Sunday, October 17, 2010

Kennedy--a Pelosi-Obama Clone


http://www.americanindependent.com/nc-foxx-and-kennedy-offer-right-left-choice-5th-district-race/

59 comments:

Jack said...

How would you reduce the federal deficit?
--Extending the tax cuts will actually increase the deficit.

What about legalizing illegal immigrants currently in the U.S.?
--Immigration policy reform needs a drastic reform. Legal immigrant workers would provide a huge bump to our economy. A wall and xenophobia are not solutions.

competitiveness of the U.S. in the global economy?
--I agree with Foxx's stance on corporate taxes. The "buy American" notion is harmful, but I also agree with Kennedy's stance on removing tax incentives.

I can elaborate on the economic principles if interested.

PS: I don't know enough about Social Security or education policy to comment...I agree with both on the terrorism subject...And health care is another discussion for another time.

Honest Debate said...

"Extending the tax cuts will actually increase the deficit." -Jack

You seem like a reasonable fellow so please explain to me how not raising taxes cost money and increases the deficit. The moral component says, "It's not the governments money". The practical aspect dictates it's a terrible time to raise taxes. Either works for me.

Honest Debate said...

"A wall and xenophobia are not solutions." -Jack

What about a wall without the xenophobia?

Also on terrorism, Kennedy seems to imply, by his suggestion to address the "root causes", that it's our fault. I don't think it is. I blame murderous terrorist not the victims. I freely admit I may be inferring something that is not implied but I'm sensitive that way. What did you infer?

Jack said...

Full extension of the tax cuts will increase the deficit due to lost revenue. If you cut revenues and increase spending, money will be lost. Spending would need to be drastically cut in order to balance the budget with the tax cuts in place. Foxx stating this would be her method of reducing the deficit isn’t feasible. Even with a pay freeze for federal employees, it wouldn’t come close. I wish I could attach a picture, I have an amazing chart that illustrates spending vs revenue and the growing deficit.

Economic research has shown that in a recession, extra money (i.e.: tax cuts) to the middle and upper tax brackets goes towards savings and investments. The lower tax brackets, however, spend the extra money and inject it back into the economy. Therefore, individual tax cuts to the upper brackets would not stimulate the economy or create jobs. Tax cuts to the lower brackets would.

Jack said...

Xenophobia seems to be the driving force behind the “wall” idea. A 1,950 mile wall seems like a bad idea. People are creative and will get around it. But I don’t have any good ideas for physically securing the border. I think, however, immigration reform and a legal crackdown on those who readily employee illegal immigrants would do a much better job than building another fence. We have a lot to gain from legal immigration. Instead of me taking up space here, I wrote a quick blog if you want to read about possible benefits of legal immigration. http://bit.ly/9LhTLQ

On the terrorism question, I read it differently. Foxx seemed to say “we need to listen to our generals”. I agree, that’s what they’ve trained for. That’s what they went to school for. If I were to be elected to office, I wouldn’t have the slightest clue how to invade Kabul. We train these people for a reason, don’t ignore them. Kennedy’s response seemed to build on Foxx’s. It read to me as if he was calling for cooperation between allies; We can’t do this alone. And the “root cause” sounds more like a “go after the financiers” or “go after the recruiters”, instead of focusing solely on the foot soldiers. It’s easy to read into it, because it’s such a personal and visceral subject. But I doubt Kennedy meant anything so callous. I liked both of their answers.

Jack said...

Here's a URL for that revenue vs spending chart. It's long but a copy/paste will work. The space between the blue and red lines is our budget deficit.

http://research.stlouisfed.org/fred2/graph/fredgraph.png?&chart_type=line&graph_id=&category_id=&recession_bars=On&width=480&height=288&bgcolor=%23B3CDE7&graph_bgcolor=%23FFFFFF&txtcolor=%23000000&ts=8&preserve_ratio=true&fo=ve&id=GEXPND,GRECPT&transformation=lin,lin&scale=Left,Left&range=5yrs,5yrs&cosd=2005-04-01,2005-04-01&coed=2010-04-01,2010-04-01&line_color=%230000FF,%23FF0000&link_values=,&mark_type=NONE,NONE&mw=4,4&line_style=Solid,Solid&lw=1,1&vintage_date=2010-10-17,2010-10-17&revision_date=2010-10-17,2010-10-17&mma=0,0&nd=,&ost=,&oet=,&fml=a,a

Honest Debate said...

Jack you wrote: "Full extension of the tax cuts will increase the deficit due to lost revenue."

I have to conclude you subscribe to the theory that it's the governments money. All one needs to ask is "How is my money considered United States revenue"? It's a theory, but it flunks the moral test. Cutting spending is not enough, true. The fallacy is that raising taxes increases revenue but even if you think raising taxes means more revenue, it's still not enough. The only way out of this mess is to grow our way out. The best way to grow the economy is through tax policy. More taxpayers paying less taxes creates more revenue than fewer taxpayers paying more taxes. It's simple math but it doesn't end there. Fewer taxpayers paying more taxes stifles jobs and strangles innovation. It can't work. More taxpayers paying less taxes grows the pie. More jobs. More risk-taking. More innovation.

