Trickle down voodoo-economics at work....

[PoliTalker]

Hello cawacko,

Look at the economic growth of the '80's. Those numbers speak for themselves. Obama was your traditional big government Keynesian and look what that produced. And economic inequality continued on a hockey stick. What's the argument today for Keynesian economics and what examples of success are we supposed to look to?

Keynesian economics is used by every major industrial nation with great success. Name me one nation which does not government-regulate parts of their economy/

 

[PoliTalker]

Hello Mott,

What drives me batty is that if, like I do, support a combination of Keynesian and Monetarist economic policy that somehow makes you a socialist. Do these folk even know what socialism is?

Obviously not.

But before we get bogged down wonkish debates about Supply Side economics is that the reality is most Republicans don't believe in it either. Hell it was a Republican President that first labeled it as Voodoo Economics. Most Republicans could care less about Supply Side theory and probably know little about it. They just use is a a rationalization to cut top marginal tax rates.

Bingo.

 

[PoliTalker]

Hello cawacko,

If growing the military brought over 5% GDP growth our military would be 10X the size it is today. The private sector roared back in the '80's. Entrepreneurship was unleas[h]ed.

A bigger downturn creates an opportunity for larger growth during the recovery.

Which was prevented by the Party Of NO because they feared Democrat popularity if the economy were to come rolling back under Obama.

Yet even with that we never had 3% GDP growth in a single year over the past eight years. Obama got a stimulus, health care overhaul (1/6th of the economy) and passed Dodd-Frank. How much more legislation did he need?

As if it is a matter of the volume of legislation, not the specifics.

'OK, Bring another truckload of legislation and dump it here!'

It wasn't coincidence the poor performance of the private sector occurred under his watch and attitude.

No, it was a combination of the PON, Party Of No, and the depth of the recession.

We had helicopter Ben Bernanke and Janet Yellen keep rates at zero with QE trying to create a wealth effect which 1) didn't occur

Yes, it did.

and 2) just boosted inequality. When you try to create asset bubbles who do we think is going to benefit?

I thought you didn't see a problem with inequality. Now you're complaining about it?

The numbers speak for themselves. Look at our growth rate in the '80's. Look at the eight years under Obama.

Speaking of inequality the 80's was when it really took off. And as far as comparing the economy of the 80's to the economy of Obama's terms, there were different factors during the two time frames. Presidential actions are not the only factor affecting the economy. It is meaningless to pretend they are.

 

[Mott the Hoople]

Hello cawacko,



Which was prevented by the Party Of NO because they feared Democrat popularity if the economy were to come rolling back under Obama.



As if it is a matter of the volume of legislation, not the specifics.

'OK, Bring another truckload of legislation and dump it here!'



No, it was a combination of the PON, Party Of No, and the depth of the recession.



Yes, it did.



I thought you didn't see a problem with inequality. Now you're complaining about it?



Speaking of inequality the 80's was when it really took off. And as far as comparing the economy of the 80's to the economy of Obama's terms, there were different factors during the two time frames. Presidential actions are not the only factor affecting the economy. It is meaningless to pretend they are.

To be fair to Reagan his war on inflation had a tremendous positive impact on our economy, significantly more than either his spending or tax cuts, but the historical record is clear that the work done by the Fed to bring inflation under control was started under Carter and Reagan wisely decided to continue on with the Fed policies implemented under Carter. They worked and the era of stagflation was brought to an end and ample credit belongs to both sides of the political aisle for that success.

 

[Flash]

No it's not. SS viability has never, ever been dependent on a surplus. It's always has been and still is dependent on current workers productivity paying for current retirees benefits.

The $2.5 trillion Social Security surplus makes it possible to pay SS benefits today since benefits began exceeding revenues in 2010. That is why SS taxes were increased in the 1980's to build a surplus to provide for the baby boomers who would retire 2010-2030.

