# Boy, that Bush tax cut really lit a fire under the economy, huh? **URL:** \ **Category:** Great Debates\ **Created:** [September 21, 2002, 8:26pm UTC](https://boards.straightdope.com/t/boy-that-bush-tax-cut-really-lit-a-fire-under-the-economy-huh/129024 "2002-09-21T20:26:38Z")\ **Posts on this page:** 20\ **Page:** 3
**Author:** ![samclem](https://avatars.discourse-cdn.com/v4/letter/s/a9a28c/32.png) [@samclem](https://boards.straightdope.com/u/samclem)\ **Post date:** [September 22, 2002, 2:45am UTC](https://boards.straightdope.com/t/boy-that-bush-tax-cut-really-lit-a-fire-under-the-economy-huh/129024/41 "2002-09-22T02:45:56Z")
Yeah! He don’t need no **steenkin’ cite**! :rolleyes: He’s fighting igorence here, doncha no? ---
**Author:** ![Measure\_for\_Measure](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/measure_for_measure/32/557_2.png) [@Measure\_for\_Measure](https://boards.straightdope.com/u/Measure_for_Measure)\ **Post date:** [September 22, 2002, 3:00am UTC](https://boards.straightdope.com/t/boy-that-bush-tax-cut-really-lit-a-fire-under-the-economy-huh/129024/42 "2002-09-22T03:00:28Z")
Basically, pk is connecting the dots between “government policies he doesn’t like” and “bad economic effects”. Hey, I can play that game too! It’s so much fun, I’ll do it with a conservative twist: Clinton’s tax 1993 tax increase took 8 years to cause an economic downturn. It sure didn’t occur during the 1990s. LBJ’s deficit spending (1967-68) didn’t cause a downturn until 1974! (The oil embargo had nothing to do with the latter). Oops, that one took 6 years. Let’s see. Ronald Reagan’s high deficits caused the 1990-91 recession. Oops, that’s right, Reagan’s deficits are **good** while Johnson’s are **bad**. This is laughable. ## Please note that all of my (nonironic) arguments can be found in basically any introductory economic text. Sam: It’s always nice to chat with an informed adult. The US economy is closer to $10 trillion, I believe. $50 billion dollars of extra spending over 1 year might have enhanced GDP growth by $50\*2/10,000 = 1%. Not trivial, not huge. Large enough to be measured IMHO (though perhaps not through “broad economic trend-spotting” I agree). The stimulus from a tax cut would be somewhat smaller. ---
**Author:** ![squeegee](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/squeegee/32/14537_2.png) [@squeegee](https://boards.straightdope.com/u/squeegee)\ **Post date:** [September 22, 2002, 3:12am UTC](https://boards.straightdope.com/t/boy-that-bush-tax-cut-really-lit-a-fire-under-the-economy-huh/129024/43 "2002-09-22T03:12:49Z")
**flowbark** : so, to speak in teeny, tiny words for us non-economists: - $1 in goverment spending stimulates the economy by $5 - 1 in tax cuts stimulates the economy by .80. Waaay counter-intuitive. Or is your point whooshing right past me? ---
**Author:** ![mangeorge](https://avatars.discourse-cdn.com/v4/letter/m/d78d45/32.png) [@mangeorge](https://boards.straightdope.com/u/mangeorge)\ **Post date:** [September 22, 2002, 4:35am UTC](https://boards.straightdope.com/t/boy-that-bush-tax-cut-really-lit-a-fire-under-the-economy-huh/129024/44 "2002-09-22T04:35:35Z")
And now a short-sighted word from the uninformed; While the Elder was in office, things got steadily \*worse. While the Sinner was in office, things got steadily \*\*better. And now, while the Younger is in office, things seem to be getting steadily worse. I’ve read, and heard, most of the reasoning (excuses?) behind this but I choose to ignore it. And I vote _every_ election. \*People I know have more money, and seem happier. \*\*People I know have less money, and seem less happy. If things don’t turn around soon, at least a little bit, the Republicans are going to have a “hard row to hoe” come 2003. Hell, _I’ll_ be passing out free cigarettes in November. 😉 Peace, mangeorge ---
**Author:** ![squeegee](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/squeegee/32/14537_2.png) [@squeegee](https://boards.straightdope.com/u/squeegee)\ **Post date:** [September 22, 2002, 5:43am UTC](https://boards.straightdope.com/t/boy-that-bush-tax-cut-really-lit-a-fire-under-the-economy-huh/129024/45 "2002-09-22T05:43:50Z")
> [@](#): > > \*Originally posted by Sam Stone \* > We’re talking about an economyt that’s producing what, 2 or 3 trillion dollars a year in GDP? And Bush’s tax cut so far has amounted to less than 50 billion dollars It sounds like you’re saying that last year’s tax rebate probably couldn’t have helped _or_ hurt the economy one way or the other. So then, Sam, you’d agree that this statement was misleading as well? > [@](#): > > The way out of this recession, the way to create jobs, is…by speeding up tax relief so people have more money to spend. For the sake of American workers, let’s pass a stimulus package. - George W. Bush, state of the union address, Jan 29, 2002 🙂 ---
