed to 19.5% the year before) and went down to a low of 16.1% after the tax cuts in 2003. However, it rebounded in 2005 (at 17.5%) and reached 18.5% (higher than the average of 18.2%) before the economic crisis.
December 14, 2010 5:26 am at 5:26 am #718587charliehallParticipantActually, it did. The economy has been growing since June 2009.
“Obama passed stimulus bills and an overhaul on healthcare that was largely seen as anti-business. “
The healthcare bill was basically a bailout of the health insurance industry. That isn’t anti-business. Neither was the bailout of the auto industry.
“The deficit is an imminent threat to our future and those of our children.”
No, it isn’t. Interest rates remain at historic lows. There is no inflation except for a few cartel-controlled commodities such as petroleum; the problem in much of the US is DEflation. We actually need some inflation to get homeowners out from under water and the deficit can help.
“The Laffer Curve suggests that a tax cut can actually increase tax revenue.”
There has yet to be such a tax cut.
This exposes your ignorance on economics. “Might” spend it??? Have you ever been unemployed, with no savings? The tax cuts to businesses and zillionaires will get stashed away (as you mention, companies are hoarding cash) while tax cuts to the poor and unemployment insurance gets spent, increasing consumer demand and giving businesses a reason to produce.
December 15, 2010 12:40 am at 12:40 am #718588Dave HirschParticipantActually, it did. The economy has been growing since June 2009.
It didn’t. Of course the GDP grew – more government spending equals a higher GDP. I’m talking about actual economic growth not induced growth. With stimuluses of such magnitude,we should hit an all-time high combined with consumption and investment. If you want to declare Keynesian dead (and that means the liberal fiscal policy) because it’s an indication of severe complete crowding out and lagging, fine. I gave them the benefit of doubt and placed it in fear. I blamed fear for the future as the indicator for bringing down the economy and keeping it down. That is supported by the fact that companies are borrowing to stash away the money. Make America a better business environment and it will change.
The healthcare bill was basically a bailout of the health insurance industry. That isn’t anti-business. Neither was the bailout of the auto industry.
Bailouts are not pro-business – they’re anti-business. It means more corporation and capital tax (to pay for it), more regulation (well, you’re indebted!) and higher interest rates (deficit). A business that fails should go bankrupt. That will give other (small) businesses a chance and remember, capitalism is the way to go! Only an entirely free market can create competition and confidence.
No, it isn’t. Interest rates remain at historic lows. There is no inflation except for a few cartel-controlled commodities such as petroleum; the problem in much of the US is DEflation. We actually need some inflation to get homeowners out from under water and the deficit can help.
It isn’t? for the first time in history people are talking about a government default. Interest rates are lower than it should be because the feds are trying to create a monetary policy. Yes, Ben Bernanke fears a deflation but that’s not because of the dollar, it’s because of the economy. A dead economy leads to deflation but high debt leads to high interest rates. It’s common sense: If more people (or government)want loans, the stakes are higher! If China, the other lenders and bond investors will have less confidence in the US economy (and they will if things continue like this) – it will go up faster than a space shuttle.
There has yet to be such a tax cut.
Well, it just makes sense. That’s the reason why communism and socialism failed. Additionally, I gave you the numbers – look at them. The Bush tax cuts nearly generated the revenue it had before the tax cuts went into effect (while the economy increased immensely); had the banking (housing) crisis not occurred (because of the Carter/Clinton mortgage doctrine), it would’ve already made up the loss. That just shows that less taxes means a higher GDP which eventually results in more tax revenue.
This exposes your ignorance on economics. “Might” spend it??? Have you ever been unemployed, with no savings? The tax cuts to businesses and zillionaires will get stashed away (as you mention, companies are hoarding cash) while tax cuts to the poor and unemployment insurance gets spent, increasing consumer demand and giving businesses a reason to produce.
As I’ve indicated, an extension of the unemployment insurance (will get people to stay unemployed in addition to work off-the-books and) will just create a bigger underground economy. And yes, say they’ll spend it, but it still isn’t a direct effect on the GDP.
