Bush's budgetn

[meazza]

I'm a coward for refusing to do your homework? You don't happen to live in NJ?

 

Why are they all from Jersey?

[GG]

Why are they all from Jersey?

 

It's the "water"

 

 

 

(And I fear for my son)

[molson_golden2002]

I'm a coward for refusing to do your homework? You don't happen to live in NJ?

My homework? LOL, ya whatever, nice dodge again. Hell, you don't even come up with your own insults. You have to rely on that idiot finger boy for material.

 

Have a nice day boys

[Bungee Jumper]

My homework? LOL, ya whatever, nice dodge again. Hell, you don't even come up with your own insults. You have to rely on that idiot finger boy for material.

 

Have a nice day boys

 

 

 

The voices in my head make more sense than you.

[TPS]

I thought it was more fun to believe that taking money away from the top quintile is a far more effective way to grow the GDP.

 

To a certain extent in the short run, redistribution from those with low marginal propensities to consume to those with high MPCs will increase consumption, and therefore GDP (so it's possible to do this if your goal is consumption-led growth, but not recommended).

 

I think the evidence is pretty clear, despite what government has done over the past 50 years, real GDP growth has averaged about 3%. The actions government has taken tend to redistribute from one group to another, with very little impact on the real growth rate.

[GG]

I think the evidence is pretty clear, despite what government has done over the past 50 years, real GDP growth has averaged about 3%. The actions government has taken tend to redistribute from one group to another, with very little impact on the real growth rate.

 

I wonder if that is because when times are good, the catcalls to raise taxes increase, which leads to the resulting slowdowns?

[meazza]

 

The voices in my head make more sense than you.

 

Are they still telling you to burn things?

[TPS]

I wonder if that is because when times are good, the catcalls to raise taxes increase, which leads to the resulting slowdowns?

 

The catcalls to raise taxes usually come after the Republicans' "tax cut, borrow, and spend" policies lead to severe fiscal imbalances.

 

Bush1 was pushed from both sides of the aisle to raise taxes after the Reagan borrowing binge. And now Bush2 is being pushed toward fiscal discipline after his own profligate ways. Of course, from what little I've read about his budget, he's "raising taxes" on the "not rich enough to influence policy" group by letting the ATM slide back to its previous level.

[KD in CA]

People seem to ignore the fact that many people (via private business or corporations) become wealthy through government contracts.

 

Define "many" people. The vast majority of people who work for organizations that survive as federal government contractors are middle class average working Joes. If there is one thing the absurd levels of federal bureaucracy ensure, it's that people aren't flat out ripping off the government. Unless of course they are named in some appropriations bills by some Congress-critter.

[GG]

The catcalls to raise taxes usually come after the Republicans' "tax cut, borrow, and spend" policies lead to severe fiscal imbalances.

 

I think we've been down this road befor, and I'm still waiting to be suffocated by the budget deficits of 2002-2003.

 

Bush1 was pushed from both sides of the aisle to raise taxes after the Reagan borrowing binge. And now Bush2 is being pushed toward fiscal discipline after his own profligate ways. Of course, from what little I've read about his budget, he's "raising taxes" on the "not rich enough to influence policy" group by letting the ATM slide back to its previous level.

 

The only religion that profligate Bush got was to finally address the spending side. There's no change in the tax rhetoric.

 

I guess you don't appreciate the political move by proposing to amend the AMT for one year, so that it becomes a campaign issue in 2008 and force the Democrat(sp?) candidates to tackle the issue head on?

[TPS]

I think we've been down this road befor, and I'm still waiting to be suffocated by the budget deficits of 2002-2003.

Yes, and I thought you finally agree that tax cuts cause deficits?

 

If you eliminate the social security surplus, the impact of Bush's tax cuts and spending increases are more obvious:

2000 an on-budget surplus of +$86 bil

2001 a deficit of -$32 bil (from 911 and a slowing economy that began in 2000).

2002 a deficit of -$317 bil (First bush tax cut phased in)

2003 a deficit of -$538 bil (another phase of tax cuts)

2004 a deficit of -$568 bil (I believe the last part of the tax cut occured this year?)

2005 a deficit of -$494 bil

2006 a deficit of -$434 bil.

