Posted on 08/22/2009 5:33:20 AM PDT by Son House
But where is the evidence that tax cuts would have done any good when so many businesses are losing money and going bankrupt, when millions of workers have been laid off and have no wages to tax, and most investors have so many losses to carry forward that they probably won't pay a nickel of capital gains taxes for years after the market recovers?
It's simply implausible to believe that more tax cuts, of which we had so many in the years leading up to the recession, would have had any effect whatsoever under current economic conditions.
Some conservatives say that while fiscal stimulus may have been worthless or even counterproductive, monetary stimulus works. As economist Anna Schwartz put it at a conference in March of this year, "Instead of fiscal stimulus we should have monetary stimulus." At the same conference, University of Chicago economist Robert Lucas said, "I think what the Fed is now doing is going to be enough to get a reasonably quick recovery."
as Keynesian economists have argued since the beginning of the crisis, that when the economy is in a liquidity trap--something that happens when interest rates are extremely low, as they are now--monetary policy is impotent. An aggressive fiscal policy is essential to raise aggregate spending and get money circulating, otherwise it just piles up in bank accounts without having any meaningful economic effect, inflationary or otherwise.
Bruce Bartlett is a former Treasury Department economist and the author of Reaganomics: Supply-Side Economics in Action and Impostor: How George W. Bush Bankrupted America and Betrayed the Reagan Legacy.
(Excerpt) Read more at forbes.com ...
Make all the excuses you want, we at Free Republic know Obama's Economic Policies are failures
Bruce Bartlett seems to have a Beverly Hillbillies' image of how banks work.
Hate to disappoint him, but there's no such thing as a temporary government program....
Since we have not had any tax cuts since 2003 it is simply idiotic for the author to make this statement. It shows such a complete ignorance of the subject at hand that it completely destroys his pretense to being an expert on the topic.
Facts: Taxcuts under Kennedy, Reagan and Bush 2 caused massive growth in the economy.
Fact. Stimulus spending, repeatedly by Japan during the 1990s and the Obama Administration now produced only longer deeper recessions.
142,000,000 Americans paid payroll taxes.
Repeal the stimulus, give $5000 to each of them and watch the economy boom.
“In Bartlett’s latest book, The New American Economy:The Failure of Reaganomics and a New Way Forward (ISBN 978-0-230-61587-8), he goes back to the economic roots of Impostor and abandons the conservative dogma in favor of a policy strongly based on what’s worked in the past. Bartlett explains what went wrong with Reaganomics and what the Obama Administration is doing to fix it.”
Sounds like a conservative convert over to the Dims.
That'd work for me, too, although I'm worried about the debt and deficit for my kids....
Hey Bruce, how can you be so stupid?
You can’t stimulate people to buy things when they are in debt up to their necks.
The only thing that will help is people paying off their debt and getting it back to manageable levels. You can’t borrow your way out of a debt crises.
In addition your stupid borrowing for “stimulus” is going to drive interest rates up and that will further damage the masses who are heavily in debt. And the more money you take out of the private sector through taxation, the less is left to pay down all that debt and the longer the crises goes.
I don’t understand how so many supposedly intelligent people can be so stupid.
The current economic catastrophe is not the result of tax rates that are set too low, this state has come about because of imprudent stewardship of the strength of the dollar. The strength of the dollar is directly threatened when the annual expenditures of the government are not being met by tax revenues.
The question is, how do we raise revenues in relation to the annual expenditures. One way, of course, woud to REDUCE spending at a time when revenues are also falling. This should be so self-evident it would not require much discussion at all.
But no, this interrupts the game. And the game is all-important. To force stimulus upon an economy unable to absorb it, is to encourage the cruelest tax of all, inflation, which falls on the rich and the poor, the strong and the infirm, the diligent and the indulgent, all alike and in almost proportionate weight upon everybody.
...where is the evidence that tax cuts would have done any good when so many businesses are losing money and going bankrupt, when millions of workers have been laid off and have no wages to tax, and most investors have so many losses to carry forward that they probably won't pay a nickel of capital gains taxes for years after the market recovers? It's simply implausible to believe that more tax cuts, of which we had so many in the years leading up to the recession, would have had any effect whatsoever under current economic conditions. [Bruce Bartlett in Forbes]
As a liberal, you have to believe that everything good comes from the government, not the people.
Therefore, government spending has to be good....doesn’t it?
Had the government placed a moratorium on Social Security withholding taxes for both individuals and businesses I believe that it may have done a great deal to stimulate the economy.
This would have helped low to middle-income workers and smaller businesses more than the rich and large corporations. Of course, European bankers would not have faired as well.
We would have incurred a debt but interest payments would have been forestalled until the economy was better.
If we GOT to have a "Stimulus" then let give it to the people who earned it, NOT create new govt programs that will balloon our budgets from now to the energy death of the universe.
Market contractions are ALWAYS the result of policy errors. In this case, monetary policy that decoupled with a defacto gold standard and s subsidy in Grahm-Leach that inflated real property prices. If you doubt that subsidies cause inflation, then take a close look at the price of automobiles before Cash for Clunkers first became an idea and now.
Just wait. When they realize people are not spending and still saving, they will take everyone’s 401K, reset it back to August 2008 levels, but manage it from Washington.
This proposal was being considered late last year and don’t think it is not dead.
Your post just contradicted this claim. What you advocated was a tax cut (Suspending SS taxes is a tax cut) which he said would not work.
NO, his analysis is not valid. It is total insanity. In his world view, giving the money to people to spend is "bad" and "doesn't work" having the Govt spend it instead is "good". Only problem is as Japan stimulus spending all thru the 1990s shows, this dogma does not work.
Halting the spending and keeping the taxes low suits me. If we shrink the govt spending we need to keep the private market stimulated to make up for the temporary loss in predictable cash flow. That’s why I would consider a rebate to tax PAYERS like you suggest.
But whatever plan goes into effect it must spark the private sector and diminish the govt sector, the debt and the deficit IMO.
This is the insanity in all this. Govt inflated the housing bubble which collapsed and created a recession so the solution is more government interference in the market to "Fix" what it broke?
What idiot came up with this idiotic idea?
“You cannot legislate the poor into freedom by legislating the wealthy out of freedom. What one person receives without working for, another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else.
When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to
get what they work for, that my dear friend, is about the end of any nation.
You cannot multiply wealth by dividing it.”
~~~ The late Dr. Adrian Rogers , 1931 to 2005
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