Posting Towards Gomorrah

[Spanky]

Originally posted by Greedy,Greedy,Greedy
So, why we're all worshipping at the altar of growth, let me ask this: do people here think that growth results in inflationary pressures? Are there times when growth should be moderated for any reason?

Unfortunately, not a problem we're facing in today's economy.

You keep inflation down because it hampers growth. Not visa versa. During the post WWII period Germany and Japan had booming economies while having almost no inflation.

The Asian tigers seemed to have avoided inflation and it does seem to be too bad of a problem in China right now.

[Tyrone Slothrop]

Originally posted by Spanky
Growth will always overcome any revenue deficienty problem.

Why do you think this?

[Shape Shifter]

Originally posted by Tyrone Slothrop
Why do you think this?

He's backed everything up with cold, hard beliefs.

[Sidd Finch]

Originally posted by Spanky
I didn't see anything about the nineteenth century in there.

The table showed a cumulative surplus of $70 million, or about .7% of revenues, for 1789-1849, and a cumulative deficit of 991 million, or about 6.8%, for 1850-1900.

It's not detailed for that period, obviously, but it does suggest that there were no consistent surpluses. Though clearly, it's not enough to refute your recollection of common knowledge around your junior high school.

[Sidd Finch]

Originally posted by Tyrone Slothrop
Why do you think this?

Because, duh. If you wait long enough, the growth in the economy -- which is never, ever cyclical -- will cover ANY tax cut, no matter how large or lop-sided.

"long enough" = more time than we've ever actually seen a growth cycle last, but I'm sure it could happen somehow somewhere under the right circumstances.

[Spanky]

Originally posted by Tyrone Slothrop
Why do you think this?

As long as you have growth, no matter how low your tax rate, eventually the growth will be a bigger factor than the tax rate in determining income.

Whatever you argue about Clintons tax increase, it was clearly the growth that put us over the top. The year after Clintons tax increase the budget wasn't balanced. It took a few more years of growth to put us over the top. When I was in college we had a three hundred billion dollar budget. Now we are approaching a three trillion dollar budget.

If we had a tax rate today of only five percent today we would still be collecting more money than we did in the early eightys. If we had a tax rate today of only one percent we would be collecting a lot more revenue than we were pulling in in the nineteenth century.

There is the seven ten rule. If your economy is growing at ten percent you double in size every seven years. If your economy is growing at seven percent you double in size every ten years. And you know what happens if you start with a penny at the first of the month and keep doubling it every day. You end up with 10 million dollars by the end of the month.

[Greedy,Greedy,Greedy]

Originally posted by Spanky
As long as you have growth, no matter how low your tax rate, eventually the growth will be a bigger factor than the tax rate in determining income.

Okay, I know I'm going to regret this, but since you've built a house of cards on this statement, without listening to Ty or reading the blurb he's now posted twice, let me break this down.

Say, for simplicity's sake, that there is an economy with GNP of $1,000,000 (add zeros if the assumption is too much for you), and the government runs on tax revenues of $200,000. There is a 20% tax rate. The economy grows at 1% per year, so it adds $1,000 per year in growth.

Now say you cut taxes to 10%, so now the Government has $100,000 in revenues, and this results in the economy growing at 5% per year - a 5x increase in growth! With a tax rate of 10%, you are now collecting a whopping $105,000 instead of $101,000.

Fast forward ten years. With 5% growth per year, you will have an economy of roughly $1,600,000 rather than an economy of $1,100,000. You will still not have made up the revenue. You will have had to either run the Government on half the revenues, or have cut Government programs. Your cuts have not paid for themselves. Moreover, the gap between what the 20% would have raised with 1% growth and what the 10% raises with 5% growth is now over $200,000 per year, and there is either a $1.5 million debt or there have been severe cuts in government service, cuts which may, for example, undermine growth.

All this is simply meant to illustrate, a tax cut that results in growth will not always pay for itself. Cuts, like expenditures, must be managed in a reasonable and balanced way. But, if the fundamental basis of your economic theories are all based on the simplistic statement I've quoted above, you may want to think about them just a little more.

[Spanky]

Originally posted by Sidd Finch
Because, duh. If you wait long enough, the growth in the economy -- which is never, ever cyclical -- will cover ANY tax cut, no matter how large or lop-sided.

"long enough" = more time than we've ever actually seen a growth cycle last, but I'm sure it could happen somehow somewhere under the right circumstances.

Over time our government has consistently grown for the past two hundred years. There are down patches, but basically we keep on growing.

The difference between a three percent and four percent average economic growth rate is huge for future generations. And therefore the difference will have a huge effect on tax revenues.

That is why anyone that discusses the Bush tax cut without addressing its effect on growth is blowing political B.S. If he had kept the budget balanced, but the cost would have been no growth, we and all future generations of Americans would have been royally screwed.

You want to convince me the tax cut was bad. Then convince me our GNP would be larger now if we hadn't had the tax cut. If you don't believe that any criticism you throw at the tax cut has absolutely no relevence or substance (you could argue that the Tax Cut could have been more effectively directed but not that having a tax cut was bad).

[Sidd Finch]

Originally posted by Spanky
As long as you have growth, no matter how low your tax rate, eventually the growth will be a bigger factor than the tax rate in determining income.

Whatever you argue about Clintons tax increase, it was clearly the growth that put us over the top. The year after Clintons tax increase the budget wasn't balanced. It took a few more years of growth to put us over the top. When I was in college we had a three hundred billion dollar budget. Now we are approaching a three trillion dollar budget.

If we had a tax rate today of only five percent today we would still be collecting more money than we did in the early eightys. If we had a tax rate today of only one percent we would be collecting a lot more revenue than we were pulling in in the nineteenth century.