 

That's a total of $2.7 trillion in deficits over his first 6 years. Payroll taxes (SS surplus) have averaged about +$160 bil a year over this period (from +$163 in 2001 to +$185 in 2006), so the overall budget numbers they report, make it look much better.

 

The only religion that profligate Bush got was to finally address the spending side. There's no change in the tax rhetoric.

Huh?!? Maybe you should qualify that with non-defense spending side?

 

I guess you don't appreciate the political move by proposing to amend the AMT for one year, so that it becomes a campaign issue in 2008 and force the Democrat(sp?) candidates to tackle the issue head on?

Yes, great strategy: cut taxes (mainly for your most important constituents) and deficit spend to finance the invasion and attempted rebuilding of Iraq; throw a bone to the not-quite-rich ATM crowd; increase defense spending again and let the ATM phase back in to partially pay for it; then let whoever comes next deal with the mess you've created. Sounds like the same scenario Bush1 faced, only the threat was communism instead of terrorism.

[GG]

Yes, and I thought you finally agree that tax cuts cause deficits?

 

If you eliminate the social security surplus, the impact of Bush's tax cuts and spending increases are more obvious:

2000 an on-budget surplus of +$86 bil

2001 a deficit of -$32 bil (from 911 and a slowing economy that began in 2000).

2002 a deficit of -$317 bil (First bush tax cut phased in)

2003 a deficit of -$538 bil (another phase of tax cuts)

2004 a deficit of -$568 bil (I believe the last part of the tax cut occured this year?)

2005 a deficit of -$494 bil

2006 a deficit of -$434 bil.

 

That's a total of $2.7 trillion in deficits over his first 6 years. Payroll taxes (SS surplus) have averaged about +$160 bil a year over this period (from +$163 in 2001 to +$185 in 2006), so the overall budget numbers they report, make it look much better.

 

You take me for a molson drinker?

 

How about looking at the tax figures relative to GDP, and see the stimulative effect of the tax cuts on the economy, and that unemployment didn't follow trends of recessions past. Maybe you can't connect the dots that if unemployment stayed high, the payroll tax take would have been lower.

 

Or how about the minor inconvenience to your position that on-budget revenues as percent of GDP for the last two years have been at or above the % during the Miraculous President's first term. I thought that supply side never leads to revenue increases?

 

Granted, on-budget revenues surged in the Wonder-boy's second term, thanks to his VP's invention. But how much of that revenue increase was also fueled by the capital gains tax? I'm not sure if economists ever studied the impact that lowering rates have on revenue collections from selling discretionary capital.

 

 

Yes, great strategy: cut taxes (mainly for your most important constituents) and deficit spend to finance the invasion and attempted rebuilding of Iraq; throw a bone to the not-quite-rich ATM crowd; increase defense spending again and let the ATM phase back in to partially pay for it; then let whoever comes next deal with the mess you've created. Sounds like the same scenario Bush1 faced, only the threat was communism instead of terrorism.

 

Gee, sounds like social security reform to me.

 

But that's ok, keep changing the topic away from the fact that supply side is expansionary.

[TPS]

You take me for a molson drinker?

 

How about looking at the tax figures relative to GDP, and see the stimulative effect of the tax cuts on the economy, and that unemployment didn't follow trends of recessions past. Maybe you can't connect the dots that if unemployment stayed high, the payroll tax take would have been lower.

 

Or how about the minor inconvenience to your position that on-budget revenues as percent of GDP for the last two years have been at or above the % during the Miraculous President's first term. I thought that supply side never leads to revenue increases?

 

Granted, on-budget revenues surged in the Wonder-boy's second term, thanks to his VP's invention. But how much of that revenue increase was also fueled by the capital gains tax? I'm not sure if economists ever studied the impact that lowering rates have on revenue collections from selling discretionary capital.

Gee, sounds like social security reform to me.

 

But that's ok, keep changing the topic away from the fact that supply side is expansionary.

