I wonder if I made the list?

[Campy]

What does that mean? I've never heard the term, and cabal when it comes to international affairs is not a good idea.

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It stems from the quasi-theory that a butterfly flapping its wings in one part of the world can create a tsunami through a chain of events - one helluva a doppler effect you might say.

[stuckincincy]

It stems from the quasi-theory that a butterfly flapping its wings in one part of the world  can create a tsunami through a chain of events - one helluva a doppler effect you might say.

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Yikes..my high-fiber diet makes me fart frequently and regularly. Am I causing these tsunamis and hurricanes?...

[TPS]

What is this a Monty Python sketch?  How many times do I have to say the same thing? 

 

Of course revenues will be lower next year, because this year's receipts are an abberation based on accumulated profits.  What you should be comparing is the probable receipts of the foreign income tax in a normalized year if the tax rate is 10% vs 35%.  You know that when the rate was 35%, tax receipts were virtually zero.  I'm guessing that the receipts would be higher than zero if the rate drops to 10%.

 

It's not really a difficult concept.

Well, there YOU go again.  Please tell me why you introduced Greenspan's comments  to support your thread?  Don't you think that I would immediately respond with:

In testimony before Congress this year, Greenspan has said that "the appropriate capital gains tax rate is zero."

 

Again, talking about the deficit as if it's a creature of its own making, rather than being the difference between revenues & expenses won't work with me.  Greenspan's warning about the deficit was as much a caution to reduce spending as increase revenue.  If you look at his economic pedigree, my guess is that his message was for the spenders' ears.

 

It's good to see continuation of the Fed dynasty that started with Volcker.  The markets reacted positively to Bernanke's testimony, and they're the ones that determine the cost of our deficit.  So far, they believe that US bonds are a much better bet, and the outlook isn't likely to change soon.

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Can't separate out quotes on my apple,so here goes;

1. I completely agree: i thought it was a monty skit: I said exactly what you said, and i couldnt believe you misinterpreted it. So you agree, it's obvious, tax revenues will decline next year.

 

I brought Greenspan into this because he said exactly what I've been saying about the dollar. I tought it was obvious. I didn't think it was that difficult to see? You bring in a quote from how long ago? I quoted AG to support my ideas on the dollar. Sorry, next time I'll make it easier to understand...

[TPS]

(Shuffles more papers, looks up...)

 

You are 2,183.

 

But that's just today.

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Fouck off !@#$!

 

Does that get me below 1000?

[TPS]

It's the foundation of supply side economics of keeping capital with the people who are better at creating new capital.  It flies in the face of a progressive tax policy that penalizes the high income earners. 

 

After the economy started bouncing back in Clinton's second term, spurred by Al Gore's invention & Telecom Act of 1996, Clinton listened to Greenspan, Rubin & Dick Morris and cut the capital gains taxes.  This helped the speculative buying of stocks, thus fueling the bubble.  TPS does not believe that the cut in capital gains was fuel for the fire, I do.  TPS said that in 2000, individuals contributed over 10% of the Treasury's revenues, and that number dropped significantly in Bush's term.  My point was that the 10% is artificial, since it includes the capital gains taxes from the peak of the bubble.

 

The main point TPS is making against supply side is that the share of personal income tax contribution to the overall Treasury revenues declined in the Bush era.  The problem I have with that logic is that supply side is a growth oriented policy, such that while personal income tax revenues will fall, the overall growth in the economy will pick up much more, and the government will have plenty of other sources of revenues (ie corp taxes, excise taxes, gasoline, etc)  So, to simply say that supply side doesn't work because personal tax revenues went down misses the point of trying to maximize total revenue.

 

As I said before, sound fiscal policy is the enemy of political policy, and leftist economics usually play to a highly populist bent that's rooted in Robin Hood economics, while the "voodoo" supply-side economics are being proven to work in a real life setting. 

