Posted on 12/04/2012 8:25:22 AM PST by ksen
The Republican Party has long promoted itself as the party of business. Republicans understand the needs of business, we are told, and if the country would leave the economy in their hands business would boom. All we need to do is to give those at the very top of the income distribution – the “job creators” – more income through tax breaks, and then sit back and wait for the magic happen. Our investment in the wealthy will produce remarkable economic growth, and everyone will be better off.
The Bush tax cuts were a test of these claims about supply-side economic policies. To justify the tax cuts the nation was, in effect, given a business prospectus from the Republican Party. We were promised that cutting taxes on the wealthy would result in much higher economic growth and broadly shared prosperity. For those who wondered how we would pay for such a large cut to the government’s revenue stream, the Republican prospectus had a remarkable claim. The tax cuts wouldn’t cost us anything. Growth would be so strong that the tax cuts would more than pay for themselves. Even those who admitted that the tax cuts might not be fully self-financing still made strong claims about faster economic growth offsetting much of the lost revenue from the tax cuts.
The reality, of course, has been quite different. There is little evidence that the Bush tax cuts, or any other tax cuts directed at the so-called job creators, have had a noticeable effect on economic growth. And the promise of broadly shared prosperity has not been realized. Most of the gains from economic growth in recent decades have gone to the top of the income distribution while the inflation adjusted wages of the working class have been relatively flat. Furthermore, the tax cuts have not paid for themselves as promised, and it hasn’t even been close. The Bush tax cuts have already cost us trillions in revenue, and if they are extended for high income tax payers, they will cost us roughly another trillion over the next decade.
The failure of Republicans to deliver on their promise that tax cuts would be mostly self-financing is a large factor in the deterioration in our long-run fiscal outlook, and it is putting considerable pressure on programs such as Social Security. In fact, the Bush tax cuts can be thought of as a loan from the Social Security Trust Fund that was supposed to be paid back with the revenues from higher economic growth, a loan that is presently in default.
To see this, recall that the government began intentionally collecting a surplus from the Social Security program beginning in 1983 in order to prefund the retirement needs of baby boomers. The idea was to run a surplus for several decades while the baby-boomers were still working to get ready for the deficit years the system would experience after they retired.
The revenue from Social Security over and above what was needed to fund payouts reduced the overall government debt and allowed taxes to be lower than they could have been without these surplus funds. For example, the surplus that Bush inherited from the Clinton administration was largely due to the Social Security Trust Fund, and Bush argued it would be better to give this surplus to the private sector through tax cuts than to leave it in the hands of the government. But it wasn’t better. The income of the wealthy grew as they pocketed the tax cuts, but workers experienced stagnant wages, a recession that hit working class households particularly hard, and intense pressure to cut important social programs.
Despite their failed promises, the Republican Party is asking that we extend the tax cuts for the wealthy, and some are even calling for further reductions in tax rates. However, if the Republican Party is truly the party of business, then surely it will understand that no responsible financial institution would continue to invest in a business that failed meet, or even come close to the growth and revenue projections that justified the investment in the first place. The payoffs from tax cuts that were promised during the Bush years have not been realized, and the failed promises about growth and revenue have damaged the health, education, and retirement programs the working class depends upon in our increasingly globalized economy.
A true party of business would end our investment in the false promise of supply-side economics. However, a party with a goal of reducing the scale of programs such as Social Security and Medicare along with delivering tax cuts to wealthy political backers would use arguments about the economic effects of tax cuts to disguise its true intentions. Which description fits best? Many Republicans still claim that tax cuts for the wealthy enhance economic growth despite the evidence to the contrary, but it’s rare to hear a Republican admit that these supply-side policies have failed.
The Republican Party has long promoted itself as the party of business. Republicans understand the needs of business, we are told, and if the country would leave the economy in their hands business would boom. All we need to do is to give those at the very top of the income distribution – the “job creators” – more income through tax breaks, and then sit back and wait for the magic happen. Our investment in the wealthy will produce remarkable economic growth, and everyone will be better off.