 

This has come full circle. Of course tax cuts are expansionary. Go back 10 years ago and read what I wrote--it's classic Keynesian theory. Tax cuts lead to deficits which are inherently expansionary. Or go back and take a look at some of my examples from last year. IF you cut tax rates, deficits increase because tax revenues fall in the years you cut rates, but after that, revenues of course increase if GDP is growing. Maybe it's too simple.

assume gdp grows 3%/year

E.g. Year 1 Gdp = 10,000 tax rate =21% --> revenues = 2,100

Year 2 cut taxes to 20%

Gdp=10,300 tax revenues = 2,060 deficit grows by 40 from decrease in revenues (much higher from Bush's spending :-)

Year 3 Gdp = 10,609 revenues = 2121.8

 

Roughly 5% tax cut takes two years of 3% gdp growth to gain back revenues. Bigger the tax cut, longer it takes to regain revenues, assuming gdp stays at long term growth rate of 3% (if I assumed the tax rate went down to 19% in year 3 much like Bush's phased in tax cuts, revenues would be 2016, again lower than year 1 and year 2).

 

For every year of the Bush tax cuts, the percentage of individual income taxes as a share of gdp fell. Oh boy, they've finally gone up the last two years. Could that also be related to the stock market rise?

 

Since you brought up Clinton (not me), he raised the top tax rate in 1993 and the share of individual income taxes as a % of gdp increased that same year, and ensuing years (even before the cap gains cut). Bush cuts tax rates and the % share decreases; Clinton raised rates and the share increases. Which one raises revenues, a tax cut or a tax increase? Please explain.

[Taro T]

This has come full circle. Of course tax cuts are expansionary. Go back 10 years ago and read what I wrote--it's classic Keynesian theory. Tax cuts lead to deficits which are inherently expansionary. Or go back and take a look at some of my examples from last year. IF you cut tax rates, deficits increase because tax revenues fall in the years you cut rates, but after that, revenues of course increase if GDP is growing. Maybe it's too simple.

assume gdp grows 3%/year

E.g. Year 1 Gdp = 10,000 tax rate =21% --> revenues = 2,100

Year 2 cut taxes to 20%

Gdp=10,300 tax revenues = 2,060 deficit grows by 40 from decrease in revenues (much higher from Bush's spending :-)

Year 3 Gdp = 10,609 revenues = 2121.8

 

Roughly 5% tax cut takes two years of 3% gdp growth to gain back revenues. Bigger the tax cut, longer it takes to regain revenues, assuming gdp stays at long term growth rate of 3% (if I assumed the tax rate went down to 19% in year 3 much like Bush's phased in tax cuts, revenues would be 2016, again lower than year 1 and year 2).

 

For every year of the Bush tax cuts, the percentage of individual income taxes as a share of gdp fell. Oh boy, they've finally gone up the last two years. Could that also be related to the stock market rise?

 

Since you brought up Clinton (not me), he raised the top tax rate in 1993 and the share of individual income taxes as a % of gdp increased that same year, and ensuing years (even before the cap gains cut). Bush cuts tax rates and the % share decreases; Clinton raised rates and the share increases. Which one raises revenues, a tax cut or a tax increase? Please explain.

That seems to be your favorite talking point and it is also the most spurious. Of course revenue from an income tax increase will go up that particular year and revenue from an income tax decrease will go down that particular year. There is no time for the tax change to alter people's behaviors.

 

Also, I have never understood why you seem to assume that GDP will always grow at 3% regardless of policy. Were that assumption valid, then your argument that tax cuts decrease forever federal receipts and tax increases increase them would be true. Fortunately, your assumption isn't valid.

 

Finally, I still don't understand why you never look at the spending side as a problem with creating the deficit.

[GG]

Finally, I still don't understand why you never look at the spending side as a problem with creating the deficit.

 

Because it would detract from his singular focus on DEFICIT. No matter how many times I say that I'm only talking about supply side impact on REVENUES and the economy in general, the response is always about the DEFICIT. It's impossible for him to acknowledge that deficits do not lead to economic expansion, but that putting more capital to use in the private sector is what leads to economic expansions. Of course that would silence the mantra that the government is the best and primary allocator of capital.

