One of the easiest ways to recognize a liberal is their refusal to accept that the universe is dynamic rather than static. The most obvious example of this is their perpetual inability (or unwillingness) to grasp the notion that increasing taxes and growing regulations impact taxpayer behavior. This can be seen in on a number of levels. On the state level it can be seen by companies and wage earners fleeing high tax locales for those with low taxes or no income taxes. Rush Limbaugh famously left New York two years ago for the zero income tax comfort of sunny Florida. Then Governor Paterson responded by demonstrating his state’s disdain for the people who actually fund New York’s nanny state spending: “If I knew that would be the result, I would’ve thought about (raising) the taxes earlier.” And New York is not alone… New Jersey, Maryland and many others have also seen taxpayers flee their states in recent years.
California too is befuddled by the exodus of taxpayers from the progressive Nirvana Democrats have been creating there over the last 40 years. In 2010 an average of 3.9 companies a week moved their operations out of California due to high taxes and burdensome regulations. During the first four months of 2011 that number increased 25% to 4.7 companies leaving per week… and taking their jobs with them! What is the destination of choice for those companies? Not surprisingly, Texas, with its minimalist regulation mentality and no income or capital gains taxes. California officials were so flummoxed by the exodus that a delegation of (mostly Republican) legislators and Democrat Lt. Gov. Gavin Newsom went to Texas to talk with erstwhile California companies about why they had left the not so Golden State.
Again, not surprisingly, the answer was obvious… High taxes and burdensome regulation. For decades California socialists in Democrat clothing assumed Golden State economics were static and that they could simply raise taxes or increase regulation and employers would simply suck it up. Of course they were wrong, but they (and California’s voters) have yet to figure that out.
At the federal level, Barack Obama is the lead siren singing the “Tax the rich” song, ostensibly to try and shore up Uncle Sam’s finances. Last week the President said: “I believe that we can’t ask everybody to sacrifice and then tell the wealthiest among us, well, you can just relax and go count your money…”
In an environment where fully 47% of the people in the country pay either zero income taxes or actually get “rebates” for taxes they didn’t pay, Obama and the Democrats want to hike taxes on the people who actually choose to put their capital at risk and produce the jobs that fuel the economy. And like all good Democrats, they feel like they can simply raise taxes and the rich will automatically fall in line and fork over more money without making any adjustments in their behavior.
Strangely enough, that’s not quite how things work as human nature on the federal level is no different than on the state level… when taxes go up, people change their behavior. While most people are not going to move to another country if their federal taxes are raised, they will do what they can to reduce their tax burden, from investing in foreign markets, to parking their money to hiring high powered accounting firms to help them shelter their income.
Nearby is a table whose data is drawn from IRS numbers showing tax rates from 1986 to 2005. The table focuses in on the top 1% of tax filers and isolates the tax rate and the share of overall taxes paid. The third column is a ratio I created that I call the Prosperity Ratio. (My apologies if someone has used the ratio earlier, I’ve just not seen it.) Essentially it is the average income tax rate paid by the top 1% divided by the percent of the overall income tax burden paid by the persons in that same 1%. I’ve dubbed it Prosperity Ratio because the higher the ratio, the more people who are prosperous and happy… When taxes on the “rich” are lower they get to keep more of their money, which of course makes them happy. Simultaneously those same taxpayers pay a larger percentage of the overall income tax burden, which means that the remaining tax payers are happier as well because they are paying a smaller portion of the overall income taxes. Everybody wins.
To demonstrate how this Prosperity Ratio works, in 1986 when the average tax rate paid by the top 1% of taxpayers was 33.13%, they paid 25.75% of all federal income taxes resulting in a Prosperity Ratio of .78. By 2005 when the average rate paid by the top 1% had dropped to 23.13%, they were paying 39.38% of all federal income taxes, generating a Prosperity Ratio of 1.70. Everyone won as the rich, able to keep more of their money were motivated to create more wealth, generating more revenue for the tax collector. The other 99% of taxpayers were happier as well as they were able to keep more of their income too. It should be the goal of the government to generate the highest Prosperity Ratio by cutting taxes as until the ratio starts declining.
Don’t hold your breath of course. Liberals live in a fantasy world where they can raise taxes or increase red tape and the world magically bends to their will and everyone lives happily ever after. Unfortunately for the rest of us we have to live with the real world consequences of their static delusions. Maybe now is a good time to have a discussion about the difference between static and dynamic, or in the lexicon of a liberal, fantasy and reality. And maybe this time we should include the people who keep voting for them…
See author page
Another factor is at play here. Dr Author Laffer developed a “curve” that explained human behavior based on tax rates. Larry explains that reducing taxes never increases tax revenue. He explains increased tax revenue as “the GDP always increases”. Others look at historic increases of tax revenues after tax rate cuts as nonexistent. The truth is in between. A good explaination is provided by Robert Sturgeon here http://www.vistech.net/users/rsturge/laffercu.html
It doesn’t take much thoght to see that if the poor doesn’t have much they don’t spend much.
The cow needs to be fed, and if the poor don’t have the food then someone higher on the food chain needs to do the feeding.
Don’t provide jobs, don’t get taxes , simple math
Your partial quote by Obama left out another of his famous Straw Men Fallacies.
Here’s the whole quote:
Not going to ask ANYTHING????
Who does Obama think he’s fooling?
On average taxpaying Americans (that’s all 50% of Americans who pay any tax) send 19% of their income to the federal government.
Of all taxpaying Americans, by far the most taxes collected by the feds is from those rich folks Obama falsely claims ”We’re not going to ask anything of you.”
He’s a creep and a liar.
BTW, wealth accumulation is not a ”zero fund game.”
“The growth in productivity of Americans in the top twenty percent of tax units increased the size of the economic pie sufficiently to register major gains across the entire distribution of after-tax income.” – Cornell economist Richard Burkhauser
I have seen the words “fair share” frequently of late from both sides of the aisle. “Fair share” is a presumptive argument. It presumes that spending levels are appropriate and what we really need to do is determine how the costs are borne. This is fallacious. We are over-spending and it must be reined in. Carter tried “zero-based” budgeting back in the late 70’s. Unfortunately, his budget also began with presumptions that programs in place needed to be kept in place, the argument was only on how much we could spend on them.
In the mid-90’s I remember seeing a cartoon of a car with Japanese in it soaring off of a cliff. It had launched from a ramp and as so gravity hadn’t negated the angle of ascent yet. The caption went something like, “Everything’s ok so far.” The Nikkei collapsed by over 70% from that point.
We are already off the cliff and hurtling down. Our cartoon caricature would be more appropriate showing the car about 5 feet from the floor of the canyon with the same caption.
