Posting Towards Gomorrah

[Greedy,Greedy,Greedy]

Originally posted by Spanky
Anyone who said this when I said we have run deficits for most of our countries history:

"Cite please.

Burger has it exactly right. And it has been true for most of our nation's history - from the Continental Congress on.

Do we have to give you a lesson in economic history, too?"

Should not be lecturing people on history. What you said was moronic and I was polite. I knew about our consistent surpluses uptil Wilson in junior high school. Now I will be stop being polite. Your statement was idiotic and showed a complete ignorance of American economic history. I was not wrong. We did run high tariffs and they did contribute greatly to our revenue. So did land sales. And we had surpluses.

What I said was a 100% accurate and what you said was a 100% wrong, and you have the audacity to lecture me on nineteenth century economic history?

I will match my knowledge of economic history of the nineteenth century against yours any day.

Spanky, my boy, the challenge was to find a cite for your statement that Congress has not, through most of our history, spent more the government received.

And Burger doesn't have it quite right, but I do have confidence that if he looked at the data he'd get it right.

But, OK, since you are knowledgable on 19th century economic history, let's start with an easy one. Any idea what the change to the country's debt level was from the time of the Revolution through 1830, or why?

[sebastian_dangerfield]

Originally posted by Spanky
The key statement you make that refutes your whole point is "regardless of whether or not there is a deficit". Stating that the deficit does not factor in is making a very strong statement on the deficit. Most economists argue that the deficit should have a strong influence on the equation where Laffer says it does not. In other words, he strongly discounts the effect of crowding out, which is where most economists have a strong disagreement with him.



Wrong. Laffer proposed this idea to Reagans people. At the time the country was running huge deficits. Laffer argued that we were above the t* and therefore cutting taxes would increase revenue. Other economists argued that the deficit was already crowding out growth and that a tax cut would further increase the deficit, crowding out even more investment, and therefor would not produce the growth needed to balance the budget. The other economists argued that by balancing the budget with tax increases, we would reduce the crowding out caused by the deficit and thereby increase growth. Laffer said that the crowding out was not that big of a deal and would not effect his curve.

His tax cut would cause growth that would increase revenue and therefore would eventually balance the budget which would eventually reduce the deficit. Thereby we would grow our way out of the deficit. That was the basis of his argument.

I enjoy the Laffer Curve. You might even call me a student of it, as its the sole element of Econ 101 I was able to coherently discuss in my exams. I somehow worked it into every essay question on every exam. It's a testament to the potency of small batch bourbons and vodka that today, I have no idea what the hell it stood for, other than the conceptual notion that it represented a peak wwhere something worked, after which that something stopped working.

I don't feel so bad about my ignorance.

[Greedy,Greedy,Greedy]

Originally posted by Tyrone Slothrop
Speaking of which, empty your d***ed PM box.

Done. I wish Hank would stop stalking me - the damn things fills up way too fast.

[Spanky]

Originally posted by Tyrone Slothrop
I gather you acknowledge that so far, the Bush tax cuts have been a net loss for government revenues. What needs to happen to disprove what you call the Supply Side theory? If it not after a few years, how many years do you need to wait before you can be sure that foregone taxes have not been made up for by the additional revenues due to increased growth?

We were in recession when they were implemented. We needed to start growing if we wanted to signicantly increase revenue and get us out of the deficit being creating by the receission. If the tax cut pulled us out of the deficit by creating growth, and this was more growth than would have existed without the tax cuts, then that growth will eventually put us in a better position (mean more revenue) in regard to the deficit if the tax cuts were not implemented (if the tax cuts were not implemented we would have less revenue in time). Can you not see that? If the tax cuts created more growth we get more revenue eventually. The only issue is if they created growth over time.

In addition, the point of Supply Side economics is growth. Not increased revenue. Increase revenue is one of the nice by products. The deficit is not bad in itself, it is only bad in that it hampers growth. So you are focused on the wrong bogeyman. Lack of growth is what Supply Side economics is supposed to cure.