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I guess Supply-siders and Keynesians need interpreters when they debate. Two things you've left out of my argument:

1. I said that taxes under Clinton were still 9% of GDP before the cap gains tax. The cut in the tax may have fueled stock bubble it my not have. Capital gains taxes went up because stock prices went up so much.

2. That's why I've been arguing that long term GDP growth is determined by labor force growth and productivity growth, and that it's averaged around 3% for the past 60 years. You want to argue that supply-side tax cuts create faster growth; the numbers aren't there unless you play with the starting period.

 

The difference for those sitting on the sidelines: Keynesians believe that personal tax cuts for individuals fuel the economy by expansionary deficit spending--witness the deficits under Reagan and Bush2; GG, a SS, believes tax cuts on individuals create incentives that must either increase participation in the labor force or increase productivity. Unless there's another way to increase long-run growth?

 

Bib: you're an idiot! Come on 999 (or turn that upside down...)!

[Ghost of BiB]

Fouck off !@#$!

 

Does that get me below 1000?

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Just for that, you've been moved to....(brings up spreadsheet...)

 

3,828.

 

The less obvious, sneaky ones are much more dangerous.

 

Yes, it's quiet out there...a little too quiet...

[dave mcbride]

I guess Supply-siders and Keynesians need interpreters when they debate.  Two things you've left out of my argument:

1. I said that taxes under Clinton were still 9% of GDP before the cap gains tax.  The cut in the tax may have fueled stock bubble it my not have.  Capital gains taxes went up because stock prices went up so much.

2. That's why I've been arguing that long term GDP growth is determined by labor force growth and productivity growth, and that it's averaged around 3% for the past 60 years.  You want to argue that supply-side tax cuts create faster growth; the numbers aren't there unless you play with the starting period.

 

The difference for those sitting on the sidelines: Keynesians believe that personal tax cuts for individuals fuel the economy by expansionary deficit spending--witness the deficits under Reagan and Bush2; GG, a SS, believes tax cuts on individuals create incentives that must either increase participation in the labor force or increase productivity.  Unless there's another way to increase long-run growth?

 

Bib: you're an idiot!  Come on 999 (or turn that upside down...)!

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sorry to chip in here, but "Keynesians believe that personal tax cuts for individuals fuel the economy by expansionary deficit spending--witness the deficits under Reagan and Bush2" is wrong. in essence, keynes advocated a much larger role for the state in generating demand, which was a persistent problem in what were essentially laissez-faire capitalist economies (excluding trade tariffs) earlier in the century. in recessions, cutting taxes and increasing government spending are the tools to use; in times of growth, increasing taxes to curb excessive demand are ok. moreover, fostering greater income equality through taxation and fiscal policy was a fundamental goal of keynes and his followers. in the oecd, this in fact occurred up through the early-mid 70s. notwithstanding the justice or injustice of capital gains taxes (or the degree to which clinton cut such taxes after 95), clinton's policies were by and large keynesian. the eitc was intended to increase income and demand among poorer earners, for instance, and it did just that. what clinton did not do is decrease inequality, one of his stated goals, either with regard to income or wealth. for a variety of reasons, mostly related to increasing neoliberal dominance across the globe, inequality has been trending upward for a couple of decades after decades of decline in the oecd.

[TPS]

sorry to chip in here, but "Keynesians believe that personal tax cuts for individuals fuel the economy by expansionary deficit spending--witness the deficits under Reagan and Bush2" is wrong. in essence, keynes advocated a much larger role for the state in generating demand, which was a persistent problem in what were essentially laissez-faire capitalist economies (excluding trade tariffs) earlier in the century. in recessions, cutting taxes and increasing government spending are the tools to use; in times of growth, increasing taxes to curb excessive demand are ok. moreover, fostering greater income equality through taxation and fiscal policy was a fundamental goal of keynes and his followers. in the oecd, this in fact occurred up through the early-mid 70s.  notwithstanding the justice or injustice of capital gains taxes (or the degree to which clinton cut such taxes after 95), clinton's policies were by and large keynesian. the eitc was intended to increase income and demand among poorer earners, for instance, and it did just that. what clinton did not do is decrease inequality, one of his stated goals, either with regard to income or wealth. for a variety of reasons, mostly related to increasing neoliberal dominance across the globe, inequality has been trending upward for a couple of decades after decades of decline in the oecd.