We need to let our representatives know that the argument isn’t over what the fair share is. The dilemma is over-spending and the damage we are doing to our balance sheet.
Every night as you tuck your children into bed, you should thank them for letting you spend like a drunken sailor back on shore after ten months at sea. Unfortunately, the disbursing officer’s safe is empty.
Nan, that quote by obama is perfectly accurate. He isn’t going to ask anything of us.
He’s just going to take it, laws or rights be damned.
To make matters worse, don’t be surprised if people making significantly less than 250K suddenly find themselves to be considered rich. It’s the only way his “plan” will work.
The distinguishing feature of the neo-conservative, on the other hand, seems to be an unquestioning acceptance of the proposition that tax cuts for the wealthiest will unfailingly produce increases in economic growth, with the degree of that growth corresponding inversely to the degree of the tax cuts. This is apparently held to be true, regardless of where tax rates stand at the present moment.
What many neo-conservatives fail or refuse to recognize is that there’s a point of diminishing returns that applies to this principle. As you approach this point while continuing to lower tax rates the wealthiest will of course continue to benefit, but dysfunction will begin to appear elsewhere. Dysfunction initially takes the form of deficits resulting from inadequate tax revenues. The longer it’s ignored the larger the accumulating debt becomes, until the debt debt burden eventually becomes unsupportable and the entire system collapses. At that point the wealthiest cease to prosper and become part of the collective disaster.
The point of diminishing returns is graphically represented on that neo-conservative icon known as the Laffer curve. Whether you believe in it or consider it totally discredited, you will note that it does depict a curve having a steep upward slope, a peak, and a steep downward slope on the other side. That steep downward side represents the territory where serious dysfunction sets in–where tax collections are insufficient to sustain a fully functional society and economy.
If you accept the Laffer curve as a meaningful depiction of how tax rates relate to revenue, the important question is just what the optimal tax rates actually are. What top rates maximize revenue and, by extension, maximize economic activity? In other words, where does the Laffer curve bend, transitioning from a positive overall effect into budgetary and economic dysfunction?
You might want to have a look at this article by Dylan Matthews, which includes a range of opinions from a number of noted economists.
The majority hold that current rates are too low, to say nothing of the significantly lower rates Ryan has proposed. To me this seems totally obvious. We’re not paying the bills already, and haven’t been paying the bills for most of the past 30+ years. During that time the wealthiest have gotten far wealthier, with the bulk of wealth and income increasingly concentrated on the high end. That might seem just fine to those who have benefitted, but it doesn’t seem just fine to the majority who have been steadily losing ground, and are now being presented with budgetary solutions that will benefit the richest even further (but only to the point of eventual economic disaster) while imposing increasing levels of austerity on everyone else. Additionally, we’d be defunding the nation’s future. All to the short-term benefit of the wealthiest and most privilaged among us.
To me it seems obvious that we’re going to have to deal with both spending cuts and revenue increases. That latter component–revenue increases–isn’t going to come from further tax cuts. Thinking that it can is irrational.
It’s not liberals who are living in a fantasy world lately.
@Greg: One of the things you missed about the Laffer Curve is that at the 18% tax level, the tax payer starts to alter his behavior. That means quite a few things like changing investments from stocks into tax free bonds. This reduces the capital needed by businesses to increase production while reducing tax revenue. As the tax rate continues to climb, the tax payer questions if it is worth the effort to continue to increase income when so little is actually returned.
When the tax payer is a small business filing as an individual instead of a corporation, the increased taxes reduces the amount of growth of the business which correlates to hiring additional personnel which can pay more taxes. The Laffer Curve has an ideal level where the government realizes the maximum tax revenues before the tax payer implements maximum tax avoidance. This ideal point changes as the economy changes. When the government fails to find that point and exceeds that point, economic stress/failure sets in. The government needs to understand the economy to constantly alter the tax rate to stay on the idea point. When the government sets the tax rate based on political gain instead of scholarship, the economy suffers. I think we are currently in that situation now.
There ought to be a flat tax for everyone, down to those who make $1/year. The tax ought to be a set percentage and, if the wealthy have to be taxed more, then there needs to be a fixed ratio, like 3x (poor pay 10% and the rich pay 30%). So, if people vote to raise taxes, they are voting to raise these taxes on themselves.
If I understand the Prosperity Ratio correctly, as the Ave income tax rate on the top 1% falls, the PR rises because the rich end up paying a higher % of all taxes. At the most basic level (ignoring all other potential explanations for any seeming correlation between the data) I would expect the PR to generally rise and fall inversely with the Average Income tax rate. To test this I assigned values, 1-20, for the tax rate and PR and sorted by tax rate (tax rate ranked lowest to highest, and PR highest to lowest).
While it’s true the PR is highest at the lowest tax rate (2005) and lowest at the highest tax rate (1986), after that the correlation falls apart. Your second lowest tax rate (23.25 in 1990) has only the 14th highest PR (out of 20). The third lowest tax rate (23.34 in 1989) is only 13th highest. Looking at the other end of the spectrum, the second highest tax rate (28.87 in 1996) has the #11 highest PR, higher than the aforementioned second and third lowest rates. I think you may have relied too heavily on years 1 and 20 to draw your conclusion. Statistically, the relationship between the Ave tax rate and the % of taxes paid by the top 1% is much less robust than you’re post implies, and any relationship is not necessarily explained by the data or conclusions you’ve presented.
1 23.13 39.38 170% 1
2 23.25 25.13 108% 14
3 23.34 25.24 108% 13
4 23.49 36.89 157% 2
5 24.04 27.58 115% 10
6 24.31 34.27 141% 3
7 24.37 24.82 102% 18
8 25.05 27.54 110% 12
9 26.41 24.81 94% 19
10 27.12 34.75 128% 6
11 27.25 33.71 124% 7
12 27.45 37.42 136% 4
13 27.50 33.89 123% 8
14 27.53 36.18 131% 5
15 27.64 33.17 120% 9
16 28.01 29.01 104% 16
17 28.23 28.86 102% 17
18 28.73 30.26 105% 15
19 28.87 32.31 112% 11
20 33.13 25.75 78% 20
@Randy, #18:
The nation had many prosperous decades of expanding economic activity without significant deficits or skyrocketing debt when high-end tax rates were much higher than they are now. While there were rich and poor, as there will always be, the disparity between the wealthiest and everyone else was far less exaggerated.
I can’t help but notice that all of that changed beginning with drastic cuts in the high-end tax rates, and that deficits and debt have ultimately worsened each time we’ve cut them further.
