Low Taxes-->Robust Economy?

[Dr. Tyler; Captain America 0]

It was never making a profit, though. We've had a national debt for many years. Even when we have a surplus, all we're doing is using it to pay down the debt. Once you finish paying down the debt, you pay back the bonds and lower taxes until it's at an equilibrium with the government's expenses.

[Guest MikeSC]

It was never making a profit, though. We've had a national debt for many years. Even when we have a surplus, all we're doing is using it to pay down the debt. Once you finish paying down the debt, you pay back the bonds and lower taxes until it's at an equilibrium with the government's expenses.

And it is impossible to do so with the people refusing to give up anything.

 

To balance the budget, Medicare is going to have to be slashed. Big-time.

Ditto Medicaid.

Ditto Social Security.

 

The gov't is doing the best it can.

-=Mike

...Hell, Clinton didn't actually run surpluses, since he --- as ALL Presidents do --- used the Social Security "trust fund" as part of the revenue...

[Dr. Tyler; Captain America 0]

Or you could cut back on pork spending... but that's something that Congress doesn't believe in. We can cut back a lot of the deficit by removing graft and waste, but that would require listening to people like you complain about slashing the Pentagon's budget, too.

[Guest MikeSC]

Or you could cut back on pork spending... but that's something that Congress doesn't believe in. We can cut back a lot of the deficit by removing graft and waste, but that would require listening to people like you complain about slashing the Pentagon's budget, too.

You could eliminate every dime of pork if you wish (a line item veto would be great here and we know which party supports that) --- until you cut the big spenders, such as Medicare, you're doing nothing.

 

As for slashing the Pentagon's budget --- in its defense, national defense is an expressly stated requirement of the US gov't according to the Constitution. Not health care for poor people.

-=Mike

[Dr. Tyler; Captain America 0]

But it's not required that you waste billions of dollars on projects from which we see no return. And if you eliminate most of the pork, you've probably cut the deficit in half. Of course, I haven't done the numbers, but let's be honest here. If we cut even HALF of what we waste, we'd be almost there already.

[LessonInMachismo 0]

As for slashing the Pentagon's budget --- in its defense, national defense is an expressly stated requirement of the US gov't according to the Constitution.

Not to mention common sense, in light of events that have taken place in the last twelve years or so...

[Stephen Joseph 0]

There are times when it is preferable to buy bonds and times when you should buy stocks. This all has to do with interest rates. Interest Rates and the stock market are inversely proportional.

 

So, in a way, I'm backing T here. But T, It's not our deficit but our debt that is worrisome. We're slowing approaching that 8%, and should we hit that marker, well, historically for other countries, 8% is the mark at which shit hits the fan.

[Stephen Joseph 0]

No party will slash spending when they are in firm control of power. It's not in their interest, if their interest is to remain in power.

 

There's only 1 way to solve the problem, but it will kill any attempt to provide the economy a fiscal stimulus during a depressive episode. Hell, the 86 bill is still law, but not followed.

[LessonInMachismo 0]

There are times when it is preferable to buy bonds and times when you should buy stocks. This all has to do with interest rates. Interest Rates and the stock market are inversely proportional.

 

So, in a way, I'm backing T here. But T, It's not our deficit but our debt that is worrisome. We're slowing approaching that 8%, and should we hit that marker, well, historically for other countries, 8% is the mark at which shit hits the fan.

What about in the 90's when I was in high school and people were crying about national debt? Oh yeah...we paid it down when Clinton cut defense and intelligence (?) spending.

[Guest MikeSC]

But it's not required that you waste billions of dollars on projects from which we see no return. And if you eliminate most of the pork, you've probably cut the deficit in half. Of course, I haven't done the numbers, but let's be honest here. If we cut even HALF of what we waste, we'd be almost there already.

And what do you cut? Nothing is pork to everybody.

 

Cut the ethanol subsidies? Not with the farm groups.