If Bush's tax cut caused growth then it pulled us out of the recession creating jobs and making american wealthier. If we had kept the budget balanced but had no growth, we would be in a much worse position. What good is a balanced budget if you are not growing.

Originally posted by Tyrone Slothrop
Do you see any cost to the Bush tax cuts? Is it possible in your mind that they increased growth and yet were not a good move from an economic perspective?

You really need to get out of this discussion because it is way over your head. It is possible the bush tax cuts hampered growth by crowding out private investment, so we may have had more growth without them in the natural business cycle. However, I don't believe that. However, it may be that their continued existence is not needed to create more growth (the cycle is in an upswing so the economy doesn't need any more stimulus) and the crowding out may be hampering growth. I don't think that is the case but a few economists have made me think twice about my decision. I have no doubt the tax cuts were the right thing, but I am only pretty sure there continued existence is the right thing.

[Spanky]

Originally posted by Greedy,Greedy,Greedy
Spanky, my boy, the challenge was to find a cite for your statement that Congress has not, through most of our history, spent more the government received.

And Burger doesn't have it quite right, but I do have confidence that if he looked at the data he'd get it right.

But, OK, since you are knowledgable on 19th century economic history, let's start with an easy one. Any idea what the change to the country's debt level was from the time of the Revolution through 1830, or why?

We both have access to Google. Demostrate to me that that our government ran a deficit through most of the ninteenth century. Prove to me that something I have accepted as conventional wisdom since Junior High School is wrong.

[Secret_Agent_Man]

Originally posted by Spanky
You [Ty] really need to get out of this discussion because it is way over your head.

Holy smoke . . . .

:rofl: :rofl: :rofl:

S_A_M

etft -- t.s.

[Secret_Agent_Man]

Originally posted by Spanky
We both have access to Google. Demostrate to me that that our government ran a deficit through most of the ninteenth century.

If you have to use Google, you don't know the answer.

Knowledge vs. Knowledge --

[Why am I thinking of Mad Magazine?]

S_A_M

[Mmmm, Burger (C.J.)]

Originally posted by Spanky
But if you don't understand how cutting taxes in certain situations even with increase spending will lead to increase revenue, you are simply not very bright.

I still don't see you explaining what deficits have to do with this. If cutting taxes would increase growth, why not do it when we're running a surplus too?

And here's the graph on which I made my historical claim. I think it tends to undermine G3's assertion, given the falling levels of debt means teh country was running a surplus.



and adjusted for GDP (which makes it look even better, because of GDP growth):



source

[Greedy,Greedy,Greedy]

Originally posted by Spanky
We both have access to Google. Demostrate to me that that our government ran a deficit through most of the ninteenth century. Prove to me that something I have accepted as conventional wisdom since Junior High School is wrong.

I've read a little history and economics since junior high school, though it's nice that you have such confidence in conventional wisdom. You made the statement, support it. You said you knew a lot about 19th century economic history, and now you are referencing the common knowledge of thirty years ago for your knowledge?

[Greedy,Greedy,Greedy]

Originally posted by Mmmm, Burger (C.J.)
I still don't see you explaining what deficits have to do with this. If cutting taxes would increase growth, why not do it when we're running a surplus too?

And here's the graph on which I made my historical claim. I think it tends to undermine G3's assertion, given the falling levels of debt means teh country was running a surplus.



and adjusted for GDP (which makes it look even better, because of GDP growth):



source

If you parse through the data, there was a strange, fascinating and wholly anomolous period in the economy from 1870 through about 1910 where I think you are right - deficits were uncommon and Congress balanced many a budget; a good part of this has to do with the growth of the West, and the presence of large amounts of revenue from land sales. In other words, it was difficult to spend all they had, especially given their conceptions of government's role.

The first 50 years of the country's history are very different, with a lot of debate on government financing of canals and railroads (or railroad right of ways); there are regular deficits in the period, significant new forms of debt develop, and the municipal finance industry is born. Even with a lot of the burden shifted to the states (there are some very good books on the financing of the Erie Canal), the federal government debt does an accordian act throughout these 50 years, and a big limit on it is the government's credit worthiness.