I don’t suppose it occurs to you that the eras you seem to remember as rosy didn’t have the SS and Medicare burden we have now for both the Greatest Generation, and the onslaught of the baby boomers. Or is it that you overlook the two largest single expenditures of the nation today, without contrasting it with the past, completely?
The problem with ponzi schemes is they eventually hit and collapse. Thus the reality of both SS and Medicare. But then, ponzi scheme failures are not always overt in their early days. It even took awhile for Bernie Maddof to be found out, ya know.
Greg #10, which times exactly are you referring to? Please don’t say “new deal” era.
@Zac, #11:
I was thinking of the period beginning immediately after the Second World War.
I will have to debate you later Greg. I have to go out with a girl.
@Randy (#1): The Sturgeon essay is entirely theoretical and doesn’t apply to the real world of tax policies since Reagan. Obviously, there is a point at which the Laffer curve probably does kick in — for example at a 95% marginal tax rate, it’s entirely likely that people taxed at that level would not work very hard to make more money. But that’s not the real world. How many entrepreneurs would really be dissuaded from working by paying a marginal tax rate of 39%, as opposed to 35%? In any event, no tax cuts in modern times have ever paid for themselves — meaning that they had to be financed by increased borrowing, resulting in increased national debt.
With regard to dumping on poor old California, our total state tax burden is on the order of 10.5%, while that of Texas is about 8.4%. That’s not a huge difference, especially considering that per capita income in California is significantly higher than in Texas. And guess what — the tax burden on our businesses is actually LOWER than it is in Texas (2nd link, below)! Where the huge difference comes in is housing costs: our homes sell for multiples of the price of comparable homes in Texas and our apartments rent for much more, also. That’s by far the biggest reason behind whatever shifting demographics there is — the need to pay workers more money, so that they can afford to live within a reasonable distance from where they work.
With respect to Democrats being responsible for California’s fiscal problems, well, since you brought up Laffer, here’s what Laffer had to say, recently, about our once and current Governor, Jerry Brown:
http://orangepunch.ocregister.com/2010/11/11/art-laffer-jerry-brown-was-californias-best-governor/37346/
With respect to the myth that we are losing jobs to Texas — that’s what it is — a myth.
http://www.statesman.com/business/study-california-bad-for-business-losing-jobs-to-1312721.html?printArticle=y
Little appreciated fact: California bails out the national treasury to the tune of $50 billion a year — that’s the excess money we send to Washington, calculated from the total amount we send minus the amount we get back. This is FAR more than any other state and it’s about double that of our current state budget shortfall. Just have the red states (predominately net RECEIVERS of Federal tax dollars) send us back the money that we sent to them, and we’d a have a huge budget surplus and could again offer free tuition at state universities, etc.
And California, with only 11% of the nation’s population, still gets more than 50% of the venture capital investment. These are investments in the businesses of the future. Texas gets 4%. The VCs vote with their pocketbooks and they know a lot more about business climate than political pundits and politicians.
I know that I don’t plan on moving out anytime soon.
– Larry Weisenthal/Huntington Beach, CA
@MataHarley, #13:
The Baby Boomer demographic is not a permanent feature.
@Zac, #14:
Well. I see YOU have YOUR priorities. *S*
A more critical mathematical flaw with the Prosperity Ratio is that this model doesn’t adjust or account for the impact of changes to the tax rates of the other 99% during the same time frame. Since the “% of All Taxes paid” by the top 1% is a function of the taxes paid by all groups, any changes to the tax rates of the other 99% would similarly impact this ratio. Assuming these rates are not entirely static during this time period, they are variables in the equation and cannot be ignored in an attempt to tie the entire change to only one variable (the tax rate of the top 1%).
@openid.aol.com/runnswim:
Larry, you forget one other thing…..maybe more, but it is what I’ll point up:
There’s a hidden tax that is greatest in CA than anywhere else.
Regulations cost $1.75 trillion in compliance costs, according to the Small Business Administration.
CA has all manner of extra regulations over the federal ones.
Remember CA put itself under Kyoto even though the nation did not.
CA plans to have more energy greener before the rest of the nation, no matter what it costs.
Heck, the state was even planning on outlawing black roofs on cars!
The hoops one must jump through to do business in CA are amazing.
Even the film industry couldn’t stay for the most part.
@Nan: Glad you brought that up; I’ve discussed this in the past (i.e. California having effectively ratified Kyoto).
This is another area where California is doing a great service for the nation. So many conservatives have stated that regulating greenhouse gases would lead to an economic calamity. So many liberals have stated that regulating greenhouse gases will lead to a technology boom — in the energy sector and elsewhere. We could all argue this one for decades, but isn’t it great that California just volunteered to be the nation’s guinea pig and put the concept to the real world test?
And this isn’t just Democratic politicians — these are the voters, who — in a resounding fashion — turned aside the recent efforts by the petroleum industry to roll back implementation of California’s greenhouse gas emissions controls until the unemployment rate came way back down.
So we’ll all get the chance — finally — to see who is/was correct in this particular argument.
– Larry Weisenthal/Huntington Beach, CA
Zac, okay, if you realy have to go out with a girl.
tell her that we will wait, until you’r back,
bye
couldn’t resist that one, hope you have a good time,
Lawrence O’Donnell confuses Jesus Christ with BH Obama!
There’s the flow of debate, Greg. And to my last observation you say:
The point I made was that you are not comparing American eras with the same debt service due to both the mid 30s advent of Social Security, or the mid 60s creation of Medicare. The majority of our debt comes from entitlement programs… money collected, spent by prior Congresses on anything but their original intent (in the case of SS).
In the case of Medicare, we all pay for an insurance policy we cannot have until we’re 65, and our “premiums” are paying for those on Medicare now. The proverbial robbing from Peter to pay for Paul. It should have been obvious from the start when LBJ signed Medicare into law, and the first two enrollees were those poor charity cases, Harry and Bess Truman. Did the Truman’s pay a dime into Medicare? Of course not. Could they afford their own insurance plan? Well, if a former POTUS couldn’t , who can?
But instead of noting that the debt service of this nation is considerably different than the post WWII era – the very same era that thrived on the Congressional piggy bank, SS – that you use as a comparison, you merely say, paraphrased, “hey… Boomers will be dying soon enough”.
I believe my point was, and still is, you’re comparing apples to kumquats, then sitting back with a smile. Don’t work, guy.
To the more on topic post subject:
Actually, dysfunction takes the form of deficits by spending more than you can get away with stealing… er, collecting. Now I’m well aware that Larry remembers our conversation INRE “tax cuts”, since he’s referenced them recently between he and some FA she-who-shall-not-be-named person. LOL
The difference between Larry’s and my assessment back then, and even today, is that I look at tax policies, and Larry narrows his vision and commentary to only legislation that is a tax cut.