**Author:** ![squeegee](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/squeegee/32/14537_2.png) [@squeegee](https://boards.straightdope.com/u/squeegee)\ **Post date:** [September 22, 2002, 5:45am UTC](https://boards.straightdope.com/t/boy-that-bush-tax-cut-really-lit-a-fire-under-the-economy-huh/129024/46 "2002-09-22T05:45:29Z")
oops, [cite](http://www.whitehouse.gov/news/releases/2002/01/20020129-11.html). ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [September 22, 2002, 6:36am UTC](https://boards.straightdope.com/t/boy-that-bush-tax-cut-really-lit-a-fire-under-the-economy-huh/129024/47 "2002-09-22T06:36:01Z")
> [@](#): > > Sam: It’s always nice to chat with an informed adult. The US economy is closer to $10 trillion, I believe. $50 billion dollars of extra spending over 1 year might have enhanced GDP growth by $50\*2/10,000 = 1%. Not trivial, not huge. Large enough to be measured IMHO (though perhaps not through “broad economic trend-spotting” I agree). The stimulus from a tax cut would be somewhat smaller. Temporarily off my head on the GDP number. I had a flashback after eating a bad Egg McMuffin. Anyway, the reason these things can’t be proven with that precision is because of the secondary effects. If the government cuts spending because it cut taxes, then the net effect on the economy is not so much stimulative due to an influx of cash, but because the money presumably stayed in more productive places. In other words, it’s not just the gain in money divided by the GDP, but the gain over and above what the smaller gain would have been had the government spent it less productively. Of course, if you borrow the money anyway, then there’s a direct stimulative effect. But that’s assuming that Bush’s tax cut is what’s causing the deficit. Some of us believe that if Bush hadn’t cut taxes, then there would have been less pressure to curb spending, and the government would have just spent the money anyway. Remember the 700 billion prescription drug benefit, which became the 500 billion dollar prescription drug benefit, then the 350 billion dollar prescription drug benefit, and now can’t be seen on the radar at all? If Bush hadn’t cut taxes, I think there would be probably a 500 billion benefit signed into law already. And I think there would have been more farm pork, and lots of other spending. What, you think Democrats awash in money wanted to just sit on it? That’s the missing factor that always crops up in these debates. It’s not a question of tax cuts vs big deficits - it’s a question of whether you want to get to the deficit through tax cuts and moderate spending increases, or higher taxes and insane spending. You’re getting the deficit either way in a recession with a war on. No way around that. ---
**Author:** ![I\_am\_Sparticus](https://avatars.discourse-cdn.com/v4/letter/i/c68b51/32.png) [@I\_am\_Sparticus](https://boards.straightdope.com/u/I_am_Sparticus)\ **Post date:** [September 22, 2002, 6:55am UTC](https://boards.straightdope.com/t/boy-that-bush-tax-cut-really-lit-a-fire-under-the-economy-huh/129024/48 "2002-09-22T06:55:10Z")
> [@](#): > > \*Originally posted by Revtim \* > \*\*Also, doesn’t he see how he’s making the identical mistake his father did, going after Iraq while doing nothing obvious to help the collapsing economy? How could he be making such an obvious political blunder? Why aren’t his advisors, well, advising him? \*\* Well isn’t it obvious? He doesn’t do anything himself, least of all thinking, he delagates that. He has said he delagates all the detail stuff many times. Why not take him at his word that he is lazy? And who are his advisors? Same bunch as his father’s. And then you go on to assume that it is a political blunder. Democratic economic philosophy is all boats rise with a rising tide. But Republican economic philosophy is puritan in the respect that there is an economic elect, predestined to do well, and everyone else is going to struggle along as best they can. There are people who do well in a poor economy, and in a wartime economy. The Carlysle Group is a munitions company. Oil becomes more valuable in wartime. Just because this sounds like a conspiracy doesn’t mean it is in fact not a conspiracy to rip us off, etc. You decide for yourself. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [September 22, 2002, 7:17am UTC](https://boards.straightdope.com/t/boy-that-bush-tax-cut-really-lit-a-fire-under-the-economy-huh/129024/49 "2002-09-22T07:17:49Z")
