I hate to Godwin this but it's the same problems the Nazis had at the end of WW2. They had intelligence they simply refused to believe because it clashed with their ideology. The Republican party did the same thing in 2008 where they refused to believ polls which had them behind and were suprised by Obama's victory, and they are doing teh same thing now. When ideology trumps reality, you have a problem.

Regardless as to your political leanings, this is something everyone should be aware of. It's necessary to have values and an ideology, but you do need to check in with objective facts from time to time to, at minimum, have a realistic understanding of what the costs of that ideology are.

"However beautiful the strategy, you should occasionally look at the results."
-Sir Winston Churchill

It's a little left-leaning, but David Brin has some nice analysis on the topic:

http://davidbrin.blogspot.com/...on-debt-ceiling.html

In reply to Tycho (msg #235):

Actually, they are making it up.  Considering the government takes in at least $200 Billion/month I think we can pay $23 Billion in SS checks.

As for the coming apocalypse, why didn't this occur in December 1973, March 1979, November 1983, December 1985, August 1987, November 1995, December 1995 to January 1996, and September 2007?  Congress and the president have fail to agree on a debt ceiling increase and still there has been no default.  Why?  Because we can easily service our debt, as required, and pay SS.  We can also cover all Medicare, Medicaid and children's health insurance, defense, federal law enforcement and immigration, all veterans benefits, and response to natural disasters.

Terrifying elderly people who are dependent on their Social Security checks shows who is really putting politics over the well-being of the nation.  I don't find these scare tactics surprising.  The Democrats behaved no differently when they ran television ads bizarrely depicting Ryan as pushing an old lady in a wheel chair off a cliff.  So let us not delve into ideology trumping reality and point fingers at the ones who have actually been presenting plans that will actually help our economy and economic stability.

To Tycho regarding Tax Cuts create Tax Revenue

The concept of tax cuts creating more tax revenue for the government stems from the concept of growth.  Growth of the economy as a whole and growth of investing.

To grow the economy means more people work.  Working people pay taxes.  To grow the investing environment creates small business.  Small businesses pay taxes as do the workers that are employed by these small businesses.

When the penalties for investing and earning money are removed people take their money out of tax protected institutions and invest it.  They try to grow it.  When taxes are levied against them for merely having the audacity to be wealthy, they put it back into the protected institutions and the wealth no longer works within the economy.

The history of reducing tax rates is quite clear: Cuts in tax rates do not mean cuts in tax revenues.  In all four past administrations, of both parties, "tax cuts for the rich" led to increased tax revenues with people earning high incomes paying not only a larger sum total of tax revenues, but even a higher proportion of all tax revenues.  This is shown by record amounts of tax revenues coming from those rich scoundrels that so many wish to villify.

Here are some linky's to look at.  If you have an issue with some of my sources then those issues are your own.

Check out the graph in this one.  It shows the staggering rise in the deficit.  Was this deficit caused by tax breaks or by Democrat budgets?  Oh, yeah, blame Bush.  I forget that tactic is still in fashion.

http://www.humanevents.com/article.php?id=35461

Thomas Sowell, highly respected economist, addresses the "tax the rich" canard as well as discussing the historical affirmation of more tax revenue due to tax cuts.

http://www.dispatch.com/live/c...an-more-revenue.html
http://www.appeal-democrat.com...00-mellon-facts.html
http://rapidcityjournal.com/ne...d3-001cc4c03286.html

Here is some confirmation from the JEC:

http://www.house.gov/jec/fisca...eagtxct/reagtxct.htm

Here are some excellent breakdowns and myth-busting by Heritage:

http://www.heritage.org/Resear...s-of-Lower-Tax-Rates
http://www.heritage.org/Resear...ut-the-Bush-Tax-Cuts

Analysis of the 1920's Tax Cuts:

http://www.cato.org/pubs/tbb/tbb-0302-13.pdf

Now here is Kennedy's appeal to Congress for a tax cut.  Needless to say this shows exactly how one is supposed to lead and how Obama is simply out of his depth and clueless.  That aside, notice the last paragraph:



http://www.nationalcenter.org/JFKTaxes1961.html

Too bad Democrats of this day and age are too bogged down by socialist fantasies.

