What has been the economic effect of Bush's tax cuts?

You have cites for all of this, right? And, of course, you can explain the brain drain from Europe to America?

So glad you asked! :slight_smile: From “The American Paradox,” an article by Ted Halstead, in the February 1, 2003, edition of The Atlantic Monthlyhttp://www.newamerica.net/index.cfm?pg=article&DocID=1155:

As for the “brain drain” – isn’t it obvious? Highly educated professionals can make a lot of money here, and America is a very good place to be rich. That doesn’t mean that the things that make it so are good for the rest of us.

I call the above a bad bargain. A real bargain, but a bad bargain still.

I’m in the middle of something else right now, so I’ll come back and respond later tonight. But I want to clear up 2 things.

No, I am not talking about inflation at all.

Ah, here is where you make the mistake. This is the proverbial zero sum game. Money does not represent a claim on the currently extant economic goods. It represents a measure of the values which were exchanged when the money was exchanged. What it is worth today has to do only with the current value of any good or service.

Well, here again, your socialism confuses things a little. I am not talking about any sort of collective morallity. I am talking about personal morality. As in a hierarchy of ‘values’. Within any such hierarchy particular goods or services will rise and fall. Especially in relation to the value of the dollars recieved for various activities. Dollars recieved without an exchange of values will by necessity be valued lower than dollars recieved based on such an exchange. I’m not talking about cultural values or collective values. I’m talking about personal valuation of goods and services.

Clear as mud. What exactly is the difference between “currently extant economic goods” and “the values which were exchanged when the money was exchanged”?

“Valued lower” by whom? If I’m poor and I get a $10 food stamp from the state, I can buy exactly as much food with it as I could with $10 of earned income. If I am the state, then $10 of tax revenue – $10 received without a direct exchange of values between state and taxpayer, although the taxpayer does benefit from public services – is worth exactly as much to me as $10 in income derived from some state-owned productive asset (like the crown lands in Britain, which produce rental income for the state).

A difference in time, for one.

Yes, but your own valuation of the money will be different. If you have to work two hours several miles away to get the $10, but only have to wait for the mail for the $10 food stamps you will value them differently.

Well, again, I am talking about individual valuations, not collective ones. We can place anthorpomorphic characteristics on states, but they are not as illustrative as you think. For instance, in your example, the $10 is not the same. In the first case, simply demanding more income will produce an extra $10 dollars. In the second, you have to convince the renter to pay the extra $10 or you have to increase the amount of land rented. A different choice, and thus a different valuation.

BTW, I am not saying that no value is recieved from government services. I agree that some value is provided to the taxpayer by government activities.

The portion you quoted makes my assertion seem overly broad. I meant that the aqusition of money through trade will necessarily be valued more highly than the aquisition of money wihtout trade. The reason is that trade requires both parties to reach an agreement. As such, each side must give up something of value. In the case of social give aways of money, you have people giving up money without a coresponding voluntary acceptance of the value recieved and you have people recieving money without any requirement of giving up anything of value.

This always sounds so nice. I used to believe it myself. But lets examine a few of the terms, shall we?

Classless: I assume you mean equality of social class. However, in order to apply that to capitalism, you have to make some rather large equivocations. From the wikipedia entry:

*"Using wealth as a dimension, many have used a bi-partite model to view societies, from ancient history to the present day:

an Upper Class of the immensely wealthy and/or powerful
a Lower Class of the poor and/or weak
Karl Marx famously called this a division between the “ruling class” and the working class. Under slavery, this division corresponds to that between the slave-owners and the slaves, while under feudalism, it corresponds to that between lords and serfs. Under capitalism, the former (the capitalists or bourgeoisie) exploit the proletariat (wage-earners). See labor theory of value.*"

Note the equivocation of the relationship between capitalists and labor with the relationship between lords and serfs. While there may be some similarities, there are far more qualitative differences. If you mean classless in the sense that serfs are not legally bound to live on their ancestors farm and work it forever to the benifit of the lord, while the lord is not legally granted power over the serfs, then I agree with you. If, however, you mean to uphold the equivication between this relationship and that of the capitalist and laborer then I cannot agree with you. If that is the case, you have slipped from an equality of opportunities to an equality of outcomes.