Then, there's that period from Jackson through the civil war, where we fight some small wars, do some more modest projects, and get ready for the coming storm. These are also accordian years, but not on the grand scale of the first 50. And Jackson is a great case study - he's quite frugal in the early years, yet by the time of what is often called his third term (e.g., Van Buren's term), the Jacksonians can spend with the best of them.

But in terms of Congress spending more than it has (taking into account commitments on debt, too), I think you'll find the only anomoly to be the gilded age. Other than that, our elected officials have generally had considerable trouble restraining themselves.

[Tyrone Slothrop]

Originally posted by Spanky
We were in recession when they were implemented. We needed to start growing if we wanted to signicantly increase revenue and get us out of the deficit being creating by the receission. If the tax cut pulled us out of the deficit by creating growth, and this was more growth than would have existed without the tax cuts, then that growth will eventually put us in a better position (mean more revenue) in regard to the deficit if the tax cuts were not implemented (if the tax cuts were not implemented we would have less revenue in time). Can you not see that? If the tax cuts created more growth we get more revenue eventually. The only issue is if they created growth over time.

Are you assuming that short-term revenue shortfalls will be paid for with long-term revenue gains, no matter the size of the shortfalls in the short term, the size of the gains in the long term, or the number of years it takes to get there? That's what it sounds like to me. Do you consider the compounded costs of that first year? Do you discount the (hypothesized) future benefits to take into account that they're not coming until some time in the future?

Those questions aside, I asked you whether there was some empirical test you would accept of whether the supply-side hypothesis is right, and your answer apparently is no, because you assume that it will be right. In other words, tax cuts are intelligently designed.

It is possible the bush tax cuts hampered growth by crowding out private investment, so we may have had more growth without them in the natural business cycle. However, I don't believe that. However, it may be that their continued existence is not needed to create more growth (the cycle is in an upswing so the economy doesn't need any more stimulus) and the crowding out may be hampering growth. I don't think that is the case but a few economists have made me think twice about my decision. I have no doubt the tax cuts were the right thing, but I am only pretty sure there continued existence is the right thing.

Is your "belief" that the costs are de minimus based on some empirical work you can point to? If so, what?

[Mmmm, Burger (C.J.)]

Originally posted by Greedy,Greedy,Greedy

But in terms of Congress spending more than it has (taking into account commitments on debt, too), I think you'll find the only anomoly to be the gilded age. Other than that, our elected officials have generally had considerable trouble restraining themselves.

I'm quite willing to accept that proposition.

And I'll go one further: if substantial revenue in the late 1800 was derived from sales of land, mining rights, etc., then it's pretty tough to say the country was running a surplus. That's like saying that your net income spiked in the year you sold your house.

[Greedy,Greedy,Greedy]

Originally posted by Tyrone Slothrop
I asked you whether there was some empirical test you would accept of whether the supply-side hypothesis is right, and your answer apparently is no, because you assume that it will be right. In other words, tax cuts are intelligently designed.

Is your "belief" that the costs are de minimus based on some empirical work you can point to? If so, what?

I just wanted to emphasize this one-liner. Because I'm sure not everyone is reading all of this anymore.

[Greedy,Greedy,Greedy]

Originally posted by Mmmm, Burger (C.J.)
I'm quite willing to accept that proposition.

And I'll go one further: if substantial revenue in the late 1800 was derived from sales of land, mining rights, etc., then it's pretty tough to say the country was running a surplus. That's like saying that your net income spiked in the year you sold your house.

The whole discussion started when Spanks responded to a quote from you indicating that Congress will spend more than it takes in by saying something to the effect of "that has not been true for most of our history" - I took umbrage, perhaps in a less than entirely civil manner, but, hey, the guy has just been going on and on all day without grounding any of it in reality.

[Mmmm, Burger (C.J.)]

Originally posted by Greedy,Greedy,Greedy
the guy has just been going on and on all day without grounding any of it in reality.

all I'll say is that he's not ready for Russert.