-=Mike

[Stephen Joseph 0]

There are times when it is preferable to buy bonds and times when you should buy stocks.  This all has to do with interest rates.  Interest Rates and the stock market are inversely proportional. 

 

So, in a way, I'm backing T here.  But T, It's not our deficit but our debt that is worrisome.  We're slowing approaching that 8%, and should we hit that marker, well, historically for other countries, 8% is the mark at which shit hits the fan.

What about in the 90's when I was in high school and people were crying about national debt? Oh yeah...we paid it down when Clinton cut defense and intelligence (?) spending.

The deficit *not debt* went down significantly because of the economy's growth, not Clinton's cuts.

 

The debt, well, really didn't change that much.

[LessonInMachismo 0]

There are times when it is preferable to buy bonds and times when you should buy stocks.  This all has to do with interest rates.  Interest Rates and the stock market are inversely proportional. 

 

So, in a way, I'm backing T here.  But T, It's not our deficit but our debt that is worrisome.  We're slowing approaching that 8%, and should we hit that marker, well, historically for other countries, 8% is the mark at which shit hits the fan.

What about in the 90's when I was in high school and people were crying about national debt? Oh yeah...we paid it down when Clinton cut defense and intelligence (?) spending.

The deficit *not debt* went down significantly because of the economy's growth, not Clinton's cuts.

 

The debt, well, really didn't change that much.

They taught us differently in college. That was before the mainstream advent of the internet. Makes perfect sense.

[Stephen Joseph 0]

There are times when it is preferable to buy bonds and times when you should buy stocks.  This all has to do with interest rates.  Interest Rates and the stock market are inversely proportional. 

 

So, in a way, I'm backing T here.  But T, It's not our deficit but our debt that is worrisome.  We're slowing approaching that 8%, and should we hit that marker, well, historically for other countries, 8% is the mark at which shit hits the fan.

What about in the 90's when I was in high school and people were crying about national debt? Oh yeah...we paid it down when Clinton cut defense and intelligence (?) spending.

The deficit *not debt* went down significantly because of the economy's growth, not Clinton's cuts.

 

The debt, well, really didn't change that much.

They taught us differently in college. That was before the mainstream advent of the internet. Makes perfect sense.

When did I ever mention the internet? I'm looking and I don't see it! Whoever taught you about the 1990s did a piss-poor job. The economy's growth rate was larger than the government's growth rate, that's why we got a surplus of sorts.

 

I swear, what's with putting words in my mouth.

 

Then again, depending on what kind of classes in economics you took, you may have gotten the simplified versions. Nothing's simple when you're getting a doctorate.

[Jobber of the Week 0]

The old liberal tactic...attack your opponent personally when you have nothing of substance to say.

Not that I'm proud to be in such company, but you can't tell me Ann Coulter and Shawn Hannity don't do the same thing.

 

You still haven't told me how the deficit affects you.

 

DO YOU BUY THINGS MADE IN OTHER COUNTRIES?

DO YOU BUY THINGS MADE FROM PARTS FROM OTHER COUNTRIES?

 

If "yes," to any of the above, our deficit affects you. Prices on things made in other countries will go up. US companies that make things with parts in other countries will have to pay more for their parts, they'll pass those expenses onto you by raising their prices.

 

"OMG, WE'RE GONNA SCREW THE NEXT GENERAAAAATION!"

 

No, you're screwing yourself.

[Jobber of the Week 0]

As for slashing the Pentagon's budget --- in its defense, national defense is an expressly stated requirement of the US gov't according to the Constitution.

Not to mention common sense, in light of events that have taken place in the last twelve years or so...

GAO: Pentagon can't track millions in war spending

 

Reuters

 

WASHINGTON — The Defense Department is unable to track how it spent tens of millions of dollars in Iraq, Afghanistan and elsewhere in the U.S. war on terrorism, Congress' top investigator said Wednesday.