 

[cawacko]

Hello cawacko,



Which was prevented by the Party Of NO because they feared Democrat popularity if the economy were to come rolling back under Obama.



As if it is a matter of the volume of legislation, not the specifics.

'OK, Bring another truckload of legislation and dump it here!'



No, it was a combination of the PON, Party Of No, and the depth of the recession.



Yes, it did.



I thought you didn't see a problem with inequality. Now you're complaining about it?



Speaking of inequality the 80's was when it really took off. And as far as comparing the economy of the 80's to the economy of Obama's terms, there were different factors during the two time frames. Presidential actions are not the only factor affecting the economy. It is meaningless to pretend they are.

So the basis of your argument is that the trillion dollar stimulus, health care act and Dodd-frank, along with QE just wasn't enough government spending. A couple trillion more and maybe we would have had real growth?

And it really doesn't say much for QE if you're arguing the intended wealth effect was created and this was the result it achieved

 

[sear]

"So the basis of your argument is that the trillion dollar stimulus, health care act and Dodd-frank, along with QE just wasn't enough government spending. A couple trillion more and maybe we would have had real growth?" c #206

I agree.
The fed has already begun bumping interest rates up. If there's ever a sign time to stop Keynesian stimulus, wouldn't that be it?

"What's pernicious about deficits for conservatives is this. It makes big government cheap. What we're doing, we're turning to the country, the "conservative" administration turns to the country and says: We're going to give you a dollar's worth of government, we're going to charge you seventy five cents for it. And we're going to let your kids pay the other quarter." George Will Nov 30, 2003

 

[PoliTalker]

Voodoo economics depends on a myth.

It is the myth that if you cut taxes for the rich, it helps the economy.

It is the myth that you can get more revenue from paying less taxes.

Kinda sounds like: "You can eat cake and lose weight."

Too good to be true.

And sure enough. Just as it is done, the market goes up.

But are the stock market and the economy the same thing?

No. That is the fly in the butter.

People who have enough money to invest are investing more, but that doesn't automatically translate into more well-paying jobs and a bigger GDP.

The GDP was going up anyway, so it's hard to claim any rise is due to tax cuts.

And because revenue got cut, more GDP is needed just to break even. This means the GDP must rise to an even higher level to see any gain.

If it doesn't then the debt goes sky high. Any economy which depends on ignoring dangerously high debt is not a good economy. It is one which is living on borrowed time.

When it all shakes out, cutting taxes for the rich does not help the economy because it creates a time bomb of inescapable debt.

You think things are going great but it is a facade. All you've done is spend something that your kids will have to pay back plus interest.

Raiding the kids piggy bank? That's your great plan for making America great?

SMH

 

[sear]

"Voodoo economics depends on a myth.
...
It is the myth that you can get more revenue from paying less taxes." PT #208

It may be generous to call that a half-truth.

More revenue CAN be obtained / derived

IF

the tax RATE is above the Laffer curve peak both before and after the tax cut.

BUT !!

That CERTAINLY does not mean all tax cuts produce more revenue. Were that the case we could slash all tax rates to zero% and party in prosperity for perpetuity.

BUT !!

It IS possible to LOWER $tax RATES, and $increase revenue. Whether that irrefutable fact qualifies as "voodoo" economics or not, I'll leave to readers.

 

[PoliTalker]

It may be generous to call that a half-truth.

More revenue CAN be obtained / derived

IF

the tax RATE is above the Laffer curve peak both before and after the tax cut.

BUT !!

That CERTAINLY does not mean all tax cuts produce more revenue. Were that the case we could slash all tax rates to zero% and party in prosperity for perpetuity.

BUT !!

It IS possible to LOWER $tax RATES, and $increase revenue. Whether that irrefutable fact qualifies as "voodoo" economics or not, I'll leave to readers.

The Laffer Curve has never been quantified. It was a figure of speech to help visualize a theory. It has never been proven if the shape of the curve drawn on that bar napkin represents reality. There are just too many variables. Nobody could prove that.

