Posted on 05/13/2008 10:17:56 AM PDT by Bob J
No, I just looked it up and it is not what I thought it was!
“So, you want only MacCain cheerleaders to comment???”
No, just non bungholes.
And on planet Bob-J, anyone who doesn't lick MacCain's backside is a bunghole, n'est-ce pas?
During the 8 years of the Bush administration, our treasury debt will increase by at least 4.5 trillion dollars. During the Reagan years, our treasury debt increased by 1.8 trillion 1980's dollars. QED
That is not evidence that the tax rate reductions were not a factor in tax revenue increases. Individuals changed behavior as a result of the tax rate reductions. Individuals worked more, invested more, and changed the pattern of their investment behavior. Static budget models do not account for changes in individual behavior.
I do not question your data about the growth in federal spending. Part of the growth was unavoidable. Spending on the war on terror was necessary. Republicans did not constrain the growth in other parts of the budget although the rats would have spent far higher. A Republican Congress with a rat president may have reduced the growth in federal spending. The tax rate reductions were still a good idea, with a positive impact on economic growth and economic freedom.
The current tax rebates are a different story. The tax rebates are just a gimmick to pump more money into the economy. The rebates will lead a loss in tax revenue and increased borrowing this year. I do not see any long term changes in consumer behavior as a result of the tax rebates. For fiscal responsibility, the tax rebates should have been offset by spending reductions. Spending reductions would have offset the short term effect of the rebates however. If it was not an election year, tax rebates would not have been done.
Allow me to repeat. Tax revenue increased because economic activity increased. Economic activity increased because there was the combined stimulus of more disposable income and more government spending. But the USG borrowed against the future to finance the increased spending. Our debt keeps growing larger. Supply siders argue that the new dynamic will ignite a frenzy of productive activity that will grow the real economy (and thus tax receipts) to such an extent that any debt incurred in the process will be wiped out. It hasn't happened and never will. IMHO "supply side" economics is akin to perpetual motion theories in physics.
You are misrepresenting supply side economics. Supply side econonics only indicates that tax rate reductions may stimulate economic activity leading to more tax revenues rather than less tax revenues. Behavioral economics supports this assertion. There is debate about the relationship between tax revenues and rate deductions. Dynamic budget modeling attempts to account for the sensitivity of rate reductions and tax revenues.
Your analogy to perpetual motion is incorrect. Critics misrepresent supply side economics to force this analogy. No responsible economist has ever claimed that unrestricted tax rate reductions will lead to increased tax revenues.
I think that we agree that spending is out of control on all government levels. The problem is not the Bush tax cuts but the spending increases. Governments are collecting huge sums in tax revenues. The Bush tax cuts were prudent policy with the intended effect of providing more economic freedom, some increased tax revenue, and more economic activity.
A long time ago, Republicans were known for prudent spending and balanced budgets. Eisenhower never changed the maximum income tax rate, which stood at 91%. During his tenure, almost all of the debt incurred during WW2 was paid off. People of his generation considered it a moral obligation to pay off debt. Today, with the baby boom generation and their proclivity toward instant gratification transcendent, debt is inconsequential. There can be no interference in their quest for a personal nirvana. Thus was born “supply side” economics where less means more and the pain of earning your own way is eliminated. When Bush 41 first heard the term, he pronounced it “voodoo” economics. And the old man was right.
You simply do not understand behavioral economics. Supply side economics is nothing more than understanding the sensitivity between tax rate reductions and tax revenues. We are overtaxed. The problem is the spending side. Governments at all levels collect a king's ransom of tax revenue.
Your analysis is reversed on the entitlement issue. The greatest generation has stolen the retirement of the baby boom generation. The greatest generation has gotten a relatively free ride on entitlements. They paid relatively low payroll taxes with much higher benefits returned. Meanwhile, the boomer generation has paid stiff payroll taxes with bleak prospects of benefits.
Even this lopsided situation is not the real problem. The problem has been the insistence of the greatest generation to continue the generational Ponzi scheme of entitlements. Entitlements need to be privatized except for a welfare component. The payroll taxes of the boomer generation have been stolen to fund other parts of government. Savings must be the cornerstone of retirement. Payroll taxes are not savings. They are simply transferred either to fund retirements of others and mostly other programs of the government.
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