NYT: Tax and spending myths and realities

Discussion in 'Politics, Religion, Social Issues' started by Thomas Veil, Apr 13, 2011.

  1. Thomas Veil macrumors 68020

    Thomas Veil

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    #1
    Heading into tonight's speech by the President, the NYT has a wonderfully clear-eyed op-ed.

    Democrats, you've just been given the message you need to drive home to the American people.
     
  2. IntelliUser macrumors 6502

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    #2
    I agree, Democrats must show some real statistics and try to make people understand.

    [​IMG]
     
  3. leekohler macrumors G5

    leekohler

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    #3
    Amazing how your posts rarely contain anything of substance.
     
  4. itcheroni macrumors 6502a

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    #4
    The article doesn't say anything about causation. During the majority of Clinton's time in office, we had a major tech bubble. The economy was so pumped up that it stayed strong despite tax increases. Bush had to deal with the consequences of the bursting of that bubble. He dealt with it by creating the housing bubble. Obama is trying to deal with this by the same traditional means. You can only pass the buck so long. The author of this article seems to be crediting taxes for these booms and busts. Although taxes can definitely have an impact on booms and busts, the author fails to make any connection between the two.
     
  5. iJohnHenry macrumors P6

    iJohnHenry

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    Lee, that chart is obviously dumbed-down for a Republican audience. :rolleyes:
     
  6. ender land macrumors 6502a

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    #6
    People give the president (or even Congress) far more credit than is due for things like this.
     
  7. IntelliUser macrumors 6502

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    Yeah I know, I don't like being serious most of the time.

    They're mostly the ones who need to be convinced so it's good.
    [​IMG]
     
  8. mcrain macrumors 68000

    mcrain

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    #8
    Look around you, and tell me how many empty buildings do you see? How many people are out of work? How many people with educations and skills are unable to find work, and thus are unable to buy the goods and services that aren't being made or provided?

    What is preventing Bob from leasing one of those buildings, setting up a business, hiring employees, and then creating products to sell?

    Money, money, money, and people with money to buy the products.

    Where is all the money? Why isn't it working its way through the economy? If every bank account over $100,000 was drained tomorrow and just given away, do you know what would happen? It would get spent on all sorts of stuff, including products, new businesses, leases, property, etc... The stagnation would end, and the economy would go crazy, and guess what would happen to all those accounts that had been drained? They would fill up again.

    What happens when you tax people who have large incomes and high value assets? The money paid the government gets used in the economy, and the people who were taxed then use their passive assets in a more active manner to generate more income to make up for what was paid in taxes. This spurs the economy even more.

    As much as economic theory can be confusing and twisted by people on all sides of the argument, what I described has actually happened. What hasn't happened? Tax cuts creating sustained growth. Tax cuts have always been followed by short term revenue loss, short term economic growth, followed by long term economic retraction, and even recession.

    (edit) Now, what happens if instead of giving the money away, you spend it on things like infrastructure, research and development, and improving education?
     
  9. dscuber9000 macrumors 6502a

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    #9
    I don't know if you guys saw The Daily Show last night, but he showed Paul Ryan's chart of how the debt will decrease over time under his budget, and then Jon Stewart showed a chart of how the debt will decrease if we do nothing but get rid of the Bush tax cuts. They looked damn near identical. :D
     
  10. ender land macrumors 6502a

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    #10
    You mean like the stimulus funds?
     
  11. IntelliUser, Apr 13, 2011
    Last edited by a moderator: Apr 13, 2011

    IntelliUser macrumors 6502

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    Aaaand here's the video:

    http://www.thedailyshow.com/watch/tue-april-12-2011/ryan-s-private-savings---path-to-prosperity

    [​IMG]

    Wonder about the factual accuracy of Stewart's graph though.
     
  12. rdowns macrumors Penryn

    rdowns

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    #12
    Despite its roots as a comedy show, you likely get more facts there than most cable news broadcasts.
     
