…I’ve decided to help TenBen and UncleBeer out. This is an extremely easy to read (and completely unbiased) summary of what tax cuts really do. Reagan’s 80’s are described beautifully by the author.
Hope this helps…
Hey When this started out it was about a rebate of (supposed?) surplus Minnesota state tax revenue! Nothing to do with tax cuts. Nothing to do with the federal government!
Now we have a bunch of people in here itching for a fight about tax cuts and debating economics. HEY! HEYYY! Yeah YOU!! Go back and READ the OP.
Hey pissant:
If the errors in my analysis are so fucking blatant, why not point some of them out? Groundless condescension is, IMO, a less effective debate tactic. Hell, even I try to mix a little argument in with my name-calling.
I have, in fact, read a macroeconomics book. In fact, I have a degree in Economics, so quit fucking acting like I’m trying to give a lecture on quantum theory in Ancient Sumerian. You are free to disagree with my premises if you choose, but this general “You’re stoopid!” is wearing thin.
It’s wearing especially thin given the fact that you have no fucking clue what you’re talking about. “Crowding out,” which you have talked about from the get-go, is the phenomenon that occurs when government takes money out of the private sector, therefore decreasing consumption and investment. In other words, it means exactly the fucking opposite of what you think it means. I know you don’t trust me, so here’s some independent verification.
In short, you don’t know very much
First of all, Hibbins, I apologize for the tangent that this thread has taken. But I can’t sit here in good conscience and allow the garbage that TenBen and his buddies are spewing to be read by others without showing that it’s wrong.
TenBen: The definition of “crowding out” that you provided is exactly what I described. I’m finding it very difficult to believe that you have an Economics degree. If you do, you certainly missed alot of classes.
Read the link that I provided in my last post.
Then read this:
http://www.cbpp.org/TXCT85.HTM
then read this:
I’m sure you’ll be able to find more.
And to Monster104, maybe you should actually read the posts in sequence before calling me an inflammatory jerk.
I suspected this was the root of the liberals’ ire. Glad to have the confirmation though. Thanks.
Kinda, there’s much sarcasm in my post. We are in near total agreement on this topic.
Again. You guys are the ones claiming deficit spending may help expand the economy. And yet you claim Reagan’s deficit spending to be a problem. Don’t add up. Ya can’t have it both ways unless my quotation of adam yax above is the true situation here.
One last time before I’m done with you:
Crowding out claims that taking money away from the public reduces investment.
You claim that tax cuts (giving money to the public) reduces investment.
How in the blue fuck is this “exactly what you described?”
Niiice analysis. Extra points for uncreative use of ad hominem.
I’ve got a better idea. Why don’t you read them and explain them to us. Demonstrate you understanding of economics, which started as “minor knowledge” earlier in the thread and has progressed, in a span of 45 minutes, to god-like comprehension.
Go away, little man. Go away and learn.
I did. In what way was my assessment of your behavior incorrect?
Here ya go, JJ. An opposing point of view from the 1999 Nobel Prize winner, Robert Mundell, for economics. A clear victory for the supply-siders.
crowding out - The claim that an increase in government borrowing or expenditure leads to a reduction in private investment through higher interet rates.
Ladies and gentlemen, the above is the definition that Tennessee Ben provided through the link in an earlier post. What proves that he has only minimal (at best) knowledge about macroeconomics is the fact that he (or she) failed to make an obvious link (obvious to even 1st year economics students) implied by the defintion.
Increase in goverment borrowing must occur when taxes are reduced and government spending stays constant. Or to use his term “ceteris parabis” (all else being equal), tax cuts lead to higher borrowing by the government. Why? Because the government still has to pay for the goods and services that it purchases.
So how does the government borrow? By raising interest rates. I might not lend the government my money for a 3% interest rate. But if it gives me 6%, I’ll part with some of it.
But when the government raises interest rates, so does everyone else who is lending. Now companies that are borrowing to grow or invest must borrow at higher levels. So what happens is that their “cost of capital” increases. Their interest payments get higher and sometimes, they can’t afford to pay them. So they forego on investments until they can borrow for lower interest rates. So the tax cut “crowds out” investment and slows everything down. Companies that aren’t investing don’t hire new employees.
There are all sorts of factors that come into play when looking at macroeconomics. The “ceteris parabis” world that Tennessee Ben doesn’t exist. But even in that world, tax cuts are bad for the economy. And the articles that I linked to show that they’re just as bad in the real world.