To use his analogy in that limited of context… that if you collect less money from taxpayers, you take in less tax revenue… that’s a true statement. As a simple analogy, that’s just like saying if I charge you, Greg, $200 more rent monthly, I’m going to have increased revenues.
But in the real world isn’t so discerning. If my liability insurance, costs of repairs and maintenance for the building, and property taxes have increased by $2600 for that annual tax year, my $200 rent increase to you, Greg, still nets me a loss. Conversely, if I reduce your rent by $200, find different insurers/maintenance, and lobby the tax assessor for reduced property taxes and reduce my other expenditures by $2600 annually, I end up with a net gain.
Lesson? When assessing fiscal results, you can’t selectively pick a single action, and assume that is the end all, be all final result you wish to achieve.
Such is the nature of tax policies… they are generally a combination of affecting tax rates, as well as reforming IRS regulations for credits and deductions. If you raise taxes, but give back more in credits and deductions, are you coming out ahead? And what is it’s effect on the economic trend? The winner is to find the right combination that stimulates and dying economy.
i.e. every one always says Reagan “cut taxes”. In fact Reagan – along with a Dem controlled House and GOP controlled Senate (for 6 of the 8 years) – did cut taxes for individuals. What is always overlooked is that he also raised taxes on corporations and reformed IRS regulations. The combination of policy changes – income tax reductions and increased corporate taxes, plus elimination of credits/deductions – did result in pulling a nation out of a Carter recession with an upward trend in revenue because of a recovering economy.
On the flip side, Clinton is credited by the lib/progs for raising taxes. But he also added a ton of IRS changes/increases, more welfare entitlement programs and tax credits *not* for the wealthy. In other words, those increases were not business growth incentives, but wefare nets. Clinton, unlike Reagan, was enjoying a healthy economy floating on the dot com bubble, and the beginning of the housing bubble. (Yes, it did start back then… and by 1998 was on a strict upward trajectory that was continued under the Bush/GOP admin).
But unlike Reagan’s economic recovery by his tax policies, Clinton left us in the beginning of a recession… something that Clinton’ista’s like to forget. Bubbles and fake economies are fickle like that.
Then there’s that fairy tale of the Clinton “surplus”. I always find it baffling as to how anyone would believe we had a “surplus”, and yet see the national debt increase from $4.692749 trillion in Sept 1994 to $5.807463 trillion in Sept 2001. Fer heavens sake, if we aren’t adding to the debt with deficits, and having balanced budgets, then why was the debt increasing during those three “surplus” years?
The details lie in the number/fact finding fudging. Clinton’s combo of tax increases/IRS regulations did whittle down the public debt, but the bubble economy also increased the intragovernment holdings to a greater extent…. better explained as taking money out of the SS “lock box”, and replacing it with an IOU. Thus the reason the national debt went up, and didn’t stay stagnant or reduced.
For example, in 2000, the CBO puts out reports that indicate a budget surplus of $236.2 bil. But the intragovernment holdings went up $248 bil that same year, increasing the national debt… not reducing it. (debt=public deb + intragovernment holdings).
But it seems when the Treasury puts out reports for CBO and other sources to use, they do not include changes in the Intragrovernment Holdings in their reports. Quite convenient to just use the reduction of public debt as a surplus, don’t you think? No admin should be allowed to get away with this.
This deliberate omission is noted even in Clinton’s own Treasury reports (using his 2000 financial report as an example.
On pgs 16-17:
The burning question for all Americans, of all political stripes, is…. how do we have an accurate picture of the economy, when the government totally eliminates a vital segment of reported info that reflects the nation’s debt?
The most ironic fallacy of all is the revisionist history that bringing down the public debt, or achieving a balanced budget between the GOP Congress and Clinton, was attributed to Clinton’s 1993 tax increase. Both Cato Institute, and Heritage Foundation remind us of an inconvenient reality. That even Clinton’s own OMB, and the CBO, were still predicting $200 billion annual deficits for the following 10 years. That was altered by at least two ensuing factors: 1997 capital gains tax cut and a temporary reduction in the growth of federal spending…. which set the last three years of Clinton’s term on growth… even tho based on a short lived, false dot com bubble growth.
But every year under Clinton was just like every year under every other Congress – a budget that gets bigger and bigger, without fail and regardless of party control. They seem to have no clue on how to downsize, pull in the belt and instead of an insatiable spending appetite.
The bottom line is still the same ol’ logic we fiscal conservatives like to throw at the lib/progs. Spending must not exceed anticipated revenues. If Congress reduces tax rates, they should reduce spending… but they don’t. When they increase tax rates, they still spend more than they collect.
None of the three proffered budgets – the Debt Commission, Obama’s or Ryan’s – is acceptable because not one of them gets us close to a balanced budget for at least two decades. In the meantime, they’re going to drain the US taxpayer dry.
@mata:
Tax cuts decrease revenue and increase debt. In that gargantuan review of the effect of all the tax law changes (I believe, from the late 60s to the time of the review, which was around 2007, if memory serves), the author considered the net effect of everything relating to the particular law in question — e.g. elimination of a deduction is a tax hike; granting of a deduction is a tax cut (i.e. it wasn’t based on simply what was done — if anything — to the tax rates).
Anyway, the take home message was that laws which cut taxes reduce revenues and increase debt. Laws which raise taxes increase revenues and decrease debt.
With regard to the so-called Reagan expansion — it was illusory. Of course the economy recovered. Reagan’s policies resulted in unprecedented, massive levels of borrowing. As long as we were borrowing the money we needed to run the government and taxes could be kept low, the economy kept expanding — even as the country reversed the debt pay down trend of the previous 35 years and started to build the debt that the GOP rails about today. If you or I supplemented out income with massive continuing credit card borrowing, our economy would expand, as well.
Conservatives look at gross tax revenues and see that they went up, despite Reagan’s tax cuts. So they claim that supply side economics worked. But the reason the tax revenues increased is that the GDP increased. The GDP always increases (except during rare recessions) and therefore tax receipts go up, also. But GDP increases primarily because more people are being born and grow up and go to work and move up the economic ladder. More people require more government. So government expenses rise with GDP, but government revenues rise more slowly than GDP. That’s what makes the debt to GDP burden go up, when you cut taxes.
What Clinton deserves great credit for is making — as the foundation of his economic policy — pay down of the debt, as opposed to expansion of the economy. Yes, of course, the GOP made it possible for Clinton to achieve his goal, through both reduction in some spending (welfare reform) and increasing taxes. But let’s not forget that Clinton was the only President since 1980 to make deficit reduction job one.