  13. hulugu macrumors 68000

    hulugu

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    The tech bubble certainly helped, with that in mind we can see that the causal link between taxes and investment may be as inextricably linked as we once thought. Despite higher taxes, more people invested in the tech market, including a booming stock market, which fueled growth.


    And, that's actually what we should pay attention to. The Bush's micro-boom was a complete bubble that helped hide stagnating wages such that once the bubble burst we "lost" the decade. Since Clinton used tax increases and Bush tax decreases, we should be able to infer that the casual relationship between the two is tenuous at best and that lowering taxes probably does very little for the economy in the short-term than the rhetoric suggests.
     
  14. diamond.g macrumors 603

    diamond.g

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    #14
    I wish news anchors had the balls to do what he does. I just love when he finds things that a party says then contradict themselves over (example 'Obamacare' and what R Paul wants to do with it are the same thing yet neither side likes it).

    Or even things that individuals say that are contradictory.
     
  15. hulugu macrumors 68000

    hulugu

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    At the very least, when doing an interview challenge the person. Most of television news has turned into stenography and goddamned "opinions" from think-tanks.
     
  16. Thomas Veil thread starter macrumors 68020

    Thomas Veil

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    It's this unfortunate fear of being labeled as having a liberal bias. While I've seen guys like David Gregory press his guests on a non-answer or contradictory answer, ultimately he lets them off the hook and moves on to the next subject.

    I suppose the other reason is because if guys like Gregory kept badgering some of these jokers until they got a real, actual answer, they could use up an entire show just getting an answer to one single question.

    Anyway, back to the article. Out of several good points, the major one that I got out of it is that the Republicans aren't serious about the deficit unless they drop the idea that tax cuts are holy. There's no way we're gonna tackle this problem without both cuts and tax hikes.

    I don't really see this happening, though. Prying Republicans away from their precious tax cuts is gonna be like convincing the pope to convert to Judaism. I don't really worry about Obama convincing the public that tax hikes are necessary, but I do worry that the Republicans won't give a damn and would rather see the country go down the tubes than approve a tax hike. These are not the Republicans that George H. W. Bush had when he was president. These are extremists.
     
  17. itcheroni, Apr 13, 2011
    Last edited: Apr 13, 2011

    itcheroni macrumors 6502a

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    #17
    Just considering that one used tax increases and one used tax decreases doesn't prove any correlation to a good and bad economy. My point in bringing up the bubbles in Clinton's and Bush's terms is that Clinton is credited with having a "good" economy. If you judge based purely on government statistics, then you can claim that it was a good economy, but that is the problem. I don't want a President to create a bubble to make himself look good only to have that bubble bring down the economy for the next guy.

    And one major difference between Clinton and Bush is one had a balanced budget and the other had the biggest deficits up until Obama. Why not point this out when talking about the "good" economy during the Clinton years and the "bad" economy during the Bush years? Maybe the factor isn't taxes but a balanced budget?


    Mcrain, you've just illustrated a very important difference in economic perspectives. You, and many others, believe that spending and lack of confidence is what is holding the economy back (Correct me if I'm wrong because some members on here get upset if I try to summarize their arguments). IMO, this is one of the biggest mistakes in economics textbooks today, along side the deflation myth. What you just described is pretty close to Zimbabwe and I don't see them as an economic utopia.
     
  18. hulugu macrumors 68000

    hulugu

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    I agree, but Congressional Republicans bang on this drum regardless of its reality.

    Sure, I agree, but the tech bubble created real companies and investments that continue to pay real dividends. The housing bubble was, except for the hundreds of sprawling empty subdivisions, one driven entirely by paper profits. For example, median real wages increased during Clinton's era, but declined during Bush's.

    Well, the economic boom started before the budget was balanced, but nearly ended just as the budget was balanced, so at best, it might be that the balancing of the budget will create more economic activity.

    Again, the Times article notes that the Bush administration's policies failed to create jobs or increase wages in the mid to long-term and thus going back to those policies would must likely not result in new economic activities. Tax cuts are simply not the right lever to pull.


    Zimbabwe is screwed up for a whole host of reasons, including rapid inflationary pressures created by the printing of huge piles of cash. That said, there's a difference between printing money and making investments.
     