Charlie, I’ve put much in a nutshell. Obviously your (non-) questions were just some off-topic throw-balls to distract, that proves my point that it’s either tax cuts permanently extended or nothing.
December 15, 2010 3:26 am at 3:26 am #718589Dave HirschParticipantCharlie, see this.
December 15, 2010 3:41 am at 3:41 am #718590charliehallParticipant” I’m talking about actual economic growth not induced growth.”
For most of this year private sector employment has increased, while public sector employment has not. That’s what you call “actual”.
“Bailouts are not pro-business – they’re anti-business.”
Then why does every business want a bailout when they get into trouble?
” higher interest rates “
Wrong. Interest rates remain at historic lows.
“for the first time in history people are talking about a government default. “
Wrong. The US *did* default on its foreign debt in 1914 by suspending convertabilty, and then again in 1933 by suspending the gold standard for what would turn out to be forever. Fortunately in 1914 the Federal Reserve System had *just* been created, and Treasury Scretary William McAdoo worked with the House of Morgan to handle the worst financial crisis the US had ever seen. Among the actions taken was to shut down the New York Stock Exchange for FOUR MONTHS because the free market was destroying the world economy. The actions were so successful that the Panic of 1914 does not even appear in history texts.
TARP was incredibly unpopular but it may go down in history as being just as successful.
“high debt leads to high interest rates”
As I have pointed out, what is happening right now shows clearly that that is not the case.
“it would’ve “
You continue to use conditional logic rather than actual empirical evidence.
” it still isn’t a direct effect on the GDP”
Wrong again. Purchasing goods and services DIRECTLY contributes to GDP.
“it’s either tax cuts permanently extended or nothing. “
You are blinded by ideology and are willing to destroy the economy as a result. Fortunately neither President Obama nor most of the Congress is as blinded.
December 15, 2010 5:45 am at 5:45 am #718591Dave HirschParticipantCharlie, you’re fielding the important questions and issues again and jumping on some unimportant statements. But, just like I’ve done before (and your issues were cut in half, Laffer Curve etc.) I’ll do so again.
When I say induced growth, it isn’t government jobs (which also had a nice share in this growth – census etc.), I’m talking about the GDP – inflated by government expenditure on transfer payments that gets people to spend and boost the GDP (for me that seems to be indirectly, don’t know how far your blindness has taken you) temporarily (as long as the government is spending and the money is circulating). I want growth that is self induced by consumption and investment – natural growth! That’s what I call an economy! (I know socialists call government expenditure the economy.)
I can’t argue on something that I’ve never read about. I doubt that such a landmark recovery of the US and capitalism would be ignored by history text books. But all I can say is that this talk isn’t just talk of the government defaulting over debt – it’s the collapse of the currency as well (Russia already decided to go for the Chinese currency).
High debt leads to high interest rates. Period. Ask Greece! Read the article I linked to, to get an idea why the interest rates are low – it’s a timebomb waiting to explode.
I’m using factual evidence. The taxes were lowered and after it went into the system affecting the GDP the tax revenue increased above average. Yes, the economy crashed and brought the tax revenue along, that would’ve happened regardless – less tax base = less tax revenue. I just mentioned it so that you shouldn’t begin screaming that it dropped thereafter.
Purchasing goods or services does indeed have a direct effect on the economy. Did they invest in the military, infrastructure etc? That’s called purchasing goods or services. WWII did that – unemployment insurance is spreading the wealth – no direct effect!
I’m blinded by ideology? I don’t favor the (liberal) Keynesian theory as all, I’m a Monetarist. I just proved that even according to Keynes – tax cuts is the way to go. You couldn’t refute that claim. Does tax cuts have the disadvantages (that exist with spending) of crowding out and lags? Do tax cuts have the ramifications (deficit – even if you don’t believe in Laffer’s curve, it still proved to do less damage to the defict than spending – covering at least most {1% less than before} of the tax revenue) spending has? Do tax cuts work demand-side AND supply-side? Will temporary tax cuts really have an effect in companies hiring? How should we get the businesses start spending instead of stashing away cash beacuse of the low interest rates? According to Keynes, spending shouldn’t be transfer payments! Those are just some of the questions and points mentioned above – and it’s all according to Keynes – Obama’s ideology!
