That is absolutely wrong. The rich have been pulling away from the pack for years. the gap between the rich and the middle class has been widening for decades.
Yes, but the only thing folks seem to be willing to fall on their swords for is tax cuts.
Mustering political will to cut taxes is fucking simple. You can win election on a platform that consists of little more than cutting taxes.
Mustering the political will to cut spending is a lot harder.
You cut spending so that we don’t need the tax revenue and the tax cuts will follow. If the last 30 years have taught us anything it has taught us that cutting revenue has no effect (ZERO NADA ZILCH) on spending. All it does is reduce revenue and increase deficits.
I know that you think cutting taxes raises revenue but you are simply wrong. No credible economist believes that cutting taxes in todays tax environment will raise revenues. So come back when you have a realstic plan to cut spending because if you can’t muster the political will to control spending then you have no business proposing tax cuts.
I don’t thinki people were saying the teh Clinton tax increases were necessarily good for the economy (all taxes create drag), we’re responding to the apocalyptic predictions from the right that increasing taxes will lead to armageddon.
Once again i think you misunderstand the argument. The argument isn’t that higher taxes will be good for the economy. The argument has a couple of facets. First higher taxes (along the lines that are contemplated) will not create much additional drag on the economy and the reduced deficits will have positive effects.
The argument that may be confusing you is the argument that money wold be better off in the hands of the poor than the rich. that some redistribution would be good for the economy.
Noone is saying that higher taxes per se would be good for the economy.
Half of our “stimulus” was tax cuts for corporations and the rich. If we got rid of those, we would be pretty much where you were.
There are significant differences between the US and Canadian structures structures. First of all you guys have a provincial tax that run in the teens, we don’t. You guys have a VAT at BOTH the federal and state level, we don’t. We have a trillion dollar a year military, you don’t. You have Universal Health Care, we don’t. You have an export economy, we don’t. You have very few problems with immigration of low skill workers, we do. We have reasonable banking regulations, we don’t. There are a whole slew of reasons why Canada and the US are not comparable. your property taxes tend to be higher than ours. Your sin taxes are higher than ours.
You can match up Canada and the US and say “see, we have lower taxes so obviously thats why Canada is faring better than the US”
the mortgage interest deduction has been around a long long time and perhaps it magnified the real estate bubble but it did not cause it. We have had low interest rates in the past and that did not cause the bubble. In fact we have really low interest rates right now and there is no asset bubble forming. It was loose lending standards and unchecked development of the mortagage finance industry. When guys like Angelo Mozillo feel like they can strongarm the GSEs into buying his junk, we have had a breakdown in government ovesight of the markets.
With that said, the home mortgage deduction and the low itnerest rates created a bit of a powder keg.
I hear what you are saying about cheap money encouraging marginal projects but I am curious where in America you see all these marginal projects being built during taht time period because as far as I can tell, they didn’t occur in the US as much as they occurred in developing nations.
That was a stock for stock deal.
Have you any idea what the margins are on auto finance. What sort of rates do you think the market demands for collateralized relatively loans with durations of 3 to 5 years? There is a reason why GMAC was the only profitable part of GM.
They found that an EXOGENOUS tax increase of 1% reduced GDP by 3%. My understanding is that by exogenous, they mean the money gets taxed by government but is not spent by government. For example, if we increased taxes, to reduce the deficit so that we are taking money out of the system without putting back into the the system somewhere else, then that wold have the effects you are talking about. It doesn’t mean that redistributive taxation is bad for the economy.
We had a highly crticized stimulus and TARP program that saved the global economy. just saying.
Despite what your broker tells you, AAA corporate bonds outperform treasuries by about 1%. AAA corporate bonds outperform equities by 1 or 2%. There is ar eason why the wealthy buy treasuries.
IIRC, the immediate benefit of the tax increases was not increased revenue, but the perception in the markets that the federal government had finally gotten its act together and embarked on a reasonable financial policy. This seemed to encourage investment. Clearly the prospect of paying a few percent more on an anticipated windfall did not stop anyone from investing or working in startups, despite the assumed doom and gloom.
THANK YOU. Its been like pulling teeth to get anyone on the right to admit that the Bush tax cuts were Keynesian deficit spending. The worst kind of deficit spending, tax cuts for the rich. Seriosuly, if you wanted to look for the least stimulative stimulus, you would cut taxes for the rich. the only thing less stimulative would be tax cuts for the child of dead rich people.
Well, you need someone who has the courage to take away the pnch bowl when the party starts to heat up.
Yes, and isn’t that a reason to avoid that very bad situation instead of taking politcal advatage of the precarious situation we find ourselves in to unecessarily cut taxes even more?