Might I remind everyone that the tax cut rebate last year was supported by pretty much everyone? Yes, it was too small to do much good. The real tax cut problems come over this decade with major cuts for top bracket people, and little for the average person. In fact the NY Times on Friday noted that because of the AMT, people in $75K - $150K brackets give a lot of the cut back - around 40 - 50 cents on the dollar. People in the top brackets give only 8 cents back. Finally, isn’t it odd how the cut started as a way to give back the surplus (which should be paying off the debt) and magically turned into the perfect recession fighter? ---
**Author:** ![Apos](https://avatars.discourse-cdn.com/v4/letter/a/838e76/32.png) [@Apos](https://boards.straightdope.com/u/Apos)\ **Post date:** [September 22, 2002, 7:47am UTC](https://boards.straightdope.com/t/boy-that-bush-tax-cut-really-lit-a-fire-under-the-economy-huh/129024/50 "2002-09-22T07:47:27Z")
—Greenspan advised against the tax cut.— Uh, no. It was in a little questionable of him given his position (he’s supposed to be in charge of things like interest rates, NO ONE elected him to have an opinion on how we should spend our finances, but he endorsed it. Maybe you meant the refund. There’s a lot of very poor economics being slung around in here. First of all, changes in tax policy take a LONG time to shake out, because their full effect is on long term incentives and often have to break through old habits and locked in plans. The people here who assert that assessing the impact of the tax rebate by the short-term performance of the economy is insane… are entirely correct. However, the rebate was pretty silly (a bipartisan effort, by the way). It was essentially a very tiny forward on our tax cuts… though thanks to the Democrats more middle class than it would have been (me, I got nothing) Squeegee, I think flobark said it was 4. But then, I AM an economist, and I can’t really understand his story very well. What he seems to be saying is that there is more _short term_ economic stimulus if, instead of me spending a dollar (or saving a dollar to spend later, or burning a dollar for fun, etc. etc.), the government taxes it away from me and spends it all for me (I, being a very very evil person, might have wanted to save some of that money for the future). The key to is story is that I spend only a majority of my dollar now, postponing some spending for later via saving. The government can spend the full dollar now. If spending is what you think is the key to economic success, then it seems that lots and lots of government spending (even completely wasteful spending!) is the dead-sure path to economic vitality. The key to _understanding_ this story, however, is that it leaves lots of very important things out, because it’s looking ONLY at the supposed short term stimulus to current spending. Hopefully you go on to read a lot more than the intro econ book, and realize that there’s a lot of controversy and uncertainty about the whole endeavor. But, here’s a little story for non-economists… Bill, to help the economy, charges 1$ on his credit card bill in pure spending. Luckily, instead of having to pay his credit card bill himself (since Bill never actually pays for anything himself, not having a paying job himself), Bill has a standing arrangement with his girlfriend Carol (who, being a wrongheaded person, doesn’t spend her paychecks, but saves some of them for future expenses) that he can beat the snot out of her and take however much money from her as he needs to pay off his bills, whenever he chooses to do so. This means that Bill’s bill is basically Carol’s debt, with a fairly erratic payment plan (Carol only seems to have much luck in changing Bill’s beating strategies once every few years). However, if Bill exacts his cash from Carol today, Carol often has to run up her own credit card bill to stay afloat, at fairly high interest rates. If Bill is merciful and holds off till later, it’s actually quite a good deal for Carol, because Bill’s credit card has an amazingly low rate (much lower than any Carol could get for herself). Bill has much better credit than poor Carol, you see, because the banks know that no matter what happens, even if Carol goes bankrupt, Bill can always find another girlfriend: the only way HE could ever default is if he bankrupts or gets kicked out by every woman in town. One day, Bill tells Carol that’s going to be really nice today. Instead of beating the full 15$ out of her he was going to, he’s going to knock 3 cents off that days collection, which is only to whet her appetite for the coming month, in which he plans to cut (actually, postpone) a portion of his usual “taxation” of her. Carol is relieved (since this postponement works out a little better for her int he long run, and gives her bruises