But that does not mean a large state sector cannot play a valuable role in a healthy economy.[/QUTOE]I’m not sure I ever implied otherwise. But a large state sector and fully half of GDP are two different things, in my opinion.

This statement is overly broad. Have you ever looked at the long term investments which are quite common? It takes decades to get the profit out of a modern mine and many millions of dollars. Have you looked into some of the long term research and development projects sponsered by private industry, not to mention private individuals?

I don’t think I ever indicated that this was untrue either. But becareful you are not eliminating the middle ground when you say that private investment are only for short term profits while some public expenditures are necessary. Neither of these proves or even implies the other.

Well, this is simply not true. There was a highway system in place when Eisenhower decided to build the one we enjoy today. Here is a history.
"At the beginning of the century, the supply of good roads was nowhere near the growing demand. Most roads at the time were little more than improved wagon trails. In fact, many of the major “highways” were actually vestiges of old trails, such as the Oregon Trail or Santa Fe Trail. There were paved highways, but most were cobblestone and almost all were in major cities. Good road organizations appeared to remedy this situation. The American Automobile Association and the Automobile Club of Southern California (they were separate organizations originally) were formed in California to promote better roads. Additionally, many trail associations were created to address the need of having marked interstate highways; this was the birth of the named highways. The Lincoln Highway, from New York to San Francisco was the first and by the early 1920s many highway organizations were formed which placed and promoted their own routes. By 1925 there were over 250 named highways, each with their own colored signs often placed haphazardly, a fact which created great confusion."

The federal government simply represented a scaling up of this popular program. But, lets be honest, road building is not the sort of thing we were talking about. Just in case, I’ll grant that law enforcement and criminal justice in general, road building and transportation infrastructure in general, as well as national defence and foriegn policy in general are good applications of public money for public goods.

Any activity or business which could have used that money as investment was displaced. Hardly none.

LOL, ok, I’ll add libraries to my list.

No, but the welfare state requires a diverting of large amounts of money from those who earn it to those who do not.

I don’t think I have made this assertion. I hope not. I have made statements to the effect that more private ownership of GDP means more capacity for the sorts of growth that private enterprise is valued for. But I hope I have not given the impression that this alone is any sort of measure of the “health” of an economy.

Of course. As long as you see the validity of suggesting that getting closer to that is a concern.

No, I was not talking about this. This is another subject altogether.

No, we will never agree on this point.

Perhaps, and a given government might be able to legislate economic activities to the betterment of everyone. But I think this is rarer than you may be willing to admit.

Exactly. At the beginning this happened. At the end I’m not sure, but the programs certainly did not grow relative to revenue growth.

The stimulus was not from spending, but from having a rational budget for the first time in years. (And the Republicans deserve some credit for this also.) An actual attempt to get the budget under control, and not stupid tricks like balanced budget amendments full of holes, did cause an increase in investment which is what the economy needed. Lots of other things, like the Internet and the sub-$1000 PC, built demand, so it was a collection of things. But Clinton deserves some credit also. There is also the factor of the several crises that happened during the boom, all of which they maneuvered through. They deserve credit for that also.

First, the actual amount spent on health care is not going to change much - except perhaps in making care available to those who do not have it now. What this policy should do, by increasing employment and improving efficiency, is to move some of the cost now supported by the state into private hands, while of course moving some back into government hands. Don’t you think the cost of health care would decrease without the insurance overhead? I’m sure your doctor has one or several people just doing insurance work. The real point is that getting more people employed with insurance will add more revenues than the program will cost, so you can’t just look at health expenditures in evaluating it. Anyhow, I haven’t studied this enough to be 100% for it, but just offered it as an example of leverage.

I hope I did not give the impression I disagreed with this assertion. If I did, I did not mean to. I think that economic factors beyond Clinton’s (or Bush’s) control lead to the boom and recession they each faced. But I did not mean to say that they were blameless altogether.

