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6 months from the largest tax increases in history (pg. 9)
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| The17sss |
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I finally got to your post. I don't have time to retort right now, and I will get back to you probably tomorrow night on some of your finer points. |
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| pkcRAISTLIN |
| haha. i like how you used 'retort' rather than 'respond'. very apt kev! :p |
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| MisterOpus1 |
Uh oh. Seems we have a slight contradiction in the current narrative:
| quote: |
Budget Deficit in U.S. Narrows 13% to $90.5 Billion on Rising Tax Receipts
By Bob Willis - Sep 13, 2010
The U.S. government posted a smaller budget deficit in August compared with the same month last year, helped by rising tax receipts.
The excess of spending over revenue totaled $90.5 billion last month, smaller than the median forecast of economists surveyed by Bloomberg News and down 13 percent from $103.6 billion in August 2009, according to a Treasury Department report issued today in Washington. The gap for the fiscal year that started in October was $1.26 trillion compared with $1.37 trillion last year at the same time.
The economic recovery has helped generate more tax revenue for the Treasury, even as the Congressional Budget Office forecasts the deficit this fiscal year will reach $1.34 trillion, the second-largest on record. The Obama administration faces the challenge of trying to limit the shortfall while stimulating an economy with joblessness close to 10 percent.
�We�re seeing the revenue coming back,� said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida. �The cumulative deficit for the fiscal year is a bit smaller, but still fairly wide. It doesn�t signal a lot of improvement.�
Stocks and Treasury securities climbed. The Standard & Poor�s 500 Index rose 1.1 percent to 1,121.9 at the 4 p.m. close in New York. The yield on the benchmark 10-year note, which moves inversely to prices, dropped to 2.75 percent from 2.79 percent late on Sept. 10.
Less than Forecast
The government�s budget deficit for August compares with a forecast of $95 based on the median of 35 estimates in a Bloomberg survey. Projections ranged from gaps of $120 billion to $85 billion.
The non-partisan CBO forecasts the budget deficit will amount to 9.1 percent of gross domestic product this year, only exceeded in the past 65 years by 2009�s 9.9 percent.
Government borrowing to finance the debt has picked up at the same time that American businesses and consumers have used growing profits and savings to reduce liabilities. Combined with a slowing economic recovery, that�s helped keep interest rates low. The average rate on a 30-year fixed mortgage reached 4.32 percent in the week ended Sept. 2, the lowest since Freddie Mac�s records began in 1972.
The CBO, in a report issued Sept. 8, projected a narrowing of the August budget deficit to $95 billion.
Second-Highest
In today�s report, the Treasury said revenue and other income climbed 13 percent from the same month last year to $164 billion, second only to the same month in 2007 as the highest August on record. Corporate tax receipts increased 30 percent for the fiscal year to date to $142.4 billion. Individual income tax collections fell over the same time period to $791.2 billion.
Spending for the entire government for August climbed 2.2 percent from the same month a year earlier to $254.5 billion. Spending by the Defense Department rose to $605 billion for the fiscal year to date. Outlays by the Social Security Administration climbed to $690.5 billion. The Department of Health and Human Services, which administers the Medicare and Medicaid programs, increased its spending to $781.8 billion.
Last month, the Treasury lowered its estimate for government borrowing from July through September, reflecting a reduction in federal spending. Borrowing will total a net $350 billion in the current quarter, compared with an estimate three months earlier of $376 billion, the Treasury announced Aug. 2. It also projected borrowing of $380 billion in the three months to Dec. 31.
Fed Survey
The Federal Reserve said the U.S. economy maintained its expansion while showing �widespread signs of a deceleration� in mid-July through the end of August, according to a survey by 12 regional Fed banks released last week.
The world�s largest economy grew at a 1.6 percent annual rate in the second quarter, down from a 3.7 percent pace in the first three months of the year, according to Commerce Department statistics.
In the second half of 2009, the economy began to recover from the recession that started in December 2007. So far this year, payrolls have grown by 723,000 workers compared with the 8.4 million jobs lost during the recession, indicating it will take years for employment to recover.