 

 

Now to answer the specific points:

 

Roughly 5% tax cut takes two years of 3% gdp growth to gain back revenues. Bigger the tax cut, longer it takes to regain revenues, assuming gdp stays at long term growth rate of 3% (if I assumed the tax rate went down to 19% in year 3 much like Bush's phased in tax cuts, revenues would be 2016, again lower than year 1 and year 2).

Except that we were not in a test-tube environment living in a hypothetical long run average GDP growth of 3%, but facing the threat of a major depression following the tech bubble and 9/11.

 

For every year of the Bush tax cuts, the percentage of individual income taxes as a share of gdp fell. Oh boy, they've finally gone up the last two years. Could that also be related to the stock market rise?

 

There you go again, the tech bubble is certainly a more valid foundation to propel the economy than a housing bubble.

 

But what difference does it make whether the revenue take is from individuals or from corporations. Don't you think that the people who make $$$$ out of deciphering the tax code will figure out the most tax advantageous way to get the returns to the shareholders? Could the rise in corporate profits be also driven by companies' desire to pay out low-tax dividends?

 

Since you brought up Clinton (not me), he raised the top tax rate in 1993 and the share of individual income taxes as a % of gdp increased that same year, and ensuing years (even before the cap gains cut). Bush cuts tax rates and the % share decreases; Clinton raised rates and the share increases. Which one raises revenues, a tax cut or a tax increase? Please explain.

 

You seem to be ignoring the tiddy that Clinton's economic policies almost got him kicked out of office after the first term, as the economy rewarded his tax plans by an almost immediate downturn. We should believe that it shouldn't matter, since you assert that the deficits drive economic growth. Yet, his move to cut capital gains taxes that added discretionary liquidity to the market is meaningless in the run up of the tech bubble.

[molson_golden2002]

It's impossible for him to acknowledge that deficits do not lead to economic expansion, but that putting more capital to use in the private sector is what leads to economic expansions.

Bzzzzt! Wrong, but thanks for playing. Redistributing income in a consumer driven economy--2/3 of our economic activity is coinsumer spending-- is not only benefiticial but extremely necessary. Money borrowed or raised from taxes--from the rich--and spent by the government does end up in the private sector anyway. It ends up in middle class consumer's hands who go out and buy things which creates jobs. That was the main lesson learned in the Great Depression that the New Deal sought to deal with. WW2 did finally deal with it on the scale necessary as the New Deal was too small in scope to fix the unequal distribution of income. But please, keep spewing your right wing ignorant talking points about how the rich are overtaxed and all that, its fun to laugh at

[TPS]

That seems to be your favorite talking point and it is also the most spurious. Of course revenue from an income tax increase will go up that particular year and revenue from an income tax decrease will go down that particular year. There is no time for the tax change to alter people's behaviors.

 

Also, I have never understood why you seem to assume that GDP will always grow at 3% regardless of policy. Were that assumption valid, then your argument that tax cuts decrease forever federal receipts and tax increases increase them would be true. Fortunately, your assumption isn't valid.

 

Finally, I still don't understand why you never look at the spending side as a problem with creating the deficit.

 

1. The supply side argument is that cutting taxes will lead to higher revenues. I've simply pointed out that each time tax rates are cut, revenues have gone down. That does not rule out the possibility of a "change in behavior" over time. However, the evidence has shown the impact to be insignificant to marginal at best. More taxes are paid when incomes rise (GDP), not when tax rates are cut. Their argument was that tax cuts would lead to higher growth rates--which leads to you next issue.

 

2. I said the average long run growth rate has been 3% for the past 50 years--of course it's cyclical. If you calculate the real average growth rates of GDP under each president's term, they are all very close to 3%. The implication is that government policies don't seem to have a huge impact on growth--which of course GG accuses me of say government causes growth.

 

3. In our last go around on this topic I looked at both sides. GG asked me to hold spending constant (or maybe a constant growth) and see what the revenue impact was. The decline in revenues from tax cuts amount to between 40-50% of the deficit as I recall. I focus on the revenue side mostly because that's what their theory focuses on.