We have a track record to look at. Kennedy, Reagan and GWB all dramatically increased revenue by cutting taxes. It's not arguable. The problem in each case was spending. It like if you got a huge raise, bought a fleet of Lamborghinis, went broke and then blamed the raise for your financial woes.

When a retail store is in trouble do they raise prices hoping to make more profit off of fewer customers? Or do the cut prices hoping to make less profit off of more customers. It's a no-brainer. More customers grows the business. Same thing.

Honest Debate said...

Jack,

On the immigration issue, I support a comprehensive approach. Unfortunately, due to Reagan, any such suggestion is labeled "amnesty" and therefor poison. It's like any suggestion of giving people the option to invest a small percentage of their income is called "privatizing Social Security". I would favor amnesty for those who are here if we stopped ALL illegal immigration FIRST. The only way to do that is with a wall. If that didn't work then build another wall 20 parallel with the border patrol continuously driving between them. The wall worked in Israel, it would work here.

I just disagree with your reading of Kennedy's stance on terrorism.

"And the 'root cause' sounds more like a 'go after the financiers' or 'go after the recruiters', instead of focusing solely on the foot soldiers."

That is precisely what we have been doing since day one. I can't see any basis in fact to claim that we were merely going after the "foot soldiers".

Honest Debate said...

Jack,

Your link suggest short term solutions and that will not help at this point. It will make things worse in the long run.

Jack said...

I guess I do think it’s “government’s money”....to a point. It is the government of the people, chosen by the people, to serve the people. So we have a responsibility to fund its activities.

Job creation, risk-taking, and innovation comes (primarily) from businesses. Corporate taxes, small business credits, etc are not in question. Personal income is the subject. Your business analogy works in the business world, but federal government and the nation does not function anything like a business.

I don’t know much about Kennedy’s tax cuts, but I will comment on Reagan’s. His economic policies fall in line with Keynesian theory. Economic expansion was due to cyclical growth cycles. There was no evident structural growth during that time period. During his administration, the following occurred....

--He signed the Economic Recovery Tax Act of 1981
--If we compare two recession-recovery periods (1971-1980 and 1983-1990), under Reagan, growth of GDP per capita was higher (2.77% vs 2.50%) but unemployment was also higher (6.75% vs 6.35%). Also, average productivity growth, private investment, and wages all decreased under Reagan.
--The average annual growth rate of real income tax revenue per person was 0.2% from 1981 to 1990. In contrast, it was 3.1% from 1990 to 2001.
--On the surface, income tax revenues increased, but if we calculate the revenues in constant dollars, they decreased then leveled off. Revenues were $1.25 trillion in 1981, they fell immediately, only returning to $1.25 trillion in 1985. Revenues finally reached $1.5 trillion in 1990.
--He signed the Tax Reform Act of 1986. This had a huge impact on the Alternative Minimum Tax. The Act expanded the AMT and the middle class was the hardest hit. It shifted the overall tax burden to poorer Americans.
--The AMT has not been reformed since (it brings in more revenue than the regular tax, so it’s a bit bulletproof). The IRS has spotlighted the AMT as “the single most serious problem with the tax code.”
--The Center on Budget and Policy Priorities states that "history shows that the large reductions in income tax rates in 1981 were followed by abnormally slow growth in income tax receipts, while the increases in income-tax rates enacted in 1990 and 1993 were followed by sizeable growth in income-tax receipts."

Jack said...

HD,

"Your link suggest short term solutions and that will not help at this point. It will make things worse in the long run."

Regarding immigration or taxation?

Mike D. said...

The wall... a shovel ready project.

Reader said...

http://www.taxfoundation.org/news/show/323.html

This might help to explain, HD. Then again, might not.

guy faulkes said...

The government does not produce anything. All it possesses is what the citizens either give it freely or what it steals from them. When the government passes things such as Obamacare against the will of the people, it is stealing from the people. If the people want lesser taxes so they can afford to invest in their businesses, create more jobs, and improve the economy (creating an upward spiral), and the government stands in their way, the government is not only stealing the peoples money, it is stealing their future.

Immigration is another issue. Illegal immigrants cost this country billions in goods and services, They fill our jails, use our social services without paying into them, hurt our education by costing us money and filling our schools with children that cannot even speak the language, and steal out jobs (driving the living wage for legal residents, both citizens and legal immigrants down).

We are a nation of laws. These laws should be upheld. Until such time as the citizens decide to change the laws, illegal aliens should be deported. The parents of "anchor babies" should be given a choice. They can take their children with them back to their country of origin or put them up for adoption. If it is the former, the child can return when he or she is old enough to get a job and care fore himself or herself.

Please do not give me the bull crap about splitting up families. If the parents rob a bank, we do not send the kids to jail with them. They are split up just the same.

Back to the subject of the thread. If People like Obama and his policies, they will support Kennedy. If they actually have some sense and oppose them, they will support Foxx. It will be interesting to see the outcome.

Honest Debate said...

