Then we should do this when the economy is just OK, in order to make it better. Right?
The market is best at allocating resources. The government is there to provide a safety net for people in hard times, but just throwing money at people could easily make things worse, especially if the problem is caused by people spending beyond their means. Isn’t that what the whole sub-prime mortgage crisis was fundamentally about? I’d rather see something like the extension of unemployment benefits (a safety net issue) than just an across the board rebate.
Scrap it and start over, this time without fiat currency and the Federal Reserve. Oh, and institute a “three-strikes and you’re dissolved” law for corporations.
I guess what bothers me is when fiscal conservatives continue to support Republicans because of their self proclaimed fiscal responsibility or economic conservativism. Just cutting taxes does not make you an economic conservative, it has to be accompanied by cuts in spending.
You think dropping the rate on the capital gains rate and the qualified dividend rate to 15% is staying within a narrow range?
There was a time when people bought deferred annuities to get the tax deferral on their investment income, now people prefer holding their investments in regular accounts because current taxation is preferable to the tax deferral that annuities offer.
We are taxing investment income at a higher rate than earned income. In what version of fiscal policy does that make sense?
I seriously doubt anyone would call Bush a fiscal conservative. Whatever he is, it definitely isn’t that.
The dilemma that fiscal conservatives are in is aproximately equal to the dilemma that, say, someone who supports a heavy environmental green type policy…namely, you can vote 3rd party or vote for one of the main stream parties and HOPE that they at least throw you a bone. A fiscal conservative might not like the Republicans and what they have done lately, but there is no point going Democrat either as they are even further from where a fiscal conservative wants to be. So, it becomes a choice of the lesser of two weasels. I myself gave up on the Republicans back when Bush’s daddy first came to office…but for some (as with the Greens) hope springs eternal…
I won’t vote for the Greens because I don’t think they should be elected, but I do think the rest of us should listen a lot more carefully to what they have to say.
They pay the lions share of federal income taxes (the figure gets less stark when you count all taxes (including sales tax, payroll tax, real estate tax, etc.) because they make the lions share of the income. With the advent of corporations and modern banking we don’t really need a class of ultra wealthy people to provide the concentrations of wealth necessary for capitalism to work, we need a reasonably high savings rate.
It isn’t just Bush that is batshit crazy, I think it is time that everyone admits that Republicans and their infatuation with the myth of supply side economics is batshit crazy.
Well, deficit spending is a bad thing (Republicans engage in deficit spending in every year of their administration since Reagan). Its not exactly chemotherapy but it comes with a price tag, either way its better than the alternative.
I agree that the market is best at allocating resources (BTW, I don’t think it is particularly good at allocating wealth) but what does that have to do with whether or not Keynesian economics work?
The reason we have this rebate is because we needto get it past a Republican filibuster. Did you see Bernanke’s testimony before congress? Democrats want to spend it on food stamps and “safety net” type stuff. They got Bernake to admit that putting money into the hands of the poor will be a more effective stimulus than putting the money inot other hands.
Aren’t pay as you go Democrats better than borrow and spend Republicans (from a fiscal conservative’s perspective)? At least then their spending (and taxing) comes with a political price. Borrow and spend Republicans spend just as much if not more but they have disconnected the political discipline that balanced budgets impose on politicians.
I don’t dispute there were lots of bad investments during the boom - in fact it strengthens my point. However productivity did increase, so not all of the investments were worthless. The stock market resumed, but lots of indicators did not - such as poverty levels, the gap between incomes, which narrowed during the boom, and of course middle class wages, which were stagnant, but which grew during the late '90s. During that time the rich got richer but the not so rich also grew richer. Not so today.
As for 9/11, I see no reason why that should have had a long lasting impact on the economy, outside of airlines. I think it is a good excuse for the failure of the tax cut.
Need? What has need got to do with it? I shudder to think what ‘we don’t really need a class of ultra wealthy people’ might mean.
Since Bush isn’t really following the doctrine of supply side economics how does one prove the other? It’s like saying that Universal Health Care doesn’t work because it didn’t work under Clinton…when Clinton pretty much chucked it out the window in his first term and never looked back.
Since pretty much ever president post-WWII through Carter used a Keynesian model of economics what is your evidence that it DOES work?
You are right though that the market isn’t good at allocating wealth…pretty much because it’s not designed to do that. Which is a GOOD thing since the whole ‘allocating wealth’ thingy gives me the screaming willies. Why do you think wealth NEEDS to be allocated? How do you think this should be accomplished?
It’s sort of like asking if a serial ax murders is somehow better than one that uses a strangling cord…
I just don’t get it, why people panic and scream “Recession! Recession! OH NOES!!!”. Recessions are a normal part of the business cycle, and historically (since 1945) they don’t last very long (average is 10 months). Just let them happen and get them over with. The country is in a fundamentally strong financial situation (except for the insane deficit), unemployment is at 3-4%, taxes are moderate and the climate is generally favorable to business. Things get screwed up when the Feds attempt to delay or mitigate the inevitable recession by cutting the prime rate and the like, it’s a house of cards that can only be supported so long, and the longer you delay the inevitable, the worse the collapse is, leading to things like double digit unemployment, inflation, interest rates and Presidents from Georgia. The solution to all of this is as easy to see as it is impossible to implement: CUT GOVERNMENT SPENDING. Unfortunately, neither party is willing (or even wants) to do that. The Republicans cut taxes and say “Well, cutting taxes stimulates economic growth (which it does), leading to increased tax revenues (which also happens, no matter how hard most Democrats try to deny it), so we’ve got a lot more money to spend. Wheee! Let the good times roll, baby, I’m bringing home the pork so I get reelected!” Democrats say “We need to raise taxes to cover costs. Hey, look, we’ll have more money coming in because of the tax hike! Wheee! Let the good times roll, baby, I’m bringing home the pork so I get reelected!” It’s madness on either side.