 

The department “doesn't have a system to be able to determine with any degree of reliability and specificity how we spent” war-related emergency funds set aside by Congress, Comptroller General David Walker told a Senate Armed Services subcommittee.

 

Walker heads the Government Accountability Office, Congress' investigative arm. He disclosed the gap as part of a broader indictment of Pentagon business practices.

 

Congress approved $25 billion in extra defense spending for fiscal 2005, which ends Sept. 30. Lawmakers were moving to approve $81 billion more this week outside the normal budget process, including about $75 billion for war-related operations.

 

While there was no doubt that appropriated funds were spent, “trying to figure out what they were spent on is like pulling teeth,” Walker said, referring to an accounting effort he said was underway for Congress.

More

[SuperJerk 0]

The deficit *not debt* went down significantly because of the economy's growth, not Clinton's cuts.

 

Are you trying to argue that something that saved the government money did not contribute at all the the budget surplus, or are you just pointing out that the amount that Clinton's policies helped reduce the deficit had little effect on the overall debt?

 

Raising tax rates lowers growth rates. True or False? Ans: True, there is causation.

 

The causation you speak of is not an absolute. It CAN happen, but it might not always happen, and it might also effect it in different ways at different times. Given the multitude of other things that effect economic growth, you can't just point to one and say "this is it, this is the cause".

 

Also consider how different tax rates are targeted at specific groups. Another big thing that effects economic growth is the distribution of wealth, which tax policies are designed to address.

 

The old liberal tactic...attack your opponent personally when you have nothing of substance to say.

 

What about the even older non-ideological tactic of taking one thing one member of a group does and applying it to every member of that group?

[Stephen Joseph 0]

pointing out that the amount that Clinton's policies helped reduce the deficit had little effect on the overall debt?

 

The causation you speak of is not an absolute. It CAN happen, but it might not always happen, and it might also effect it in different ways at different times. Given the multitude of other things that effect economic growth, you can't just point to one and say "this is it, this is the cause".

Ceteris paribus, lowering taxes increases growth. When answering questions that in fact have multiple dependent and independent variables, you isolate the variable in question. Thusly, my answer is *economically* correct. Reality of course, does not hold to ceteris paribus. But theoretically, yes, it works.

 

Also consider how different tax rates are targeted at specific groups. Another big thing that effects economic growth is the distribution of wealth, which tax policies are designed to address.

Of Course. A tax is still a tax though, and the equation of MPC still holds for everyone, just the coefficients will be different for different groups.

MPC = 1 - MPS - t

[SuperJerk 0]

Given the amount of whining done by Republicans whenever someone mentions raising taxes on higher income groups, you'd think taxes on higher income groups were the only things that ever factored into the equation.

 

My view is that if taxes are taken, the money is not removed from the economy altogether (as libertarians seem to claim), but simply moved to another part of the economy via redistribution. Higher taxes on upper income groups could cause some to work harder by requiring them to be more productive in order to accumulate the same amount of wealth.

[Stephen Joseph 0]

My view is that if taxes are taken, the money is not removed from the economy altogether (as libertarians seem to claim), but simply moved to another part of the economy via redistribution. Higher taxes on upper income groups could cause some to work harder by requiring them to be more productive in order to accumulate the same amount of wealth.

You're forgetting about the deadweight loss associated with the bureaucracy to take those taxes that would otherwise not be in place.

 

Also, you're assuming the taxes are going towards society's best use. If they are not, then the lost utility from that best use and the use of taxes is also a deadweight opportunity cost loss.

 

Higher taxes would not incentive those who are wealthy to work harder, that's covered in economic theory. In fact, the incentive would be to not work as much so as to not put yourself in that higher tax bracket.

 

The libertarian argument involves the opportunity cost of money. Your argument is correct only if accounting costs matter, which is incorrect.

[Stephen Joseph 0]

*Cough* Schumpeter *Cough*

[SuperJerk 0]

You're forgetting about the deadweight loss associated with the bureaucracy to take those taxes that would otherwise not be in place.

