Do you have any idea what their unemployment rates were before they had roads and bridges?
Yes but two of the bigest ones are the lack of economic and societal infrastructure.
Oh, well, an “offhand reference”. Of no particular importance, then? Not actually offered to substantiate any point?
And simply because you have enjoyed better economic performance after a given fact does not prove that you enjoy it because of that fact. Post hoc ergo poutine hoc. A common logical phallus. You have enjoyed better economic performance after I was born, there is no need to thank me.
The middle class isn’t being impoverished. They’re moving up into the ranks of the rich; at least they were until this recession, after which they will resume their upward climb.
I take that you think the problem right now is the last item on your list. malinvestment due to distrotions in teh economy. Well, first of all, distortions in the economy are not necessary for malinvestment. Malinvestment occurs organically in all free markets. What malinvestment do you think we have right now?
I’m in favor of deep, deep spending cuts. I already said this.
In addition to the spending cuts I mentioned, I’d also say end Social Security and put all that money into investment funds.
Well, we will have to insist that those investment funds only be funneled into triple-A rated securities, where there is nothing to worry about. What could possibly go wrong?
As one of the 2.5M unemployed after Labour’s disastrous splurge, I’d like to know about when you are talking.
And commonly used to justify the higher tax rates under the Clinton administration, and to blame the Bush tax cuts for the weak economic performance of 2002-2004, and to take credit for any stimulus spending…
The fact is, you can’t conduct scientific experiments on an economy. There are no control economies you can test your changes against. All you can do is look at the past, the changes that were made, and how the economy performed after. But the economy is so complex and has so many dependent variables that it’s damned near impossible to know for certain which changes had which effect.
For example, in the biased article Dick Dastardly linked to above, the authors claim that Canada’s improved performance had nothing to do with cutting spending or taxes, but was the result of expansionary monetary policy, NAFTA, the the tech boom. It’s true that all those things happened at roughly the same time. So which one is responsible? All we can do is look at timelines, relative impact, and other historical examples. But we can never be certain.
However, to make my case, I’d point out that Canada’s economic performance continued after the tech bubble collapsed, and in fact we’ve continued to outperform the G8 despite the U.S. economy cratering. In addition, I’ve posted meta analyses before of countries where economic performance is charted against the size of government, and there is a strong correlation between smaller government/lower taxes and improved economic performance.
But if we’re going to disallow Post hoc ergo prompter hoc reasoning, then from here on in I expect the lefties on the board to stop claiming that Clinton’s tax increases were good for the economy. Hey, maybe the economy would have been even better without the tax increases, right?
Nonsense! You can conduct scientific experiments on anything!
Once you accept that the survival of the test subject, at least in its pre-experimental form, is nonessential.
Fools! I’ll destroy them all!
Counting a huge deficit as an implied tax is not exactly a stretch. When you’re running deficits of close to 11% of GDP, it matters. But even on a direct comparison basis, had the Bush tax cuts been allowed to expire Canada would have had lower taxes overall than the U.S. this year. Now we’re still slightly higher. But we were much higher in the past, and our economy suffered. Yet some of you still think that higher taxes are the path to prosperity.
Wow, what a lame analysis. I guess that was to be expected from an outfit calling itself “New Deal 2.0”. Not exactly an unbiased source, eh?
So they claim that the Canadian economy got better not because of tax and spending cuts, but because of NAFTA and the tech bubble. There are several problems with that: one is that the tech bubble never affected us as much as it did you, and the other is that Canada’s economic performance continued to be strong compared to other nations after the tech bubble collapsed, and in fact is still strong today, even after exports with the U.S. have collapsed due to the U.S. economy cratering.
Can you imagine where Canada would be today if we had started this recession with a 10% of GDP deficit and a 90% of GDP debt? We’d be a basket case. Instead, we entered the recession with budget surpluses and a debt closer to 30% of GDP, and we’re better off for it.
We also spent about half as much on stimulus as you did as a percentage of GDP, and that doesn’t seem to have hurt us either. And because we didn’t run our debt through the ceiling to ‘stimulate’ the economy, we’re going to be running surpluses again within 3-4 years, so while you’re starting another round of debates over raising taxes to get your monstrous debt under control, we’ll be debating another round of tax cuts.
Typically when you hold interest rates artificially low, you bias against short-term use of capital and incentive long-term use of capital. As a result, the biggest malinvestment in the U.S. would seem to be a bloated real estate sector, over-building in houses, apartments, and commercial real estate. I’d say that distortions caused by the mortgage interest deduction have resulted in higher demand for home ownership, driving up real estate prices dramatically in areas that are constrained by geography or zoning. San Franscisco, for example.
But that’s just a very large, very visible distortion. Malinvestments could be occurring all over the place. Projects being financed that don’t have customers, exuberance and cheap money leading to crazy mergers like Time Warner/AOL, etc. I’d say the auto sector was bloated because of cheap auto loans and easy credit, and it might have been a good thing to let GM or Chrysler die. These companies are barely treading water right now, while auto loan costs are still at historic lows. How are they going to perform when a car loan costs 8% per year?
You know what the problem with that reasoning is? The problem is that the tax cuts were implemented because the economy was slowing down. That makes the analysis of the effect of those tax cuts suspect.
Last year’s Romer and Romer paper tried to account for this by examining only ‘exogenous’ tax cuts, and they found very strong, very robust evidence that tax cuts stimulate the economy and tax increases damage the economy. The effect was much larger than they had anticipated - they found that a 1% increase in taxes resulted in a 3% decrease in GDP growth. That’s a huge factor. They also found that this did not hold when the tax increase was used to pay down the deficit - which is evidence that the economy sees deficit spending as a form of taxation.