"I guess I do think it’s 'government’s money'....to a point. It is the government of the people, chosen by the people, to serve the people. So we have a responsibility to fund its activities." -Jack

Only those activities enumerated in the Constitution, even then it's still not the government's money.

The business analogy works because business is individuals and many small businesses file taxes as individuals. Nearly half (48%) of those earning $250,000 or more are small businesses filing as individuals.

Reagan's tax cut brought in more revenue as tax cuts usually do. That's my only point. It doesn't happen in a vacuum. I would argue Reagan's tax policies were still taking hold after he left office just as Carter's policies were still affecting Reagan. Your numbers actually buttress my point
about growing our way out. When GDP was high so was revenue. In the 90's we had the incredible dot com run, that created many more taxpayers and revenue as the GDP soared. Unfortunately, it was a bubble that popped and left GWB a recession. There are many forces at play, way beyond the scope of this thread. My argument is tax cuts do not increase the deficit, they grow the economy. Tax cuts do not cost money, to me that idea is completely backwards and illogical unless you consider it the governments money. So you're consistent.

Check out Reader's link for the nitty gritty.

I've never heard anyone describe Reagan as a Keynesian, he just had a big spending Democrat Congress off setting much of his gains.

The link I was referring to was the one on revenue vs. spending. Think about it. Is the theory we should encourage the middle class to buy flat screen TV's instead of saving or investing? That's a short term solution, better to have households on strong financial foundations for the long haul.

Honest Debate said...

Guy,

"Back to the subject of the thread."

As Blogger's post was a wide ranging interview with Foxx and Kennedy, and immigration was discussed, it is completely on-topic. Thank you for bottom lining the issue so clearly.

Jack provided a link on the benefits of legal immigration. I did not look at it because I don't know anyone who would disagree with the premise or who opposes legal immigration. I really don't see that it's an issue at all... if legal.

NewGuy said...

THANK YOU JACK, HD, GUY, and READER for showing us all how adults debate issues.

It's nice to see people disagreeing without being disagreeable.

Honest Debate said...

New Guy,

Screw you!

NewGuy said...

TOO LATE!

Was already done......November 2008!



http://somosrepublicans.com/wp-content/uploads/2010/05/george-bush-miss-me-yet.jpg

Honest Debate said...

Sorry New Guy, I just couldn't help myself. I just had to hit "Publish".

Seriously, I appreciate the kind words because that's what we try to do here at AWC. I've got to put some thoughts together and start a new thread on the subject. You and a "Tweedle Dee, tweedle dum" comment by Anonymous have got me thinking. I think I could make a case for genuine passion being the most important aspect (behind truth) of blogging. There is a place for personal attacks and disagreeable discourse, I'm not arguing your point though. It is nice and, even though I try my best to always be open minded, my mind is more open when civility rules. The goal is to expand and if I'm wrong about something I want to be corrected or I cannot grow.

NewGuy said...

HD...


Totally agree!




(and screw you too) ;)

Jack said...

The business analogy doesn’t fit. Government works differently than that. If you drop retail prices, you can attract new customers and grow your base. If you drop income taxes, you don’t attract new residents. Workers from France or Sweden will not move to the U.S. because it’s “cheaper” to live here. The only way to grow a tax base is to create jobs. To create jobs, we need to incentivize business and promote consumer activity. Consumer activity is promoted by tax credits to the lower brackets, as I outlined earlier, and business activity is increased by the current tax credits and proposed incentives. Businesses will invest in themselves if they have incentives and predictable consumer spending.

Tax cuts cost money because of simple arithmetic. If, in your personal budget, you increase your spending and take a pay cut at the same time, your personal deficit will increase. Again, tax cuts to personal income do not create jobs. The current cuts have not stimulated job growth over the past two years, and they will not in the future. Tax cuts to businesses do promote job growth. If a business is incentivized to invest in growth (and there’s some level of consumer activity), jobs are created, the tax base grows, and the deficit decreases because of more income-tax revenue and less spending on welfare programs. It seems backwards that personal income tax cuts would cost money, but it’s true.

Reagan’s cuts decreased revenues, returning to baseline four years later (after the end of the recession). The minimal growth from 1985 to 1990 was due to cyclical economic cycles; natural growth out of a recession. It was not due to economic genius.

Perhaps we should promote spending. That would grow our economy and reduce our overall debt. Economics is a silly beast, but it is a game of “short term” solutions. If economic policy was a long-term game, we wouldn’t need a constant change in strategy. We could simply pick the best policy and stick with it. The revenue/spending chart simply illustrates that the deficit has grown so large because of a drastic decrease in revenue, not due to a spike in federal spending.

I think we agree entirely on the immigration front. A comprehensive approach to the issue is vital to long-term stability.

guy faulkes said...

Jack, again, I must disagree. Tax cuts to personal income certainly increase jobs and the economy.If the government does not steal my money in taxes for discretionary things it wants, then I can save my money, invest my money, or spend it on discretionary things I want.