November Vote
The economy, jobs and the budget deficit are likely to be top issues in November elections that will decide control of Congress. Heading into the campaign season, pessimism nationwide about the direction of the country is sapping the enthusiasm of Democrats and political moderates.
A national Gallup Poll completed Sept. 5 found 50 percent of Republicans �very enthusiastic� about voting this November versus 25 percent of Democrats and 28 percent of independents. Among all registered voters, Republicans tied Democrats in voting preferences for Congress, with each party attracting 46 percent support.
A Quinnipiac University poll released last week showed 56 percent of respondents disapproved of Obama�s handling of the economy while 39 percent approved. The percentage of voters who approve of Obama�s overall job performance remained unchanged from a July Quinnipiac poll, at 44 percent.
To contact the reporter on this story: Bob Willis in Washington [email protected]
http://www.bloomberg.com/news/print...x-receipts.html |
. Damn libruls...... |
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| The17sss |
| quote: | Originally posted by MisterOpus1
I'm happy to cede ground when the evidence supports your arguments. I just haven't much of what you submit demonstrate that very well, especially on your failing to demonstrate current Bush tax cuts that largely benefit primarily the top 2% will somehow stimulate the economy again while putting us anywhere between $700-800 billion EVEN FURTHER into the red. Or, conversely, how letting those expire on the top 2% and keeping the tax cuts for the middle class somehow spells Armageddon. |
You've had me thinking about this topic for the last 48 hours. You definitely know more about business than the strict academics in this forum, but hear me out on this:
The Bush tax cuts benefited all levels of income across the spectrum, not just the top 2%. As for letting them expire on the top 2%... yeah perhaps they wouldn't be as personally affected as a Walmart register lady; like I said before, many of them can afford to lay low and that's what they'll do until the storm blows over. But included in that 2% group are at least half of small business owners- the vast majority of job creators and some of the most productive people for our economy- who show just over that much in profit each year (as explained earlier, Sub Chapter S Corp owners have to show their company's profits on their personal tax returns). This includes the likes of Lee Fong the laundromat owner whose life's investment is tied up in his small business with 5 employees. Squeeze a little more money out of him, and Lee's going to reduce workers' hours, lay someone off, or simply not hire. The very "rich" that Obama believes need no tax relief are the same people who employ. These same "rich" 2% already pay about 50% of all income taxes, and the top 10% of earners pay over 70% of all income taxes. Real fair.
A few "targeted" tax breaks for short term periods of time aren't going to create growth for small businesses. Just one example, those breaks will EASILY be offset by one of the new health care mandates that requires owners to produce a 1099 form, at a cost of about $600 each, for every entity they do business with. It's a shell game man. I only have 11 employees at the moment, and I do business with about 100 different entities ranging from insurance companies, building owners, property managers, contractors, etc. just out of my Charlotte office. That's $60,000 for some ing 1099's... which means I'm likely going to lose yet another employee. And how many peoples' 401K retirement nest eggs are vested in major companies like Exxon Mobile who have the biggest target of all on their back? Taxing them into oblivion will affect the individual middle class person's 401K who just got a sweet $600 tax break. Shell Game. One year tax breaks may be good for the near term bottom line, but everyone knows (at least I think they do) that successful companies operate on long term time lines. If you think Obama's crack team of economic illiterates believe a company will get a 1 year $2 million write off and will therefore hire 75 new employees as a result, I want what you're smoking. A year later when the said benefits expire, the cost of keeping those new workers employed will just keep going up. What actually motivates hiring is a long term rate cut across the board.
