The Fiscal Cliff talks

[TPS]

 

 

What do you mean? Everything in TPS world is in a vacuum. I mean if Clinton had a surplus and he raised individual income tax rates, then that would surely mean that because of the higher rates it would of had to have led to the surplus. Never mind the fact that spending relative to GDP was down, never mind the fact that we were fully employed, going through a massive and historic stock market run, and that corporate profits and tax receipts were soaring. Nooooo, it was all because of the income tax rates.

man, you need to improve your reading comprehension. I never said the rates caused the surplus, i said growth, and the Fed not constraining that growth, was the main cause. You make my point above.

That said, for a given level of GDP, the tax rates under Clinton raise more revenue than the rates under Bush. YOU posted the CBO's new estimates. How much revenue are they forecasting from the increase in the top rate?

 

GG, Al Gore caused the strong growth of course.

 

 

 

Because the majority of this money has been sitting on various bank ledgers, and has not found it's way into the general economy yet.

 

This is not in any way an argument against the idea that it won't make it into the economy, causing a tremendous amount of inflation, over and above what we've already seen. And despite your assertions otherwise, we have seen inflation of around 9%/yr for the past four years. We've covered this already.

It is sitting as an electronic credit on the Fed's balance sheet. It is not something physical that once created, can't be destroyed. The Fed has the power to destroy money as well as create money. Rising Inflation will mainly depend on the growth of the economy relative to unemployed resources.

 

And what's this about a government conspiracy to lie about inflation again?

[Magox]

man, you need to improve your reading comprehension. I never said the rates caused the surplus, i said growth, and the Fed not constraining that growth, was the main cause. You make my point above.

That said, for a given level of GDP, the tax rates under Clinton raise more revenue than the rates under Bush. YOU posted the CBO's new estimates. How much revenue are they forecasting from the increase in the top rate?

 

GG, Al Gore caused the strong growth of course.

 

You said, the higher rates coupled with growth. Let's not try to pretend you didn't imply that.

[TPS]

 

 

You said, the higher rates coupled with growth. Let's not try to pretend you didn't imply that.

Yes, higher rates generate more revenue than lower rates, just as the CBO estimates. Why do you think the CBO estimated higher revenues had we gone over the fiscal cliff? Because the rates would've gone back to the Clinton era rates. That would initially slow down growth, but as the economy recovered after that, more revenues would be generated under those higher rates. It's not real difficult stuff.

 

If I were to put the factors in order:

1. growth

2. lower spending

3. tax rates

4. higher cap gains revenues (over and above what's taken in on average)

 

 

[Magox]

Yes, higher rates generate more revenue than lower rates, just as the CBO estimates. Why do you think the CBO estimated higher revenues had we gone over the fiscal cliff? Because the rates would've gone back to the Clinton era rates. That would initially slow down growth, but as the economy recovered after that, more revenues would be generated under those higher rates. It's not real difficult stuff.

 

If I were to put the factors in order:

1. growth

2. lower spending

3. tax rates

4. higher cap gains revenues (over and above what's taken in on average)

 

The argument wasn't whether or not there would be more revenues as a result of the Clinton era rates, but rather you're argument that higher rates with full employment was the main reason for the Clinton Surplus. You made no mention of the tech bubble stock market rally, capital gains rates, corporate profits, Clinton era reduction of defense spending. You were trying to make the point that because of the higher rates, we got the surplus. Don't try to pretend that is what you weren't trying to do.

[TPS]

 

 

The argument wasn't whether or not there would be more revenues as a result of the Clinton era rates, but rather you're argument that higher rates with full employment was the main reason for the Clinton Surplus. You made no mention of the tech bubble stock market rally, capital gains rates, corporate profits, Clinton era reduction of defense spending. You were trying to make the point that because of the higher rates, we got the surplus. Don't try to pretend that is what you weren't trying to do.

Go back to all of the arguments GG and I had, which is where all of that was discussed ad nauseum. You won't find any discussion about tax rates there other than the cap gains rate--we were debating whether growth and income tax revenues were more important than the cap gains revenues.

 

My comment in this thread was related to the fact that if we went over the fiscal cliff then we would go back to the same tax rates that we had during Clinton's term, when there were surpluses. That's what I said. So this argument gets caricatured by the right. That said, I stand by the fact that if all rates went back to the Clinton rates, as would've happened with the cliff, then going forward more revenues would be generated than with the current agreement, which kept all rates at the Bush rates except the top.

REally, it's not that difficult, but you guys want to paint me into a corner. Fine.

