The Stimulus Package

[Bond]

Originally Posted by TheGame

1) Republican's answer for this financial situation is to have more tax cuts. We watched Bush do tax cut after tax cut after tax cut, and we see how perfectly it worked. If it were up to the republicans we'd get down to 0% tax before they start thinking logically. Tax cuts and giving out free cash to spend to the public does not help the economy, it hurts it.

Could you please elaborate on your view that tax cuts hurt the economy? Also, do you believe, in reverse, that tax increases help the economy?

[BreakABone]

Originally Posted by Bond

Could you please elaborate on your view that tax cuts hurt the economy? Also, do you believe, in reverse, that tax increases help the economy?

Well, he is right in the sense that we've gone through it a bit recently, and aren't in the best condition.

And as stated before, the middle/lower class are less likely to spend the money they get back instead using it to save or pay off debt.

Now the concept is giving larger companies tax breaks will allow them to invest in more jobs and stuff, but there has to be a demand for their product or service and if the lower/middle class people aren't buying that chews up a lot of your potential audience.

[TheGame]

Originally Posted by Bond

Could you please elaborate on your view that tax cuts hurt the economy? Also, do you believe, in reverse, that tax increases help the economy?

"We watched Bush do tax cut after tax cut after tax cut, and we see how perfectly it worked."

That should be answer enough. But, ask yourself this. If the country is in huge debt to the fed and to other countries, where is money supposed to be generated to pay off this debt? Give me an example of how a tax cut will make the government more money, and I'll gladly disarm it.

In my opinion, I think Obama shouldn't have touched taxes.

The republican tax cut strategy is 100% political, and in my opinion makes no sense whatsoever. They keep pushing for tax cuts over and over, even when it makes no sense.. And when their opposition gets into office they're stuck with the tough decision of raising taxes to help the situation.

Tax cuts do not help the economy, they help republicans win elections. But thanks to Bush, a lot more people see things for what they are. Hopefully Obama will take the responceable stance in the long run, and be smart enough to make people understand the truth of the sitation.

(But with how this stimulus bill is, I guess that's too late. Politics defeats common sense again.)

I actually like that the stimulus now is more of a long term thing, and not one of those bush spending bills that's treat everything like an emergency. "Zomg I need 1 trillion to give to my buddies before I leave office!" That helped...

[Professor S]

Originally Posted by TheGame

"We watched Bush do tax cut after tax cut after tax cut, and we see how perfectly it worked."

That should be answer enough. But, ask yourself this. If the country is in huge debt to the fed and to other countries, where is money supposed to be generated to pay off this debt? Give me an example of how a tax cut will make the government more money, and I'll gladly disarm it.

Easy. It's been shown and admitted by Charles Gibson in the Obama interview that cutting capital gains increases revenue from capital gains taxes. Glad that argument is done with...

And if the country is in such debt, like you said, how is borrowing $1,000,000,000,000.00 for the "stimulus plan" going to fix that?

The republican tax cut strategy is 100% political, and in my opinion makes no sense whatsoever. They keep pushing for tax cuts over and over, even when it makes no sense.. And when their opposition gets into office they're stuck with the tough decision of raising taxes to help the situation.

Tax cuts do not help the economy, they help republicans win elections. But thanks to Bush, a lot more people see things for what they are. Hopefully Obama will take the responceable stance in the long run, and be smart enough to make people understand the truth of the sitation.

So in your argument then Obama would be the biggest Republican ever. His plans are to eliminate federal taxes for over 50% of citizens, AND send many of them tax rebate checks. Talk about a vote grab... evil republican Obama...

I actually like that the stimulus now is more of a long term thing, and not one of those bush spending bills that's treat everything like an emergency. "Zomg I need 1 trillion to give to my buddies before I leave office!" That helped...

Thats fine that you like it, but its not a stimulus plan and thaty makes it a dishonest argument for this bill.

[Bond]

Originally Posted by TheGame

"We watched Bush do tax cut after tax cut after tax cut, and we see how perfectly it worked."

That should be answer enough. But, ask yourself this. If the country is in huge debt to the fed and to other countries, where is money supposed to be generated to pay off this debt? Give me an example of how a tax cut will make the government more money, and I'll gladly disarm it.

In my opinion, I think Obama shouldn't have touched taxes.

The republican tax cut strategy is 100% political, and in my opinion makes no sense whatsoever. They keep pushing for tax cuts over and over, even when it makes no sense.. And when their opposition gets into office they're stuck with the tough decision of raising taxes to help the situation.

Tax cuts do not help the economy, they help republicans win elections. But thanks to Bush, a lot more people see things for what they are. Hopefully Obama will take the responceable stance in the long run, and be smart enough to make people understand the truth of the sitation.

(But with how this stimulus bill is, I guess that's too late. Politics defeats common sense again.)