Also, what happens to costs if we're forced to Unionize via Card Check? Most employers won't even get the benefit of the Capital Gains tax break; who wants to sell company assets to cover expenses? And a tax break for "advanced depreciation" on equipment and capital expenditures? Cool... who's going to go pay for 6 new laptops hoping that will cause new business to walk on in? I don't need to post peer reviewed articles to make sense of this- I know because this is my life, running a business, being a part of the Chamber of Commerce, dealing with the chess game of government intrusion and regulation. In the business community these days among owners, the sentiment is clearly, "Why even take a risk of hiring, growing, expanding when we have no idea what government will do next in the markets and keeps requiring more of our profits?" Even the larger most profitable companies who would normally take the investment risks and hire and grow if Capital Gains taxes were reduced are less likely to do so now by what they're watching.
| quote: | | I also seem to remember that the housing bubble was at it's peak at that time - is that directly related to tax cuts? If so, does the end result of tax cuts inevitably become a gigantic bubble burst and recession, because I could just as easily correlate that to tax cuts like you just did if that's the case. |
3 words: $0 down payments.
| quote: | Well that is an interesting point, because below you are arguing that it was the Republican-led Congress that we owe all the success to the Clinton economy in accordance to your Heritage article. But yet, according to you, when things were ty with our national debt under Bush II and the Housing Bubble burst, well hell, that too was Congress' fault, only this time it's led by the Democrats.
Funny how you seem to yet once again try to have your cake and eat it too. When things are good, it's the Republicans in charge, but when things are bad, it's the...uh...Democrats in charge of Congress. And you're asking me about taking Responsibility for the economy? |
Well in these examples, pretty much, yes. The factual evidence in exponential capital investment, rise in risk taking, direction towards a deficit surplus, and GDP growth post 1997 Taxpayer Relief Act (compared to post 1993 massive tax increases) is irrefutable.
And, the Community Reinvestment Act which encouraged/forced bank lending to deadbeats, and the Fannie/Freddie debacle certainly wasn't spearheaded by Republicans. Some tidbits from some of the dozen attempts by Bush to reign in Fannie/Freddie's ticking time bomb:
| quote: | House Financial Services Committee hearing, Sept. 10, 2003:
Rep. Barney Frank (D., Mass.): I worry, frankly, that there's a tension here. The more people, in my judgment, exaggerate a threat of safety and soundness, the more people conjure up the possibility of serious financial losses to the Treasury, which I do not see. I think we see entities that are fundamentally sound financially and withstand some of the disaster scenarios
Rep. Maxine Waters (D., Calif.), speaking to Housing and Urban Development Secretary Mel Martinez: Secretary Martinez, if it ain't broke, why do you want to fix it? Have the GSEs [government-sponsored enterprises] ever missed their housing goals?
House Financial Services Committee hearing, Sept. 25, 2003:
BARNEY FRANK: I do think I do not want the same kind of focus on safety and soundness that we have in OCC [Office of the Comptroller of the Currency] and OTS [Office of Thrift Supervision]. I want to roll the dice a little bit more in this situation towards subsidized housing.
Rep. Frank: I believe there has been more alarm raised about potential unsafety and unsoundness than, in fact, exists.
MAXINE WATERS: However, I have sat through nearly a dozen hearings where, frankly, we were trying to fix something that wasn't broke. We should be enhancing regulation, not making fundamental change.
Mr. Chairman, we do not have a crisis at Freddie Mac, and in particular at Fannie Mae, under the outstanding leadership of Mr. Frank Raines. Everything in the 1992 act has worked just fine. In fact, the GSEs have exceeded their housing goals. |
As you know Mrs. Waters is currently under investigation for multiple ethics violations. Continuted:
| quote: | Senate Banking Committee, Feb. 24-25, 2004:
Sen. Christopher Dodd (D., Conn.): I, just briefly will say, Mr. Chairman (Greenspan), obviously, like most of us here, this is one of the great success stories of all time. And we don't want to lose sight of that and what has been pointed out by all of our witnesses here, obviously, the 70% of Americans who own their own homes today, in no small measure, due because of the work that's been done here. And that shouldn't be lost in this debate and discussion.
Senate Banking Committee, April 6, 2005:
Sen. Schumer: I'll lay my marker down right now, Mr. Chairman. I think Fannie and Freddie need some changes, but I don't think they need dramatic restructuring in terms of their mission, in terms of their role in the secondary mortgage market, et cetera. Change some of the accounting and regulatory issues, yes, but don't undo Fannie and Freddie.