[Magox]

You should have used an exclamation mark after your usage of "Fine"

[3rdnlng]

Damn, how hard is it for people to believe that lower tax rates spur the economy and that growth along with the accompanying increase in employment, work week etc. brings in more money in taxes? Yes, there can be a period of time during robust growth where tax rates could be raised and more taxes would be collected. It's an inadvisable way to keep the economy going though. Higher tax rates always put a damper on the economy in the long run.

[Magox]

Damn, how hard is it for people to believe that lower tax rates spur the economy and that growth along with the accompanying increase in employment, work week etc. brings in more money in taxes? Yes, there can be a period of time during robust growth where tax rates could be raised and more taxes would be collected. It's an inadvisable way to keep the economy going though. Higher tax rates always put a damper on the economy in the long run.

Everything is subject to the Laffer Curver. So it's difficult to determine what is the optimal rate. It's not a static figure, what may be the ideal rate for one period in time may not be for another.

[3rdnlng]

Everything is subject to the Laffer Curver. So it's difficult to determine what is the optimal rate. It's not a static figure, what may be the ideal rate for one period in time may not be for another.

 

What is your definition of optimal here? The most money for the government? Knowing you, we probably agree here but the optimal rate has to have a reason behind it.

[Magox]

What is your definition of optimal here? The most money for the government? Knowing you, we probably agree here but the optimal rate has to have a reason behind it.

Oh I don't know. That is above my pay grade.

[GG]

Go back to all of the arguments GG and I had, which is where all of that was discussed ad nauseum. You won't find any discussion about tax rates there other than the cap gains rate--we were debating whether growth and income tax revenues were more important than the cap gains revenues.

 

My comment in this thread was related to the fact that if we went over the fiscal cliff then we would go back to the same tax rates that we had during Clinton's term, when there were surpluses. That's what I said. So this argument gets caricatured by the right. That said, I stand by the fact that if all rates went back to the Clinton rates, as would've happened with the cliff, then going forward more revenues would be generated than with the current agreement, which kept all rates at the Bush rates except the top.

REally, it's not that difficult, but you guys want to paint me into a corner. Fine.

 

That's a mighty assumption that the economy would resume growth following the fiscal cliff, current regulatory regime and general anti-rich guy sentiment. Maybe if Obama wags his finger one more time, the risk takers will get off their collective asses.

[3rdnlng]

That's a mighty assumption that the economy would resume growth following the fiscal cliff, current regulatory regime and general anti-rich guy sentiment. Maybe if Obama wags his finger one more time, the risk takers will get off their collective asses.

 

Didn't you hear? Obama is going to mandate a growing economy via executive order.

[TPS]

 

 

That's a mighty assumption that the economy would resume growth following the fiscal cliff, current regulatory regime and general anti-rich guy sentiment. Maybe if Obama wags his finger one more time, the risk takers will get off their collective asses.

I made my prediction earlier in this thread--growth will be slowed by the tax hikes in the first half, but will should be 2.5-3% in the second half. In normal conditions (meaning no huge debt over hang), the economy chugs along despite various tax rates and regulations.

[Magox]

In a fully employed economy, 2.5-3% is acceptable, in an economy with real unemployment through the roof, 2.5-3% is totally unacceptable.

[TPS]

In a fully employed economy, 2.5-3% is acceptable, in an economy with real unemployment through the roof, 2.5-3% is totally unacceptable.

Yes, but it is an improvement, which is what I'm predicting. I'm not saying it's great, just better. When we do reach that point, the real growth determinants will be lower than the historical average because of the decline in the growth rate of the labor force.

[Magox]

As long as we continue economic policies centered around social justice (injustices), the economy will never come close to reaching it's potential.

[3rdnlng]

Yes, but it is an improvement, which is what I'm predicting. I'm not saying it's great, just better. When we do reach that point, the real growth determinants will be lower than the historical average because of the decline in the growth rate of the labor force.

 

Because of those that have given up looking for a job?

[TakeYouToTasker]

The government intentionally, and systemically, manipulates the inflation rates for several reasons; the chief among them being social security and COLAs.

[TPS]

 

 

Because of those that have given up looking for a job?

No, the changing demographics--the greater numbers of boomers retiring relative to the number entering the labor force for the first time. Now, about that other issue...

 

You would agree that the SS surplus is made up of IOUs called t-bonds, yes? Like any government security, it represents the government's promise to pay on those obligations. Where will the funds come from to meet those obligations?

[unbillievable]

No, the changing demographics--the greater numbers of boomers retiring relative to the number entering the labor force for the first time. Now, about that other issue...

 

You would agree that the SS surplus is made up of IOUs called t-bonds, yes? Like any government security, it represents the government's promise to pay on those obligations. Where will the funds come from to meet those obligations?

Rich People and Illegal Immigrants.