Posting Towards Gomorrah

[Tyrone Slothrop]

Originally posted by Spanky
You just don't appreciate how important growth is.

I am often puzzled when I try to figure out what straw man you think you're arguing against, but this time moreso than others.

[Spanky]

Another way of looking at it is the deficits are only bad if they hamper growth. If they don't hamper growth then there is nothing wrong with them. So if the tax cut brings growth, why care about the deficit? Once you have admitted that the Bush tax cut brought growth (and did not hamper growth) from an economic perspective you have admitted that they were a good thing. Both you and Gattigap admitted that the Bush tax cuts brought growth, so that means both of you are arguing that the Bush tax cuts were good. You don't understand that because both of you do not understand the importance of growth.

Once you admit that the Bush tax cuts brought growth, now the only issue is does their continued existence help bring more growth or less growth? The Kenysians would want the tax cuts to come to an end (the crowding out would overwhelm the stimulus), where the Supply Siders would argue that they should stay (the stimulus would still out do the crowding out).

It is a very small minority of economists that think that the tax cuts did not bring more growth and were therefore bad.

[Spanky]

Originally posted by Tyrone Slothrop
I am often puzzled when I try to figure out what straw man you think you're arguing against, but this time moreso than others.

Maybe I am.

1) Do you agree that the Bush tax cuts brought growth?

2) Do you agree that the Bush tax cuts were good for the economy and were therefore the right thing to do?

If you answer yes to both of those then I am creating a straw man and I am sorry. I am not sure that Gattigap would agree with number one, but I am sure he would disagree with number two. So I am not creating a straw man there. Since you gave Gattigap "your proxy" I assume that you were agreeing with everything he said.

If Gattigap agrees with one and not two, he is an economic moron (beccause he doesn't understand the importance of growth). If he disagrees with number one, than he is in a small economic minority, and he disagrees with all those guys he quoted, including that guy from AEI, and making the assertion from his original posting wrong (that what these guys were saying disputed Supply Side Economics). In other words, if the Bush tax cuts have not paid for themselves yet that does not mean Supply Side economic is wrong. If they in fact brought any growth that shows that the tax cuts were definitely the right move from an economic perspective.

[Greedy,Greedy,Greedy]

Originally posted by Spanky
Yes Pelosi and Rangel are going to take a pro-military position. Rangel already said he will cut off funding. Pelosi has already said she wants a definite timetable for withdrawal. You can dispute many things, but there is no question the military does not want a timetable set for withdrawal. A Democrat takeover will not help the military in any way.

I now see that this is so basic it can be taken as faith. It's as simple as 2 + 2 = 5.

[Gattigap]

Originally posted by Spanky
Since you gave Gattigap "your proxy" I assume that you were agreeing with everything he said.

Actually, he gave Burger his proxy, not me, which is probably wise.

Because when I came back and read your arguments? It's like, so clear now. Tax cuts create growth. Growth, like, grows the tax base and pays for the cuts in a year or two. Growth maximixes individual economic utility and establishes stable societies, peace, democracy, improved prime-time televisions shows, and most importantly better foreign markets for more growth.

It's so simple. It's ... well, it's beautiful, once you think about it.

[Greedy,Greedy,Greedy]

Mark Foley Action Figure

Next Republican Action Figure

[Tyrone Slothrop]

Originally posted by Spanky
Maybe I am.

1) Do you agree that the Bush tax cuts brought growth?

2) Do you agree that the Bush tax cuts were good for the economy and were therefore the right thing to do?

If you answer yes to both of those then I am creating a straw man and I am sorry. I am not sure that Gattigap would agree with number one, but I am sure he would disagree with number two. So I am not creating a straw man there. Since you gave Gattigap "your proxy" I assume that you were agreeing with everything he said.

If Gattigap agrees with one and not two, he is an economic moron (beccause he doesn't understand the importance of growth). If he disagrees with number one, than he is in a small economic minority, and he disagrees with all those guys he quoted, including that guy from AEI, and making the assertion from his original posting wrong (that what these guys were saying disputed Supply Side Economics). In other words, if the Bush tax cuts have not paid for themselves yet that does not mean Supply Side economic is wrong. If they in fact brought any growth that shows that the tax cuts were definitely the right move from an economic perspective.

I don't think anyone disagrees with the concept that tax cuts, in general, promote growth. The criticism of the Bush tax cuts -- well, one criticism of them -- is that they were a less effective way of spurring growth than other alternatives.