Whatever the shape might be, it should be quite obvious that we are on the diminishing returns side of the curve for lowering taxes. Clearly we are not collecting enough revenue to pay for the country. Taxes were cut, but the revenue has not gone up.

We need to tax the rich more.

 

[sear]

"The Laffer Curve has never been quantified." PT #210

In the U.S. the quanta are $dollars and ¢cents.
The exact curve peak cannot be determined, because it is a dynamic state, and thus it varies within a narrow range over time.

"It was a figure of speech to help visualize a theory." PT

By definition a "theory" (your word) is speculation.
Neither the Laffer curve, nor the Laffer curve peak are speculative, even if the latter may not be precisely determined.
We KNOW it is there because:
At zero% taxation there is no government revenue, because the government's share is zero%.
At 100% taxation there is little government revenue, because there is no incentive to earn, if / when all revenue goes to government and none stays with the one that earned it.
Therefore we KNOW maximum government tax revenue is obtained at some tax rate between zero% & 100%.
I'm not sure that meets the minimum qualifications for a "theory".

"It has never been proven if the shape of the curve drawn on that bar napkin represents reality. There are just too many variables. Nobody could prove that." PT #210

Whatever.
None of that disproves my reply to your #210.

"Whatever the shape might be, it should be quite obvious that we are on the diminishing returns side of the curve for lowering taxes. Clearly we are not collecting enough revenue to pay for the country." PT

Very sloppy. Your grade is F.

The U.S. federal government runs deficits because its spending exceeds revenue. Deficit spending can take place on either side of the Laffer curve peak.

"We need to tax the rich more." PT

"They [Republicans] would have us borrow $700 $Billion $Dollars over the next ten years, to give a tax cut of about a $hundred $thousand $dollars each to folks who are already $millionaires." U.S. President Obama 2010

You'll find no more zealous advocate for balanced budgets and paying off the U.S. federal debt than sear.
But as all others, this equation has two sides. CERTAINLY we need to attend to tax rates and revenues.

BUT !!

We also need to heed spending, and proportion one to the other. We haven't done so since the Clinton administration.

 

[PoliTalker]

Hello sear,

Words are easy to say, and they can be arranged in any order. The meaning connoted by various phrases has no more weight then the supporting evidence behind them.

It is just as easy to say that the deficit is the result of spending exceeding revenue, as it is to say that the deficit is the result of insufficient revenue to match the spending.

Just as it is easy to arrange words and create phrases, it is easy to SAY spending needs to be reduced.

Actually reducing spending is a completely different matter.

It is irresponsible to vote for more spending [Republicans] and also vote for reduced revenue [Republicans.]

The reason spending has not been decreased in conjunction with decreasing revenue is because it would be irresponsible to give tax breaks to the rich as funding for poverty assistance programs is cut.

But that is what Republicans want to do.

So they have decoupled the two.

It makes it no less reprehensible.

Saying that spending should be decreased is easy. The tough part is what spending to reduce. What one person thinks is OK to cut is opposed by another. The only way to make everyone happy about that is to not cut anything and instead raise taxes on the rich to cover the existing spending.

 

[sear]

"It is just as easy to say that the deficit is the result of spending exceeding revenue, as it is to say that the deficit is the result of insufficient revenue to match the spending." PT

Clearly.

BUT !!

Your assertion I clarified / refuted was:

"Clearly we are not collecting enough revenue to pay for the country." PT

To invoke Majority Leader McConnell (R-KY) YOUR assertion is NOT that we over-spend,
but instead that we are fundamentally undertaxed.

Clearly to balance the budget one must be proportioned to the other.

BUT !!