So you trash Clinton because his tax increases did contribute to triggering a very mild recession. Recessions are good for the economy. They deflate bubbles. Post World War II, we always had recessions. A little bit of tolerable pain for a lot of long term gain. Remember, we paid down the war debt from a debt ratio of 1.1 after WWII clear down to 0.3 after Carter — despite recessions. Despite the Great Society. Despite Vietnam. Despite the early 1970s oil crisis. Despite hyperinflation under Nixon/Ford and stagflation under Carter. The debt ratio kept coming down.
Until Reagan. So we got this unprecedented, uninterrupted economic expansion. Fueled by tax cuts paid for by borrowing and ratcheting back up the national debt. So Reagan “bought” economic expansion through running up debt. Clinton raised taxes and the country’s economy was put back on a sustainable footing. No, he didn’t completely balance the budget, but you really don’t need to entirely balance the budget.
When a business is expanding, it doesn’t have to balance its budget every year. Large corporations borrow huge amounts of money to finance expansion. But this only works if their business is growing faster than their debt level. Under Reagan, the debt level grew at a higher rate than the economy grew. Clinton finally reversed this although it took a very mild (and very “normal”) recession to accomplish this.
Everything would have been A-OK, hunky dory. Except that Bush decided to double down on voodoo economics. Massively cut taxes. While massively increasing spending (two wars; Part D Medicare). Yes, the spineless, hyper-political unprincipled Democrats deserve their fare share of the blame, also. But none of this changes a few clear conclusions:
1. You can’t borrow your way to prosperity. Well, actually you can, for a little while, until reality rears its ugly head.
2. The greatest and most courageous Presidential decision of the past 30 years was Clinton’s decision to make deficit reduction the foundation of his economic policy.
3. Voodoo economics is voodoo economics. It’s the biggest Ponzi scheme which has ever been perpetrated on the American taxpayer — it dwarfs Social Security, by comparison. The last 30 years has been one giant Ponzi scheme, based on tax cuts. You cut taxes for today’s taxpayer; borrow money to pay for them; and then pass the bill along to the next generation of taxpayers.
Before Reagan, the nation was on a 35 year path of economic advancement. Sure we had recessions and inflation and other “normal” economic hiccups. But the debt level always went down. For 35 years! Then Reagan decided to test the theory of supply side economics, just as Lenin decided to test the theory of communism.
Communism failed, and so did supply side economics.
It’s time to raise taxes. Not just on the rich. Everyone needs to sacrifice to dig ourselves out of the hole that we’ve dug for ourselves, during our ill-fated flirtation with voodoo economics.
– Larry Weisenthal/Huntington Beach, CA
Tax cuts ONLY increase debt when spending is not cut by equal or more. You want tax increases. I want spending cuts. We both want to get the nation out of debt. With my way, we’ll get there. With your way, as history has shown, they will just spend more.
@openid.aol.com/runnswim: Yes Larry, it is great that CA is throwing their tax money in the ocean!
@Greg:
That is as intellectually dishonest a statement as I have seen here in quite a while. For one, government spending changes greater than the rate of increase for GDP. Federal revenue has stayed relatively constant, as a percentage of GDP, since 1944, at around an average of 17-18%, regardless of the tax rate at the time.
This begs the question though; Do tax rates affect the GDP? I believe they do, but there are many factors affecting the GDP, outside of taxes, so this is hard to prove definitively. For example, tax rates were constant from 1999 -2003, yet we started that period off in the middle of a GDP boom, mainly due to the dotcom explosion, until 2000, then the dotcom bust happened, and the GDP growth rate dropped. Bush cut tax rates in 2003, and starting in 2004 we had 5 good years of growth, both in GDP, and overall federal revenue, until the housing bust. But our real problem during that time wasn’t a shortage of government revenue, but rather, increased spending, much greater than the increase in GDP.
It is spending compared to GDP growth that puts the government into financial trouble.
I don’t care how one looks at taxes, GDP, spending, or anything else associated with the economy. It doesn’t happen in a vacuum. One thing affects another, and simply saying that we need to raise taxes to increase federal revenue is to forget the affect higher taxes have on GDP growth.
Besides, if you liberals were really interested in taxes, federal revenue, and deficits, then you’d also be calling for ALL tax rates, including those on the lower income earners, to go back to pre-Bush levels. By arguing that only the “rich” need to pay the higher rates, you’ve shifted the argument into the realm of discussing just how much the “rich” should keep compared to the poor, or middle-class.
One last thing; You liberals do realize, of course, that higher taxes are not necessarily borne by the “rich”, but passed down to the consumers themselves, many of whom are the lower wage earners.
@johngalt, #27:
Consistent failure to take in enough money to pay your expenses is indicative of a budgetary dysfunction. I don’t believe there’s anything illogical about that statement, nor anything intellectually dishonest about making the observation.
Intellectual dishonesty sets in when it’s asserted that this problem can be rectified soley through spending cuts, while misrepresenting or concealing what what the consequences of those spending cuts will be. Ryan, for example, doesn’t want to acknowledge the fact that the Medicare changes he’s proposing will increase future beneficiaries’ out-of-pocket health care costs by thousands of dollars per year, and that those seniors lacking the personal means to make up the difference will simply have to do without the level of health care seniors presently enjoy. Similarly, Medicaid cuts will deprive those who cannot afford some essential services of those essential services. This point is evaded by essentially saying, “That will no longer be our responsibility. The state is in a better position to make those decisions. Talk to your state government.”
Intellectual honesty requires such issues to be confronted head on. If we’re cutting spending items, we need to make those decisions with a full understanding of the consequences. Without that, some very bad decisions will be made. If consequences must be hidden in order to convince people of the rightness of one or the other side of the argument, the presentation is dishonest.
In the context of an honest, open, and informed discussion of the entire budget problem, my guess is that most Americans will accept the necessity of both spending cuts and tax increases.
What happens when voters believe the presentation has been dishonest?
This is what was waiting for Paul Ryan at a town hall meeting back in Wisconsin today. The second clip in the video is from another town hall meeting today, this one with Congressman Dan Webster, back home in Florida.
Sorry about the source. For some odd reason, I couldn’t find anything on the Fox News sites. Feel free to ignore Maddow’s comments. The video clips pretty much speak for themselves.
Breath mints- $1.00
Box of fine chocolate- $8.00
Dinner and walk in the park- $45.00
Kiss on the cheek from a sweet curly haired hispanic girl- priceless…
*And for everything else there’s master card.
I used to be a humble farm boy and now I am just humble, not bad though, she is four years older than simple Zachariah. I had a great time Bees, thank you. Much better than debating on FA.