I don't think your discussion above captures the various issues on which supply-siders disagree with other economists, conservative and otherwise.

I thought you were making the claim above that tax cuts pay for themselves in the short term in the sense that because they spur growth, the result is that the government takes in more revenue at lower tax rates than it would have at higher rates absent that growth. Only a few economists not on the government payroll believe this, and it's not clear that those on the government who are saying it also believe it.

[Greedy,Greedy,Greedy]

Originally posted by Tyrone Slothrop
I don't think anyone disagrees with the concept that tax cuts, in general, promote growth. The criticism of the Bush tax cuts -- well, one criticism of them -- is that they were a less effective way of spurring growth than other alternatives.

I don't think your discussion above captures the various issues on which supply-siders disagree with other economists, conservative and otherwise.

I thought you were making the claim above that tax cuts pay for themselves in the short term in the sense that because they spur growth, the result is that the government takes in more revenue at lower tax rates than it would have at higher rates absent that growth. Only a few economists not on the government payroll believe this, and it's not clear that those on the government who are saying it also believe it.

Not all cuts are created equal in spurring growth (sorry to take the discussion beyond bumper sticker level) - for example, Clinton focused many of his cuts on investment incentives, including some particularly targetted toward venture capital. Those cuts are more effective at spurring growth than simple rate reduction. In particular, a rate differential oriented toward particular investment can have an impact disproportionate to cost.

And, failure to raise sufficient revenue can deter growth - part of what attracts grown is infrastructure, and someone has to pay for it. Likewise, our economy is increasingly focused on and dependent on an educated workforce, and someone has to pay for that education. Spanky's made these points himself before.

This is a balancing act; the Democrats acknowledge that, and debate the balance. Many R's, however, deny it, and simply push for every cut they can get. While, of course, still spending like drunken sailors. All you have to do is compare records.

[Tyrone Slothrop]

Originally posted by Greedy,Greedy,Greedy
This is a balancing act; the Democrats acknowledge that, and debate the balance. Many R's, however, deny it, and simply push for every cut they can get. While, of course, still spending like drunken sailors.

The way that you can tell that Spanky is a Modern Republican is that he posts about the economic effects of tax cuts while completely ignoring the notion that the government has to pay for its spending somehow, and the associated economic effects. From what Spanky has posted above, he obviously supports continuing to cut taxes until the government collects none. As a matter of electoral politics, this is wonderful stuff -- it's how you buy votes from rich people. As a matter of public policy, it's insane.

[Mmmm, Burger (C.J.)]

Originally posted by Spanky


Once you admit that the Bush tax cuts brought growth, now the only issue is does their continued existence help bring more growth or less growth? The Kenysians would want the tax cuts to come to an end (the crowding out would overwhelm the stimulus), where the Supply Siders would argue that they should stay (the stimulus would still out do the crowding out).

Who are the supply siders in favor of persistent deficits?

The supply siders so far as I can tell believe only in "starving the beast"--that is, the only way to reduce overall government involvement in the economy is first to cut taxes, and make it impossible to spend more. That's true to a point, because it's been consistently shown that Congress will spend more than 100% of every revenue increase resulting from higher taxes.

Of course, Congress will spend more than 100% of any revenue, so that's a bit irrelevant. And the size of government is fundamentally determined by spending, not by taxing, and absent a committment to cut spending, not much changes.

[Secret_Agent_Man]

Originally posted by Greedy,Greedy,Greedy
I have a slightly different view. The biggest problem I see underlying our Iraq policy is that the administration is simple-minded about it's goals: our goal is victory was Bush's most recent statement.

***
The current administration is completely ill-equipped to let both the army and the career state department types have enough leeway to deal with the situation in all its complexity.

I agree that the first statement seems to me to be big problem, and tend to agree with the second statement.

The Administration is only now, nearly 4 years into Iraq, publically discussing the need to revisit its strategy, and that only because important, conservative GOP Senators are saying that we must.

I wonder if the KISS approach is due mostly or entirely to the politics of the issue. Simple statements are easier to rally around, and win elections. Nuanced positions are easier to misinterpret and tear apart (witness Kerry).

That may be good politics, but when that attitude infects actual policy-making and the way the "deciders" view the world -- not so good.

S_A_M

[Secret_Agent_Man]

Originally posted by Spanky
One thing is certain. With a Democrat takeover of the House all those things you have listed above will be harder to accomplish.

That may be so, but the journey of a thousand miles begins with a single step.

In other words, we've gotta start somewhere to get those f-ing bums out of power.