Senate Banking Committee, June 15, 2006:
Sen. Charles Schumer (D., N.Y.): I think a lot of people are being opportunistic, . . . throwing out the baby with the bathwater, saying, "Let's dramatically restructure Fannie and Freddie," when that is not what's called for as a result of what's happened here. . . .
Sen. Chuck Hagel (R., Neb.): Mr. Chairman, what we're dealing with is an astounding failure of management and board responsibility, driven clearly by self interest and greed. And when we reference this issue in the context of -- the best we can say is, "It's no Enron." Now, that's a hell of a high standard. |
http://online.wsj.com/article/SB122290574391296381.html
Sickening.
| quote: | | Can't. Too busy hugging this big one I'm under right now :D. |
Yes! A glimpse of that rare sense of humor I know you got locked up in there. ;)
| quote: | IMO, no - they didn't go far enough, which was exactly what your favorite boy Krugman argued:
I'm pretty certain this discussion has occurred before on TA. I distinctly remember Occrider trying to discuss this with you about Keynesian economics and why spending has to happen at this point, because the reverse would have essentially meant economic devastation not just on a national front, but a global one. And again I wonder exactly how this ties into the supposed Armageddon that would occur when we let the tax cuts for the top 2% of Americans who are pretty well-off expire. |
So you think we'd be better off now if we would have spent even more? I'll get to that and Krugman below. For now, I'll let these gentlemen speak for me:
New York Times ombudsman Daniel Okrent: "Paul Krugman has the disturbing habit of shaping, slicing and selectively citing numbers in a fashion that pleases his acolytes but leaves him open to substantive assaults."
Robert Barro, the distinguished Harvard economist: "Krugman just says whatever is convenient for his political argument. He doesn't behave like an economist. And the guy has never done any work in Keynesian macroeconomics, which I actually did. He has never even done any work on that. His work is in trade stuff. He did excellent work, but it has nothing to do with what he's writing about."
http://www.theatlantic.com/politics...bert-barro/370/
(an excellent interview in the above link actually... you should read it)
| quote: | A tax cut for the middle class is often the most appropriate response to an economic downturn, which funny enough that's exactly what Obama has done.
You do remember that Obama did cut taxes for most of us in his Stimulus plan, right? |
Should read "A tax cut for the middle class is also an appropriate response to an economic downturn." And yes I remember the tax cuts but I already addressed that in the first paragraph.
| quote: | | That's hardly a point for you Conservatives to hang your hat on considering how far into the red he was, not to mention completely failing to cover the cost of his wars in the budget numbers in the ing first place. That's like saying I owe you $1,000,000, and I'm borrowing 10K from you every month still. Now I pay you 5K a month in return, but then for about 3 months I pay you 10K a month back. Yeah, woo ing hoo. How much does my ass still owe you? |
Dude, I agree with you here. True conservatives aren't hanging their hats on that, believe me. It was things like that- compromising fiscal integrity- that lost many of his previous supporters.
| quote: | False logic. It's pretty clear from the Bush II years that a huge cut in taxes, primarily benefiting the upper echelon, doesn't somehow create more jobs:
Or that it really boosted revenues:
You want to somehow believe that increases in income taxes on corporations and the affluent will force them to tighten their belt, yet history provides ample evidence of very high income tax rates in the past yet our economy did quite well under those previous Administrations.
But if we logically follow the reverse of what you're saying and try to believe tax cuts somehow cause a loosening of their belts to spend and hire workers, the evidence simply does not support your view. |
Speaking of false logic, by your rationale we should tax everything 95-100% for best economic growth results.