Just in case you wish to read into my statement "tax cuts means more tax revenue", let me add that tax cuts do not immediately cause a flood of money into the IRS office.  It takes time for the economy to grow and THAT is where the additional growth in revenue comes from.  Much of the "data" I have seen against lower taxes is the immediate reduction in tax revenue for the first and second years.  Much of their "data" also fails to take into account budget increases.

Also let me state that government, as we all seem to agree, can do with a great deal of cutting of fraud and waste.  That being said, the money earned by small businesses, working people, and large organizations is money that belongs to them first, not the government.  I am a firm believer, supported by fact, that money does the most good in the hands of those who have worked for it.  Period.

There you go Tycho.  I enjoyed your post and I hope you enjoy mine.

However, some people reinvest that money faster than others. The velocity of money for wealthy people is relatively slow; they're more likely to tie it up in long-term savings and investments, such as property and bonds. The middle class spends a much larger portion of their income, and are more likely to spend it domestically (because they can afford to, and because they're buying the more expensive manufactured goods, which are more likely to be owned or manufactured by the US), so the velocity of their money is much higher. The poor are the most likely to spend that money; they are unlikely to be at a place where saving that money is better than using it for necessities of living. However, they're less likely to spend it domestically, since their sole driving motivation is price, and cheaply made stuff is more likely made overseas.

So if your goal is to stimulate growth by reducing taxes, it would make the most sense to tax the rich and give tax breaks to the poor (or if you'd prefer, give tax breaks to the rich for engaging in growth behaviors, such as starting up businesses).

What about the core needs of the nation besides jobs, being a citizen means meeting all obligations of the government. Lowering taxes also demands cuts somewhere and I will note we have many crushing issues socially in our nation - hunger, lack of medical care, homelessness, crushing poverty in many places. Waving a magic wand saying you create more jobs and it will trickle down has not worked for many it made it worse. If these jobs cannot lead to a living wage at some point then they are not good jobs take an average Walmart job its usually dead end for most and they get paid and to few hours in many cases to support a family not to mention lack of affordable health care on top of that.

The governments programs for feeding the poor were cut over and over again, yet in many places children go to bed hungry in our nation. We have homeless that are likely never going to be employable so we should look to provide for them as a nation. We have war vets coming back all screwed up worse than Vietnam from my experience so what about them they need therapy, medical care and help that is a long term commitment as a nation.

I happen to think its important for our nation to set real priorities and re-examine itself on how we use the resources we have and then have the funds to meet our overall need. This may require more people across the board paying more taxes including the very wealthy.

In reply to katisara (msg #242):

With the over-regulation, a Unions-before-investors administration, uncertainty with healthcare, possible tax increases, and class-warfare rhetoric coming out of the POTUS every single time he opens his mouth, I would say that investors aren't just worried about taxation.  As Wynn just said, the President is a wet blanket for business all together.

But no, you don't redistribute wealth to make an economy grow.  How did that work in Europe?  You give tax breaks to the people who actually pay them and allow them to invest the way wish.  The markets are smarter than government.

In reply to RubySlippers (msg #243):

I would argue that the US does alot for homeless, medical needs, and hunger.  Entitlements already chew up a huge amount of our budget and our poor have it better than anywhere else.

Here is a nice breakdown, according to the Census Bureau, of how hard it is to be poor in America:

http://www.heritage.org/resear...1/07/what-is-poverty

I think more people would have more if they stopped asking the nanny-state to provide it and blaming others for the troubles that are, most likely, caused by their bad choices.