S_A_M

[Secret_Agent_Man]

Originally posted by Spanky
It is a matter of dispute as to whether they are listening to them now. Bush and Rumsfield say they are, others say they are not.

I tend to believe them. Why would they lie? It is in other people's interest to lie, because the Democrats and allies want to make them seem incompetant.

So, it is only in the interests of the Administration's opponents, but not in the interests of the Administration, to shade the truth or try to paint themselves in the most favorable possible light?

Fascinating.

S_A_M

[Mmmm, Burger (C.J.)]

Originally posted by Secret_Agent_Man
That may be so, but the journey of a thousand miles begins with a single step.

In other words, we've gotta start somewhere to get those f-ing bums out of power.

S_A_M

The odd thing is, I see the party winning the house being worse of in 2008--for either party. If the Dems win, they'll be expected to try to do something, but they won't, other than investigations. And those will make them look petty. If the R's win, of course they have to do something, but they won't either, and 8 years will go down as the biggest do-nothing admin. of all time, or at least in recent memory.

In other words, that journey may be better taken by getting 217 seats.

[Tyrone Slothrop]

Apropos of our conversation, here's a piece from Jonathan Chait on the subject:

Alan D. Viard, a former Bush White House economist currently at the conservative American Enterprise Institute, recently told The Washington Post: "Federal revenue is lower today than it would have been without the tax cuts. There's really no dispute among economists about that."

He's right. There's no dispute among economists. Conservative, moderate, or liberal, every credentialed economist agrees that the Bush tax cuts caused revenues to drop. There is, however, a dispute between economists and pseudo-economists. Supply-siders may be laughed at by real economists, but they still enjoy a strong following among politicians, including, alas, the president of the United States. Here is what President Bush said a week and a half ago:

• They said that we had to choose between cutting the deficit and keeping taxes low--or another way to put it, that in order to solve the deficit we had to raise taxes. I strongly disagree with those choices. Those are false choices. Tax relief fuels economic growth, and growth--when the economy grows, more tax revenues come to Washington. And that's what's happened. It makes sense, doesn't it?"

Well, no, it doesn't make any sense at all. Bush, of course, is correct that tax revenues have risen over the last few years. This is normal.

Except in certain extreme theoretical conditions, tax cuts cause revenues to fall, and tax hikes cause them to rise. The economy also can affect revenues. During an expansion, revenues can rise unusually fast, and during a recession, they can drop unusually fast.

The latter is what happened following the first Bush tax cut. When Bush took office, tax revenues accounted for 19.8 percent of gross domestic product. After the tax cut, they collapsed to a low point of 16.3 percent--far lower than even the most pessimistic projection.

Yes, revenues have risen from that low level, but they still haven't recovered. The Center on Budget and Policy Priorities found that revenues currently lag $200 billion behind the revenue growth you would normally find during a recovery.

Now, Bush's reply to that is to say that if it weren't for his tax cuts, we would still be in a recession. Indeed, in the same October 11 speech, he asserted, "I'm convinced that if we had raised taxes, it would cause there to be an economic decline, which would make it harder to balance the budget over the years."

Because Bush can veto any tax hike, we can't know for sure whether he's right. But there's another pretty good way to check that claim: Go back to the last time there was a major tax hike. That was in 1993. Just about every major elected Republican predicted the 1993 tax hike would slow down the economy, probably cause a recession and cause revenues to decline. Instead, they boomed, rising from 17.5 percent of GDP when Bill Clinton took office to 19.8 percent when he left.

Republicans say Clinton just benefited from a good economy. Of course he did. That's the point. Raising taxes on the rich, within reason, did nothing to slow down the economy. Moreover, that same logic applies to Bush. Clinton did not invent the business cycle, and neither did the current president. Both benefited from a growing economy.

But here's the difference. Clinton inherited a large deficit and, with the economy going full-tilt, turned it into a sizable surplus. Bush inherited a sizable surplus and, with the economy going full-tilt, he's still running a deficit north of $200 billion. If Bush had a responsible fiscal policy, we'd be paying off our debt right now, not adding to it.

In the same speech in which he claimed that his tax cuts have caused revenues to rise, Bush bragged that he's "restraining spending." So why do we still have a deficit? I mean, he says he's kept spending down, he's caused revenues to skyrocket, and the economy is going great guns. Why are we still in the red?

And if Bush's own economists say his tax cuts caused revenue to drop--and Viard isn't the only one--then how can he continually get away with insisting the opposite?