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I was specifically addressing the question of the impact tax cuts have as viewed by Keynesians vs. SSs. For Keynesians, all else constant, a cut in taxes is expansionary because it increases deficits. For SS, tax cuts are supposed to change behavior--increasing work effort and productivity, so that the tax cut leads to higher growth, and therefore lower deficits, eventually...

 

Otherwise I agree with your description of "functional finance." By the way, every policy is really "by and large Keynesian." The evidence from the impact from both Reagan and Bush2 tax cuts is that they caused higher deficits. As Reagan's former budget director wrote in his "tell all" book, Supply-Side theory was really a ruse to re-direct income from the bottom to the top.

[Taro T]

I was specifically addressing the question of the impact tax cuts have as viewed by Keynesians vs. SSs.  For Keynesians, all else constant, a cut in taxes is expansionary because it increases deficits.  For SS, tax cuts are supposed to change behavior--increasing work effort and productivity, so that the tax cut leads to higher growth, and therefore lower deficits, eventually...

 

Otherwise I agree with your description of "functional finance."  By the way, every policy is really "by and large Keynesian."  The evidence from the impact from both Reagan and Bush2 tax cuts is that they caused higher deficits.  As Reagan's former budget director wrote in his "tell all" book, Supply-Side theory was really a ruse to re-direct income from the bottom to the top.

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The tax cuts did NOT increase the deficit. They led to increased government revenues. The deficit increased because spending increased more than the increase in revenues. Had the tax cuts not been enacted, the deficits would have increased even more as revenues would have been lower, assuming as you do that all else remains constant - i.e. that the increase in spending would have occured regardless of revenue.

 

Had spending remained constant, the tax cuts would have REDUCED the deficit as they increased revenues. Deficit = Spending - Revenue when Spending > Revenue. If spending < revenue, you get a surplus. By the way, the '90's "surpluses" were not true surpluses as they were created using SS money that has been earmarked for future outlays.

[X. Benedict]

  As Reagan's former budget director wrote in his "tell all" book, Supply-Side theory was really a ruse to re-direct income from the bottom to the top.

509198[/snapback]

Stockman wrote that??

[TPS]

The tax cuts did NOT increase the deficit.  They led to increased government revenues.  The deficit increased because spending increased more than the increase in revenues.  Had the tax cuts not been enacted, the deficits would have increased even more as revenues would have been lower, assuming as you do that all else remains constant - i.e. that the increase in spending would have occured regardless of revenue.

 

Had spending remained constant, the tax cuts would have REDUCED the deficit as they increased revenues.  Deficit = Spending - Revenue when Spending > Revenue.  If spending < revenue, you get a surplus.  By the way, the '90's "surpluses" were not true surpluses as they were created using SS money that has been earmarked for future outlays.

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Cripes! And I thought you were taking the Keynesian side...

 

You supply-siders keep making that argument, but none of you have ever provided evidence. And to simply show that dollar revenues went up, is not evidence, because revenues will increase as national income increases. What you have to show is that revenues as a % of income increased, and that's just not the case. When you break down the deficits, they have increased because of the combination of increased spending plus lower tax rates.

 

year Rev Exp personal inc rev

2001 19.8% 18.5% 9.9%

2002 17.8% 19.4% 8.3%

2003 16.4 19.9 7.3

2004 16.3 19.8 7.0

 

 

For the first 4 years of Bush, revenues fell as a % of GDP and exp. increased--his deficits were a combination. I've included the personal income tax revenue % as well, since that was the major source of tax cuts.