Ok you want legitimate peer reviewed evidence shattering your Krugmanian beliefs? READ IT AND WEEP:
Harvard economists Alberto Alesina and Silvia Ardagna examined 91 attempts at stimulus since 1970 in 21 OECD countries (USA, Canada, Mexico, Germany, Japan, France, Italy, etc.) and found that tax cuts, NOT spending, stimulated. After witnessing the last 2 failed stimuli (including W's), Krugman's (and your) argument is that it should have been larger. Krugman also says that more jobs would have been lost if not for it. Per his first point, we might get a chance to see. His second point is completely unsupportable. And so we are back to an argument based on availability of evidence. Who should we go with... the two Harvard economists and their legitimate analysis of 91 events in 21 OECD countries that all show Keynesian economic failure, in all environments with respect to both spending and tax cuts? Or Krugman who admits to the failures of Keynesian economics in the current modern economic environment with this stimulus (http://krugman.blogs.nytimes.com/20...bs-not-created/) by way of making unsupportable assertions?
Served for you on a silver platter:
Might as well also include the latest economic science showing how the multipliers Keynesians use is incorrect (which Krugman used in 2008 to predict the stimulus would keep unemployment below 8%):
http://www.volkerwieland.com/docs/CCTW%20Mar%202.pdf
And Krugman's busted calculations: http://krugman.blogs.nytimes.com/20...but-important/
| quote: | | You know what's really funny? The fact that you seem to overlook what exactly was in Obama's stimulus plan - ING TAX CUTS! Over 1/3 of his bill was direct tax cuts, another 1/3 one could argue were indirect tax cuts. |
Per the CBO's numbers, 22% was actually "tax cuts", not 1/3... but they were so paltry they haven't benefited anyone OBVIOUSLY.
http://cbo.gov/ftpdocs/117xx/doc11705/08-18-Update.pdf
| quote: | | Take a look at what Clinton said |
"But I want to say one thing to the American people. I want you to listen to me. I'm going to say this again: I did not have sexual relations with that woman, Miss Lewinsky. I never told anybody to lie, not a single time; never. These allegations are false. And I need to go back to work for the American people." :)
| quote: | | So is the stimulus plan bad because of the tax cuts then? Or, wait, , only some tax cuts are good when they benefit the wealthy because THEY are the ones who help the economy the most? Now I know you'll prove that one of these days, but I'm just really confusing myself now! |
The stimulus is bad because it isn't doing a ing thing in terms of stimulating the economy. You can always say "well we woulda been worse off if not for it," but there's no way to know. Just like how we were told we'd be worse than 8% unemployment if we didn't pass the stimulus. Now look at us. Oh sure it hooked up the United Auto Workers Union, the SEIU, the welfare cases, and the NEA teacher's unions pension plans... but we now have record debt, deficits, length of time for people being unemployed, 1 in 6 taking govt. assistance, a record 40 million people on food stamps, 32 states bankrupt, record high youth and minority unemployment, more new debt in 2010 than all the world's governments combined, a record drop in home sales and foreclosures... to name a few. Post stimulus.
| quote: | | You're so ing hellbent on your stereotypes of Democrats and lefties that you can't even grasp the fact that we can and often do tax cuts too, you ing twit! And what's worse, you stereotype even yourselves as Conservatives so much that you buy into your own bull into believing tax cuts pay for themselves, don't create deficits, and true Conservatives don't ever raise taxes (which excludes your boyhood hero Reagan). |
You had to bring on the ad homin didn't you. You were doing so well man, and at the very end you couldn't resist.
Anyway, you're injecting the idea into my head that I believe Democrats never cut taxes, that tax cuts don't create deficits, and that true conservatives don't ever raise taxes. Simply wrong. |
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| Lebezniatnikov |
| quote: | Originally posted by The17sss
And I've said before, I was against excessive spending and Bush doing that. It's important to note that the 2008 budget was created by Democrats- Congress pushed it back until after Bush left office. That's why its blue. Even with a poor spending record by Bush while on his way out that final year, he is still a piker compared to Obama's spending tactics. If you're criticizing what Bush did, please be consistent. |
Ok, let's be consistent. The $4.7 trillion dollar reduction in revenue caused by the Bush tax cuts far surpass any spending by Obama in terms of deficit-creation. |
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| Shakka |
| quote: | Originally posted by Lebezniatnikov
Ok, let's be consistent. The $4.7 trillion dollar reduction in revenue caused by the Bush tax cuts far surpass any spending by Obama in terms of deficit-creation. |
Tax cuts don't cause deficits, spending too much money does. That's why tax cuts have proven to increase revenues over time (much as the left hates the concept). It's the reckless spending that gets us into the pickle we're in. You can blame plenty of spending woes on Dubya for all I care but Obama has out-spent him by leaps and bounds. |
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| pkcRAISTLIN |
| quote: | Originally posted by Shakka
Tax cuts don't cause deficits, spending too much money does. |
Well of course spending is the cause of deficits, but if you have something to pay for, and then you cut the revenue in order to afford it, in a way the tax cut is what causes the deficit.