FYI the stock market is already back up to 11,000. Those who sold out when it hit 6000 (or so) were fools. Just saying.
The market is a good investment. You can even find ways to invest in growth markets like China.
Cite? At Wikipedia we see that real household income from 1967-2003 rose at an annual average 2.86% rate for the top 1%, 1.55% for the 95th percentile and only 0.73% for the 50th percentile (a fair proxy for “middle class”, no?) A graph on that page shows that much of the modest middle-class gain was during Clinton’s administration.
Of course some right-wingers argue that growing income inequality is a good sign.
This is kind of off-topic but someone did mention investing our “savings” money elsewhere…
The question I have always had is what should the US Government have invested in (or do so in the future) to get a better return for programs like Social Security. If, for instance, the US Gov invested in the Stock Market, what happens when it owns enough of a company (and with the 2.5 trillion that went into SS that seems feasible) to be come a big stakeholder or even majority share holder? Does that mean that President or Congress would get to vote on who becomes on the Board of Directors, executive compensation an other share holder responsibilities? I don’t think that’s a situation any business wants, as evidenced by how fast every company is trying to give back TARP funds.
So, if the US GOV should stay out of Stock Market, what’s left? I suppose they could by currency of another country like China does, but I think there would be some pretty nasty politics associated with that. They could invest in the private bond market, but I wonder if there’s really enough out there to do that. They could invest in commodities, but with the size of the funds we’re talking about I’m sure the world would cry foul of trade manipulation. I think I would like to see the US Government be a bank (given how much venom I have towards the banking industry these days), but I’m sure that would bad in many ways.
I guess in the end they chose T-Bills because they were the only investment that was ‘neutral’ to the political and business world. As it stands what that did, I think, was just give the baby-boomer generation who was paying in all that money lower taxes since the government had the money they needed from a non-tax source. Treasuries are just “IOU’s” so now the baby boomer generation that got the deferral during their working career is going to be dealing with the IOU being due as they retire. It should be interesting to say the least…
What I’d really like to see is some radical changes to simplify both personal and corporate taxes. Make them all “1040EZ” style, pick a percentage (grading due to income levels is fine by me) with little to no deductions. To start with they could set the overall rate to the averages people and businesses pay now (no average take hike or cut). Consistent collection of taxes based on actual income and profits would, I believe, give a better foundation for actually making a sane budget. I think that in the end easy to understand expectations would help business investment than continuing our bizarre tax system.
What 9/11 financial crisis? There was a fairly mild recession. 9/11 was temporary - it clearly did not change any market fundamentals. Neither did Enron, as has already been mentioned.
Also mentioned is how slow job growth was during the recovery. I think it is fair to say that this is because the tax cuts were slanted so heavily towards the rich, and were ineffective in increasing consumption and thus job growth.
Also, given that the tax cuts have been in effect for so long, how come the average American has seen very little income growth during this time?
This is absolutely true, in as far as correlation not necesarily being causation, you can’t say tax cuts had no effect on growth but then through the same observations claim increased helped growth.
On the other hand, it can disprove the extreme assertions of the OP throughout the thread that tax increases or even lack of tax cuts will obviously doom our economy. In that case you just need to show periods of prosperity during periods of relatively high taxes to disprove that specific notion.
As WFB liked to say, you are a prisoner of your own rhetoric.
Nov 2010 GM earnings.
August 2010 GM earnings.
$3.5 billion in earnings over 2Q, plus a very nice IPO, is hardly treading water. Are you sure this post didn’t somehow pop up from last year?
I for one welcome our new investment banking overlords. If there’s one person I trust less to grow my money than the government, it’s large investment banks with limited or no-bid contracts (and you know it would wind up that way.)
All the inflexibility of not being able to get to your money, with none of the benefits of investment return since it will all be eaten up by the “managers”.
I would be in favor of rolling back the Social Security system modestly, because people with a high middle class income stand to recieve much more than the amount they need to avoid poverty in their retirement (cite: my yearly SS statement).
So we should roll back the disbursements slightly on those who will not be left destitute, while at the same time offering them a deal: you can actually, really, truly get some of your money now, in return for that money lowering your monthly SS payments when you retire.
It would be win-win for Generation X’ers like myself, who do not believe SS will be there when we retire, and for the government whose SS balance will be stabilized since their future obligations will be reduced by a much greater sum than the immediate payments.
Unfortunately for you, this would require raising tax rates temporarily, or else the glut of all of the new money entering the market at once would spike inflation. But I don’t see the point of letting me play with Monopoly Money in a jar until I’m [del]63[/del] [del]67[/del] 72 would be any improvement over the current system.
In addition, SS is more than “retirement”, it is also insurance. Those who get disabled are able to start collecting some money immediately in some circumstances. You can be against that portion of Social Security, but those people won’t magically be taken care of if you simply transfer their accounts to an investment bank. So if you are against that, be honest in that you want to reduce social spending rather than meaningless wealth transfers (which is what a lot, but not all, of current old-age SS payments are.)
Though the mortgage deduction does inflate housing prices, it has been constant for a long time. It was in effect when I bought my Bay Area home in a relatively depressed market in 1996. Greenspan’s action in holding interest rates unnaturally low, in part to mitigate the poor results of the Bush tax cut, did have a big effect on the housing bubble. Though geography counts, the worst hit places were not the Bay Area and other limited stock markets, but Las Vega and Florida, both of which had plenty of room for new housing stock, which led to a much bigger oversupply than here.
But, given that low interest rates had a bad effect, are you proposing they be raised today? (You seem to be implying that, but I’m probably wrong.) The Fed at the moment has plenty of room to raise them if the supposed inflation actually happens, or when the recovery is self-sustaining. It is also the time to raise taxes and to start working on reducing the deficit.