 

And i agree with you about the surpluses; only problem with that argument is that the SS revenues have also made Bush's deficits look better because of your same reasoning. So, Bush's "true deficits" are even worse.

[Taro T]

Cripes! And I thought you were taking the Keynesian side...

 

You supply-siders keep making that argument, but none of you have ever provided evidence.  And to simply show that dollar revenues went up, is not evidence, because revenues will increase as national income increases.  What you have to show is that revenues as a % of income increased, and that's just not the case.  When you break down the deficits, they have increased because of the combination of increased spending plus lower tax rates. 

 

year  Rev      Exp    personal inc rev

2001  19.8%  18.5%      9.9%

2002  17.8%  19.4%      8.3%

2003  16.4      19.9        7.3

2004  16.3      19.8        7.0

For the first 4 years of Bush, revenues fell as a % of GDP and exp. increased--his deficits were a combination.  I've included the personal income tax revenue % as well, since that was the major source of tax cuts.

 

And i agree with you about the surpluses; only problem with that argument is that the SS revenues have also made Bush's deficits look better because of your same reasoning.  So, Bush's "true deficits" are even worse.

509480[/snapback]

PLEASE don't make me have to argue for the Keynesians!

 

I don't follow your argument that revenues need to increase as a %age of national income in order to have truly increased. If that were the case, the only way to ever maximize revenues to the gov't's coffers would be to have a 100% tax. By lowering the tax rate, you increase revenues, but by definition have lowered the percentage of the GDP that the revenues make up. (Obviously, there is some tax rate where overall revenues will decrease, but my guess is that we are still comfortably on the high side of the inflection point.)

 

As you admit, the economy picked up after the tax cuts, (I realize you believe that would have occured with or without the tax cuts) had spending been anywhere close to where it was prior to 2001, then the percentage of GDP shown as expenditures would at a minimum remain constant; it actually SHOULD decrease much as the revenues as a %age decreased. The fact that it grew by more than a full %age point indicates that spigot got opened a heck of a lot more than the tax cut would have accounted for.

 

Had expenditures remained constant, or even close to constant, the deficit would have been a lot lower. I will not state that all of the increased spending was necessarily bad, as much of the military budget increases were necessary due to the US being at war. A certain amount of the discretionary spending was also necessary to get out of the brief recession. There was, however, a lot of unnecessary spending and that definitely ballooned the deficit.

 

I agree with you 100% that the true deficits are worse than they look due to the SS "surplus". I wish the politicians were forced to keep them separate from the rest of the gov't's funds so people would see just how bad Congress is at staying in a budget.

[GG]

Uhhm, the whole point of supply side is to grow the economy as a whole and commensurate tax revenues. The goal is not to penalize the high earners with a progressive tax. Of course the rhetoric is turned on its head by saying that the rich get the bigger tax break, but ignoring the obvious, that they also pay the lion's share of taxes.

 

To say that supply siders and Keynesians promote deficit spending misses the whole point of who's better served to spend the "deficit." If Keynsians' theory that deficit spending stimulates demand, then that demand has to go through the government first. I won;t doubt that this has historically provided a short term boon. But, governments are notoriously horrific in building up long term value, and if you don't have sustained private investment, the government led short term stimulus will turn into a structural deficit.

 

Contrast that with supply side, which strives to stimulate demand by keeping more cash with individuals, and let capitalism take its course.

 

As to Dave M's point of Clinton's policies not normalizing income inequality, who should really care about income inequality? As long as overall incomes are rising above the rate of inflation, and that the infrastructure exists for people on the bottom rung to climb to the top, people shouldn't care about their neighbor's wages.

 

In practicality, income inequality in the US is swayed by a handfull of Bill Gateses making more money than many countries. The critics make it sound that if Bill Gates made $100Mil less this year, your income would actually rise. Right.