For most of U.S. history the U.S. federal government did not impose income tax. [see Amendment #16, ratified Feb. 3, 1913]

"It is irresponsible to vote for more spending [Republicans] and also vote for reduced revenue [Republicans.]" PT

"What's pernicious about deficits for conservatives is this. It makes big government cheap. What we're doing, we're turning to the country, the "conservative" administration turns to the country and says: We're going to give you a dollar's worth of government, we're going to charge you seventy five cents for it. And we're going to let your kids pay the other quarter." George Will Nov 30, 2003

"The reason spending has not been decreased in conjunction with decreasing revenue is because it would be irresponsible to give tax breaks to the rich as funding for poverty assistance programs is cut." PT

Please forgive me my conservatism.
But I do not abide by deficit spending unless for absolute immediate survival.
And for the most conservative reasons I do not endorse these lavish entitlement programs.

"The policy of the American government is to leave their citizens free, neither restraining nor aiding them in their pursuits." Thomas Jefferson

"... everyone's for big government. The American People say we hate big government, but we like our social security and medicare. That's 38% of government right there. The biggest components of government are the most popular components of government." George Will Nov 30, 2003

Two frick in bad George!

The popular opinion you correctly observe is wrong, and Founder Jefferson is right. United States federal government should NEVER have elbowed its way into the insurance bidness.

"Saying that spending should be decreased is easy. The tough part is what spending to reduce." PT

Yes, the familiar metaphorical whose ox is $gored.

BUT !!

You under-state the case. You call it "tough". It's quite easy, and simple. End entitlements. Privatize Social Security, and etc.

BUT !!

While simple and easy, it's also surely politically suicidal. I deduce that's what you meant by "tough". The difference between you and me PT is (if you'll pardon the Bushism), I don't misunderestimate you. It is not necessary for you to 'splain reality to me.

"What one person thinks is OK to cut is opposed by another. The only way to make everyone happy about that is to not cut anything and instead raise taxes on the rich to cover the existing spending." PT

You have me longing for the days (long, long ago) when Republicans were $fiscal conservatives.

I'm not Republican.
I'm conservative.
"Tax cuts" is not my mantra. "Balanced Budgets" is my mantra; and why I'm so politically lonely way out here on the fringes of the right wing.

 

[PoliTalker]

Hello sear,

Part of political loneliness on this Forum is having considerate manners.

On deficit spending, I once took the position that we should have no deficit.

But I have changed my position on that.

Gradually I came to understand that the way finance works in this country it is actually a good thing to carry a small deficit. Most of our deficit is in the form of US Bonds. This is a basic investment vehicle upon which all others are based. Much is referenced to the T-Bill or Treasury Notes. It is thought to be the most secure place one can put their money.

Our problem is that the deficit is too high with relation to our GDP. That is why we have this figure called the Debt to GDP ratio. It is right around 100% right now, and that is too high.

We need to reduce our deficit. If we reduce deficit enough, the Debt/GDP will drop to a healthier level which is sustainable.

You would willingly eliminate all 'entitlement programs.'

Easy to say, tough to do.

If that were done, the economy would crash.

Since we don't want to crash the economy we don't do that.

We could raise taxes on the rich without crashing the economy.

That's what we have to do.

 

[sear]

"Gradually I came to understand that the way finance works in this country it is actually a good thing to carry a small deficit." PT

Deficits may be orgasmic.
Debt is potentially fatal. Don't take my word for it. Just ask the Soviet Union.

Reductio ad absurdum PT.

If $1.oo of U.S. federal debt is a little bit better than none, the $2.oo of U.S. federal debt is $twice as good. Right?

Why stop there?!
Once the deficit exceeds GDP, just keep it going! If a little is good, a lot is better !!

BUT !!

Whatever the economic merit claimed for it, there's no smoothing over the ethics. With $20+ $Trillion in debt, and fast climbing, we're spending $money our grandkids haven't earned yet.

"There are two ways to conquer and enslave a nation. One is by the sword. The other is by debt." John Adams

That's not hyperbole.
Slavery is theft of wages.
Government debt on this scale is theft of wages. It's slavery. Economically I see little difference.
Deficit spending may be justified legally, economically.