[GG]

Bzzzzt! Wrong, but thanks for playing. Redistributing income in a consumer driven economy--2/3 of our economic activity is coinsumer spending-- is not only benefiticial but extremely necessary. Money borrowed or raised from taxes--from the rich--and spent by the government does end up in the private sector anyway. It ends up in middle class consumer's hands who go out and buy things which creates jobs. That was the main lesson learned in the Great Depression that the New Deal sought to deal with. WW2 did finally deal with it on the scale necessary as the New Deal was too small in scope to fix the unequal distribution of income. But please, keep spewing your right wing ignorant talking points about how the rich are overtaxed and all that, its fun to laugh at

 

Thank you for the confirmation that one should keep quiet to at least keep up the pretence of not being an idiot.

[TPS]

Because it would detract from his singular focus on DEFICIT. No matter how many times I say that I'm only talking about supply side impact on REVENUES and the economy in general, the response is always about the DEFICIT. It's impossible for him to acknowledge that deficits do not lead to economic expansion, but that putting more capital to use in the private sector is what leads to economic expansions. Of course that would silence the mantra that the government is the best and primary allocator of capital.

You might want to visit that site on reading comprehension.

You clearly don't remember our last go around when I did the numbers holding expenditures constant (see previous post). Also, as stated in the previous post, my point is that government policies don't influence long run growth, but it can influence short run growth.

 

 

Except that we were not in a test-tube environment living in a hypothetical long run average GDP growth of 3%, but facing the threat of a major depression following the tech bubble and 9/11.

Yes, and you again don't remember that I suggested a cut in the payroll tax as a way to stimulate the economy (see previous post about GDP being cyclical).

 

There you go again, the tech bubble is certainly a more valid foundation to propel the economy than a housing bubble.

Thank you for putting words in my mouth as usual.

 

But what difference does it make whether the revenue take is from individuals or from corporations. Don't you think that the people who make $$$$ out of deciphering the tax code will figure out the most tax advantageous way to get the returns to the shareholders? Could the rise in corporate profits be also driven by companies' desire to pay out low-tax dividends?

You seem to be ignoring the tiddy that Clinton's economic policies almost got him kicked out of office after the first term, as the economy rewarded his tax plans by an almost immediate downturn. We should believe that it shouldn't matter, since you assert that the deficits drive economic growth. Yet, his move to cut capital gains taxes that added discretionary liquidity to the market is meaningless in the run up of the tech bubble.

 

I didn't know profits were a function of "desire to pay out ... dividends"? I always thought they were a function of sales and low costs?

 

Yo MacFly, Clinton raising taxes would be contractionary fiscal policy, cutting deficits, not increasing them. Clinton followed Rubin's recommendation of fiscal discipline so that interest rates would fall, leading to capital-led growth.

 

I won't even respond to the last couple sentences. You can find my posts that contradict the words you're putting in my mouth.

[GG]

You might want to visit that site on reading comprehension.

You clearly don't remember our last go around when I did the numbers holding expenditures constant (see previous post). Also, as stated in the previous post, my point is that government policies don't influence long run growth, but it can influence short run growth.

 

You mean this post about "your" assumptions of holding the expenditures constant? (Just so I don't get accused of putting words in your mouth)

 

I didn't know profits were a function of "desire to pay out ... dividends"? I always thought they were a function of sales and low costs?

Profits are the result of a lot of things that happen outside of sales & expenses. Perhaps you should talk to an accountant who's worked on large multinational accounts about the tug of war of maximizing profits vs minimizing taxes. (I know, real world accounting is a dirty word to economists)

 

Yo MacFly, Clinton raising taxes would be contractionary fiscal policy, cutting deficits, not increasing them. Clinton followed Rubin's recommendation of fiscal discipline so that interest rates would fall, leading to capital-led growth.

 

(Can you please stay on the actual topics being discussed?) Interest rates were already low in Clinton's first term because we were coming out of the '90-91 recession. When the recovery started, Greenspan was raising rates commensurate with the pick up in the economy. Then Bill thought he was safe to raise taxes, which promptly sank GDP growth from about 4% to about 2%. I guess you don't think that it matters that his first Treasury Secretary was the academic-bred Larry Summers, while Rubin came in AFTER the near disaster of the first term.

 

 

I won't even respond to the last couple sentences. You can find my posts that contradict the words you're putting in my mouth.

 

I've seen your past posts. But it's what they don't say, speaks volumes.