Who you give tax breaks to depends on what you're trying to encourage. If you're trying to cut down taxes for tax cuts' sake, sure, cut them for the wealthy. If you're trying to speed up the economy (which seems to be what you're arguing for), you need to cut them where the velocity of money is the highest. It's a simple economic fact that that is not the wealthy. If it were, the wealth of the wealthy would not be increasing, while everyone else's wealth is decreasing.

We've put our faith in the rich taking care of the country of their birth several times, and broadly speaking, they've failed to live up to it. Cutting taxes has helped their portfolios and corporations grow, but it hasn't done much to help normal Americans or the economy in general. Why? Because the wealthy put money where it's most likely to generate money, and that is most likely NOT in the US. Why are we giving corporations tax breaks so they can build factories in Taiwan that sell products to Japan?




I am curious where children go to bed hungry. By law, if you are not able to feed your children, child services will take those children and put them where they can be fed until you can pick yourself up. There are programs available, for those who are willing to take advantage of them. Vets also are generally well cared for; they get free, quality medical care. They get buckets of money towards school. The benefits for service are very generous. Of course, if you are a guy whose only skills are 'shooting people', you won't do well in the economy. But that isn't on the government to fix.

It would seem like it, wouldn't it?  It's an easy error to make, and one that leads more companies to go under than does not being profitable.  It seems so simple:  I'm going to bring in X in revenue this month, and I'll need to pay Y in bills.  X is greater than Y, so I'm all set, right?

Not necessarily.  The issue is that it doesn't just matter how much you owe, and how much you're going to bring in, but also WHEN you're going to get the money and when you have to pay the bills.  Basically, you can't pay today's bills with money you're going to get later this month (well, at least not if you rule out more debt).  Yes, we're going to take in much more in August then we'll need to pay for SS.  But we need to pay for SS at the beginning of the month.  And all that money we expect to get in August isn't going to show up on the 1st.  Our best estimate is that we're going to be completely out of cash on the 3rd of August.  Like, at 0 balance.  That means when we come to pay for SS checks, we can only pay out as much as we take in that day, not how much we're expecting to make all August.  By all estimates, if we don't reach a debt limit agreement, we're not going to have enough cash on hand to pay all the checks when we've said we would.

Now, you might say "oh, well, fine, we just pay a few days later then!" and fair enough, if you don't think that's a problem.  But that's different from saying there's plenty of money to pay for it.

And more importantly, even if we pay SS, somebody is going to be left waiting for a check that won't come.  In fact, a whole lot of somebodies are going to be going without a whole lot of money they were expecting (130 Billion dollars worth, in just one month!  That's more than the republicans were promising to cut, from the YEARLY budget, back when they were just running.  They backed it off to 80 Billion over a year after they got into office, remember?  Now we're going to do 50% more than that, in just one month?).  It's going to be very bad for lots of people who essentially won't get paid until the government makes a deal.  And that'll be bad for the economy in general, because those folks waiting to get paid are going to cut back on spending, which means less income for businesses, and the whole cycle.


The difference is in all the past cases we haven't reached the point where we're actually out of money.  Never before have we gone so far as to reach a day where we had more checks to right than we had cash on hand to pay out.  We didn't reach the point where mandatory spending couldn't be met in those cases, because we got things sorted out soon enough.  Remember, we're already past the deadline where we don't have money to pay for everything.  That happened months ago.  This deadline is when we really, truly, have no money left in the coffers, and can only spend what we take in each day.


Perhaps, but then you don't pay defense contractors, unemployment insurance, any federal salaries, the department of energy, pell grants, housing assistance for poor people, and more than 50 Billion dollars in other government services.  And those aren't just a few days late, like SS would be, they'd be "sorry, nothing for you this month."




I appreciate all the links, but you didn't really address most of the questions I asked in my last post.  I'll address the stuff you bring up here, but I'll re-post the questions from my post that I'd really like you to answer.


I can agree with most of this.  Cutting taxes can, and has, helped speed growth.  I don't deny that.  But that's different from saying it raises overall revenue.