I know of no rational justification for it morally, ethically.

"You and I as individuals can, by borrowing, live beyond our means, but for only a limited period of time. Why, then, should we think that collectively, as a nation, we are not bound by that same limitation?" Ronald Reagan's First Inaugural Address, 1981

 

[PoliTalker]

Hello sear,

Deficits may be orgasmic.
Debt is potentially fatal. Don't take my word for it. Just ask the Soviet Union.

'potentially' being the operative word there.

If $1.oo of U.S. federal debt is a little bit better than none, the $2.oo of U.S. federal debt is $twice as good. Right?

Why stop there?!
Once the deficit exceeds GDP, just keep it going! If a little is good, a lot is better !!

No, not at all. I already explained there is a limit to health deficit spending.

Whatever the economic merit claimed for it, there's no smoothing over the ethics. With $20+ $Trillion in debt, and fast climbing, we're spending $money our grandkids haven't earned yet.

That's not hyperbole.
Slavery is theft of wages.
Government debt on this scale is theft of wages. It's slavery. Economically I see little difference.
Deficit spending may be justified legally, economically.

I know of no rational justification for it morally, ethically.

Deficit spending may sound insane and scary but it provides a basis for the financial system, which actually accounts for so much of our economy that it is crucial. All lending is driven by one basic: The US Treasury Note. T-Bills, for short. Lending rates weigh risk vs ROI. The T-Bill is the lowest risk investment. It is the standard by which the rest of the lending market is based. When you invest in a T-Bill, you are lending the USA money. You feel safe and secure lending the USA money because everything else is considered more risky. Interest rates are all referenced to the T-Bill. It is the basis. Without it, the lending which allows so much of our economy to thrive would have no basis.

It is not necessary to pay off the US debt. If you have been troubled wondering why no knowledgeable major politician ever talks about paying off the debt that is why. It is also why I knew when Trump claimed he could pay off the US debt as President that he didn't know what he was talking about, that he was making things up, and it would never happen.

But just because it is not necessary to pay off the debt, does not mean that it can be limitless. While some deficit spending is actually a good thing, too much of it is definitely bad. You are correct that $21 Trillion is already too high for the size of our economy. And since the Debt/GDP is already too high, the recent tax cut for the rich was a big mistake.

The major reason is that you can't pay down your debt during a recession.

A recession forces government spending higher to help people who are laid off, and possibly to stimulate more economic activity. And there is less revenue during a recession.

The only time you can pay down the debt is when the economy is doing well, such as right now. This is the perfect timing in the bust/boom cycle of capitalism to reduce the deficit and improve the Debt/GDP figure.

It is irresponsible of Republicans to have this tax cut while things are doing well. This was our chance to reduce the deficit, hold the debt rise back and let the economy generate more revenue. By taking that revenue and divvying it up among the richest and the big corporations, Republicans have raided the piggy bank at a time when it is important to save that. Very foolish. That will come back to bite us.

And did you notice they didn't even really talk much about believing in supply side economics this time? They knew it wasn't going to generate any more revenue. They just got dollar signs in their eyes and could not resist. So irresponsible.

 

[cawacko]

hello sear,



'potentially' being the operative word there.



No, not at all. I already explained there is a limit to health deficit spending.



Deficit spending may sound insane and scary but it provides a basis for the financial system, which actually accounts for so much of our economy that it is crucial. All lending is driven by one basic: The US Treasury Note. T-Bills, for short. Lending rates weigh risk vs ROI. The T-Bill is the lowest risk investment. It is the standard by which the rest of the lending market is based. When you invest in a T-Bill, you are lending the USA money. You feel safe and secure lending the USA money because everything else is considered more risky. Interest rates are all referenced to the T-Bill. It is the basis. Without it, the lending which allows so much of our economy to thrive would have no basis.