| quote: | Originally posted by Shakka
That's why tax cuts have proven to increase revenues over time |
Yeah, maybe in weirdo-bizarro world populated by rightwing stoners. But, by all means show how what opus and I have already addressed is somehow way off base? |
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| Shakka |
| quote: | Originally posted by pkcRAISTLIN
Well of course spending is the cause of deficits, but if you have something to pay for, and then you cut the revenue in order to afford it, in a way the tax cut is what causes the deficit. |
Right. So cut the ing needless spending on boondoggles and earmarks. Don't tell me that it's the general population's fault that the government can't balance a budget and that them keeping more of their own money actually caused the government to bankrupt the nation. My point is that reckless spending is more of a problem than marginal tax rates. Rich people are just a convenient excuse for a Federally sponsored power grab in the name of populism.
| quote: | | Yeah, maybe in weirdo-bizarro world populated by rightwing stoners. But, by all means show how what opus and I have already addressed is somehow way off base? |
What did you show? I'm sure we can all cherry pick whatever details we want from whatever time period fits our data. The bottom line is that consumers represent 70% of GDP. Consumers are also more efficient allocators of their own capital than the government. Giving consumers more purchasing power means that 70% has greater disposable income with which to drive the economy. If they are rich and choose to save that money, it still gets lent out for private investment where it is more efficiently allocated for productive use. Government is the least efficient allocator of capital as it is generally just a redistribution mechanism. When consumers have more money the economy can grow much better than when the government takes that capital away and, over time, that will mean a bigger revenue stream into the government. It drives lefties batty to try to wrap their heads around the concept, but it is true. Government does not grow the economy.
What we are suffering from now is a leverage hole that the government has proven impotent to stop and has instead left our children and grandchildren with a greater tax burden than they otherwise would have had.
Another great quote from Stephanie Pomboy about those evil rich and the economy.
| quote: |
Rather than being encouraged to get out and spend, the high-end is being cowered into a corner with threats of rising taxes and spreading the wealth around. Never mind that these same folks are responsible for driving incremental spending. If they weren't already racked with guilt for deigning to spend while others are out of work, they must now live in fear of reprisal from the 'equalization police.'
Sigh. It's almost as though the administration were determined to foil the Fed. Rather than making daily TV appearances to talk about how great America is and how soon we'll be back to our wanton ways, they persist in belittling the economy and wagging their finger at the well-to-do. That leaves the Fed in a rather uncomfortable spot. Since Greenspan took the helm twenty-four years ago the Fed has eschewed Machiavelli, preferring to always be loved, not feared. But now, with its efforts to reward the behavior it wants (spending) being flouted, it has no choice but to punish the behavior it doesn't (saving). With rates already at zero, the only way to do that is to trash the buck. |
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| pkcRAISTLIN |
| quote: | Originally posted by Shakka
Right. So cut the ing needless spending on boondoggles and earmarks. Don't tell me that it's the general population's fault that the government can't balance a budget and that them keeping more of their own money actually caused the government to bankrupt the nation. My point is that reckless spending is more of a problem than marginal tax rates. Rich people are just a convenient excuse for a Federally sponsored power grab in the name of populism. |
I don�t disagree.
| quote: | Originally posted by Shakka
What did you show? |
We showed that cutting taxes cannot, and do not, raise tax revenues! The claim is absurd, except perhaps in really extreme situations, which do not exist in the real world (ie in areas where there�s a 100% tax rate which kills off 100% of economic activity).