Er...clearly not, or we wouldn't need to having this discussion! ;)


Clinton raised taxes, no?  And the thing is, the economy is pretty much always growing at a pretty steady rate.  Just saying the economy grew after tax cuts isn't sufficient evidence, because the economy grows after tax increases, and after taxes staying the same.  What you have to demonstrate is:
1) that it grows faster than it would without the tax cut, and
2) that it grows so much faster that it offsets the loss of revenue due to the lower tax rate.


It's not, though (shown, that is).  This is a "post hoc, ergo procter hoc" argument.  Yes, the rich have gotten richer, but to show your point, you need to show that they wouldn't have gotten richer without those tax cuts.


Er...7 years of actual budgets, and 9 years of projected budgets?  And the main feature of the plot, the big spike in the deficit starting in 2008, is due to the recession, not tax policy.  The tax cuts started before this plot starts, so we can't tell how they changed trends because we can't see the trends in place before the tax cuts.  If we could, we'd see that the deficit was actually negative (ie, the clinton surplus), and then became large when we put in tax cuts for the rich.  Sure the deficit got smaller after that, but it was still a deficit.


I see the claim, but I don't see anything more than that.  Him saying it isn't enough to change my mind here.  I need either data or at least a theory.  I'm not just going to take him at his word.


This is interesting, and makes a valid point, though I disagree with the conclusion.  If people are ignoring the law and just not paying their taxes, then the answer isn't to lower taxes to whatever they're willing to pay, but to chase after them to pay what they owe.  Or, if they're putting their money in tax exempt investments, we need to tax away those tax exemptions (or, if we made them tax exempt because we want rich people to invest lots of money in them, well, it seems like not a problem in that case).


This is mostly just ideology, not theory or data.  "Left is bad, right is good," stuff.  Might make half the people reading it feel good about themselves, but it doesn't change anyone's mind on the other side, because it provides nothing to persuade them that they're wrong, it just claims it.


This one is about the Regan tax cuts, but again, is mostly just the basic idea, without much to back it up beyond that.  I've already said that cutting tax rates from 78% was a good idea, and that it seems possible to me that revenues could have increased from that.  But just showing that the rich paid more taxes in 88 than they did in 81 doesn't prove that the tax cut paid for itself.  Because the economy grows even if you don't provide tax cuts.  You have to show that that paid more than they would have if we didn't cut taxes.



This one gets off to a bad start, by saying that periods of higher taxes are periods of poor growth and economic performance.  But the Clinton years were high-growth and high economic output.  The rest is similar to the other stuff mentioned already.  Only looking at "did the rich pay more 8 years after a tax cut than at the time of the tax cut?" doesn't address the issue, because they'd pay more taxes 8 years later no matter what you do to taxes.  You need to compare what happened with what would have happened otherwise, which none of these links seems to do.


This one even says that tax cuts don't pay for themselves, and calls the idea that they do a "myth."  That part sounds good to me.  Most of the rest of it I question, though.  It also says that revenue as a fraction of GDP hasn't returned to pre-recession levels (talking of the bush tax cuts and the previous recession), but discounts this because the pre-recession levels were abnormally high.  Mostly its a "supply side is right, keyesians are wrong" list, but without enough data to back it up one way or another.


I can agree that a rate of over 70% is too high, and is quite likely to be on the wrong side of the Laffer curve.


Remember, Kennedy cut the rate to 78%.  If you want Obama to do that, I'm sure he could make the same speech, but I'm guessing you wouldn't go for it. ;)


Okay, but the economy also grows when taxes are high.  If all we look at is whether the economy grows after tax cuts, it's not very illuminating.