It is not necessary to pay off the US debt. If you have been troubled wondering why no knowledgeable major politician ever talks about paying off the debt that is why. It is also why I knew when Trump claimed he could pay off the US debt as President that he didn't know what he was talking about, that he was making things up, and it would never happen.

But just because it is not necessary to pay off the debt, does not mean that it can be limitless. While some deficit spending is actually a good thing, too much of it is definitely bad. You are correct that $21 Trillion is already too high for the size of our economy. And since the Debt/GDP is already too high, the recent tax cut for the rich was a big mistake.

The major reason is that you can't pay down your debt during a recession.

A recession forces government spending higher to help people who are laid off, and possibly to stimulate more economic activity. And there is less revenue during a recession.

The only time you can pay down the debt is when the economy is doing well, such as right now. This is the perfect timing in the bust/boom cycle of capitalism to reduce the deficit and improve the Debt/GDP figure.

It is irresponsible of Republicans to have this tax cut while things are doing well. This was our chance to reduce the deficit, hold the debt rise back and let the economy generate more revenue. By taking that revenue and divvying it up among the richest and the big corporations, Republicans have raided the piggy bank at a time when it is important to save that. Very foolish. That will come back to bite us.

And did you notice they didn't even really talk much about believing in supply side economics this time? They knew it wasn't going to generate any more revenue. They just got dollar signs in their eyes and could not resist. So irresponsible.

We haven't paid down national debt since the Eisenhower years. It's not a priority in our country.

 

[PoliTalker]

Hello cawacko,

We haven't paid down national debt since the Eisenhower years. It's not a priority in our country.

That could be because we normally should not have to pay it down.

As long as GDP rises faster than debt, then the Debt/GDP ratio improves.

Most people don't understand why this is an important metric to watch.

There is something more important than the debt.

That is the Debt/GDP ratio.

Check out this valuable resource:

http://www.usdebtclock.org/

Notice the debt is $21 trillion.

The GDP is $19.9 trillion.

The ratio of Debt/GDP is 106.2%.

That last figure is the most important figure.

Some debt is healthy up to a certain point.

Our problem is not that we have debt.

It is that the debt we have is too high for the size of our economy.

Obviously, a larger economy can carry a larger debt than a small one can, so the amount that is OK depends on the size of the economy. That's why we look at the Debt/GDP ratio.

 

[Ross Dolan]

Hello cawacko,



That could be because we normally should not have to pay it down.

As long as GDP rises faster than debt, then the Debt/GDP ratio improves.

Most people don't understand why this is an important metric to watch.

There is something more important than the debt.

That is the Debt/GDP ratio.

Check out this valuable resource:

http://www.usdebtclock.org/

Notice the debt is $21 trillion.

The GDP is $19.9 trillion.

The ratio of Debt/GDP is 106.2%.

That last figure is the most important figure.

Some debt is healthy up to a certain point.

Our problem is not that we have debt.

It is that the debt we have is too high for the size of our economy.

Obviously, a larger economy can carry a larger debt than a small one can, so the amount that is OK depends on the size of the economy. That's why we look at the Debt/GDP ratio.

Poli, with all the respect in world to you, CA, Evince, sear, and the others...

...arguing over whether it makes better sense to deal with the debt by cutting spending or raising taxes (whether in general or focused on the rich)…is the ultimate case of working INSIDE the box.

Neither is truly feasible; neither will get us out of the problem; and neither will ever occur, because both require the consent of legislators…and legislators have no interest in either of those “solutions.” They do not even see them as “solutions”; they see them as impediments to re-election.

Anyway, if an automobile has 300,000 miles on it…and spends more time in the repair shop than on the road…the question stops being “which repair shop should (or shall) we use”…and becomes “how do we get rid of this car and get a new (or newer) one?”

More to come.


...

 

[evince]

that is why infrastructure building is so important

it helps increase the size of your economy