Uncle Beer’s link leads to an economist whose theories just don’t work in the real world. It has been proven over and over again. Even the article states that most economists just don’t agree with him.
Now Tennessee Ben, since you initiated the ad hominem attacks, I ask you: JUST HOW FUCKING STUPID ARE YOU?
Now I’ll go away…until tomorrow.
Exactly! That’s what the government didn’t want us to know. It was touted as a refund, which to me, means a refund on past taxes paid. At least I saved my “refund” or “rebate” to put toward my 2001 taxes, just in case I’m fucked.
Now, since I don’t know if Gov. Ventura’s “rebate” is the same as Bush’s, I can’t say that this is the case. But if it is, it’s only a loan on your 2001 taxes.
Aaaah. Analysis. Nevermind that JJ got six posts into the thread before attempting it, and nevermind that it’s based on faulty premises. Oh, sweet Analysis. Milton Friedman is dancing the rhumba in his living room.
If one thing necessarily leads to the other, then explain away the entire decade of the eighties. What that glorious epoch (and logic) show us is that interest rates don’t necessarily rise with tax cuts if one of (at least) three things happens:
- The government actually reduces spending. (Not likely, but it’s a possibility, so I’ll list it.)
- The government is running a surplus and therefore doesn’t need to borrow money.
- Because people have more money, the rates of savings and consumption grow, and business is able to invest either the money they earn (when people consume, that money goes somewhere), or by borrowing some of the piles and piles of new money in the bank. (I realize this is an oversimplification, but it gets the idea across.) This investment naturally yields returns, people get jobs, business makes money, and the tax base grows. Government can now spend the same amount of money without borrowing.
So, in your equation, GDP=C+I+G+X, C goes up, I goes up, G does whatever it wants, and GDP grows. The neat thing is, as long as investment is healthy, this cycle repeats ad infinitum.
I, Alan Greenspan, Robert Mundell, and Milton Friedman accept your apology.
Um.
Remind me to never, EVER again copmlain about my state governor/legislature here.
chique, I really truly am sorry. This mega-hijack was exceedingly rude. I got a little carried away, so my apologies to you and your (now unrecognizable) thread.
Aw, don’t sweat it, TenBen. I’ve seen odder hijacks 
Oh, and to that awfully rude fuckwit 'way back there someplace? I don’t know what Kreepy Kathy has to do with tax rebates, but…uh. Yeah. She’s a flake.
Oh! The sound of crashing glass! Break a stereotype for you or something?
Hi chique, I didn’t know you were into Great Debates, you sure started one here.
I think I should get a job with Jesse, be in charge of spin control, always work there.
But…but…but…
I don’t LIKE GD!
Hold me, imthjckaz, I’m scared.
Now, now, chique, simma down na.
You know I can’t hold another woman without gittin myself all bit up with Spider bites.
Get a grip girl.
No, not there.
All is well, all is well.
This whole GD thing shall pass, give it time, give it time.
Oh Lord, now we’ve swung totally in the opposite direction. At least Juggy and I were swearing at each other and arguing and stuff. You guys are re-living Woodstock.
This is a pit thread that was just never meant to be.
Um, TenBen, NONE of 3 things that you mentioned happened in the '80s. If you’d bothered to actually read any of the links that I provided, you would’ve known that. Not one. Why? Because it’s a pipe dream. No economist in his right mind believes that tax cuts help the economy. And this goes back to your initial premise: Just because taxes are cut doesn’t mean that the government will spend any less. These days, in economics classes in universities around the country, professors and students laugh at Reagan’s supply-side tax policies. They make absolutely no sense mechanically. Even republicans in congress today refrain from using the term “supply-side economics” to avoid looking like morons. All empirical evidence that exists refutes the premise that tax cuts help the economy. Sorry, no dice! Bring on the next idea!
The reason that I didn’t provide an analysis earlier is because I’ve done it numerous times in the past on these boards. But it’s like explaining evolution to creationists. They simply don’t want to believe in reality. Proponents of tax cuts are trying to form a theory based on nothing. It stems from the greed of their supporters who want to keep more money in their own pockets at any cost whatsoever.
But I’ve done my part. If anyone has any doubts about what I’m saying please read this:
http://www.huppi.com/kangaroo/23More.htm
Or just do an internet search on “crowding out effect of tax cuts” or “supply side economics” and you’ll soon learn just how friggin’ retarded you have to be to believe that tax cuts help the economy.