The Bush tax cuts were a test of these claims about supply-side economic policies. To justify the tax cuts the nation was, in effect, given a business prospectus from the Republican Party. We were promised that cutting taxes on the wealthy would result in much higher economic growth and broadly shared prosperity. For those who wondered how we would pay for such a large cut to the government’s revenue stream, the Republican prospectus had a remarkable claim. The tax cuts wouldn’t cost us anything. Growth would be so strong that the tax cuts would more than pay for themselves. Even those who admitted that the tax cuts might not be fully self-financing still made strong claims about faster economic growth offsetting much of the lost revenue from the tax cuts.
The reality, of course, has been quite different. There is little evidence that the Bush tax cuts, or any other tax cuts directed at the so-called job creators, have had a noticeable effect on economic growth. And the promise of broadly shared prosperity has not been realized. Most of the gains from economic growth in recent decades have gone to the top of the income distribution while the inflation adjusted wages of the working class have been relatively flat. Furthermore, the tax cuts have not paid for themselves as promised, and it hasn’t even been close. The Bush tax cuts have already cost us trillions in revenue, and if they are extended for high income tax payers, they will cost us roughly another trillion over the next decade.
The failure of Republicans to deliver on their promise that tax cuts would be mostly self-financing is a large factor in the deterioration in our long-run fiscal outlook, and it is putting considerable pressure on programs such as Social Security. In fact, the Bush tax cuts can be thought of as a loan from the Social Security Trust Fund that was supposed to be paid back with the revenues from higher economic growth, a loan that is presently in default.
To see this, recall that the government began intentionally collecting a surplus from the Social Security program beginning in 1983 in order to prefund the retirement needs of baby boomers. The idea was to run a surplus for several decades while the baby-boomers were still working to get ready for the deficit years the system would experience after they retired.
The revenue from Social Security over and above what was needed to fund payouts reduced the overall government debt and allowed taxes to be lower than they could have been without these surplus funds. For example, the surplus that Bush inherited from the Clinton administration was largely due to the Social Security Trust Fund, and Bush argued it would be better to give this surplus to the private sector through tax cuts than to leave it in the hands of the government. But it wasn’t better. The income of the wealthy grew as they pocketed the tax cuts, but workers experienced stagnant wages, a recession that hit working class households particularly hard, and intense pressure to cut important social programs.
Despite their failed promises, the Republican Party is asking that we extend the tax cuts for the wealthy, and some are even calling for further reductions in tax rates. However, if the Republican Party is truly the party of business, then surely it will understand that no responsible financial institution would continue to invest in a business that failed meet, or even come close to the growth and revenue projections that justified the investment in the first place. The payoffs from tax cuts that were promised during the Bush years have not been realized, and the failed promises about growth and revenue have damaged the health, education, and retirement programs the working class depends upon in our increasingly globalized economy.
A true party of business would end our investment in the false promise of supply-side economics. However, a party with a goal of reducing the scale of programs such as Social Security and Medicare along with delivering tax cuts to wealthy political backers would use arguments about the economic effects of tax cuts to disguise its true intentions. Which description fits best? Many Republicans still claim that tax cuts for the wealthy enhance economic growth despite the evidence to the contrary, but it’s rare to hear a Republican admit that these supply-side policies have failed.
I'm happy with Obamacare as a first step. That was easy. Give me a tougher question.
No, the HotAir article referenced more than one poll. Only the first grey box was the 800 Obama voters poll.
Did your premium go down? Funny thing about that promise, everyone, and I mean everyone has had their insurance premium go up, not down.
Yes, you're all dumb as stumps, believing that somehow you can increase coverage for everyone, decrease the cost, add a huge bureaucracy to oversee the new system, and voila! A system as dependable as Great Britain! (Yes, they were the first, and it's horrible, congrats, you're gonna love it).
That you believe this is a good first step shows just how terminally stupid progressives are.
I think your first answer wasn't so easy after all. It simply showed how brain dead "progressives" have become.
Free stuff! Free stuff!
Spending catches up to you so STOP SPENDING. But tax cuts have nothing to do with spending. Now stop the Marxist drivel.
That is one way of looking at them I guess. ;)
Fact 1: This is the weakest recovery since the great depression.
We're coming out of the worst recession since the Great Depression so it makes sense it's not as strong as normal. Combine that with the fact that businesses are sitting on trillions in cash and not investing it despite record profits then you have a recipe for s slow recovery.