[dave mcbride]

Uhhm, the whole point of supply side is to grow the economy as a whole and commensurate tax revenues.  The goal is not to penalize the high earners with a progressive tax.  Of course the rhetoric is turned on its head by saying that the rich get the bigger tax break, but ignoring the obvious, that they also pay the lion's share of taxes.

 

To say that supply siders and Keynesians promote deficit spending misses the whole point of who's better served to spend the "deficit."  If Keynsians' theory that deficit spending stimulates demand, then that demand has to go through the government first.  I won;t doubt that this has historically provided a short term boon.  But, governments are notoriously horrific in building up long term value, and if you don't have sustained private investment, the government led short term stimulus will turn into a structural deficit.

 

Contrast that with supply side, which strives to stimulate demand by keeping more cash with individuals, and let capitalism take its course. 

 

As to Dave M's point of Clinton's policies not normalizing income inequality, who should really care about income inequality?  As long as overall incomes are rising above the rate of inflation, and that the infrastructure exists for people on the bottom rung to climb to the top, people shouldn't care about their neighbor's wages. 

 

In practicality, income inequality in the US is swayed by a handfull of Bill Gateses making more money than many countries.  The critics make it sound that if Bill Gates made $100Mil less this year, your income would actually rise.  Right.

509813[/snapback]

in the long retreat from keynesianism in the oecd beginning in the mid-1970s (the test case was Chile, which was followed by Britain and the US), wages declined in the US for something in the range of over 20 years. I know there's a lot of debate about the measure of this (especially around the rate of inflation in the 1980s), but i've read a lot on it and i'm pretty convinced that wages in fact fell. they started to rise at a very slow rate, mind you, around 1994-1996. i don't honestly know if they've risen or fallen in the last couple of years. i'd be surprised if they had risen, but again, i don't know.

 

as for rising inequality, bill gates making a ton of money is entirely irrelevant - we're measuring median incomes, not averaging out deciles. there has been a huge growth in the earning power of the top 20% since the early 1980s which has of course not been matched in the bottom 50%. and let's not even get into wealth as opposed to income inequality - it's gone off the chart. basically, i think rising inequality is a huge problem, and for a variety of reasons -- for one, elite institutions that reproduce privlilege in america are becoming increasingly unaffordable to lower and middle income americans while easily remaining in the grasp of the top 20-25 percent. today, social mobility into the elite is largely a function of access to elite institutions (primarily the university but other institutions as well), and my understanding (i don't have stats at hand) is that this possibility has diminished significantly in recent times. i'm not arguing that social mobility doesn't exist for people entering the work force, but it's far less than pollyannas exclaiming the benefits of an increasingly privatized economic system make it out to be. the greatest period of social mobility and declining inequality was in fact from 1945-1973, and that was a function of, well, keynesian economic policies (i.e., disguised and not so disguised income transfers). did/does keynesianism have its own built in problems? of course, but to my mind its cost/beneift ratio far outweighs that of neoliberalism.

 

of course, i respect your opinion about this - everyone has different ideas of what the good society is. so we can agree to disagree!

[TPS]

I don't follow your argument that revenues need to increase as a %age of national income in order to have truly increased.  If that were the case, the only way to ever maximize revenues to the gov't's coffers would be to have a 100% tax.  By lowering the tax rate, you increase revenues, but by definition have lowered the percentage of the GDP that the revenues make up.  (Obviously, there is some tax rate where overall revenues will decrease, but my guess is that we are still comfortably on the high side of the inflection point.)

Well then look at the aggregate data:

Personal tax revenues

2000 $1 tril

2001 $994 bil

2002 $858

2003 $794

2004 $809

 

Obviously part of the decline was attributable to the slowdown in 2001-02, but much of it was due to the cut in personal tax rates. The Laffer curve is nice in theory, but no one has ever shown any evidence of it--please show me if you have any.