@johngalt: You perpetuate a cherished supply sider myth — that tax receipts remain constant as a percentage of GDP despite changes in tax rates. No, that’s not correct. Or, rather, that’s only correct if you construct a graph with a broad axis, running from zero to 100, which conceals the impact of small changes in tax receipt to GDP ratio. Small changes which have a huge impact on budget deficits.
Government spending actually tracks very well with GDP rise, for obvious reasons, except for times of crisis (e.g. war , e.g. catastrophic economic collapse, which necessitate temporary and unusual government spending increases). If it were true that tax receipts increase in proportion to GDP, regardless of tax rates, there’d have been no massive reversal in the decline of the debt to GDP ratio, following Reagan’s tax cuts.
Under the period of Reagan’s policies, tax revenues as a percentage of GDP declined significantly. Gross tax revenues (adjusted for inflation) were virtually flat. In contrast, under Clinton, tax revenues as a percentage of GDP rose significantly. Gross tax revenues rose far more robustly than under Reagan. In addition, Clinton cut spending, relative to Reagan, mainly by rolling back defense spending. The results speak for themselves: Reagan massively increased the debt ratio; Clinton cut the debt ratio.
Now (same table), Bush comes in. Cuts taxes. Same old same old. Revenues as percent of GDP fall. Rate of revenue rise falls. Debt ratio rises. Rate of spending also goes way up, relative to Clinton.
Here’s the actual, complete, unmassaged data, year by year which backs that up:
http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=200
Example:
Tax receipts (in billions of constant FY 2005 dollars):
1981: 1,251
1982: 1,202
1983: 1,113
1984: 1,174
1985: 1,250
1986: 1,277
1987: 1,375
1988: 1,421
1989: 1,494
1990: 1,508
1991: 1,473
1992: 1,467
1993: 1,511
1994: 1,617
1995: 1,691
1996: 1,775
1997: 1,889
1998: 2,040
1999: 2,136
2000: 2,310
2001: 2,215
2002: 2,028
2003: 1,901
2004: 1,949
2005: 2,153
2006: 2,324
2007: 2,414
2008: 2,288
2009: 1,906
Just as I said, actual tax receipts were relatively flat during the Reagan and Bush years, even as GDP was robustly increasing and government spending (much of it the massive defense build up) was also increasing. This resulted in a doubling of a debt ratio which had been steadily falling for 35 years. Maybe the defense build up was worth it; if so, we should have paid for it, rather than cutting taxes and borrowing the money to finance it.
During the Clinton years, with the Clinton-Rubin tax increases, actual tax receipts went up steadily and substantially and Clinton also markedly scaled back defense outlays, and the deficit came back down.
Bush goes in, cuts taxes and fights a war (which, again, may have been worthwhile, but it also should have been paid for), and the deficit and debt ratio again balloons.
Charles Krauthammer is no fool and he’s no “lib-dim.” He wrote last winter that extending the Bush tax cuts will add 900 billion in debt with money borrowed from China which is going to stimulate the economy and therefore improve Obama’s re-election challenges. Not a single GOP politician has said that extending the tax cuts will help the GOP’s born again resolve to cut the deficit; they are just defending it as an economic stimulus, pure and simple, which is all it is, only in very indirect language, while Krauthammer had the intellectual honesty to call a spade a spade.
– Larry Weisenthal/Huntington Beach, CA
@Greg:
How silly. Of course, you can find the wacky conservative here or there who thinks there should be no taxes whatsoever, but nearly all of us recognize there is a need for government and that government must be paid for. The argument is how much and who pays. Conservatives recognize that government tends to piss money away freely and to use a great deal of it to make political payoffs (that is the very essence of our convoluted tax system).
I propose an amendment which ties spending level to a percentage of the previous year’s GDP. Our economy goes down, and government starts spending less (just as a normal household would do). What history has shown us is, there is a sweet spot of government activity, around 18% or so, where there is a maximum amount of freedom for business and a reasonable amount collected in taxes.
@Greg:
The point of the Laffer curve is, taxing at 0% or at 100% results in no income to the government. The key is using experience to find the sweet spot where there is a maximum amount of economic activity where the government is able to function.
@Greg:
This is a canard. A 90% tax rate did not mean that rich people paid 90%. They used the tax system to figure out ways to pay much less than that. A business ought not spent its time and resources figuring out how to circumvent the tax code (like GE) or to have huge subsidies written into the tax code in order to lessen their burden.
A simple low, flat tax, without all of these tax credits written into the law (from whence comes lobbyists of the worst kind) would mean a business could concentrate on its business.
User fees and taxes for individuals at set amount without all of these deductions is the easiest way to go and will result in the greatest prosperity.
Did it ever occur to you that might be related to government spending?
@Nan G: I asked a friend of mine in California how many inspections they had in order to do an additional to their home which extended into the backyard. It was a substantive addition and it seems like this required a dozen inspections. I don’t recall how much this cost, but I would not be shocked to hear $10,000 (and oodles of tax money for these inspectors). This compares to nearly 2000 sqft that I added on to my own house. I had to send a picture of the proposed project, along with the color of the exterior and the roof to my neighborhood association. The builder was a known contractor in our area. No cost. That was the only “inspection.” No one from the city or the county had to come out. The exterior of my home has to not piss off the neighbors, and the interior is what I choose to do (I followed the recommendations of my electricians to update the electric panel).
We may agree that I got away with something here and that Californians have excessive regs they have to obey. But I far prefer the former over the latter.
@openid.aol.com/runnswim:
California is the bastion of financial stability and a model for us all. Thanks!
If it were not for the movie industry…..
@Nan G: And let me add that Jesus had at least 2 rich friends who are named in the gospels, and Jesus never tells them to give away all that they have to give.
And the rich young ruler was not told to give away all of his money to the state as well. 🙂
Zac, muc better hey?, we’ll see, later, now right those numbers down,
and see how escalating it will become and how fast it will,
then we will debate on it.
bye
GARY KUKIS I will have to start charging you on the like button,
I’m taking notes now,
bye
I knew this thread would bring out the usual suspects–especially Larry and his disproven tax cuts= deficit propaganda. Larry, saying the same thing over and over doesn’t make it true.
Cite Krauthammer all you want, it doesn’t make him any less wrong on the issue if that’s what he said.
@openid.aol.com/runnswim:
You seem to be missing the essence of my post, Larry, namely, that in any discussion of tax receipts and GDP, one cannot claim definitively that tax cuts are responsible for any decline, or, on the flip side, that any tax increase is responsible for an increase, AND/OR, that the obverse of those is true as well. Let’s take the most recent example, so as to explain my position.