Fact 2: He promised that his stimulus would prevent us from htting 8% unemployment. It's still higher than that, and it's likely we are going back in to recession.
Yes, the unemployment numbers went higher than 8% but economists still agree that the stimulus package kept unemployment lower than it would have been without stimulus.
Fact 3: He promised to cut the deficit in half, he more than doubled it.
Well, when you have Republicans refusing to raise revenue what do you expect?
Fact 4: Real wages have gone down under his policies, over $3,500 per household. REAl buying power has gotten worse under his policies, energy, food, and most necessities have gone way up in price.
Real wages have been stagnating since the 1970s. I wasn't aware that Obama was President back in the 1970s.
Did my premiums go down? No, I never claimed they did. But they have been rising more slowly.
2. Only brain dead liberal economists like Krugman say that kind of garbage. The "stimulus" gave money to cronies, it was never meant to fix anything.
3. The problem is not taxes, it's spending. The problem is your policies are anti-growth so they bring no recovery so they bring in no revenues. AS backwards thinking on your part. Actually, Bambi called it "basic fairness" in his primary debate (oh yes, I remember, do you?), and incredibly he was right. Everyone now suffers (hey, it's fair) because of his (and your) stupidity.
4. No, no, you're prevaricating. The data shows a huge drop in buying power since he became president, also a huge drop in wages. Precisely as he promised.
Unfortunately, all of us have to suffer for his (and your) stupidity.
:-)
I've seen my own, seen the averages, I know people in the business, they hit their highest jump in this past year in a long long time.
It's only beginning. It's going to get a lot worse. That you bought (and buy) the lie is much to your intellectual discredit.
You should look up what the “marginal utility of income” is because that might help you understand that tax cuts for lower income levels is better for the economy than tax cuts for wealthy individuals.
The more cash we can get into the hands of people that will actually spend it the quicker and stronger our recovery will be. Corps and individuals sitting on huge hoards of cash hurts the economy.
Bye for now, thanks for the discussion, you're proof that playing with the brain dead can be fun....
:-)
I’m taking off for awhile too.
I’ll find something else good to post tomorrow and we can do it again. :wave:
It.....was.......a.......non......sequitor.
Ahhh, a kinder, gentler, Murrymom.
It's what I've come to expect from "progressives", the incapacity to think or actually debate on the merits. You sidestep his obvious failures (everything the man has touched has failed, think about that) and call them successes and are surprised when we call you brain dead.
Obamacare's gonna be every bit as good as the pathetic health care system in England. Whoopee! So glad you forced this on everyone.
If your statement was true, the most wealthy in America would stay atop the list year after year. My understanding is that the list of most wealthy in America is very fluid and changing year after year.
I couldn’t help but notice you just like to throw ad hominems around and ignore facts and figures and can’t even understand the articles you post to try and get a GOTCHA!
But whatever floats your boat son.
I never said anything about tax cuts being spending. If you’re gonna shout and declare someone deluded you should take the time to actually read what they posted.
The only real supply side economics the last century was tried by Warren Harding...
The economic situation in 1920 was grim. By that year unemployment had jumped from 4 percent to nearly 12 percent, and GNP declined 17 percent. No wonder, then, that Secretary of Commerce Herbert Hoover — falsely characterized as a supporter of laissez-faire economics — urged President Harding to consider an array of interventions to turn the economy around. Hoover was ignored.
Instead of “fiscal stimulus,” Harding cut the government’s budget nearly in half between 1920 and 1922. The rest of Harding’s approach was equally laissez-faire. Tax rates were slashed for all income groups. The national debt was reduced by one-third. The Federal Reserve’s activity, moreover, was hardly noticeable. As one economic historian puts it, “Despite the severity of the contraction, the Fed did not move to use its powers to turn the money supply around and fight the contraction.”2 By the late summer of 1921, signs of recovery were already visible. The following year, unemployment was back down to 6.7 percent and was only 2.4 percent by 1923.
http://www.lewrockwell.com/woods/woods125.html
the combination of DEREGULATION-aggressively cutting the size of Federal Government...and DETAXATION has never been done since. Kennedy and Reagan came the closest...but only via tax cuts for the most part.
Unfortunately entitlement programs exist only as the principle means by which to force Keynesian policies of borrowing upon the country. They’re good for the bankers.
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