Yes, but what we mean by a "great deal" needs to be clarified.  We could probably save billions a year cutting waste.  But we're looking at 1.5 Trillion in deficits.  Cutting waste and fraud is good, but it's not going to solve our problems (and cutting taxes isn't going to get rid of waste and fraud anyway).  We're all against wasteful spending, but a lot of people seem to have the idea that it's the reason we've got this huge deficit.  It's not.  We have a huge deficit because we keep voting for politicians who promise us we can have lots of services and low taxes.  Inefficiencies are bad, but their a minor issue compared to the the real causes of our deficit.


So, you don't believe in taxes at all?  I would disagree.  We're all better off not living in an anarchy.  I consider taxes to be the dues we pay for getting to living a functioning society where working hard, coming up with clever ideas, etc., can lead to wealth.  Free markets are very good at doing many things, but there are a few things they're not very good at doing, and we need a government to handle those things.  And that government needs to be paid for.  And those of us benefiting from it have a duty to contribute, in my opinion.  When people say things like "taxation is theft!" I tend to think of people going to a restaurant, ordering a big meal, eating it, and when the bill comes, saying "this is theft!  My money is mine!  I earned it working hard, and you have no right to it!"  Many people think that if they don't get a check from the government, or go to some government office for a specific service, that they're not getting any benefit from the government, so don't owe anything.  I disagree with that kind of view.  All of us who have lived in the States, or any other western nation, have benefited in countless ways that lots of people around the world haven't.  I grew up in the US.  Got a public school education, and had a lot of opportunities that I would never have had if I had been born in India, say, or Mongolia, or any number of other places.  The advantage I had just by being born in the US is worth the taxes I've paid, in my opinion.

Now, as I said at the start, there were some questions I was hoping you'd answer in my last post, so I'm going to repeat them here:

1.  what do you think the peak of the Laffer curve is?  At what tax level will lowering taxes actually lower revenue, in your view?
2.  My hypothetical:  Does it really matter to you if tax cuts pay for themselves?  If they don't, would it change your position on them at all?
3.  What level of taxes do you feel is optimal?  Say you get to set the size of government exactly where you want it, get to cut out all the programs you don't like, set up all the ones you do like exactly how you want.  What level of taxes would you feel was fair to pay in that situation?  What level of taxes would you feel would be necessary to pay for it?  Say, for some reason, all the services you feel the government should provide turn out to be more expensive than you expect (again, this is a hypothetical, just bear with me and give it a go), what do you do?  Cut services, raise taxes, borrow, something else?  Alternatively, say the government isn't providing the services you think it should, and is already running a deficit.  What do you think they should do?  Cut services further?  Raise taxes?  Borrow to pay for more services?  (to save us some time, if you just say "improve efficiency" to either of these, assume that you've tried that already, and haven't managed to squeeze any more efficiency out of them).


Uff da!  That was a long one!  Sorry for the long post, but I wanted to cover everything.  No rush to get back to it...I can't do posts this long very often these days!

In reply to katisara (msg #246):

No, you don't throw money from the wealthy to the poor if you want real, sustained growth.  How did all that "stimulus" go down?  A perfect example of what happens when you want to effect a small bump in the economy with no real lasting power.

The rest of your post is rather class-warfarey for me and rather tiresome.  Please show me this time in recent history where the wealthy have failed the nation.

In reply to Tycho (msg #247):

You couldn't have read all my sources and considered them in this amount of time.  Damn.  Makes me feel like I wasted time actually reading your sources.  I didn't address any of your questions because you said you wanted objective proof that tax cuts create tax revenue.  That was what I was presenting.

But at least my answer is out there.  Moving on.

As for your "were out of money" argument, the government has a steady flow of cash coming in in the form of income tax and SS withdrawls.  These do not come in at the end of the month at once.  Nice try though.

Stimulus, like stimulants, can be a usefull *short term* solution for dealing with some issues. an adreneline shot to get the heart started, as it were, as opposed to taking speed three times a day. We need to get away from the 'always good/always bad' approach to problems if we want to find real solutions...

In reply to silveroak (msg #250):

The stimulus didn't work at all.  To quote you:

Compared to what? The economy has gone from spiraling out of control downwards to leveled out with indications of mild growth.