 

Let me try and explain the mathematics:

Your income is $50,000 and personal tax rate is 10%, so you are paying $5,000 in taxes. If your income grows by 3% next year, you are now making $51,500. If the tax rate remains constant, you are paying $5,150 in taxes. If you reduce the tax rate by 3% (a decrease from 10% to 9.7% is a 3% decrease) to 9.7%, then you are paying the same absolute tax value as before: $51,500x0.097=$5,000, but your tax rate is now the lower 9.7%. The 3% increase in your income is offset by a 3% decrease in your tax rate.

 

Now, if taxes are decreased by more than 3%, say a 10% decrease (going from from 10% to 9% would be a 10% decrease), then tax revenues will fall. Taxes paid=$51,500x0.09=$4635. The only way tax revenues can increase is if your income increases by more than the 10% cut in your taxes. That is the crux of the SS argument--the only way that revenues can increase is if taxable income increases by more than the decrease in the tax rates. Their argument is that the cut in taxes either increases the growth of income faster than it would've been, OR people were hiding income in tax shelters, so the lower tax rate will induce them to shelter less income.

As i recall, Bush had a 3-year phase in on his tax cuts, which is consistent with the data above--personal income tax revenues fell every year.

[TPS]

To say that supply siders and Keynesians promote deficit spending misses the whole point of who's better served to spend the "deficit."  If Keynsians' theory that deficit spending stimulates demand, then that demand has to go through the government first.  I won;t doubt that this has historically provided a short term boon.  But, governments are notoriously horrific in building up long term value, and if you don't have sustained private investment, the government led short term stimulus will turn into a structural deficit.

Contrast that with supply side, which strives to stimulate demand by keeping more cash with individuals, and let capitalism take its course. 

 

I think you are twisting the ideas to fit your own notion of them. A Keynesian would say deficits in general are expansionary, and they can be created in two ways: one, increase government spending; or two, decrease taxes.

 

Keynesians argue that the the cut in taxes stimulates the economy by increasing disposable income and therefore consumption, AND via a higher deficit, which implies that more of government spending is funded by borrowing--and we all know that is the republican way...borrow and spend baby!

 

Unless of course, that supply-side stuff really works, then we'd have a surplus eventually...

[Taro T]

Well then look at the aggregate data:

Personal tax revenues

2000  $1 tril

2001  $994 bil

2002  $858

2003  $794

2004  $809

 

Obviously part of the decline was attributable to the slowdown in 2001-02, but much of it was due to the cut in personal tax rates.  The Laffer curve is nice in theory, but no one has ever shown any evidence of it--please show me if you have any.

 

Let me try and explain the mathematics:

Your income is $50,000 and personal tax rate is 10%, so you are paying $5,000 in taxes.  If your income grows by 3% next year, you are now making $51,500.  If the tax rate remains constant, you are paying $5,150 in taxes.  If you reduce the tax rate by 3% (a decrease from 10% to 9.7% is a 3% decrease) to 9.7%, then you are paying the same absolute tax value as before: $51,500x0.097=$5,000, but your tax rate is now the lower 9.7%.  The 3% increase in your income is offset by a 3% decrease in your tax rate. 

 

Now, if taxes are decreased by more than 3%, say a 10% decrease (going from from 10% to 9% would be a 10% decrease), then tax revenues will fall.  Taxes paid=$51,500x0.09=$4635.  The only way tax revenues can increase is if your income increases by more than the 10% cut in your taxes.   That is the crux of the SS argument--the only way that revenues can increase is if taxable income increases by more than the decrease in the tax rates.  Their argument is that the cut in taxes either increases the growth of income faster than it would've been, OR people were hiding income in tax shelters, so the lower tax rate will induce them to shelter less income. 

As i recall, Bush had a 3-year phase in on his tax cuts, which is consistent with the data above--personal income tax revenues fell every year.

510495[/snapback]

Ist off, I'm not certain where you got your numbers from because they don't match up with info on the IRS web site. That is neither here nor there for the point of this discussion.