December 15, 2010 5:34 pm at 5:34 pm #718592Dave HirschParticipantCharlie, in the words of a successful businessman.
December 16, 2010 2:37 pm at 2:37 pm #718593Dave HirschParticipantWell, this proves my point – it’s all about re-election!
December 16, 2010 10:12 pm at 10:12 pm #718594rtParticipantif tax cuts are so wonderful for the economy, why didn’t they, after an entire decade, either prevent or soften the ecomomic disaster we found ourselves in?
December 17, 2010 2:01 pm at 2:01 pm #718595Dave HirschParticipantrt,
Contrary to what Obama is telling you about the ‘failed policies of the past decade’, it was the Democrats that caused the crisis by easing loans for those that couldn’t afford it. Tax cuts boost an economy they don’t fix broken things. President Bush wanted to regulate Fannie Mae and Freddie Mac but the Democrats opposed it. That’s what brought upon this economic crisis. And who tells you it wouldn’t be worse without the tax cuts? If the housing crisis would’ve come on the heels of the dot-com burst, you would’ve seen more than just a reminiscence of the Great Depression. The Bush tax-cuts recovery definitely cushioned the blow before the Barney Frank Doctrine hit.
December 17, 2010 3:21 pm at 3:21 pm #718596nfgo3MemberI thought there was a Coffee Room rule against posting a “megillah.”
December 17, 2010 3:32 pm at 3:32 pm #718597nfgo3MemberWhen are you tax cut shtarkers going to specify the spending cuts that will support your proposed tax cuts. Yes, sometimes lower tax rates increase revenues, but sometimes they do not. I personally think Hashem is telling us something when He caused the (human and false) theory that tax cuts always yield revenue increases would be illustrated by something called the “Laffer curve”.
The idea that tax cuts always lead to revenue increases is as plausible as the tooth-fairy story. Deficits grew under Reagan, Bush Sr. and Bush the Dim. Deficits disappeared under Clinton (thanks, in part, to the “new taxes” that Bush Sr. supported, which ended the Republican party’s support for him). Fiscal policy is difficult, and sloganeering, e.g., Reagan’s “government is always the problem, never the solution,” is a poor substitute for careful analysis and hard choices.
December 19, 2010 1:50 am at 1:50 am #718598Dave HirschParticipantWhen are you tax cut shtarkers going to specify the spending cuts that will support your proposed tax cuts.
Yes, sometimes lower tax rates increase revenues, but sometimes they do not.
I personally think Hashem is telling us something when He caused the (human and false) theory that tax cuts always yield revenue increases would be illustrated by something called the “Laffer curve”.
The idea that tax cuts always lead to revenue increases is as plausible as the tooth-fairy story. Deficits grew under Reagan, Bush Sr. and Bush the Dim. Deficits disappeared under Clinton (thanks, in part, to the “new taxes” that Bush Sr. supported, which ended the Republican party’s support for him).
Do you know that it took two years for the deficit to start leveling out? Tax raises should generate revenue instantly! Is it a coincidence that the deficit started going down after Gingrich fought Clinton?
Who Really Balanced the Budget
(Federal Deficits in Billions)
1994: Clinton Baseline* – $203 Actual – $203
1995: Clinton Baseline* – $175 Actual – $164
1996: Clinton Baseline* – $205 Actual – $107
1997: Clinton Baseline* – $210 Actual – $22
1998: Clinton Baseline* – $210 Actual – +60
* Congressional Budget Office forecast.
Fiscal policy is difficult, and sloganeering, e.g., Reagan’s “government is always the problem, never the solution,” is a poor substitute for careful analysis and hard choices.
December 19, 2010 1:37 pm at 1:37 pm #718599Dave HirschParticipantDebt Crisis: More Numbers
-
AuthorPosts
- You must be logged in to reply to this topic.