I’m sorry, this seems ridiculous on the face of it. Making something free will inevitably increase demand for it. Consider that many sorts of care are not accessed now because people do not want to see a doctor for little ailments. If the care were free, why should they postpone such visits. Consider also, that some tests and procedures are chosen over others because of costs. Remove the patient and doctor from considering costs and this will increase their use as well.

Finally, even if we assume that very few new patients or procedures are caused by this policy. The costs of medical care are increasing at an ever alarming rate. Spending will go up with or without this sort of policy. You will simply shift those costs from the people who could do something about it to those who cannot. A sure way to exacerbate this part of the problem if I ever heard one.

Not really. There would be a moving around of funds, but the overall costs would not be that different. I’ll admit that consolidating the various forms and processes would reduce costs. But I think these costs are not the large percentage of health care cost increases you seem to.

Yes, and several of them fill out government forms. I knew a person once who used to teach classes on how doctors should fill out medicare and medicaid forms in order to get paid for the procedures they performed. Don’t kid yourself that these process are streamlined while the insurance industry is a mess. It just isn’t so.

Right, but I think that is a mistaken point. Everything will have costs. If you add 20-30% more people to the rolls of the insured, and only save the insurance industry 5-7% on their costs, I really don’t think there is much justification for saying that you will save more money than the program costs.

Fair enough.

We need national health insurance.

I agree, but how do you propose we pay for it? That’s what this thread is about, really – if Kerry reverses Bush’s tax policies, if he increases upper-bracket taxes to increase revenue*, will that stifle economic growth or not?

*(And a tax hike will, at any rate, increase revenue. Please don’t waste our time with any bullshit about the laughable “Laffer Curve,” pervert!)

Come now. I have been known to advocate responsible tax policies (from my perspective anyway). But as far as I know, I have not ever said that all tax increases decrease revenue. Clearly a small tax increase can increase revenue.

Surely you, on the other hand, are not claiming that any and all tax increases will increase revenue, are you?

Why, exactly. I know that we have a large number of people without health insurance. Did you know that significant percentages of those people are without health insurance simply because they have not signed up? There are those rich enough to afford it who simply don’t have it, there are those too poor to afford it but who qualify for the assistance programs currently available and who, again, have not signed up. Then there are those who are indeed uninsurable under the current system. IIRC they amount to around 20 million or so (This is a very rough guess from some numbers I am remembering from several other threads). As a percentage of the population this is not the disaster we might think. 1st of all, no one is turned away from a hospital because they cannot pay if they have a life threatening illness or injury.

What I am asking (and once again, BrainGlutton I am willing to drop it in here if it is a hijack) is why the automatic suggestion that the government has to take over funding of medical insurance for this problem. Don’t get me wrong. I am not trying to denegrate the suffering of anyone without access to medical care. But why not explore ways to expand current progrms? Why not explore ways to increase the supply of medical care? Why not explore ways to provide cheaper medical care?* Why the rush to take over the medical industry completely. The government already controls most of it. Why is that not enough?
*By this one, I do not mean simply passing the costs on to others. I mean actually changing things so that some types of medical care is cheaper to provide.

Not that I recall, no. But you seem usually to argue from the economic-libertarian, “supply-side” perspective, and the Laffer Curve is a hoary chestnut of that school of economics. I can’t put my hands on it right now, but I recall that Martin Gardner noted in his classic Whys of a Philosophical Scrivener that “nobody knows what a Laffer Curve is supposed to look like.” That is, no economist have every actually mapped it out with figures to back it up. It is simply a vague illustration of a general theory that increasing taxes, beyond a certain point, decreases tax revenue by stifling the economic activity being taxed.

Why not? Bear in mind that whatever government takes out of the private-sector economy by taxation, it always pumps back in, by one route or another. Why should that stifle economic activity in general terms?

Well, lets re examine your rule about not applying linear estimation too generously, shall we? Are you actually claiming that a 100% tax rate would not affect the economy? Surely not. I am misunderstanding you.

To be fair, the ideas behind the laffer curve are older than Laffer. Take a look at teh wikipedia article and notice the links at the bottom.