If I save my money, sooner or later I will use it for one of the other purposes. If I invest it, I am directly creating jobs buy using business goods and services. If I spend it on personal items I want, it creates need for more such items and services that have to be produced. The other people spending their money does the same for the goods and services I produce. This comprises a cycle that is not what occurs when the government spends my tax money. The government does not produce anything, so there is no cycle to turn the money over again. Many if not most government expenditures are one time wastes of money.

When you cut taxes, you do promote spending. That is the entire point.

NewGuy said...

We don't have a revenue problem. We have a spending problem.

Capital always flows to where it can be most efficiently utilized. And people DO move for tax reasons. Look at the number of people who have left NYC, or California and moved to lower tax (or no tax) states. EBAY is just the latest of many California companies who are leaving because of California's high tax anti-business environment.

Cities who imposed income taxes - such as Philadelphia and New York - have learned that the higher earners move (with their income) OUT of the city limits and away from the city taxing authorities.

The lower income people - which include all of those on welfare, subsidized housing, etc. - remain in the city. The result is a smaller group of contributors are subsidizing an increasing number of the beneficiaries of subsidies.

Raising taxes will reduce the deficit ONLY if taxpayers don't adjust their behavior as a matter of self interest.

Blogger said...

Democrats all over the country are running from the Pelosi-Obama agenda as fast as possible. You have to wonder about a candidate who is running on the Pelosi-Obama agenda in one of the most conservative districts in America.

Makes one wonder.

Honest Debate said...

"Tax cuts cost money because of simple arithmetic. If, in your personal budget, you increase your spending and take a pay cut at the same time, your personal deficit will increase." Jack

Are you equating a pay cut to a tax cut? I don't get it. A tax cut would be more like your rent being lowered. Your needs haven't changed, your pay is the same but your burden is lighter. Your landlord (government) may not make as much but he did not spend a dime more than he ever has. It cost him nothing. In fact by lowering the rent on all the houses he owns he was able to rent some of the empty ones and maybe makes more money. It would be wise of him to lower rent in this market. On top of that he quit smoking crack (reckless spending) and is leaner and more fit. It's all good.

I would also endorse Guy Faulkes' comments.

Honest Debate said...

Jack, you wrote: "To create jobs, we need to incentivize business and promote consumer activity."

The best way to do both is for government to get out of the way. Demand already exist and should not be artificially influenced by government. All that is needed is to identify the demand and supply it.

I don't know where you got the numbers to suggest there wasn't much revenue gain from Reagan's tax cuts and to the extent there were it was cyclical. I didn't say he was (or wasn't) a genius. It doesn't take a genius to know a 70% tax rate strangles an economy. I will research and revisit the numbers with a skeptical eye but I don't think I'm wrong. I'll get back.

Honest Debate said...

Blogger,

I don't think it's working for him.

Honest Debate said...

"Raising taxes will reduce the deficit ONLY if taxpayers don't adjust their behavior as a matter of self interest." -New Guy

And if a frog had wings...

Good point.

Liberal POV said...

Guy and misinformed Conservative

"The government does not produce anything"

Except TVA, Interstate Hwy System, Space Program, to name a few.

Sarkazein said...

"The government does not produce anything"

Except TVA, Interstate Hwy System, Space Program, to name a few.-POV


The NEW meaning of produce.

Nobody said...

"The business analogy doesn’t fit. Government works differently than that. If you drop retail prices, you can attract new customers and grow your base. If you drop income taxes, you don’t attract new residents."

This doesn't quite work. Dropping taxes often leads to economic growth, moving the unemployed (who do not pay taxes and normally receive benefits) into the job market, where they will become tax payers no longer receiving benefits. The revenue stream is reversed, leading to greater revenues for the government. There is no need for workers to move here from other countries -- we just need to move the 10% unemployed into jobs. The major problem with using tax credits (read, give aways) to boost consumer spending to boost the economy is that eventually, as we are now seeing, the gov't spending becomes a concern, gov't cuts back and the source of the consumer demand dries up. This is what happened in the recession of 1937-9, when FDR tried to curtail deficits and triggered a recession many people felt was as severe or worse than 1929-1932. Bottom line, higher taxes crowd out private investment, crowding out private sector job growth. It is private sector job growth that must be focused on, since government is dependent on taxes taken from the private sector to pay the wages of government employees.

Nobody said...

"Raising taxes will reduce the deficit ONLY if taxpayers don't adjust their behavior as a matter of self interest."

And I agree with HD -- good point. When I was in econ many moons ago, the professor made the point that people will act in their own self-interest and WILL respond to incentives and disincentives. Taxes do affect peoples' behaviors.

Liberal POV said...

Nobody

The trickle down Republican theroy is a huge failure.

Full 40% of Americans have 0 wealth or negitive wealth. The current income in America is in the top 20% most in the top 1%. Most of the Americans with jobs don't make a wage high enough to buy lifes basics, housing, food, Utilities, transportion, Health care, education for children much less pay federal income tax but they do pay Social Security, Medicare, sales Tax, car tags, property tax and gasoline tax.

One of you do a budget for a working family of four with two parents working at 8.50 per hour far above what Republican want as a minium wage. Then do one for a single parennt home.

http://www.businessinsider.com/15-charts-about-wealth-and-inequality-in-america-2010-4#half-of-america-has-25-of-the-wealth-2

Reality is not something Republicans are good at.