The point is that you don’t know what the economy would have done without the tax increases. In economics, we never know the path not taken. That makes it especially tricky to measure and attempt to direct, and is another good reason to have more humility with regards to the capability of very big governments to really improve society.
I think you misunderstood what I was arguing. That post was a direct response to emacknight’s use of Canada as an example of a country taxing its way to prosperity. My whole point was that Canada under-performed the G8 when we had bigger government and higher taxes, and began improving and eventually outperforming the G8 after we had lowered taxes, shrunk the size of government and the size of the deficit and debt. All these things are a drag on the economy. We made them smaller, and our country did better. Exactly the opposite of what emacknight was claiming.
Ah, that’s just like you. When losing an argument, resort to appeals to authority and ad hominem cheap shots. Predictable as rain.
Really? Given the cries that removing the tax cuts for the wealthy would have us back in recession we have just heard, I didn’t think the right had any problem with the stimulative nature of tax cuts. What they don’t get is that cuts for the rich are ineffective.
Oh, I agree. It was just one of many factors. Basically the financial markets AND the government put a lot of weight behind the real estate bubble. Bad policy, out-of-control financial dealmaking, the fed holding rates low… These forces all directed increasing amounts of money at real estate. When money is loose and cheap, it tends to flow towards long term and capital intensive projects. Real estate qualifies on both accounts.
Don’t be too sure. There’s talk of a new bubble possible forming in the tech sector again. Facebook now has an estimated value of $50 billion dollars. We’re starting to see crazy prices being paid for marginal companies again. It’s very early, but I’d keep my eye on it.
There could also be an education bubble. Numbers of college students and the price of college has been increasing dramatically, while the monetary value of a degree has been decreasing. That doesn’t seem stable. Of course, a college education is a very long-term investment.
I sort of agree with this. Certainly the ability to package risk and sell it off at a big discount encouraged much more risk-taking in the financial sector, and rapidly increased the liquidity of the banks, since they could re-use the mortgage money instead of having to sit on the mortgage for 30 years. The problem became worse because of information losses in the financial markets - after one or two transactions, the actual risk of the mortgage securities was unknowable and therefore not priced correctly. The financial system was basically vacuuming up risk and institutionalizing it without the participants really knowing what was happening.
Where I part with you is that you say that this was a failure of regulation. I agree that it was, but not that it could have necessarily been prevented. These are the kinds of problems that are easy to see in hindsight, but while it was happening the government was paying plenty of attention - they just didn’t see a problem. In fact, they were encouraging the shenanigans. That goes for both Republicans and Democrats AND the bureaucrats in the government accounting offices. There was simply no pressure for the kind of regulations that might have prevented the problem. We can pass those regulations and prevent the exact same thing happening again, but next time it will be something different that we didn’t foresee. Again.
Government isn’t omniscient. It has no more ability to understand and diagnose problems in the economy than do the very smart people in the private sector who have fortunes on the line.
Not necessarily marginal projects. Capital intensive and long-term projects. For example, a project that will take five years to build and cost $500 million dollars may be completely warranted when interest is at 3%, and a financial disaster if interest is at 8%. Low interest rates also encourage risk-taking, because you can’t earn enough money with the capital in safe investments.
When interest rates seek their natural level, then the price of money is based on real factors in the real economy - for example the capital requirements in the short-term economy (building consumer goods and the like), the savings rate of the population, and the relative value of new short-term projects vs new long-term projects. When there’s excess capital, interest rates fall and money starts to flow into the long term projects.
When the government holds the interest rate artificially low, it has the effect of diverting capital into long term, high cost projects and into higher-risk investments. But this is a disconnect from the real needs of the underlying economy, so you start getting malinvestments - projects that would never have been started had the proper information about the value of money been transmitted to the investors through market pricing.
I don’t know how old you are, but for most of my adult life interest rates have been much higher than they are now. I wouldn’t take low interest rates for granted. My mother’s mortgage by 1980 was something like 17.5%. When my wife and I bought our first house in 1991, we were ecstatic that the mortgage rate had fallen from 13.5% to 11.5%. Now it’s 4%. It could easily be 8% or 10% in a few years.
Yeah, sorry. 2001. Arthur C. Clarke promised us moonbases, sentient computers and crazy alien monoliths, and all we got was Pets.com.
That’s not how I remember it. I remember lots of talk of ‘putting money in the pockets of American families’ so they would go out and spend it. The tax cuts for the rich were because Bush was also a supply-sider. The whole package was basically a compromise - supply-side tax cuts for the Republicans, in exchange for demand-side tax cuts for the poor and middle class promoted by the Democrats.