a chance to heal), but a little worried, because Bill seems to be spending just as much as ever, and if Bill would stop spending so much in the first place, Carol wouldn’t have to worry about paying off Bill’s bill at all. Bill is, Carol reasons, something of a deadbeat, but she knows that she still needs Bill around to protect her from a stalker in the next town over named Saddam (who used to be Bill’s buddy: but they had a falling out or something and have been trading nasty phone calls with each other… it’s complicated). Carol is also unhappy that Bill is cheating on her. In fact, he’s playing the same game with every woman in the town, having scared off every other man. While the women don’t individually have any say over what Bill does, their collective will seems moderately influential (though Bill remains a little erratic), as there is the threat that enough of them could bring in another man and give him enough support to oust Bill. Some women have been suggesting that they could all largely do without Bill (he causes more problems than he’s worth a lot of the time: maybe he could just go duke it out with Saddam and otherwise leave them the hell alone?), but they are dismissed as a bunch of radical feminazis. ---
**Author:** ![Apos](https://avatars.discourse-cdn.com/v4/letter/a/838e76/32.png) [@Apos](https://boards.straightdope.com/u/Apos)\ **Post date:** [September 22, 2002, 7:58am UTC](https://boards.straightdope.com/t/boy-that-bush-tax-cut-really-lit-a-fire-under-the-economy-huh/129024/51 "2002-09-22T07:58:32Z")
—Finally, isn’t it odd how the cut started as a way to give back the surplus (which should be paying off the debt) and magically turned into the perfect recession fighter?— Note: a recession is not the opposite of a government surplus. Also, there was no real “surplus.” It was imagined into being only by ignoring certain aspects of the long term budget. It made about as much sense as me pretending I’m running a “surplus” by forgetting that I have a huge outstanding deffered loan I’m going to have to start paying back in a few years. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [September 22, 2002, 8:07am UTC](https://boards.straightdope.com/t/boy-that-bush-tax-cut-really-lit-a-fire-under-the-economy-huh/129024/52 "2002-09-22T08:07:38Z")
> [@](#): > > \*Originally posted by Apos \* > \*\*- > > Note: a recession is not the opposite of a government surplus. \*\* I trust that you are not claiming that I thought it was! However, a surplus is rare in a recession, due to lower tax revenues. Not impossible, but rare these days - and actually not advisable if you’re any kind of a Keynsian. > [@](#): > > \*Originally posted by Apos \* > \*\* > Also, there was no real “surplus.” It was imagined into being only by ignoring certain aspects of the long term budget. It made about as much sense as me pretending I’m running a “surplus” by forgetting that I have a huge outstanding deffered loan I’m going to have to start paying back in a few years. \*\* A company can certainly be profitable even with long term debt. A person with a mortgage greater than his current income is not bankrupt. However, if your point is that an excellent use of a surplus is accelerating reduction of the debt, then I totally agree. ---
**Author:** ![Scylla](https://avatars.discourse-cdn.com/v4/letter/s/a5b964/32.png) [@Scylla](https://boards.straightdope.com/u/Scylla)\ **Post date:** [September 22, 2002, 1:31pm UTC](https://boards.straightdope.com/t/boy-that-bush-tax-cut-really-lit-a-fire-under-the-economy-huh/129024/53 "2002-09-22T13:31:17Z")
> [@](#): > > \*Originally posted by flowbark \* > \*\ ***Scylla** hypothesizes, “The economy isn’t worse.” > > Hm. Well, according to this week’s Economist, > > US Unemployment Rate: > Aug 2002: 5.7% > \> Aug 2001: 4.9% > > Thank you for providing a falsifiable (and falsified) hypothesis. > > \*\* For the contextually impaired, the quote should be “The economy isn’t worse than it is.” ---
**Author:** ![Scylla](https://avatars.discourse-cdn.com/v4/letter/s/a5b964/32.png) [@Scylla](https://boards.straightdope.com/u/Scylla)\ **Post date:** [September 22, 2002, 1:33pm UTC](https://boards.straightdope.com/t/boy-that-bush-tax-cut-really-lit-a-fire-under-the-economy-huh/129024/54 "2002-09-22T13:33:16Z")
Spoke: > [@](#): > > Oh come on. Republicans always advertise tax cuts as magic bullets. And no, this one did not “surely” stimulate the economy. (See my last post.) And Democrats always lie out their asses. ---