It is true that government tax revenues grew, in proportion to GDP, it did so steadily from nearly the start of his presidency, and the growth that happened to the GDP grew as well. What you fail to mention is the effect of the economy itself on that GDP growth, more specifically, the tech boom we experienced in the 90’s. We, as a country, didn’t just piggyback some technological advances off of the current industries. We, as a country, created a whole new industry that took off quite well, particularly within the years of 1998-early 2000.
Now, look at the year 2000. That was the year of the bust, in the tech stock bubble burst. Can you measure the economic uncertainty that set in after that bust? Neither can I, but I do remember that it didn’t just affect the NASDAQ, but also companies trading on the DOW as well, with the uncertainty of how their tech operations would fare.
And then, what happened in 2001? 9/11. Our markets never had a chance to start recovering from the tech bubble-bust before they were hammered with the uncertainty of pending war, or further attacks.
The point is, that simply looking at tax revenue as a percentage of GDP, and it’s relation to any tax hikes or cuts, one cannot make the claim that higher tax rates result in higher revenue, and vice versa. To rely on that as any sort of definitive answer as to what tax rates should be is just plain ignorant.
What’s more, when a portion of the electorate is clamoring for merely one section of taxpayers to receive higher rates, rather than an across the board increase, of all tax rate divisions, back to pre-Bush rates, the motive changes from what you have described in your postings, to one of jealousy and envy, and institution of punishment for one’s success. Otherwise, if they truly believed that higher tax rates would result in higher federal revenue, then the return of ALL rates to pre-Bush tax cut numbers would be their goal. But it isn’t.
Do you believe that ALL rates should go back to what they were under Clinton? Or, do you believe, as Greg does, that arbitrary massaging of the rates must be accomplished so as to artificially inject a correction into the division of wealth?
@Gary Kukis:
Your point about lobbyists is quite true. It is also worth mentioning that it is simply a different means to the same end, that of using pull to give unearned benefits to the undeserved, that liberal democrats practice with their welfare programs to the unions, poor, and the ‘needy’. Both democrats and Republicans(the liberal ones) practice this kind of welfare politics where those receiving the benefits of taxpayer money are based not on any sort of Constitutional justice, but on arbitrary values of need and how many friends they have in DC.
@johngalt: Larry doesn’t believe that increasing taxes above certain levels change the behavior of the tax payer, yet tax avoidance is a $2 billion+ industry.
@Randy:
Not only for individuals, but for business as well. The unrecognized industry of influence peddling in DC, in order to receive tax breaks and subsidies is probably not included within that $2 Billion either.
johngalt, hi, I don’t think It is from the CONSTITUTION EITHER,
AND THE BILL OF RIGHTS
BYE
@Randy:
Tax avoidance?
More like audit avoidance.
Over the years, both as a company and as a family we have done our taxes so as to most likely avoid audits.
Getting the amount down has been a secondary issue.
(I’m not saying it wasn’t an issue, just not ever our top priority.)
@John and Randy: The three metrics which are informative are tax revenues as a percentage of GDP, spending as a percentage of GDP, and debt as a percentage of GDP.
For 35 years and 7 different Presidencies, GDP rose at various rates, with only temporary dips owing to business cycle recessions, but debt to GDP ratio fell, despite “uncertainty,” recessions, wars, and Great Society social programs. Then Reagan made unprecedented tax cuts. Revenues as a percentage of GDP fell and debt to GDP zoomed upward.
Clinton raised taxes and not only did GDP increase, but revenues to GDP increased and debt to GDP fell (tech bubble, etc. being the main driver of the GDP increase — I’m not one to give Presidents any credit at all for business cycle fluctuations, in the absence of tax cuts and massive borrowing to compensate, which artificially inflates the economy in the mother of all ponzi schemes). The point here is that it’s tax rates which drive revenue to GDP ratio, which are independent of GDP, itself. This is just simple math.
So you look at gross tax revenues and you find that they were flat ONLY during the time periods coinciding with massive tax cuts and rising debt to GDP ratio. At all other times, dating back 65 years, tax revenues increased along with GDP. At all times, during the past 65 years, debt to GDP ratio was steadily reduced, save for those periods of time following the massive Reagan and then Bush 43 tax cuts.
I don’t have anything against tax cuts, per se, if they are fully paid for with spending cuts. But that’s not what Reagan did or Bush did. Both Presidents massively cut taxes, WITHOUT cutting spending, on the fanciful, voodoo-economic hope that somehow there would be more economic activity which would generate sufficient revenue to pay for the cuts. George HW Bush had it absolutely correct when he challenged Reagan in 1980 and labeled it “voodoo economics.” It was an implausible, unproven theory back in 1980, just as communism was an implausible, unproven theory back in 1917. But, by now, both implausible theories have been tested in the real world and supply side (“voodoo”) economics has been discredited just as much as communism has been discredited.
I’m the conservative here, not you. I pay off my credit card balances each and every month and the only massive borrowing I ever did was to pay for the educations of my two children, the latter being borrowing to finance what I consider to be a solid investment in their futures. I believe that government must also not borrow money which it can’t pay back within a reasonable period of time and should not take on a debt load which doesn’t grow faster than the economy grows. This is the way a conservative handles his money. If you say that the government is spending too much money and you have the political power to force constituencies to accept cuts in spending, then more power to you. Cut the spending first and — only then — reward yourself with a tax cut. But cutting taxes without cutting spending (or, worse yet, increasing spending, e.g to finance a defense build up or to finance wars or to finance a new prescription drug benefit) is handling national finances in the same manner of the average nouveau riche lottery winner. It’s anything but conservative.
With regard to current tax policy, I am utterly disgusted with Barack Obama for his pandering, tax the rich policy. This nation cries out for leadership. We’ll follow a real leader and we’ll make the sacrifices which are needed to get the country on a sound footing again. We need someone who will not just give oratorical speeches, comprised of slogans and sound bites, but who will sit down and explain basic economics to the American people, in a series of latter day fireside chats, and help us to understand how we are not going to get out of the present mess without universally shared sacrifice and compromise.
For starters, I’d go back to the tax rates of the 1990s — for everyone. I haven’t seen a shred of evidence that tax shelter-seeking behavior and tax fraud are any less under the Bush tax cut policies of the 2000s than they were during the Clinton tax hike policies of the 1990s. If businesses or individuals can find a way to reduce their taxes, they’ll do so — whether the rates are 35% or 39%. Likewise, if they can find a way to make more money, they’ll do so, whether the rates are 35% or 39%.