  19. iJohnHenry macrumors P6

    iJohnHenry

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    Olde English proverb: “Many a true word is spoken in jest” ;)
     
  20. itcheroni, Apr 13, 2011
    Last edited: Apr 13, 2011

    itcheroni macrumors 6502a

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    #20
    I believe the previous President did the correct thing during a recession (letting it happen), which put the economy on solid footing to grow. He didn't get re-elected. Clinton benefited from the positive effects of letting a recession happen.

    If we're investing, where is the money coming from? With the stimulus, where did that money come from? It's all just borrowed or created like in Zimbabwe. Ask a politician to imagine balancing the budget and they act like it's impossible. Can we defy economic laws forever? Is America unique among all the past empires in history?
     
  21. mcrain, Apr 14, 2011
    Last edited: Apr 15, 2011

    mcrain macrumors 68000

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    #21
    What I did was just an illustration of a concept to counter the radical concept that righties keep pushing, namely that [fantasy]eliminating revenue while eliminating needed services will magically make more revenue appear. Any damage done from eliminating services will be ok because the "free market" will step in and replace any truly 'needed' government services. [/fantasy]

    Zimbabwe may be a mess, and I'm not advocating that we create a mess like that here. We already have a different kind of mess thanks to this fantasy that conservatives keep pushing. My illustration is not to say we should drain every bank account, but that logically it makes as much, or more sense than the voodoo economics that the Republicans have been pushing for over 30 years.

    As for economic textbooks and mistakes, I guess the question is whether there is any historical evidence to support the right-wing corporate sponsored belief that reducing taxes on the rich, while increasing the tax burdens of the poor and middle classes, improves the economy. Are you aware of any?

    On the other hand, there are many times in history where economies improved after inequality was reduced. The US inequality prior to the great depression was massive; taxes and spending were increased (for many reasons) and we had an economic boom.

    Clinton did not let the recession happen, and neither did George HW Bush. HW didn't get reelected because when he was faced with deficits and a looming recession, he raised taxes (part of a negotiated budget deal). Clinton benefitted from that, but also from the tax increases that were passed during his early years. All of which led wealthy taxpayers to convert passive investments into riskier more active and higher yield investments. (Oddly, this led to the tech bubble as people were having fun gambling on risky investments). On the flip side, after GWB reduced taxes, what bubble grew? Housing and real estate. As passive and presumably safe an investment as you can find (until the GOP gave Wall St. a way to suck the life out of those investments).

    Clinton did not balance the budget, he left a surplus.

    $27.5 billion deficit? Yawning deficit? Yes, that's how we used to think about deficits until Reagan, Bush and Bush desensitized us to the idea of massive, MASSIVE deficits. I can actually say to my son that when I was his age, our deficits were less than 30 billion dollars, and he looks up at me with wide, unbelieving eyes, and says, "Really dad? No way! What happened."

    "Economic laws"? You mean, like the "law" that revenue must be greater than spending in order to have a surplus, and that surplus has to be sustainable to pay down the debt. That is going to require more than just cutting programs that the fringe elements of the tea party dislike.
     
  22. Sydde macrumors 68020

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    I think history is full of important lessons (e.g., IIRC, the recovery in the 1930s was not quick or what could realistically called a "boob"), the most important being the one we all seem miss in our haste. Every situation is different, especially in economics. We look at 1995, 1987, 1981, 1973, 1948, 1930, 1921, etc., etc., all of these were handled differently, in ways that might have been optimal, inadequate or incompetently. But they are not 2008~2011. we would examine those events for lessons, but not as templates.

    What we should do today is not what should have been done a quarter or half century ago, because what is today is not what was then. In this light, adopting a platinum-tongued scion who has all the answers is and always has been folly (and one of the biggest shortcomings of the American electoral system). We need to have the situation studied by people who are without bias or agenda (yeah, I know, Utopites) to figure out how to right the ship without making anyone happy. The spirit of compromise lies in pissing everyone off in equal measure. We need more of that.
     

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