Exactly, and you can add “job creators” to the list … “If only we give them rich people more money, they will start new companies and hire us all to work for them!” is the central idea. Now, learned men may reasonably disagree over whether or not economics as a whole is mathematics prostituting itself for politicians, but “trickle down” and all its variations is clearly a cheap, blowzy slut crawling through the aisles of a darkened XXX movie theater, whispering “Chew your stub for a dollar, mister!”
As I see it, no one wants to invest in a slumping economy. With their new tax break the rich are just going to want to put it somewhere safe say T-bills. Meanwhile, the tax reduction is going to increase the deficit so the government will have to issue more T-bills. To simplify things they should just cut out the middleman and issue T-bills to the rich directly for the sake of their being rich. Shall we say a round number like $10,000 for each million in net worth? This may not be sustainable but we can always grind it out of the poor when it comes time to pay the T-bills off. Given that the rich have bought the government it makes sense that they should be allowed to make some of the money back on their investment.
Well, in a disjointed way it actually does. Think of all the people trying to retire that saw their 401(k)s shrink after 2007. If the rich put more money into the stock market, without removing it, the market goes up and retirees have more money to spend.
In effect, when a rich person buy’s a lot of stock, the price goes up, and the poor retiree benefits.
Treasuries being an investment in the government, which is how the US affords to pay for all those shiny new programs. Isn’t the alternative to have China buying up our government debt?
How does them paying down debts help the economy?
If they have any debt than more consumer spending really just means more debt.
Dollar for dollar, wouldn’t we be better off giving the money to someone without debt rather than someone with it?
They are exactly the same thing because they are both misrepresentations of what the person was intending.
I no more enjoy being accused of heartlessness than you do of being a criminal. If you don’t like it being done to you, don’t do it to others.
What’s the difference? It is all sovereign debt, and it’s not like the Chinese can suddenly call the note and demand payment. In many ways, paying the Chinese in ever weaker US dollars is in our fiscal interest.
Paying down debt helps in 2 ways: lowers interest rates by freeing up credit, and increases disposable income since people have to pay less each month to service the debt.
If the are still pay it off, how do they have an extra disposable income?
I guess in other words, how does someone with debt have any “disposable” income?
So, you are saying that bidding up stock prices beyond a sustainable level is a good thing? Oh, the humanity!
A. Rich people, who probably follow the market more closely than poorer people, can profit also.
B. The guy cashing out his 401K may do well, but there are a bunch of other guys buying into 401Ks who will lose.
C. Really poor retirees don’t have big 401Ks.
You’d do better breaking windows. Let’s make the recovery sustainable this time, not based on a bubble.
The difference is that YOU actually said “rice and beans”, I didn’t bring up child molesting, you did.
I’m not really sure what you’re getting at, but you do know that most people don’t put every cent they possibly can into paying down their debts immediately? How many people do you know who pay more than expected monthly payment on the mortgage or car loan? Some do, but it’s not typical.
Yup, I expected you to switch to mortgages and car loans, both being amortized with a payoff structure.
But if you want, let’s look at people with a $100,000 mortgage, how does the government giving them $1000 help? If the put it all into their mortgage now it’s $99,000 and their monthly payments are EXACTLY the same.
Any change to demand? Nope. Didn’t you say there would be more disposable income? Well maybe in 28 years.
For people with car loans it might mean they could pay it off a bit sooner, unlikely it would be right away. Again, no change in demand.
Now, if someone has $10,000 in credit card debt, and you give them $1000, it’s down to $9000, and the monthly minimum goes from about $1000 per month to $900, but are they really doing to run out and spend that $100 per month? Or would they personally be better off putting it towards their debt?
The only people that it would actually help is someone with exactly the same amount of debt as the government hand out.
Not sure where you see that written? Perhaps you could quote where I said that.
Are you saying that’s a bad thing?
You do realize that’s how 401(k)s work right? Poorer people and rich people put their money in the stock market, and hope that it goes up. If the rich didn’t think they’d profit, they wouldn’t bother doing it. Meanwhile poorer people get to enjoy the retirement they dreamed of.
So are you saying we should do away with 401(k)s? Shut down the stock market?
So? A rising tide lifts all ships.
Sounds good, know any political party capable of pulling that off?
It’s true that the payoff for mortgages and the like come farther down the road, but that’s no reason for people to not do it. I know someone who payed off a 20 year mortgage in 10 years and saved quite a bit in interest by doing so. Not really an option for most people, though.
But if you’re not happy with that, let’s just stick to credit cards. In your hypothetical, the person with $9000 debt would be better off using the extra $100/month to keep paying down their debt, but people don’t always do what’s best. But even if they did do the right thing, they’d pay off their debt faster and have benefited from the $1000 reduction in debt. And in either case, assuming $10,000 was their credit limit, they now have the extra credit capacity if they need it for an emergency, e.g., medical bills or fixing their car.
Again, I’m not sure what your point is, but it seems pretty self-evident that paying down debts is beneficial for the economy. It probably wouldn’t create as big of a short term boost as creating jobs through public works or the like though.
Terrific arguments when some Democrat politician goes on about the poor or middle class being “job creators” so we should lower their taxes. You could even start a thread if a politician were to say something so stupid.
Can we all agree that the economy is complicated, and jobs are not “created” by a particular economic class of people? Rather, jobs are created by a complex economic system that contains poor, rich and middle, business owners, employees, contractors, and the self-employed.
My point is this:
Which is in direct conflict with what Voyager said, "But tax breaks for the rich don’t put money back into the economy. Any consumer goods they buy will be relatively trivial. There is nothing to invest in these days. All the money will do is to bid up the prices of stocks and such, which does not help.
Though the poor will get less per capita, they will spend all of it and there are lots more of them. "
Great in theory, as long as the poor don’t have any debt. Because has we’ve shown, money given to someone with debt, while very good in the very long term, does nothing to help the economy in the near, short, or medium term.
Who is more likely to have consumer debt, the poor, or the rich?
If you could get one other person on this message board to agree to that I’d be impressed. Good luck with either political party, or their flock of sheep, I mean voters.
No, the difference is that while I said “rice and beans” YOU were the one that added “and nothing else.”
So when you later said, “adoption should be made easier.” I added in “for child molesters.”
Notice now where I said, " If the rich put more money into the stock market, the market goes up and retirees have more money to spend." Then Voyager decided to add, “So, you are saying that bidding up stock prices beyond a sustainable level is a good thing?”
There is a teachable moment here, hope you don’t miss it.
I’m a crazy optimist then…
Can I hear an AMEN for this:
I don’t totally agree with Voyager, but I see his point. Even if the rich all used their tax breaks to buy yachts and vacation homes, would we really be better off than if we gave the tax breaks to lower- and middle-income families that will spend it on more essential things, including paying down debt?
I’m pretty sure a lot of people, on this message board and IRL, do agree with that. I know I do. A lot of simplified economic models get thrown around in political discussions, but I’m pretty sure most people know on some level that it’s more complicated.