Everyone has to sacrifice. People currently paying income taxes must all pay more than they are today. People currently receiving help from the government must all receive a little less. The trouble with a “targeted” approach is that the lobbyists and special interests will get involved. If it is a simple, across the board approach, based on tax hikes (or benefit cuts) proportional to what one is currently paying (or receiving) — with the tax rates of the Clinton 90s being a very good blueprint — then that’s truly shared sacrifice and it would be considered to be very dishonorable/unpatriotic to attempt to evade one’s responsibility to do one’s fair share. There will always be cheats. There will always be fraud. There will always be crime. But society works because a critical mass of people play by the rules, leading to self-inflicted ostracization on those who cheat.
It’ll work, but it takes a leader. Obama is playing politics, rather than leading. But so is everyone in the GOP. Playing politics. Getting ready for 2012. Not doing what needs to be done to actually solve current day problems.
I’d like to see David Stockman as the Secretary of the Treasury. He’s not a great orator, but he’s a patient, quiet, understated speaker who is capable of educating the public, over time. And I’d like to see a politically adroit leader in the White House who was capable of getting the public behind the concept of shared sacrifice and getting the political elite to make the necessary compromises to get not a perfect deal, but a pragmatic deal which will work to solve the problems.
Changing either Social Security or Medicare to a voucher system is a non-starter. It will never work politically. Nor should it be done, even if it could be made to work (argument for another time). The solution to Social Security is raising retirement age — almost immediately — to age 70, means testing recipients, and removing the cap on yearly payroll tax and self employment tax. The solution to Medicare is allowing negotiation on prescription drug prices and changing reimbursement from paying for services to paying for outcomes.
– Larry Weisenthal/Huntington Beach CA
According to the Clinton Treasury Dept’s study done by Jerry Tempalski ( originally done in 1998, and then revised in 2006), the effect of tax bills on the GDP is small. From Pg 8 of the PDF… either one:
For contrast between the revenues INRE the tax legislation relations, here’s the 1998 graph of revenue as a percent of GDP (tax bills only)
Here’s the revised 2006 version. Clinton’s revenues… looking rosy to Tempalski in 1998, didn’t look so rosy in the revised 2006.
The revenues to GDP are indicative of how that single piece of legislation would affect revenues. Note that both the Reagan and the Clinton policies were still a net “loss” of revenue for all the tax policies implemented… when you think of taxes not collected as “lost revenue”, that is… Of course that, in itself, is done in a virtual vacuum, assuming that there is a constant status of economic conditions and employment. So all of this has it’s caveats.
As one can see, the overall effects of the combined tax policies really do not have significant impacts in relationship to the GDP, which is why Tempalski notes that it’s relatively small.
As the Clinton Treasury report points out, without indexation, “bracket creep” comes into play during eras of inflation. This is where the taxpayers will get pushed into a higher tax bracket, effecting increased federal revenues but without any real income increase. This was prevalent during the pre 1982 era, and will likely apply to our current era of inflation as well.
I did note the debate over the Laffer curve, but I’m also surprised no one mentions dynamic scoring… i.e. revenue estimates as effected by any overall economic changes. Having the only general references to the OMB’s sensitivity rating, this is generally left out of most government analyses. The Heritage Foundation had a great 2002 article on dynamic scoring, as well as discussin the Laffer curve, by Daniel Mitchell.
Heartland’s article also echoes Larry’s claim that tax reductions “never pay for themselves”, but offers caveats on that as a blanket/true statement.
This is why I continually argue with Larry that it’s tax “policies”… i.e. a combination of reductions, IRS reforms, etc…. vs his more simple and single “tax cut” piece of legislation. This is also one of the reasons, using the Reagan income tax reduction, and combining it with tax increases and IRS reforms, that the economy again started to grow.
The spending is a completely different story, unrelated to how legislation affects tax revenues.
As Heartland notes, using a dyamic scoring when analyzing propose tax legislation makes the tax reduction look far more attractive… which is why that method is shunned.
Well this is an interesting argument within a vacuum of reality. Comparing gross tax receipts from 1981 to 1988-89 to 1993 to 2000-01 is rather like comparing a 1980s Mustang performance to a 1999 Mustang’s. Are you considering the difference in contributing factors that affect that performance?
How about the size of the workforce from 1981-88, and population in general, to that of 1993-2000? Consider unemployment… ergo, no tax receipts… in Reagan’s post Carter recession started at 9.7%, and ended up at 5.5%, while Clinton’s larger work force started at 6.9%, ending up a 4%.
Uh… ya think that may have an effect on “gross tax receipts”… more workers and less unemployed?
But on the flip side, it’s great to hear you finally expound on your “disgust” with the lack of “leadership”, and point out we need more than orators and slogans.
@mata:
You are missing the point.
You say:
What you are not recognizing is that, in the 65 years since World War II, tax receipts have always tracked with GDP, save during post Reagan tax cuts and then, again, following Bush tax cuts. In the 35 years prior to Reagan, through 7 Presidencies, the debt got paid down steadily, despite many recessions just as bad as the “Carter recession.” During the Reagan/Bush periods in question, GDP rose, while tax receipts remained flat (rather than rising along with the GDP, as they’d always done before), tax receipts as a percentage of GDP fell, and debt to GDP ratio increased. As I said, it’s not rocket science and the math is simple and the numbers are crystal clear.
I have been very amused at the machinations of the Heritage Foundation — a long time supporter of the discredited supply side theory — with respect to its own version of “hide the decline.”
But how could they possibly come right out and admit how wrong they were?
– Larry Weisenthal/Huntington Beach, CA
If everyone will forgive a small sidestep to a very similar topic– while reading FA, I was watching TV with one eye and they reported the NLRB hammering Boeing for moving away from Seattle to So. Carolina to build an additional 787 assembly line because it is “union busting” when making a move to a right to work state. When costs get to high in one place, operations are generally moved elsewhere! Why is the Govt even contemplating this issue?
My question is: Where were all these deeply concerned bureaucrats over the last 17 years of jobs disappearing into Mexico with the passing of NAFTA. AND, we still have countless numbers of those peons swarming across the borders illegally, illegally taking jobs and putting MORE Americans out of work. How is it that the same group that extols wetbacks for their industry claims that a huge segment of the American population should be supported for their lack of the gumption to do the same jobs and PULL THEMSELVES out of poverty!
And we have been “unamused at you machinations” Larry, as they reek of class envy/warfare and lack factual support. Before you claim others are being disingenuous or inaccurate, perhaps you should get your own house in order. Several of us here have seen you ignore information that proved you wrong or flat out refused to answer a question that did the same
As to someone refusing to admit how wrong they are, you are a sterling example of it on this issue Larry.
Oh, you are the typical liberal on tax cuts and nowhere close to being a Conservative. Delude yourself all you want, but don’t expect us to buy into it too.