 

Also, you're assuming the taxes are going towards society's best use.  If they are not, then the lost utility from that best use and the use of taxes is also a deadweight opportunity cost loss.

 

The libertarian argument involves the opportunity cost of money.  Your argument is correct only if accounting costs matter, which is incorrect.

The opportunity cost is that the money is used to create jobs in the public sector rather than the private sector. I'm not arguing for socialism here or anything, but I also don't believe that the private sector is the utopia of efficiency and job creation that libertarian economists make it out to be.

 

Consider how low taxes were and how unregulated the economy was before the New Deal. It didn't stop recessions and depressions from still happening.

 

Higher taxes would not incentive those who are wealthy to work harder, that's covered in economic theory.  In fact, the incentive would be to not work as much so as to not put yourself in that higher tax bracket.

 

Is the fear of putting yourself in a higher tax bracket really enough to keep people from trying to become rich? I doubt it.

 

edit: That's not to say that I'm not open to looking at data that supports the theory (as opposed to the anecdotal stuff people usually give me), but I have yet to see any that was convincing.

Edited April 16, 2005 by RobotJerk

[EricMM 0]

I think you just have to make sure that the increments of taxation are gradual enough that someone wouldn't get a 8% raise and suddenly get taxed 10% more, thus losing money.

[LessonInMachismo 0]

There are times when it is preferable to buy bonds and times when you should buy stocks.  This all has to do with interest rates.  Interest Rates and the stock market are inversely proportional. 

 

So, in a way, I'm backing T here.  But T, It's not our deficit but our debt that is worrisome.  We're slowing approaching that 8%, and should we hit that marker, well, historically for other countries, 8% is the mark at which shit hits the fan.

What about in the 90's when I was in high school and people were crying about national debt? Oh yeah...we paid it down when Clinton cut defense and intelligence (?) spending.

The deficit *not debt* went down significantly because of the economy's growth, not Clinton's cuts.

 

The debt, well, really didn't change that much.

They taught us differently in college. That was before the mainstream advent of the internet. Makes perfect sense.

When did I ever mention the internet? I'm looking and I don't see it! Whoever taught you about the 1990s did a piss-poor job. The economy's growth rate was larger than the government's growth rate, that's why we got a surplus of sorts.

 

I swear, what's with putting words in my mouth.

 

Then again, depending on what kind of classes in economics you took, you may have gotten the simplified versions. Nothing's simple when you're getting a doctorate.

Sorry, I wasn't being facetious. They essentially lied to us in school because we had no way of proving them wrong. With the internet, we can look anything up and see for ourselves how something really happened. I think that's why the conservative movement is on the upswing...now we can challenge liberal professors' and schoolteachers' biased lessons...

[SuperJerk 0]

Or MAYBE you just weren't listening very well. I'll thank you not to insult my profession just to keep from looking like you don't know what you're talking about.

 

The debt did go down while Clinton was president, just not very much.

[LessonInMachismo 0]

Or MAYBE you just weren't listening very well. I'll thank you not to insult my profession just to keep from looking like you don't know what you're talking about.

 

The debt did go down while Clinton was president, just not very much.

It's true, it's true.

 

Also, we spent an average of twenty minutes a week in Astronomy 1 listening to how Rush Limbaugh was a "short-sighted ignoramus" among other things.

 

And I wasn't insulting you in particular. I'm sure, given your views as expressed here in these forums, that you are fully capable of teaching from an objective point of view...

[Stephen Joseph 0]

Yeah, it did, but not much. Also, its a fallacy to be able to compare the 1920s low tax performance against periods today of higher taxes. Constraints have changed (world is global, women and blacks are voting, etc..)

 

The libertarian view says this:

Maximize utility based on your budget

Budget= $

We can spend it on public or private goods

 

Therefore, Utility = (Beta1)Public +(Beta2)Private, where Beta1 and Beta2 are the respective returns per spending, with each experiencing diminishing marginal returns. So we have to have spending on both. All you have to do now is solve the F.O. conditions, and you'll know the right level of public and private spending.