**Author:** ![Patty\_O\_Furniture](https://avatars.discourse-cdn.com/v4/letter/p/96bed5/32.png) [@Patty\_O\_Furniture](https://boards.straightdope.com/u/Patty_O_Furniture)\ **Post date:** [September 22, 2002, 1:41pm UTC](https://boards.straightdope.com/t/boy-that-bush-tax-cut-really-lit-a-fire-under-the-economy-huh/129024/55 "2002-09-22T13:41:55Z")
> [@](#): > > The economy isn’t worse than it is. That is something of a vacuous tautology. The economy isn’t better than it is, either. Here’s where we talked about it before it happened: [Tax refunds based on projected surplus - fiscally irresponsible!](http://boards.straightdope.com/sdmb/showthread.php?threadid=84147&highlight=surplus) Wherein **Elvis** pointed out that > [@](#): > > What’s even more irresponsible than spending money the US may not have a year from now is that these are not actually refunds–they are advances against projected refunds. In essence, this means you will get less of a refund next year or, if you will owe next year, you’ll have to pay more. So really, we have all been made into debtors to the USA. As a matter of public policy, it seems to me that making debtors out of the entire adult population of America as, essentially, a public relations ploy, stinks. Yes, the money came, not from a surplus, but from a projected surplus. Note to the administration: the crystal ball could use a shot of windex. Wait! We can still save this theory by subscribing to **pk’s** “somewhere down the road” analysis. Namely, the refund was based on a projected surplus _that still hasn’t happened yet_, but most assuredly will eventually happen. ---
**Author:** ![Scylla](https://avatars.discourse-cdn.com/v4/letter/s/a5b964/32.png) [@Scylla](https://boards.straightdope.com/u/Scylla)\ **Post date:** [September 22, 2002, 1:55pm UTC](https://boards.straightdope.com/t/boy-that-bush-tax-cut-really-lit-a-fire-under-the-economy-huh/129024/56 "2002-09-22T13:55:39Z")
Are we just talking about the $300 or the tax cut as well? When Clinton was in office he signed a capital gains tax cut and revenues went up, jobs went up, the stock market went up. I don’t hear any Democrats bitching about that. And now I’m actually sitting here reading earnest words that are actually saying that tax-cuts and refunds are not economic stimuli. Or maybe they’re only stimuli when implemented by Democrat Presidents Those complaining that the tax-cut hasn’t worked yet, need look no further than the democrats to place blame. The democrats of course back loaded Bush’s plan so that the bulk of the cuts don’t take effect until 2005 and later. ---
**Author:** ![squeegee](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/squeegee/32/14537_2.png) [@squeegee](https://boards.straightdope.com/u/squeegee)\ **Post date:** [September 22, 2002, 2:02pm UTC](https://boards.straightdope.com/t/boy-that-bush-tax-cut-really-lit-a-fire-under-the-economy-huh/129024/57 "2002-09-22T14:02:17Z")
> [@](#): > > \*Originally posted by Scylla \* > Spoke: > And Democrats always lie out their asses. And Jews are money grubbers, the Irish are drunkards, blacks are lazy, Italians are crooks, Scots are tightwads, the Polish are stupid, women are less intelligent than men. And any number of generalizations. Glad we got that all straightened out. :rolleyes: ---
**Author:** ![Scylla](https://avatars.discourse-cdn.com/v4/letter/s/a5b964/32.png) [@Scylla](https://boards.straightdope.com/u/Scylla)\ **Post date:** [September 22, 2002, 3:58pm UTC](https://boards.straightdope.com/t/boy-that-bush-tax-cut-really-lit-a-fire-under-the-economy-huh/129024/58 "2002-09-22T15:58:25Z")
My point exactly, squeege. ---
**Author:** ![Spoke](https://avatars.discourse-cdn.com/v4/letter/s/a88e57/32.png) [@Spoke](https://boards.straightdope.com/u/Spoke)\ **Post date:** [September 22, 2002, 4:02pm UTC](https://boards.straightdope.com/t/boy-that-bush-tax-cut-really-lit-a-fire-under-the-economy-huh/129024/59 "2002-09-22T16:02:12Z")
Just for clarity’s sake, that last quote was **Scylla** ’s, and not mine. ---
**Author:** ![PhiloVance](https://avatars.discourse-cdn.com/v4/letter/p/e19adc/32.png) [@PhiloVance](https://boards.straightdope.com/u/PhiloVance)\ **Post date:** [September 22, 2002, 4:20pm UTC](https://boards.straightdope.com/t/boy-that-bush-tax-cut-really-lit-a-fire-under-the-economy-huh/129024/60 "2002-09-22T16:20:42Z")
> [@](#): > > \*Originally posted by wring \* > **let’s continue the ever so mature response of misspelling a name…** > [@](#): > > \*Originally posted by wring \* > oh come on, **Maud** you’ve seen all the news reports about the government having budget woes, haven’t you? I could have sworn it was reported. The name was: **Muad’Dib** Pot…Kettle 😛 [Previous page](https://boards.straightdope.com/t/boy-that-bush-tax-cut-really-lit-a-fire-under-the-economy-huh/129024.md?page=2) [Next page](https://boards.straightdope.com/t/boy-that-bush-tax-cut-really-lit-a-fire-under-the-economy-huh/129024.md?page=4)