Jack said...

“If I save my money, sooner or later I will use it for one of the other purposes.”
--That’s exactly the problem. Spending “sooner or later” does not stimulate the economy now. Business needs some level of consumer activity before they start taking expansion risks. That’s exactly my point about the tax cuts, the upper brackets do not spend.

“If I invest it, I am directly creating jobs buy using business goods and services.”
--Not really. Let’s say you invest by buying stock in GM. GM gets that money, and sits on it, waiting for a more opportune time to spend it. Because there is no consumer activity, businesses will not take expansion risks. That’s exactly my point about the tax cuts, the upper brackets do not spend.

“EBAY is just the latest of many California companies who are leaving because of California's high tax anti-business environment.”
--Alright, I don’t want to say this again....we are not discussing corporate taxes. We are discussing personal income taxes. Please do not confuse the two. They are two VERY different issues with two VERY different effects.

“Are you equating a pay cut to a tax cut? I don't get it.”
--I was comparing the federal budget to a personal budget. Taxes are the government’s “paycheck”. If you think about it on a smaller scale, if you had a smaller paycheck, but your expenses kept growing, the difference between the two (spending and income, i.e.: a deficit) would grow larger. Tax cuts create a smaller “paycheck” for government. That’s how it increases the deficit.

“I don't know where you got the numbers to suggest there wasn't much revenue gain from Reagan's tax cuts and to the extent there were it was cyclical.”
--The numbers come from the Congressional Budget Office, the Office of Management and Budget, the Internal Revenue Service, and a couple of articles (not editorials) from the New York Times. On the surface, there was a revenue gain. But if you adjust for inflation, gains did not occur until 1986. I can’t explain it as concisely as I would like, so I will just quote Dr. Paul Krugman (Nobel Prize-winning Economist, 2008). “Reagan’s economic policy was not a refutation but rather a confirmation of Keynesian economics: the expansion was primarily a recovery from the 1982 recession, which was created by the textbook Keynesian monetary policy of Volcker, not the tax policy of Reagan. At the start of the Reagan administration, inflation was high. The textbook Keynesian prescription for high inflation is high interest rates (contractionary monetary policy), designed to create a sustained period of high unemployment to break the price/wage spiral. Volcker did precisely this, creating the 1982 recession, then lowered interest rates once inflation was under control, resulting in economic growth and the unemployment rate coming down gradually. There is nothing unusual about the economy under Reagan – because unemployment was reducing from a high peak, it is entirely consistent with Keynesian economics for the economy to grow as employment increases while inflation remains low – the expansion was a cyclical recovery, but did not feature an increase in the structural rate of growth as its supply-side proponents argued.”

“When I was in econ many moons ago, the professor made the point that people will act in their own self-interest and WILL respond to incentives and disincentives. Taxes do affect peoples' behaviors.”
--The theory of rational choice does apply on the microeconomic level. However, it loses traction on a macro level. The argument is pertinent if we were discussing city or county taxes. But it doesn’t apply to federal taxes and national consumer behavior.

“Tax cuts to personal income certainly increase jobs and the economy.”
--How? I have been kind enough to provide research, facts and numbers, and economic analysis from industry experts. I expect the same if one is to posit an opposing opinion. I will no longer respond to personal thoughts, feelings, and rantings overheard from Auntie Deb at the last family dinner. 


NewGuy said...

Jack said : "--The theory of rational choice does apply on the microeconomic level. However, it loses traction on a macro level. The argument is pertinent if we were discussing city or county taxes. But it doesn’t apply to federal taxes and national consumer behavior.

Jack, if that were true, then we should tax at the 100% level. If people continue to work and earn and invest at the same level as before, then your point would be proven.

It isn't always a matter of relocating to avoid taxes. Although their are certainly some who will do that. It is more a question of what one does with ones money. If my income is taxed at confiscatory levels, I have less incentive to earn that income and certainly less incentive to invest it.

Money invested in corporate bonds, savings accounts, etc provide a source of funds for businesses to borrow in order to expand. Yes, of course you are right in that a demand for their services must also exist for the business to grow....

With reference to your GM example. For the most part, investors are buying stock from each other because they think the value of their stock will grow. The money invested does not go to (in your example) GM unless it is a new offering by GM which would not occur unless GM was raising money for a specific purpose....expansion or capital investment being the most common.

It's a little like hunting crows. You may see 100 crows in the cornfield and think you can shoot all 100 of them. Of course you probably could if they would stand still.

My bet is that you will find MOST of them will leave when the shooting starts.

Honest Debate said...

Jack,

Here are the OMB numbers. It looks to me that revenues began to increase at the end of 1982 and leveled off around 1989 before climbing again about 1992. That tells me tax cuts did not cost the government. I maintain they are responsible for the increased revenue but I can't prove it. The chart does not go back far enough to analyze the effects of Kennedy's tax cuts but the Bush tax cuts show a stark increase. It's very easy to see the bursting of the dot com bubble in 2000, one year before Bush took office and nearly 2 years before the tax cuts. Before that, the effects of the dot com run are also plain to see and I believe the increased revenue coupled with the fiscal responsibility provided by the "Contract with America", which was supported by a very savvy President Clinton, created the perfect storm for the fabulous economy of the 90's. It's too bad the dot com part of the equation was just a bubble.