When I last worked in the drug industry (2001), the stat I saw on how much of the medical insurance the govt. provided was 44%. That included Medicare, Medicaid, Veterans’ benefits, etc.

With the people off the rolls, typically said to be 45M or so, that means that private insurance covers a minority of the population. It is a sad crazy quilt of a system, fraught with problems in each of its “squares.” For example, we’ve all heard the stories of people not quite poor enough for Medicaid who had to become just a little poorer in order to “afford” it.

My mom is freaking out because she had to quit her job because of increasing pain and disability, yet is not yet eligible for Medicare (is not yet 65). She’s fighting an uphill battle trying to convince the SSA that she is disabled.

My wife and I have to get private insurance. I am a freelance writer right now and get no corporate health insurance, obviously. We’re going to have to get a high deductable Blue Cross plan, which is barely different than having no insurance at all. It will cover basic office visits (copay of $25) and will be useful if something catastrophic happens. Knock on mahogony.

It’s time to put all these health insurance companys, HMOs, and other inefficient, unprofitable organizations out of their misery. And the American people have had enough, too, of dealing with this maze of health care “providers.” We pay for by going to a one-payer systems like most of the civilized world has and completely reforming the tax system. A complete overhaul.

No, I don’t have the numbers. I doubt that even very many people in Washington have the numbers. Do we ever hear the pols talk in specifics, with numbers? No. But we do know that France and Germany have built truly excellent medical programs. Heck, even Cuba is said to have great medical care. Japan’s is pretty good too, as I can attest. I’m sick of hearing the same crap about the Canadanian and British systems (not that I necessary accept the right-wing interpretations of those systems either), that we can’t, with our American ingenuity, build a truly excellent system for our people.

We need a tax revolution in this country. As they about closing sales, “Everything’s gotta go!”

*Payroll taxes–regressive. Gone!
*Sales taxes–regressive. Gone!
*Property taxes–unfair. Gone!
*Crazy quilt of import tariffs–inefficient. Replaced with a single tariff except for those related to industries we truly want to protect.
*Progressive income taxes–fair. Stay! And soak the rich, of course.
*Sin taxes–fair. Stay!
*Etc. etc.

“Payroll taxes” could be read to mean everything deducted from your paycheck. I assume you mean only the deduction for the regressive Social Security tax, and not the progressive income tax deduction?

The term “payroll taxes” is conventionally used to refer to the social security and Medicare taxes…These are taxes that fall specifically and only on wage income.

Let’s get this back on track. This has been an intellectually stimulating thread, but we still haven’t answered the OP: In retrospect, just looking back over the past couple of years, what has been the economic effect of Bush’s tax cuts? Bush credits the cuts with stimulating the economy. Have they?


But only in a limited fashion. There are good arguments that other more productive uses could have been found for the tax cut money. Personally, I am skeptical in the extreme that they would have been put to any use except the creation of entirely new programs. But that is not the question in this thread. IF you look at the amount of money the tax cuts represent as a percentage of GDP, they could not have had much of an effect at all. IMO tax cuts or expenditures are not very good ways to stimulate an economy. I do acknowledge, however, that they can have such effects.

In simplistic terms:

Dow Jones Average, December 1999: 11,400
Dow Jones Average, Today: 10,209

Granted, the average today is way up compared to, say, December of 2002, when it was at about 8400. But there has essentially been (without arguing about who caused it) a net loss under this administration to this point. If you were not savvy enough to buy and sell at the proper times, your net gain over the past four years has probably been negligible. I don’t see where the tax cuts have done anything to spark the economy in a meaningful way.

Errmmm . . . OK, I tried starting a GD thread on this very question but nobody bit . . . Look, just how relevant is the DJA as a measure of the general health of the economy? I mean, those aspects of the economy that directly affect the daily lives of people who have nothing invested in the securities markets – unemployment rates, income levels, inflation, etc. I honestly don’t know, but I would hesitate to simply assume (as Pubbies often do) that a thriving Wall Street and a thriving national economy are one and the same.