I actually like that the stimulus now is more of a long term thing, and not one of those bush spending bills that's treat everything like an emergency. "Zomg I need 1 trillion to give to my buddies before I leave office!" That helped...

I'll try to reply to this this coming weekend, when I'll hopefully have time to engage in an economic discussion full of bar graphs and data.

Real quick: I *think* the issue here comes from a fundamental misunderstanding of tax cuts, coupled with the need to consider other economic events in the past eight years.

[Bond]

Originally Posted by TheGame

"We watched Bush do tax cut after tax cut after tax cut, and we see how perfectly it worked."

It seems the popular thing today to blame all the country's woes on Bush. Now, I wasn't his biggest fan either, but this is unfair. In this hypothetical and highly unrealistic situation, you have held all other factors but tax cuts constant. America's economy is far more complex than this, as is its interaction with the world economy.

Also, the recent banking collapse has nothing to do with Bush's tax cuts. Please see this ten-page New York Times article for the main cause behind the collapse (which, in short, was due to out-dated risk management software).

That should be answer enough. But, ask yourself this. If the country is in huge debt to the fed and to other countries, where is money supposed to be generated to pay off this debt? Give me an example of how a tax cut will make the government more money, and I'll gladly disarm it.

Here is a fundamental misunderstanding of tax cuts. The recent dramatic rise in debt is not due to tax cuts. It is due to increased spending, above and beyond tax revenue generated by the government.

Remember, there is little correlation between tax rates and tax revenue:



However, there is a strong correlation between tax revenue and GDP:



Since tax revenue increases with ever-increasing GDP, it makes sense to facilitate private economic growth, through smart tax policies. So, no matter the tax rate, tax revenue (what matters), remains largely the same percentage of overall GDP:



Unfortunately, that's all I have time for today. I hope this makes things a little clearer.

[KillerGremlin]

Bush is an awesome scapegoat though.

[Professor S]

One thing the charts should also illustrate is that these "new ideas" that are being pushed by President Obama, Pelosi, etc. are not new at all, just tired retreads of old ideas like The New Deal under FDR and The Great Society under Johnson.

Bond, why do you think fiscal conservatives have such a hard time making the argument that you did? It's so straight forward and simple when you put it in those terms. Do you think politicians are simply afraid that people won't understand the tax cut argument beyond the immediate affect to their pocket book?

Its things like this that make me appreciate Reagan more the older I get: He never talked down to the American people or tried to misrepresent his views out of fear his constituency wouldn't "get it". I think there is a lack of trust and confidence by politicians today, and that gets returned in kind.

As for the Bush scapegoating, the dems will get some mileage out of this right now, but they need to be wary of continuing with it. The feeling I get is that most people who disliked Bush want to get BEYOND his presidency, not give it grave dressing, and every time a politician mentions Bush's name people get more and more sick of it.

[Bond]

Originally Posted by Professor S

Bond, why do you think fiscal conservatives have such a hard time making the argument that you did? It's so straight forward and simple when you put it in those terms. Do you think politicians are simply afraid that people won't understand the tax cut argument beyond the immediate affect to their pocket book?

Your guess is probably as good (or better) than mine. I do have a few ideas, though.

For one, I don't think most people want to deal with quantitative graphs, the distinction between tax rates and tax revenue, real numbers adjusted for inflation, etc.

Secondly, most of our politicians are lawyers, from liberal arts backgrounds. I would have to assume few understand economics. It's very complicated, and I only have a very basic understanding. As you go into more complex economic theory, the conclusions that are drawn become more and more subjective. But, I think it is possible to arrive at at least a few fundamental truths, at the most basic level, which the graphs I posted illustrate.

Also, economic discussions (really arguments) in politics always boils down to class warfare rhetoric, which is neither helpful, nor accurate. Each part of an economy depends on the other part: rich depend on poor, poor depend on rich, etc. The graphs are evident of this. The goal of economic policy, in my opinion, should always be to create the most wealth within the society (as I believe the creation of wealth is unlimited). Once you understand we are all interconnected, and all need to work toward wealth creation, there is no reason to hate thy neighbor, whether they be rich or poor. But that's just my view.

[KillerGremlin]

I plead ignorant, which is why I'm avoiding this discussion for the most part.

However, I think part of the problem is the media too. I mean, turn on FOX or CNN or even the extreme liberal media (Daily Show), and all they talk about is how the Republicans are all opposing the Stimulus, or how it is Dems vs. Pubs.

There is very little content actually explaining how our economy works, and why our economy is in such a shitty spot right now.

Does the mass media get a cookie for polarizing/stupidizing the American Public? How come the American public are too ignorant to be educated on their own economy. Of course that makes me a huge hypocrite, but when I have some time I would like to sit down and learn US Econ 101 because soon I'll be doing all my own taxes and stuff.