Tax cuts vs. spending cuts during recession - which is worse?

Discussion in 'Politics, Religion, Social Issues' started by mcrain, Jan 26, 2011.

  1. mcrain, Jan 26, 2011
    Last edited: Jan 26, 2011

    mcrain macrumors 68000

    mcrain

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    #1
    From Salon.com

    I think this goes hand in hand with the fact that tax increases lead to economic growth, while tax cuts lead to recessions. Demand drives economies, not supply. It's always been that way, and it always will be (edit - this is just my opinion, and I'm not an economics expert. Feel free to disagree. I'm not claiming that my opinion on this issue is better than any one else's). Our demand for cheap goods has created massive economies in Japan, Korea, Thailand, and China.
     
  2. leekohler macrumors G5

    leekohler

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    #2
    Hey- why let reality get in the way of a good myth?
     
  3. rdowns macrumors Penryn

    rdowns

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    #3
    The Democrats clinging to their spending are as bad as the Republicans clinging to their tax cuts. We won't get any real solutions until there are no more rocks to smoke.
     
  4. mcrain thread starter macrumors 68000

    mcrain

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    #4
    Except, there are good arguments for spending cuts (in a lot of programs), there are good arguments that many programs should be given serious reconsideration, there are good arguments for cutting some (maybe all) taxes, and there are good arguments for many of the conservative ideas, but they aren't being made.

    Reasonable people can disagree about a lot of things, and in fact do. What I don't understand is not the disagreement, but that the politicians who represent one side of the argument are absolutely failing to make their case with sound argument. It's like the loons have taken over the party that supposedly represents the "mature," "stable" and "safe" positions.

    Sorry for the off-topic post, but it's frustrating to try and debate a serious issue with people who argue we should do or not do something based solely on something cryptic written by one or two of the 39 signers of a document 222-223 years ago.

    (edit) If the Democrats are so wrong, why did the DOW just cross 12,000 for the first time in several years? Someone and something turned around the mess, and it certainly wasn't the filibusters.
     
  5. fivepoint macrumors 65816

    fivepoint

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    #5
    Mcrain - let's see your strong tax-cutting conservative arguments. Put your money where your mouth is. After hearing you suggest this several times, I want to see how well you can make the argument. Feel free to refute the points immediately after you make them... but lets see just how strongly you can make the conservative argument.
     
  6. iBlue macrumors Core

    iBlue

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    #6
    I don't know what the best course of action is but what the UK government is doing is quite cruel. They've gone the hardest and deepest at those who are the most disadvantaged rather than getting their rich buddies to pay their bloody tax bills. I'm not even affected personally by the cuts but it's still awful to watch so many decent things about this country being dismantled one by one.

    I don't think borrowing your way out of a recession is a great idea (which is what Labour proposed, in a nutshell) but I don't think what our current government is doing is a great idea either.

    They're all horrible bastards, the lot of them.
     
  7. leekohler macrumors G5

    leekohler

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    #7
    Welcome to the US- oh wait...

    Sorry to export our stupidity.
     
  8. mcrain thread starter macrumors 68000

    mcrain

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    #8
    I have done that in the past on these forums. In fact, I've done it in discussions with you. You may not have recognized that my stance on taxes is far more conservative than yours, but that's not my fault.
     
  9. leekohler macrumors G5

    leekohler

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    #9
    Did you put your arguments in talking point format? If not, that's probably why he didn't understand. ;) Fivepoint probably think you're a "librool". :)
     
  10. mcrain thread starter macrumors 68000

    mcrain

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    #10
    I am a liberal when it comes to social policies, and an arch-conservative on fiscal matters. Unfortunately, neither party in Washington is very conservative, and neither party can or will do what needs to be done to put our house in order from a fiscal standpoint.

    On fiscal policy, when you look at the numbers, there are really only a few choices that can be made. How you go about accomplishing things once you have made your choice is debatable, but right now, both parties have or are spending too much (republicans more so), and neither party is acting responsibly on the revenue side.

    (edit) By the way, fiscally conservative does NOT mean that you are against all spending. That's a fallacy.
     
  11. leekohler macrumors G5

    leekohler

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    #11
    rino. :)
     
  12. fivepoint macrumors 65816

    fivepoint

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    #12
    :rolleyes:
    Prove it. Linky.
     
  13. mcrain thread starter macrumors 68000

    mcrain

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    #13
    The link is next to my name. Find other posts by this user. :rolleyes:

    (edit) I don't expect you to know about the discussions that I had on these forums years ago, but then again, maybe there's something wrong if you can't remember the discussions we have had.
     
  14. NickZac macrumors 68000

    NickZac

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    #14
    Both are going to continue to get worse given the current trends. The US, and virtually all other Western nations, cannot compete with the economy of China, which is growing at a rate never seen in the history of industrialization. Their level of control on the entire global market is very understated. Furthermore, tax cuts will put us into worse debt, and spending cuts can harm the infrastructure.

    As crazy as it sounds, this could happen with North Korea too, and they could easily have one of the largest GDPs and have massive affect on the global market.
     
  15. firestarter macrumors 603

    firestarter

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    #15
    That's not very likely.

    They're a small country of only 22 million people, very old and crumbling industrial base, very low GDP ($40bn and reducing), poor education and no sign of departing from their hard line socialist regime.

    They couldn't be more different from the Chinese.
     
  16. senseless macrumors 68000

    senseless

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    #16
    We're printing up a mountain of debt to keep us out of a depression. Even when we recover, we'll have a drag on our standard of living for decades. The spending cuts and higher taxes come later.
     
