I’m a Bush supporter (for the most part), but I wouldn’t give the tax cuts that much credit for the improved economy. The size of the tax cuts is mice nuts compared to the overall economy. The business cycle is still in effect, and the gov’t can’t do much but diddle around at the edges.
It will be interesting to watch the jobs data. If they don’t imrove in this economy (7.2% is huge), then we are indeed in a new kind of economy. I’d be very surprised if the economy could continue to improve anywhere near that rate w/o the employment situation getting better. The growth can’t all be coming from outsourced jobs or productivity improvements domestically. Can it?
Too soon to decide- if the causes can ever be untangled. The issue is confounded by increased military spending in Iraq (up 46%) and increased business spending (up, what, 14-15%?; these figures are from the NYtimes). These %ages are higher than the increase in consumer spending, the main theoretical source of growth from tax cuts.
The rising productivity is what is boosting the GDP.
Jobs will not be created if productivity continues to rise; many of the increases in productivity are due to jobs being sent overseas.
“The total outsourcingof business-process jobs by American
companies is expected to grow to $136 billion by 2015, from
$4 billion in 2000, and create 3.3 million jobs, according
to Forrester Research of Cambridge, Mass.” So in my opinion, this is going to be another “rentier recovery,” as the numbers keep rising, but job creation remains stagnant.
Keeping labor cheap in America is great for Bush’s corporate backers, but not so hot for the average resident of, say, Mattoon, IL. (flipping through stack of Wal-Mart stock certificates) Which is too bad.
You don’t think that the tax cuts loosened the pockets of Joe Sixpack a bit, which increased demands for goods and services across the board? It would seem that the tax cuts would act as a catalyst for growth, not the growth in and of itself.
I don’t know about you, but me, being a joe sixpack kinda of guy, used the tax refunds for helping to pay of standing debts. My refund did shit for the economy.
Seems to me you could better attribute this spike to unemployment coupled with the economic decline. The economy was in the toilet, now it’s starting to come out. The decline allowed for a so-so increase in actual GDP to translate to a large percentage increase. Couple that with the fact that capital has not been reinvested in restoring the jobs and factories cut over the last couple years and there’s a very liquid economy. Following this, reinvestment should begin, slowing the growth rate. Unless it’s another bubble.
Same here – my refund went into a college fund, and didn’t do diddly-squat for the economy. I suspect that the average “Joe Sixpack” refund recipient was in a similar quandry, since the size of the refund wasn’t big enough to finance any economy-boosting big-ticket items.
I disagree. You received either goods or a service. The fact that you are paying for it now instead of then means the person/company you owed the money to now has capital it did not have before. Capital that it will use to purchase goods and services…
Ennnh - wrong answer. Tax cut did bubkis for Joe Sixpack. Local paper is not online, so can’t cite, but I’m sure an enterprising google-er can find the report: increases in consumer spending and rise in purchases of durable goods are all within the upper 15% of all wage earners. Porsche sales across the U.S., up 14%, new home starts at record highs. This bump of GDP fueled by consumer spending is driven by rich folks reassured by the fat cats in D.C. that they’ll be “taken care of” if they start spending like loons again. If you’re not refinancing your $250,000 home, then you’re not part of this boom.
This fiscally conservative liberal will give due credit - the bottom of this particular roller-coaster may well have been leveled out by Mr. Greenspan and his Incredible Shrinking Interest Rates. The problem is that this is a short-term spurt only - no way it’s sustainable. U.S. consumer spending is built on a house of cards - debt, debt, and more debt, all of it secured by continued foreign investment in U.S. assets. If you aren’t in the black within the next 5 years or so, hold on to your socks, 'cause it’s all coming down. Dollar devaluation, federal deficits, stalled wages, job flight, and the imminent retirement of an entire generation of wage earners and taxpayers, are all coming home to roost.
I agree that the refunds and cuts had an impact. More money in peoples pockets means more money spent and this helps the economy.
However, the tax cuts were tiny in proportion to the overall economy. The effect that they had was minimal.
Hell, even if the government could cut taxes so much that it would affect the economy or go the other way and spend so much that they help the economy, I wouldn’t want them to do it.
It’s important to distinguish between the different parts of the Bush tax cuts. The refunds and child tax credits ,which had broad support probably did have some effect on the economy in the last few quarters. However the most controversial aspects of the Bush tax cuts consist of the deep cuts for the very rich and will largely be phased in later in the decade. These don’t contribute to aggregate demand today but they do damage the long-term fiscal outlook which will tend to raise long-term interest rates and hurt long-term growth.
If only you were right, CyberPundit - do you really think the tax cuts for the wealthy will be allowed to sunset like they were written? If Congress and the White House retain their present makeup, it is more likely those cuts will be made permanent. Tack on a few billion more to that deficit, boys!
You seem to have misunderstood me; I didn’t say anything about the sunsets. I just said the cuts will be phased in later which will damage the long-term fiscal outlook.
I agree that the real test is whether jobs follow. Obviously, people spending money (tax cuts) should lead to job growth.
As I’ve said on many occasions, I’m not sure if globalization is helping less developed countries or starting a race to the bottom in terms of political rights, human rights, and labor standards. If China is the new template, we can’t compete without some changes I’d rather die than see.
('possum does spit-take as his ten-gallon hat spins above his head)
It may be that projected future deficits are shrinking due to today’s new numbers, but I don’t believe anyone has calc.'d it yet. The OBM numbers are ~made-up, anyway.
Believe you me, the deficit grows every day. If you can find a ref. that honestly shows the deficit shrinking in any meaninful way, I will eat my hat. And its a big hat.
That’s supposed to be good news? We had surpluses as recently as 3 years ago, remember?
As for the rest of it, whose “economy” are we talking about, even assuming it’s really growing? That of the MNC’s who’ve been exporting wealth-creating jobs for years, or the bulk of the people? Jobs have been lost constantly under this Administration and its policies, and they’re the first since Hoover to have failed us so spectacularly. The recession officially ended 2 years ago according to Bush’s Treasury - the increase in jobs should have started to show by now, wouldn’t ya think? Right, Sam?
Crimeny, NOBODY knows the future. Sure, I called the Marlins in six. If they won the series, I had a one in four shot.
The surpluses went straight to hell when the Twin Towers fell down. Some things require a lot of money. “You cannot be a superpower on the cheap.”
If Disney World is struck by a squadron of B-52s tomorrow on a “routine training mission” gone awry, what happens to our deficit? That’s the situation we face now in foreign policy.