 

2nd off, you seem to basically understand SS, but don't seem to fully grasp it.

 

What you seem to be unable or unwilling to grasp is that the money that is not collected by the government is going to be put to much better use by the individuals and corporations that are generating it than the government will. As YOU have stated in your earlier posts, overall revenues went up. This would imply that the money that was not taxed initially was put to productive use and generated additional taxable revenue that would otherwise have not existed. If the government had taken the money out of the system, overall GDP would have been lower than actual and although the tax rate would have been higher than it actually was the total taxes collected would have been lower. Or to put it another way, the income had to have grown by a larger percentage than the tax cut (as you posted), or else overall revenues would have decreased. That hypothetical $365 appears to have had at least a 100% return on investment as the overall revenues increased (again, per your previous posts).

 

I will not have the time to try to look it up until sometime after this weekend, but government revenues increased in the '20's, '60's, and '80's after tax cuts were introduced.

 

My point in my earlier post, which you have not addressed, is that the deficit went up because SPENDING increased more than revenues did. Your final point in your reply to GG shows that you don't factor spending into the equation at all. Lowering tax rates and increasing the output of the economy will never result in a surplus if they are always accompanied by massive increases in spending.

[GG]

I think you are twisting the ideas to fit your own notion of them.  A Keynesian would say deficits in general are expansionary, and they can be created in two ways: one, increase government spending; or two, decrease taxes. 

 

Keynesians argue that the the cut in taxes stimulates the economy by increasing disposable income and therefore consumption, AND via a higher deficit, which implies that more of government spending is funded by borrowing--and we all know that is the republican way...borrow and spend baby!

 

Unless of course, that supply-side stuff really works, then we'd have a surplus eventually...

510519[/snapback]

 

I am twisting the argument? Tell me when was the last time a Keynesian advocated a tax cut as a way into deficit spending?

 

This is what you get when economists argue fiscal policy without understanding the basics of accounting & finance. The deficit does not arise on its own - it needs revenues & expenses. Yet, you continue to talk about government receipts from individuals, as if it's the only thing that matters, without acknowledging the effect on total economic output, employment, standards of living and building a base for future output. You are attacking SS from the standpoint that the government has an inalienable right to a portion of an individual's income.

 

You come back to say that Keynesians & SS'ers both advocate deficit spending, but don't acknowledge the key difference in how they get to that deficit. You would figure that even though we are still subject to economic cycles, the transitional pain that was endured during Reagan's terms have certainly built a strong foundation for the US economy to carry the rest of the world over the past 5 years.

 

EU practices deficit spending in the way you advocate. How's their economic recovery coming along? The dot com bubble was very similar to Japan's burst in the early '90s, how did the recoveries of both countries compare?

[GG]

in the long retreat from keynesianism in the oecd beginning in the mid-1970s (the test case was Chile, which was followed by Britain and the US), wages declined in the US for something in the range of over 20 years. I know there's a lot of debate about the measure of this (especially around the rate of inflation in the 1980s), but i've read a lot on it and i'm pretty convinced that wages in fact fell. they started to rise at a very slow rate, mind you, around 1994-1996. i don't honestly know if they've risen or fallen in the last couple of years. i'd be surprised if they had risen, but again, i don't know.

 

I have seen evidence this, but as always statistics are highly inconclusive. The questions I would have are where are the starting points on income growth, who is counted in the numbers, and do the trends track individuals' income, or just report data on quintiles.

 

My suspicion is that you had a lot of very very poor people coming out of Depression & post-war periods, that New Deal & Great Society programs had a huge impact in lifting incomes at the lower end of the scale. My guess is that the high growth abated by the late '60s, early '70s. This also corresponded with a period of heightened immigration. If you count newly arrived immigrants, your income numbers would naturally weigh lower.

 

But the key to the income figures would be to see the composition of the income stratification across generations to see movement from one income level to another.