There is the seven ten rule. If your economy is growing at ten percent you double in size every seven years. If your economy is growing at seven percent you double in size every ten years. And you know what happens if you start with a penny at the first of the month and keep doubling it every day. You end up with 10 million dollars by the end of the month.

It's because of posts like this that I am periodically asked "you've met Spanky -- is he as big an idiot in real life as he seems?"

[Sidd Finch]

Originally posted by Spanky
Over time our government has consistently grown for the past two hundred years. There are down patches, but basically we keep on growing.

The difference between a three percent and four percent average economic growth rate is huge for future generations. And therefore the difference will have a huge effect on tax revenues.

That is why anyone that discusses the Bush tax cut without addressing its effect on growth is blowing political B.S. If he had kept the budget balanced, but the cost would have been no growth, we and all future generations of Americans would have been royally screwed.

You want to convince me the tax cut was bad. Then convince me our GNP would be larger now if we hadn't had the tax cut. If you don't believe that any criticism you throw at the tax cut has absolutely no relevence or substance (you could argue that the Tax Cut could have been more effectively directed but not that having a tax cut was bad).

No, you convince me that the delta -- the increased growth brought about by tax cuts, that would not have occurred as a result of the economic cycle* -- has been large enough to offset the effect of tax cuts. Or, explain when that will come about. And back it up with something besides gut feel.


*you know, the economic cycle that Rs liked to credit the Clinton expansion to.

[Greedy,Greedy,Greedy]

Originally posted by Sidd Finch
It's because of posts like this that I am periodically asked "you've met Spanky -- is he as big an idiot in real life as he seems?"

That's not fair. I think he is at least as knowledgable and intelligent as the economic decision makers in the administration.

[Ignore]

Originally posted by Greedy,Greedy,Greedy
Okay, I know I'm going to regret this, but since you've built a house of cards on this statement, without listening to Ty or reading the blurb he's now posted twice, let me break this down.

Say, for simplicity's sake, that there is an economy with GNP of $1,000,000 (add zeros if the assumption is too much for you), and the government runs on tax revenues of $200,000. There is a 20% tax rate. The economy grows at 1% per year, so it adds $1,000 per year in growth.

Now say you cut taxes to 10%, so now the Government has $100,000 in revenues, and this results in the economy growing at 5% per year - a 5x increase in growth! With a tax rate of 10%, you are now collecting a whopping $105,000 instead of $101,000.

Fast forward ten years. With 5% growth per year, you will have an economy of roughly $1,600,000 rather than an economy of $1,100,000. You will still not have made up the revenue. You will have had to either run the Government on half the revenues, or have cut Government programs. Your cuts have not paid for themselves. Moreover, the gap between what the 20% would have raised with 1% growth and what the 10% raises with 5% growth is now over $200,000 per year, and there is either a $1.5 million debt or there have been severe cuts in government service, cuts which may, for example, undermine growth.

All this is simply meant to illustrate, a tax cut that results in growth will not always pay for itself. Cuts, like expenditures, must be managed in a reasonable and balanced way. But, if the fundamental basis of your economic theories are all based on the simplistic statement I've quoted above, you may want to think about them just a little more.

[Penske_Account]

Originally posted by Ignore

2!

[Spanky]

Originally posted by Greedy,Greedy,Greedy

Say, for simplicity's sake, that there is an economy with GNP of $1,000,000 (add zeros if the assumption is too much for you), and the government runs on tax revenues of $200,000. There is a 20% tax rate. The economy grows at 1% per year, so it adds $1,000 per year in growth.

Now say you cut taxes to 10%, so now the Government has $100,000 in revenues, and this results in the economy growing at 5% per year - a 5x increase in growth! With a tax rate of 10%, you are now collecting a whopping $105,000 instead of $101,000.

Fast forward ten years. With 5% growth per year, you will have an economy of roughly $1,600,000 rather than an economy of $1,100,000. You will still not have made up the revenue. You will have had to either run the Government on half the revenues, or have cut Government programs. Your cuts have not paid for themselves. Moreover, the gap between what the 20% would have raised with 1% growth and what the 10% raises with 5% growth is now over $200,000 per year, and there is either a $1.5 million debt or there have been severe cuts in government service, cuts which may, for example, undermine growth.

All this is simply meant to illustrate, a tax cut that results in growth will not always pay for itself. Cuts, like expenditures, must be managed in a reasonable and balanced way. But, if the fundamental basis of your economic theories are all based on the simplistic statement I've quoted above, you may want to think about them just a little more.

Under your example you would be insane not to institute the tax cut. If the difference between having the tax cut and not was one percent growth for ten years vs. five percent growth for ten years. After the tax cut, in ten years time every one in the country would be on average sixty percent richer!!!!. Can you even fathom what that means?

And if you institute a fifty percent tax cut, you can't expect it to pay for itself in ten years. That is a huge tax cut. But if you wait another twenty years, because of the growth you have paid off the debt you created, every body is like three times wealthier and you only have a tax rate of ten percent on a income that is three times what it used to be.

If cutting the tax rate by fifty percent in the US right now would increase our growth rate by 500 percent (1% to 5% is a 500% increase) for the next ten years we would be insane not to do it. Hell at the end of ten years you just go back to the old rate and your new budget would be way in surplus and you would pay off the debt you accumulated in the past ten years in just a couple of years. And everyone would still be sixty percent richer.

Unfortunately, in an advanced economy like ours (and being the world leader) I don't think it is possible for us to achive a 5% growth rate.

[Spanky]

Originally posted by Sidd Finch
It's because of posts like this that I am periodically asked "you've met Spanky -- is he as big an idiot in real life as he seems?"

What statment did I make that was idiotic?

You guys keep making these attacks but you never back it up.