I'll throw you this bone: At the time, I predicted Clinton raising the top rate from 30% to 39% would be a disaster and it wasn't. I am still reluctant to credit that over the dramatically increased tax base for the success. The difference between then and now is the economy was stable and not in free fall as it is now.

Bush's first tax cuts were made law 3 months before the annihilation of the financial universe on 9/11. A year later the dramatic fall turned around. As the effects of the first tax cuts were kicking in a second round was passed in 2003 and just look at the spike. The tax cuts DID NOT cost the government they saved it.

Thanks for clearing up the pay cut thing, I interpreted you wrong. I still don't like the analogy and concur with the other commenters who say people adjust. And it's not just corporations. Many, many, many people have fled New York for Florida or Texas to escape taxes. The Millionaire tax was a complete failure in NY.

Speaking of complete failures, Obama has added $3 trillion to the debt in just 2 years, the economy is still in the dumps (worse even) and some like Paul Krugman are suggesting we spend more.

Finally, and this may get dicey, I honestly mean no disrespect but I have to address Paul Krugman.
The man is a blinded partisan. I have no respect at all for him. I can give you example after example where he has directly contradicted himself depending on which party is in charge. As for his Nobel prize, I have even less regard for that organization. They gave the prize to Jimmy Carter purely to spite Bush and admitted so. They gave the prize to Algore whose movie was a complete fraud and cannot be shown in England in public schools without the disclaimer that the information is false. That's by court order. He purposely misrepresented the C02 data in his hideous graph. Obama won the Nobel for... uh... er... who the hell knows, maybe expanding the war in Afghanistan? The Nobel means nothing. Paul Krugman's opinion means nothing, I'll stick with Art Laffer, Milton Freedman, Walter Williams and scores of other more qualified economist. Here's the dicey part. It's my opinion, if you are looking to Krugman for advise or the Nobel Committee for validation then you really should look elsewhere or risk loosing what credibility you have. You seem smart and fair minded, don't be influenced by partisan fools.

guy faulkes said...

So, Jack, you are against saving money to invest or purchase goods without incurring debt. You perceive this to be bad for the economy. An interesting position. Are you connected with the lending industry that was bailed out?

Honest Debate said...

Guy,

That's exactly the point I was trying to make to Jack when I said his link addressed short term solutions but hurt in the long run. To be fair, Jack isn't the only one making that point and indeed there may be some validity in the short term fix but what a terrible idea it is. If you had to give one broad summary of the trouble we're in it's the lack of fiscal responsibility. Living within our means, whether it's an individual, family, business or country is only a start. Spend less than you make, the bigger the gap between the two the better. Saving and investing wisely is a good thing. We're being told spend, don't save... for the good of the country. It's immoral.

Liberal POV said...

HD

"If you had to give one broad summary of the trouble we're in it's the lack of fiscal responsibility. " You do mean the wealthest Americans don't you?

You have two wars the conservatives wanted but the wealthiest Americans who have the only money there is in America don't want to pay for or send their children to these wars fought by low income Democrats for the most part.

Honest Debate said...

"You do mean the wealthest Americans don't you?" -LiberalPOV

No, everybody.

Liberal POV said...

HD

Make me a budget for the working poor who have no Art Pope Family to fund the NC political process in their favor, No lobbyist, no attorneys.

The working poor do pay sales tax, Social Security, Medicare, Gasoline tax and property tax.

The working poor pay a higher percent of their total income in taxes than the wealthest Americans.

The working poor supports the American economy with very low wages which increases profit for the top 2%.

Who lacks of fiscal responsibility?

guy faulkes said...

Liberalproverbs18:2, how about posting your budget? Maybe we can help you determine how to live within it. We cannot do this until we know the amount of welfare and food stamps you receive and what items such as I Pods you own that you do not HAVE to have. I know this does not relate to the WORKING poor that share our disdain for those of you needlessly taking advantage of the safety net that should be used just for those that deserve it, but you fraudulent entitlement babies should live withing a budget also.

Anonymous said...

"Who lacks of fiscal responsibility?"

The left. $3 Trillion of debt in 19 months, 10% unemployment, a devalued dollar on verge of collapse and attacks on American families.

"The working poor pay a higher percent of their total income in taxes than the wealthest Americans."

Percentages do not tell who pays the most in taxes, NUMBERS do....

Top 1% of wage earners, you know, people who WORK, pay 39% of all income taxes.

The top 25% of wage earners pay 86% of all income taxes.

50% of US wage earners, the lowest income workers, PAY NO INCOME TAX.

Someone making 80K a year pays more in income tax alone than the "poor" pay in all other taxes.

AND they ALSO pay the other taxes you listed.

Grow up and learn math Cracker lpov. Class warfare is for Marxists and Morons.