 

Which leads me to address your points below. I don't think it's debatable that Great Society had a huge impact in raising the standard of living of the underclass.

 

However, borrowing from the other debate that's raging here, all Great Society programs are simply wealth transfer as opposed to wealth creation programs. What's happened is that you've created a permanent underclass that's dependent on others for their sustainability. This would all be fine & dandy if we never had to worry about our demographics flipping to less workers supporting retirees & unemployed.

 

as for rising inequality, bill gates making a ton of money is entirely irrelevant - we're measuring median incomes, not averaging out deciles.  there has been a huge growth in the earning power of the top 20% since the early 1980s which has of course not been matched in the bottom 50%. and let's not even get into wealth as opposed to income inequality - it's gone off the chart.  basically, i think rising inequality is a huge problem, and for a variety of reasons -- for one, elite institutions that reproduce privlilege in america are becoming increasingly unaffordable to lower and middle income americans while easily remaining in the grasp of the top 20-25 percent. today, social mobility into the elite is largely a function of access to elite institutions (primarily the university but other institutions as well), and my understanding (i don't have stats at hand) is that this possibility has diminished significantly in recent times.  i'm not arguing that social mobility doesn't exist for people entering the work force, but it's far less than pollyannas exclaiming the benefits of an increasingly privatized economic system make it out to be. the greatest period of social mobility and declining inequality was in fact from 1945-1973, and that was a function of, well, keynesian economic policies (i.e., disguised and not so disguised income transfers). did/does keynesianism have its own built in problems? of course, but to my mind its cost/beneift ratio far outweighs that of neoliberalism.

 

of course, i respect your opinion about this - everyone has different ideas of what the good society is. so we can agree to disagree!

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[TPS]

Ist off, I'm not certain where you got your numbers from because they don't match up with info on the IRS web site.  That is neither here nor there for the point of this discussion.

CBO

 

 

What you seem to be unable or unwilling to grasp is that the money that is not collected by the government is going to be put to much better use by the individuals and corporations that are generating it than the government will.  As YOU have stated in your earlier posts, overall revenues went up.  This would imply that the money that was not taxed initially was put to productive use and generated additional taxable revenue that would otherwise have not existed.  If the government had taken the money out of the system, overall GDP would have been lower than actual and although the tax rate would have been higher than it actually was the total taxes collected would have been lower.  Or to put it another way, the income had to have grown by a larger percentage than the tax cut (as you posted), or else overall revenues would have decreased.  That hypothetical $365 appears to have had at least a 100% return on investment as the overall revenues increased (again, per your previous posts).

Please see post #51 again. I gave you both the revenues as a % of GDP and expenditures. The expenditures have certainly gone up, and I stated the deficits are a function of both--lower revenues and higher expenditures. AND I don't deny that I'd rather see individuals with more income than see the government waste it. I totally support that part of anyone's argument, and supply-siders don't have a monopoly there.

 

However, my focus has been on the revenue side because that's where all of the supply-side hocus pocus occurs. You guys claim a tax cut creates more revenue, and I'm saying only if there is higher income to offset the tax cut.

The evidence I've provided for Bush2 suggests that tax revenues declined for every year of his 3-year (?I'll have to check this again) phase in. Once the tax cuts cease, if income goes up the next year, OF COURSE you'll have higher revenues. For example, if average personal rates are lowered over a 3-year period, say 10%, 9%, then 8%, and income increases each year by 3%, say from a base of $100,000, then you get the following:

Yr1 $100,000 x .1 = $10,000 in taxes

Yr2 $103,000 x .09 = $9,270 " "

Yr3 $106,090 x .08 = $8, 487

Now if rates stay the same 8%, but income still grows, then

Yr4 $109,273 x .08 = $8,742

 

Once the tax cuts are stopped, then revenues increase as income increases--it's basic math. Again, take a look at the CBO data--the deficits are a function of lower revenues AND higher spending; NOT just higher spending.