 

Voila!

[SuperJerk 0]

Therefore, Utility = (Beta1)Public +(Beta2)Private, where Beta1 and Beta2 are the respective returns per spending, with each experiencing diminishing marginal returns. So we have to have spending on both. All you have to do now is solve the F.O. conditions, and you'll know the right level of public and private spending.

I didn't understand five fucking words of that. I washoping for some actualstats, rather than a formula.

 

 

Back up and explain why women and blacks voting changes why lower taxes help the economy.

[Stephen Joseph 0]

Therefore, Utility = (Beta1)Public +(Beta2)Private, where Beta1 and Beta2 are the respective returns per spending, with each experiencing diminishing marginal returns.  So we have to have spending on both.  All you have to do now is solve the F.O. conditions, and you'll know the right level of public and private spending.

I didn't understand five fucking words of that. I washoping for some actualstats, rather than a formula.

 

 

Back up and explain why women and blacks voting changes why lower taxes help the economy.

You have different constraints today than you did back in the 1920s. We can learn some valuable lessons from the 1920s, but you can't apply the way the world worked back then to today.

 

The problem in the 1920s was more institutional arrangements on how the economy worked, insitutions that don't exist today.

 

Having blacks and women as integral and active parts of the economy is a significant change (that, and the advent of white-collar jobs, the 40 hour work week, and the change to the current tax structure) all have changed how people behave.

 

This is why economists use the notion of ceteris paribus and analyze one variable at a time, because there's no way we can really analyze how things work if everything's allowed to change

[SuperJerk 0]

Or MAYBE you just weren't listening very well.  I'll thank you not to insult my profession just to keep from looking like you don't know what you're talking about.

 

The debt did go down while Clinton was president, just not very much.

It's true, it's true.

 

Also, we spent an average of twenty minutes a week in Astronomy 1 listening to how Rush Limbaugh was a "short-sighted ignoramus" among other things.

I didn't know we were talking about Astronomy class. I assumed you were getting your info on the government from PoliSci or history teachers.

 

My reason for disputing your info as being the result of a "liberal bias", rather than just a lack of attention on your part, is that there's no liberal conspiracy to withold information from students.

 

I'm amused by the idea that you think you're so well informed that you can so easily dismiss liberalism as a product of misinformation, as if you know something the liberals do not, and if only they knew what you know, they'd turn conservative.

 

Conservatism is "on the upswing" not because people are just now learning the "truth", but because popular ideology shifts left and right periodically over long numbers of years. Historians generally believe that American history undergoes cycles.

 

I'm sure, given your views as expressed here in these forums, that you are fully capable of teaching from an objective point of view...

 

I'm actually quite good at presenting multiple points of view on various topics.

[LessonInMachismo 0]

I didn't know we were talking about Astronomy class. I assumed you were getting your info on the government from PoliSci or history teachers.

 

I said "also." It seemed that in EVERY class, the professors felt the need to put forth some kind of liberal drivel. In Criminal Justice, we had a "special guest" come in to tell us how prisoners were being treated badly by guards. The examples he put forth could only be equated to mistreatment by someone grasping for straws.

 

My reason for disputing your info as being the result of a "liberal bias", rather than just a lack of attention on your part, is that there's no liberal conspiracy to withold information from students.

 

I'm amused by the idea that you think you're so well informed that you can so easily dismiss liberalism as a product of misinformation, as if you know something the liberals do not, and if only they knew what you know, they'd turn conservative.

 

And I think that liberalism isn't just an exercise in misinformation, it's a knowing exercise in misinformation. Mainstream liberal leaders have a goal and they know what the end to that goal is...people like myself don't like it.

 

I'm actually quite good at presenting multiple points of view on various topics.

 

As I stated in my last post in this thread.