Wolf's Head said...

And by the way, who CONSUMES those taxes in benefits? The "poor".

How much does the 50% of wage earners get in income distribution from the Marxist gov't? Practically NOTHING.

From a cost/benefit analysis the "poor" are making out like bandits at the expense of working families.

And the "rich"? They have the "joy" of funding their own destruction by the left.

So who are the Parasite Class now?

Liberal POV said...

Wolf and Misinformed Conservatives

"From a cost/benefit analysis the "poor" are making out like bandits at the expense of working families. "

Most of America's adult poor work but the fact is most of Americas poor are children.

What you think you know just ain't so.

"50% of US wage earners, the lowest income workers, PAY NO INCOME TAX."

Think about the above.. That's problem we need to fix and its because on the Reagan era and trickle down economic is a failure.

All adult Americans of working age need jobs that pay a living wage to rasie their families and pay taxes after life' basic are met.

Liberal POV said...

Misinformed Conservatives and Tea Party Revolutionaries on Medicare Scooters

I see no budgets for the working poor or were the Tea Party would cut spending enough to make a 3% difference in the total US budget?

Silly misinformed people have taken power and turned back civilization before, look at Iran the religous nuts got control of the government there.
What time is the beck history lesson today?

The Tea Party has no plans, No vision, and no understanding of the world.

guy faulkes said...

Where is your rebuttal, Liberalproverbs18:2? Your La La La La La chants are boring.

Jack said...

Guy,

“So, Jack, you are against saving money to invest or purchase goods without incurring debt.”
--We need consumer activity to stimulate the economy. I’m not saying that you should cash in your 401(k) and buy 37 TVs, 2 convertibles, and mint-condition collector beanie baby. I’m just making a point that businesses will not make any significant moves until consumer activity increases.

--There’s also the idea of federal deficit spending as a positive move. It’s a contentious idea and I’m not sure I’m completely onboard, although I see the main point. Basically, the federal government can borrow money at a ridiculously low rate (~1%). Right now, materials and labor costs for infrastructure are also very low. We could build a new bridge right now for a very low price. Or, we could leave the old bridge there. That old bridge will need to be replaced in, say, 10yrs. The costs will be much higher in 10yrs, so will the financing rates. So that bridge will cost two or three times more. The argument is delaying needed infrastructure improvement is the same as incurring monetary debt. Again, I’m still on the fence on this one, but thought I’d throw it out there.

HD,

Paul Krugman is liberal. Alright, really liberal. But he makes some good points here and there, and backs them up with research....and really colorful graphs (joke). I still respect the Nobel Prize although I understand your trepidations. I don’t agree with Obama’s Peace Prize.....he didn’t really do anything, and still hasn’t for global peace. The Al Gore discussion is for another post, so I’ll let that slide.

But, if you get to quote the Heritage Foundation, I get to quote Paul Krugman.

PS: Do I get points for pulling-off a successful beanie baby reference?

Jack said...

HD,

I jest, but I have to point this out......
You called Krugman a "partisan fool", then listed two economists who have been irrelevant since the Reagan administration (one of whom has been dead for 5 years). And listed Walter Williams, a highly partisan Libertarian who has some VERY interesting views.

No malice, just fighting partisan with partisan.

Honest Debate said...

Jack,

Don't worry about the malice thing and be as partisan as you like.

I think partisanism (is that a word?) is fine. My only problem is when it trumps truth. That's my point about Krugman. I don't trust what he says because I know from experience (I've followed him closely) that his partisanism trumps his truth. He's obviously got some smarts but I believe it's foolish to let ones ideology play too big a role in analysis.

The numbers on the Heritage Foundation link are from the OMB. Look at the bottom of the graph. Are you accusing Heritage of: a) claiming the numbers are from OMB when they're not, b) fudging the numbers, or c) both? Do you think Heritage puts ideology over truth? I don't but I'm not just saying that, I've seen no evidence of it. If you have some, I'm open.

Here's the OMB page with the historical tables. If you want to cipher through them. You said your numbers were in part from the OMB, which table did you look at? Do you want to discuss the difference between the OMB and the CBO and the partisan influences of each? We can do all of that but the numbers are the numbers and this is how we've always measured them.

I would argue that Art Laffer and Milton Freedman are as relevent today as ever. Walter Williams is indeed very partisan but, as you said, towards Libertarian views which do not agree at all with Republican views. Again, that's fine if ideology doesn't trump the truth. I cannot point to anything Williams has said that makes me think that's true. He's very consistent, Krugman is not.

How about CATO, do you trust them?

Jack said...

Table 1.3—Summary of Receipts, Outlays, and Surpluses or Deficits (-) in Current Dollars, Constant (FY 2005) Dollars, and as Percentages of GDP: 1940–2015

Jack said...

I don’t like the Heritage Foundation, I find them too partisan, but pretending they're not. I do like the CATO Institute, but only when their papers are backed-up by more non-partisan sources. I recently cited a CATO paper, but the position was also backed by the Joint Economic Committee of the U.S. Congress. Anyone can lie with statistics, it’s insanely easy.