| quote: | Originally posted by Shakka
I'm sure we can all cherry pick whatever details we want from whatever time period fits our data. The bottom line is that consumers represent 70% of GDP. Consumers are also more efficient allocators of their own capital than the government. Giving consumers more purchasing power means that 70% has greater disposable income with which to drive the economy. If they are rich and choose to save that money, it still gets lent out for private investment where it is more efficiently allocated for productive use. Government is the least efficient allocator of capital as it is generally just a redistribution mechanism. When consumers have more money the economy can grow much better than when the government takes that capital away and, over time, that will mean a bigger revenue stream into the government. It drives lefties batty to try to wrap their heads around the concept, but it is true. Government does not grow the economy.
What we are suffering from now is a leverage hole that the government has proven impotent to stop and has instead left our children and grandchildren with a greater tax burden than they otherwise would have had.
Another great quote from Stephanie Pomboy about those evil rich and the economy. |
Again, I don�t disagree with anything you�ve got here, my comment was purely in response to your assertion that cutting taxes increases revenue. That just isn�t possible, and the data Opus and I refer to in previous pages in this thread made that abundantly clear, by massive massive margins (ie capital gains tax cuts pay back only 10% of the revenue lost by said tax cuts etc). |
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| Comrade Stalin |
| It's like saying, "I got paid more after getting a wage cut." It's not mathematically feasible. |
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| Shakka |
You guys are ing idiots (no offense).;)
It's like retailers running sales promotions to increase their revenues. There's nothing mathematically impossible about it. It's pretty basic common sense.
The only assumption of higher taxes is that the government can somehow spend that money more wisely than you can. Only the government isn't paying down debt with it, they're just redistributing it and leveraging up the public sector balance sheet. |
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| pkcRAISTLIN |
| quote: | Originally posted by Shakka
You guys are ing idiots (no offense).;) |
No offense taken, but I have to say this is the first time I�ve ever thought you were a brick short.
| quote: | Originally posted by Shakka
It's like retailers running sales promotions to increase their revenues. There's nothing mathematically impossible about it. It's pretty basic common sense. |
| quote: |
Myth 1: Tax cuts �pay for themselves.�
�You cut taxes and the tax revenues increase.� � President Bush, February 8, 2006
�You have to pay for these tax cuts twice under these pay-go rules if you apply them, because these tax cuts pay for themselves.� � Senator Judd Gregg, then Chair of the Senate Budget Committee, March 9, 2006
Reality: A study by the President�s own Treasury Department confirmed the common-sense view shared by economists across the political spectrum: cutting taxes decreases revenues.
Proponents of tax cuts often claim that �dynamic scoring� � that is, considering tax cuts� economic effects when calculating their costs � would substantially lower the estimated cost of tax reductions, or even shrink it to zero. The argument is that tax cuts dramatically boost economic growth, which in turn boosts revenues by enough to offset the revenue loss from the tax cuts.
But when Treasury Department staff simulated the economic effects of extending the President�s tax cuts, they found that, at best, the tax cuts would have modest positive effects on the economy; these economic gains would pay for at most 10 percent of the tax cuts� total cost. Under other assumptions, Treasury found that the tax cuts could slightly decrease long-run economic growth, in which case they would cost modestly more than otherwise expected. (http://www.cbpp.org/7-27-06tax.htm)
The claim that tax cuts pay for themselves also is contradicted by the historical record. In 1981, Congress substantially lowered marginal income-tax rates on the well off, while in 1990 and 1993, Congress raised marginal rates on the well off. The economy grew at virtually the same rate in the 1990s as in the 1980s (adjusted for inflation and population growth), but revenues grew about twice as fast in the 1990s, when tax rates were increased, as in the 1980s, when tax rates were cut. Similarly, since the 2001 tax cuts, the economy has grown at about the same pace as during the equivalent period of the 1990s business cycle, but revenues have grown far more slowly. (http://www.cbpp.org/3-8-06tax.htm)
Some argue that, even if most tax cuts do not pay for themselves, capital gains tax cuts do. But, in reality, capital gains tax cuts cost money as well. After reviewing numerous studies of how investors respond to capital gains tax cuts, the Congressional Budget Office concluded that �the best estimates of taxpayers� response to changes in the capital gains rate do not suggest a large revenue increase from additional realizations of capital gains � and certainly not an increase large enough to offset the losses from a lower rate.� That�s why CBO, the Joint Committee on Taxation, and the White House Office of Management and Budget all project that making the 2003 capital gains tax cut permanent would cost about $100 billion over the next ten years. (http://www.cbpp.org/policy-points4-18-08.htm) |
| quote: |
Myth 2: Even if the tax cuts reduced revenues initially, they boosted revenues and lowered deficits in 2005 to 2007.