I don’t know how accurate this assertion really is, but history can be illustrative.
Here are graphs of the national debt over the time period you specified. As you can see, there are two times that the debt has been exploded during this period.
Now, I know that you are a fan of Reagan’s economic performance, so somehow you must like the idea of exploding the national debt. Many people, however, think it is a particularly bad idea.
You have, in the past, shown an ability to learn from the facts on different topics. I wonder if you can do the same when it comes to economic issues. Here’s a link to the site I mentioned before, which had amassed data from a variety of sources, all showing that a range of economic indicators have been better under Democratic presidencies.
Well, we don’t have any rebate yet, so I’m not quite sure what you’re talking about. But the Dems are talking about rebates, and I don’t see any evidence that they’re only talking about it because they’re afraid of a Republican filibuster. If you have a cite for that, though, I’d be happy to change my mind.
Yes.
Well, that’s part of what they want to spend it on, but if you look at what they’re saying, they want to put money in pretty much everyone’s pocket except the rich. From CNN:
Emphasis added. But hey, it’s an election year, so what politician isn’t going to want to drive around throwing money out of the back of a truck? Whether that is good or bad for the economy, I don’t know. But as long as it’s small enough (and it seems like it will be) it probably won’t be too bad.
It seems to me that Americans spend too much. Throwing them a lifeline every time there is a bump in the road isn’t going to do anything but make that worse. Help the people who desperately need help, but otherwise, I say let the economy ride it out-- it’ll be stronger when we come out the other end, which we surely will.
We need concentrations of capital for capitalism to work. Now corporations and banks provide those concentrations of capital.
For Republicans: supply side economics=tax cuts, nothing more nothing less.
You’re kidding right? IINAE but every reputable economist I know of thinks that Keynes was onto something.
How is allocating wealth any creepier than allocating capital?
No its not. Not even close. Borrow and spend is spending without political consequences (or any hint of responsibility), tax and spend has political consequences and doesn’t saddle our economy and future generations with our deficit spending.
I agree with your entire “lets cut spending” rant but the rest of it is off base.
The economic impact of tax cuts on earned income is significant when you cut the top marginal tax rate from 92% to 36%, it does almost nothing when you cut it from 39.6% to 35%. The economic impact of cutting taxes on investment income (capital gains and qualified dividends) is almost nonexistent.
The overwhelmingly vast majority or reputable economists (by a huge margin) don’t think tax cuts lead to higher increased tax revenues. The Deficit spending that results from cutting taxes without cutting spending DOES result in increased tax revenues but it is the DEFICIT SPENDING that does it not the tax cuts.
We disagree on some of the details but it seems like you basically agree with me (the Republican economic policies are based on pixie dust and powered by unicorns).
The point about the rebates is hard to prove so lets just say its my opinion.
Putting money into the pockets of rich folk does NOTHING to stimulate the economy.
Certainly. Recall for a moment WHY the debt went up so markedly under Regan and the period that proceeded him. Note that under Carter and the preceding presidents on your graph the debt was trending downward…yet the ECONOMY was trending downward as well. Note the economy, with a few bumps has trended UPWARD since then. Even during the dot com bust and the current housing crisis this is so compared to where the economy was during the stagnant 70’s.
I’m unsure what point you are trying to make here wrt whether US presidents followed Keynes post WWII up to Carter. Which was after all the point I made. I think Keynes is mostly out of favor these days in main stream economic circles (though there is like a NEW Keynes model that has some favor). I was never a big fan as I though his models were flawed under our system but acknowledge that mileage may vary depending on ones preconceptions and world view.
BTW, I wouldn’t characterize myself as a big fan of Regan. I’m a follower of Hayek’s economic system if anything. I certainly don’t LIKE the idea of exploding national debt…I just see it as a sometimes necessary evil. As with all things it can be taken to far…just look at the current clown in office for an example.
Well I thank you for that…and I appreciate the thought even if we might not meet up eye to eye on this. I like to THINK I have an open mind and can be convinced about anything if I really am wrong.
The solution to all of this is as easy to see as it is impossible to implement: CUT GOVERNMENT SPENDING. Unfortunately, neither party is willing (or even wants) to do that. The Republicans cut taxes and say “Well, cutting taxes stimulates economic growth (which it does), leading to increased tax revenues (which also happens, no matter how hard most Democrats try to deny it), so we’ve got a lot more money to spend. Wheee! Let the good times roll, baby, I’m bringing home the pork so I get reelected!” Democrats say “We need to raise taxes to cover costs. Hey, look, we’ll have more money coming in because of the tax hike! Wheee! Let the good times roll, baby, I’m bringing home the pork so I get reelected!” It’s madness on either side.