As for economists, they’re like lawyers. You could ask 10 economists the same question and get 10 different answers. It’s (relatively) easy to analyze past economic experiments, but impossible to predict future reactions. There are too many variables for which to account. If there was one economic concept or one methodology that worked in every situation, we’d all be billionaires and Lib would be calling us oppressed.

Honest Debate said...

Jack,

Look at the spreadsheet in Table 1.3 from OMB. It looks to me that the column "Receipts" in "In Constant (FY2005) Dollars" corresponds with the graph (Total Revenue line) from Heritage if you convert the thousands of billions to trillions. The Heritage graph is what it says it is, the OMB numbers. Heritage is partisan and that's fine as long as they don't let it trump truth.

The numbers support my premise that tax cuts bring more revenue. Being generous, I'll give you the fact there could be some other reason to explain the correlation my evidence (from the accurate Heritage representation of OMB numbers) supports but I don't know of one.

The numbers do not support the idea that tax cuts "cost" money. That's your premise. You have not given evidence (or even a correlation) to support your premise... unless you consider Paul Krugman's opinion as evidence.

I'll get to him next.

Honest Debate said...

Here's Paul Krugman fretting about Bush's deficit in 2003 when it was $377 billion and 3.4%of GDP:

"... I'm terrified about what will happen to interest rates once financial markets wake up to the implications of skyrocketing budget deficits."

and

"If you take into account -- as the C.B.O. cannot -- the effects of likely changes in the alternative minimum tax, include realistic estimates of future spending and allow for the cost of war and reconstruction, it's clear that the 10-year deficit will be at least $3 trillion."

Here he is not fretting about Obama in February after a 2009 $1.4 trillion deficit (It's now $3 trillion over the first 2 years) that was 9.9% of GDP:

"These days it’s hard to pick up a newspaper or turn on a news program without encountering stern warnings about the federal budget deficit. The deficit threatens economic recovery, we’re told; it puts American economic stability at risk; it will undermine our influence in the world. These claims generally aren’t stated as opinions, as views held by some analysts but disputed by others. Instead, they’re reported as if they were facts, plain and simple.

Yet they aren’t facts."

Need I elaborate? Find anything comparable from Heritage and I'll eat my hat.

Honest Debate said...

Just look at the headlines Jack. In 2003 it's a "Fiscal Train Wreck" and in 2010 with the the deficit QUADRUPLED he calls any worry "Fiscal Scare Tactics".

Which is it? Depends on the party in charge according to Krugman.

Jack said...

I’ll concede the point on Krugman. And I’ll refrain from citing him unless backed by other, less biased sources. I agree with the 2003 Krugman, a large deficit is a bad thing. My problem is with the reason behind the deficit. Certain sides try to blame it on outrageously extravagant spending by the federal government, but that hasn’t happened. Revenues are to blame.

I’m not sure what numbers on the OMB table you’re looking at. Here are the ones I see: Receipts in Constant Dollars:

1981 - $1.25 Trillion
1982 - $1.20T
1983 - $1.11T
1984 - $1.17T
1985 - $1.25T

That’s a decrease during the recession (late 1981-early 1983).

As for the Heritage Foundation, here are some critiques:
Critique of Education Policy
Criticism from the United Nations, US Liaison Office
Critique of Heritage's Economic Analysis

Honest Debate said...

Jack,

I must be missing something. Yes, we are looking at the same column and it corresponds with the Heritage graph. The graph line goes up and down every time the OMB numbers do. 1981 looks like $1.25 trillion to me on the graph.

I wrote earlier: "It looks to me that revenues began to increase at the end of 1982 and leveled off around 1989 before climbing again about 1992".

Isn't that what the numbers say? I said "end of 82" OMB say's "83" is the low point. The Reagan tax cuts were in 1981 and 1986. Revenue increased the whole time and then some. I don't know how the rate changes were phased in or even if they were but revenue increased. How could it be said the tax cut's cost money?

It's even more dramatic with the Bush tax cuts.

I can't readily find the quote but you wrote something to the effect of the debt is not because of excessive spending but a result of loss of revenue due to a shrinking GDP. Did I get you right? I am saying the spending is the reason the GDP is shrinking. I am also saying the reverse is true. Revenue increases as the GDP grows. Further, taxation does not let the GDP to grow. Tax cuts do. More taxpayers paying less taxes.

I glanced at the Heritage critiques. I get peoples problem with their sophisticated delivery system especially when it's opinions of the implications of their research emailed to a million computers. I don't want to get into all that.

By rejecting the OMB numbers just because Heritage cited them (with no opinion just a graph), you made an entirely different accusation. You implied the numbers were purposely misrepresented in a dastardly manner. Didn't you? If not, why wasn't "Source: White House Office of Management and Budget" good enough for you?

That's more than a difference of opinion.

Jack said...

I'm not rejecting Heritage's graph, just their analysis. The increases in revenue after 1985 (or so) were due to cyclical economic growth coming out of recession. The tax cuts DURING the recession decreased revenue.

My problem with Heritage is their analysis, as they often times overlook opposing arguments/findings when presenting their "research".