  17. mcrain, Jan 28, 2011
    Last edited: Jan 28, 2011

    mcrain thread starter macrumors 68000

    mcrain

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    #17
    We are in a situation where we have overspent in the past. Our current spending levels are actually not much higher than where they have been in the past, and what has been needed to accomplish what was necessary.

    Much of our growing costs are related to debt service (interest and loan payments), increasing health care costs, and military spending.

    Ok, here's a conservative idea. Let's deal with our fiscal problems. Head on. We can't go back and un-elect the fiscally irresponsible people that put us into this mess, and bickering about our poor choices in the past won't make things better. So, what can we do?

    We can make damn sure we have sufficient revenue to cover our current expenditures. That will require ending tax cuts that are making our fiscal situation worse. (Can anyone explain to me how tax policy that makes things fiscally worse is considered "conservative?") Second, we go through every program and make tough choices to eliminate unnecessary spending and try to save money on the things that are necessary. This will require some tough choices, but the tough choices also may include keeping or expanding some things the GOP doesn't like. In fact, the GOP needs to get its head out of its rear on its uniform hatred for programs like medicare, medicaid, social security, and anything even remotely like welfare when those programs have a history of protecting our economy. Furthermore, regulations are not all bad when they protect the American people from mistakes made by the corporate sponsors of the Republican party.

    Spending more on any system that does less compared to one that is more efficient and cost effective is NOT conservative. The only explanation for the hatred of health care reform is that it might harm the people who are benefitting the most from the current system. Namely the health insurers, hospitals and drug companies. There is a reason they spent huge amounts of money trying to deceive the American public about health care reform. Someone who is fiscally conservative would not limit their options to a system that is more expensive and allows for certain participants to "steal from the till." You wouldn't run your business like that.

    There are a thousand things that could be done that are fiscally responsible and fiscally conservative, and we can disagree all day about what choices to make. Heck, we can disagree all day about the ways of addressing health care reform, but what we can't disagree about is that the current system (even after Obamacare) is overly expensive and protecting it is not fiscally responsible.

    When we have our debt down to a manageable level (say less than a trillion), and we are operating on a budgetary surplus (where surplus is being used to pay down remaining debt at a fast rate), then we can talk about the liberal idea of being more carefree and taking more fiscal risks (namely reducing revenue by lowering taxes or increasing discretionary spending on pet projects).

    [/rant]

    (edit) Information for those who want to look:

    PDF on 2008 to 2010 discretionary spending, along with 2011 to 2015 projected budgets. Note that the projected budgets are within 100 billion dollars of the pre-collapse levels of 2008.

    [​IMG]
     
  18. Queso macrumors G4

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    #18
    This week's negative quarterly GDP figures for the UK were mostly due to a 3.3% drop in output from the construction sector. Given that a quarter equates to a 13 week period having the entire country under a deep blanket of snow for most of December can explain this fall away without even thinking about government cuts.

    There is a reason why it takes two quarters figures to declare a recession. I fear people are projecting their own agendas onto things.
     
  19. mcrain thread starter macrumors 68000

    mcrain

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    #19
    It is clearly too little "substance" to base an entire country's fiscal policy on, but it is still far more evidence than what is typically used by those who claim tax cuts help the economy or benefit the poor.
     
  20. Sydde macrumors 68020

    Sydde

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    #20
    Much as I hate to admit that there was some sound reasoning and logic behind smoke-and-mirrors cocktail-napkin reaganonomics, the underlying theory did make sense.

    In the early eighties, the top tax bracket was in the range of 70%; yet, those "citizens" rarely paid anywhere near that: a good 3% of GDP could be accounted for in the tax-shelter industry (hyperbole). This was the Reaganites' argument: that we could increase revenue by lowering rates and closing loopholes. Naturally, the lowering of the rates had to happen first. A few of the prominent loopholes may have been closed, "I can't recall," but most of them became we'll-get-arount-to-its.

    At that time (which I believe was well after the economy has recovered of its own accord) the tax cuts were touted as contributing to the robust economy (perhaps they had a retroactive effect, as people had been anticipating them in the down times and thus reacted positively due to their optimism). Many of the loopholes were never closed, so the rate cut ended up not only reducing revenue and increasing the wealthiest's sense entitlement, but also established the misperception that tax cuts help the economy and that trickle-down works.

    Meanwhile, "conservative" has been co-opted to mean "right-wing nut-job". Persons who misapply "conservative" (and by extension , "liberal") in this sort of way need to be relentlessly called out until conservatives can take back at least this much of their good name.
     
  21. Zombie Acorn macrumors 65816

    Zombie Acorn

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    #21
    Tax increases don't lead to economic growth, economic growth leads to increased taxes.
     
  22. NT1440 macrumors G4

    NT1440

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    #22
    Link?

    I know you like these one liners, they're easy to memorize I know, but lets see some evidence.
     
  23. Zombie Acorn macrumors 65816

    Zombie Acorn

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    #23
    If x amount of tax increases led to y amount of economic growth we would have a bullet proof plan by just increasing taxes to 100% of earnings.

    In reality x amount of economic growth allows y amount of increased taxation, not the other way around.
     
  24. NT1440 macrumors G4

    NT1440

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    #24
    I'm sorry but anyone that seriously tries to boil down something as huge as taxation or the economy to two variables is either being intellectually lazy or just doesn't realize the massive complexities involved in either subject.

    I'm nowhere near an expert, but I do understand these subjects are much more than X or Y.
     
  25. Zombie Acorn macrumors 65816

    Zombie Acorn

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    #25
    In a thread that is attempting to sum up the economy by who is president I thought my post would be welcome.
     

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