In reply to silveroak (msg #252):

Compared to the recession Bush got us out of by cutting taxes.  Compared to the recession Reagan got us out of by cutting taxes.

You know, actually working on the economy unstead of creating a billion dollar slush fund, destroying US healthcare, and spreading the wealth around.

But hey, we have a nice, steady new normal of 9+% unemployment, rising food and gas prices, a tanking housing market, and a petrified business environment that fears the guy "who is keeping the pitchforks at bay".  Yep.  Leveled out is awesome.

And looking for a long term stable solution instead of cycles of growth and crash is better yet. Taxes are already at their historical lows, we are already at war, all the traditional curess for a depression were already in effect when teh crash began.

In reply to silveroak (msg #254):

Except for one thing, this recession was caused by government social engineering (the Community Reinvestment Act) and government meddling in markets (Clinton's revisions to the CRA that allowed for the securitization of the risk).

So I would say that, perhaps, just maybe, we could try small government and less interference in markets?  The cycles of growth and crashing are not something that anyone has control over but it can be handled much better by markets than by uninformed politicians.

It's odd then that it should wait nearly 8 years for this recession to emerge, and only after 8 years of Bush's "never say no to banks" policy combined with 2 major wars while cutting taxes would Clinton's acts cause a recession...
That's a bit like saying you crashed teh car in Des Moines because you didn't turn left at Albacerque (and if bugs bunny taught us nothing else it's always to turn left at Albecurque)

In reply to silveroak (msg #256):

Not odd at all.  Clinton didn't cause the tech bubble that lead to the recession at the end of his term.  That was caused by the over-valuation of tech start-ups that didn't actually produce anything.  The market adjusted and the tax cuts allowed the private sector to grow out of the recession and the hit we took from 9/11.  It led to steady growth up until the housing bubble burst.

The housing bubble is different from the tech bubble.  It took years for the mortgage risk to work its way through the markets and then when the housing bubble burst that risk brought down the financial markets.

It wasn't wars, it wasn't tax cuts, and it wasn't evil bankers in smoke-filled rooms gleefully chuckling and wringing there hands that caused the crash.  It was markets that were forced to give loans to people who couldn't afford them and it was markets who were given the ability, by government, to offset that risk by spreading it into the securities market.  I wonder at the mindset, and sanity, of those who believe that government meddling is needed to fix government meddling.

It seems to be a common thing that so many believe a change in economic policy yields immediate results.  This is why 'stimulus' government spending is stupid and counterproductive.  Government doesn't grow the economy.  If your statement about Bush never saying no to banks refers to the bailout supported by him and Obama I would totally agree.  I was against the bailout as well.



Nonsensical metaphors are no substitute for economic reality.

It doesn't *just* refer to the bailout, it also refers to the complete abandonment of all regulation of anything financial, which allowed teh 'handfull' of con men to game the system to a point of collapse.
And while economic impact may not be immediate an 8 year gap with someone else at the helm is a pretty signifigant delay. We might just as well talk about what role NAFTA has played in the debacle.

For the record the only problem I *personally* see with NAFTA is that we are the only ones living up to our side of the bargain, and frankly we should have already declared teh agreement to have been defaulted upon by other parties and either sought redress at the UN or declared it an act of war. Annexing Mexico makes much more sense than invading Iraq. For one thing we will almost completely eliminate the illegal immigrant problem...

By all means, show me the which regulations were abandoned and how it contributed to the collapse.  Also, if it was a 'handful' of con men who caused the collapse I would love to see their names.



Except that it was the manipulated housing market which caused the collapse.  You can talk about NAFTA all you want but it had nothing to do with our current situation and is merely another attempt to divert attention away from the fact that you seem to have no evidence at all to back up any of your statements.  Perhaps another Bugs Bunny metaphor would help?

Excellent article in Investors Business Daily:

http://www.investors.com/NewsA...px?id=578623&p=1