Funny, that’s what Obama’s stimulus package looked like too. Goodies for everyone! Go team.
Agreed on all counts. So why do you believe that this time the government will get its financial house in order once the crisis has passed? The stage is set for a long, slow recovery and a new equilibrium with higher unemployment rates. As long as that exists, there’s never going to be a time when the Democrats say, “Hey, this would be a good time to slow down job creation and growth and start tackling that deficit problem.” Especially not if it requires actual, significant cuts in the size of government.
You’ll never beat me in an argument because you never use facts and evidence. You have a long, documented history of dissembling, strtching facts to meaninglessness to prove your points, plagiarising from right wing think tanks, making stuff up and what have you. Pointing that out isn’t an ad hominem attack, it’s a simple statement of fact. Pointing out you’re a plagiarist isn’t a cheap shot, it’s a fact. Even in your last post you’re doing the exact same thing you always do. Your biggest refutation of my cite was that, in your own words, " Canada’s economic performance continued to be strong compared to other nations after the tech bubble collapsed".
So I look at what actually happened and invite anybody interested to judge for themselves whether that claim is accurate from looking at this graph, which shows Canadian/US economic performance over the relevant period:
I think most people would conclude that Canadian economic growth dropped remarkably similarly to US economic growth when the tech bubble burst, which kind of backs my cite and, not for the first time, makes it look like you’re just making stuff up again.
I would like you to post one example of my ‘plagiarism’, citing both my text and the original so we may see the similarity.
Or, you could retract your comments.
Or, you could stop polluting Great Debates with personal attacks.
Which leaves us with only analysis of past tax cuts and increases to judge what might happen in the future. When was the last time tax cuts were followed by an increase in the rate of GDP growth? When was the last time tax increases were followed by a decrease in the rate of GDP growth? Is there any historical correlation between tax rates and GDP growth? If not, will you please abandon this devotion to tax cuts as economic stimulus?
I note you’re not disputing the fact that you have a long and storied history of dissembling, stretching facts, making things up etc. Excellent. All you are disputing is your plagiarism and complaining about ad hominem attacks. Again, a simple statement of fact is not an ad hominem attack.
Google spotted your plagiarism for me :
http://boards.straightdope.com/sdmb/showpost.php?p=12580660&postcount=68
and here’s the original :
http://boards.straightdope.com/sdmb/showpost.php?p=12561522&postcount=84
You posted almost verbatim some outright nonsense from one of the right wing bullshit factories that you normally use to back up your arguments but that particular time your argument was so ridiculous I thought I’d try and find out where you got it from and googled it.
No one expects all economists to be intimately familiar with the economic systems of ancient Mesopotamia, but you might want to refresh your knowledge of the 1990’s if you intend to debate American economics.
(And what’s with the Clarke snark? He predicted communication satellites.)
In 1993, it was the Democrats who tackled the deficit with a tax increase. It’s the Republicans, on the other hand, who insist on tax cuts in all economic environments.
The story of the Deficit Reduction Act of 1993 should be much better known. This budget, which passed without one single Republican vote, and ushered in one of the most prosperous eras in American history passed a key House vote with a 1-vote margin and was tied 50-50 in the Senate, with Al Gore breaking the tie. The same day that Bill Clinton signed this bill into law, the right-wing blowhards went on national TV and insisted that the Democrats were to blame for all the inevitable horrible economic consequences of this budget. And (repeating myself) this budget led to excellent growth in stock prices, middle class income, etc.
But these are just facts. And facts are of little interest to right-wingers.
Just out of curiosity, do you know what plagiarism is? It seems that you think that if you can find any ‘right wing’ site that makes the same general points that I do, then I’m ‘plagiarizing’ them. If that’s the case, then every person on this board who ever posts a general political talking point or agrees with the points made by say, Media Matters for America, is guilty of plagiarism.
For your own information, plagiarism is the direct theft of someone else’s writing, copied verbatim, while claiming personal attribution.
You say I posted material ‘almost verbatim’. Please give an example. Don’t just drop links - post a paragraph of mine that you believe is an ‘almost verbatim’ copy of someone else’s - close enough that it’s clear that I stole the material and called it my own. You accused me of cutting and pasting other material without attribution. Prove it by showing the source material and mine.
If you can’t do that, I expect an apology. You accused me of intellectual theft. Back it up.
And no, I don’t agree with the other claims you make about me. I specifically brought up plagiarism because it’s directly testable. I’ll let the other participants in those threads decide whether I’m ‘dissembling’ or not.
And would you please take these stupid personal attacks to the pit?