�Some in Washington say we had to choose between cutting taxes and cutting the deficit� Today�s numbers [the updated 2006 budget projections] show that that was a false choice. The economic growth fueled by tax relief has helped send our tax revenues soaring.� � President Bush, July 11, 2006
Reality: Robust revenue growth in 2005-2007 has not made up for extraordinarily weak revenue growth over the previous few years.
When discussing revenue growth since the enactment of the tax cuts, Administration officials typically focus only on revenue growth since 2004. This provides a convenient starting point for their arguments, as it sets a very low bar. In 2001, 2002, and 2003, revenues fell in nominal terms (i.e. without adjusting for inflation) for three straight years, the first time this has occurred since before World War II. Measured as a share of the economy, revenues in 2004 were at their lowest level since 1959. Given this historically low starting point, it is not surprising that revenues have recovered since then. Supporters of the tax cuts selectively cite revenue growth over just the past three years to argue that the tax cuts fueled increases in revenues.
Even taking into account the growth in revenues in fiscal years 2005-2007, total revenues have just barely increased over the 2001-2007 business cycle, after adjusting for inflation and population growth. (The business cycle began in March 2001, when the 1990s business cycle hit its peak and thereby came to an end.) In contrast, six and a half years after the peak of previous post-World War II business cycles, real per-capita revenues had increased by an average of 12 percent, and in the 1990s, real per-capita revenues were up 16 percent (see Table 1). Revenues in 2007 were still more than $250 billion short of where they would have been had they grown at the rates typical in other recoveries.
Further, while the Administration has credited the tax cuts with the drop in the fiscal year 2007 deficit to �only� $162 billion, the 2007 budget would have been in surplus were it not for the tax cuts. Based on Joint Committee on Taxation estimates, the total 2007 cost of tax cuts enacted since January 2001 was $300 billion (taking into account the increased interest costs on the debt that have resulted from the deficit financing of the tax cuts). This means that even with the spending for the wars in Iraq and Afghanistan, the federal budget would have been in surplus in 2007 if the tax cuts had not been enacted, or if their costs had been offset. While supporters of these tax cuts claim that their positive economic effects have lowered their cost, the non-partisan Congressional Research Service found in a September, 2006 report that �at the current time, as the stimulus effects have faded and the effect of added debt service has grown, the 2001-2004 tax cuts are probably costing more than their estimated revenue cost.�
Looking out over the next several decades, when deficits are projected to be far larger (because of the impact on the budget of the continued rise in health care costs and the retirement of the baby boomers), the tax cuts, if extended, will still be a major contributor to the nation�s fiscal problems. (http://www.cbpp.org/1-29-07bud.htm) To put the long-run cost of the tax cuts in perspective, the 75-year Social Security shortfall, about which the President and Congressional leaders have expressed grave concern, is less than one-third the cost of the tax cuts over the same period. |
http://www.cbpp.org/cms/?fa=view&id=692
| quote: | Originally posted by Shakka
The only assumption of higher taxes is that the government can somehow spend that money more wisely than you can. |
Nobody is making this argument.
| quote: | Originally posted by Shakka
Only the government isn't paying down debt with it |
They could though, and this isn�t the argument. The argument is that cutting taxes cuts taxation revenue. |
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