The Stimulus Package

[TheGame]

Once again, please show evidence that decreased taxes equals increased spending.

Nice way to ignore:

I take any gross income chats with a grain of salt, how about some NET incoming numbers for the last 10 years, taking into consideration the spending too and not just the raw revenue that the governemnt has gained.

I have 7 minutes until I take off for work, but this is the #1 point I want to reply to. From 1999 to 2009, have taxes been lowered or raised? From 1999 to 2009 has spending been lowered or raised? I don't need to find a graph to show this point. Because you KNOW what the facts are.

Lets make it high school level so that everyone can understand the flaw in what you're saying and the flaw in that graph. Lets say Mcdonalds drops the price of their big mac, and the graphs show that their GROSS income is the same, and the amount of customers have risen. That's pretty much what Bond's chart illustrates.

GDP (On his chart would equal the cusotmers on the mcdonalds chart) went up, while taxes (which would be the price of the big mac on the Mcdonalds chart) went down. And GROSS revenue stayed the same. If you posted a chart like this, it makes it seem like its favorable to drop the price of the big mac because you service more customers.

But wait!

Since you have more customer's you have to hire more people, and you need more equipment to service them. So while your gross income stayed the same, and your customer amounts went up, your SPENDING went up also. So that chart suddenly is deemed pointless by the fact that yor NET income went down.

What the goverment is doing now, is like what would happen when Mcdonalds goes bankrupt. Now the spending jumps up a ton, because they're trying to save their asses by taking out loans to get themselves out of their current bad situation.

That's why a chart that shows gross income while ignoring spending is bullshit and misleading. Have a nice day and see you guys in 9 hours.

[Professor S]

Originally Posted by TheGame

Nice way to ignore:

I didn't ignore it, I told you it was the DEFICIT. Turn on the news and you'll hear all about it. Its not like its some tightly held secret.

I have 7 minutes until I take off for work, but this is the #1 point I want to reply to. From 1999 to 2009, have taxes been lowered or raised? From 1999 to 2009 has spending been lowered or raised? I don't need to find a graph to show this point. Because you KNOW what the facts are.

Lets make it high school level so that everyone can understand the flaw in what you're saying and the flaw in that graph. Lets say Mcdonalds drops the price of their big mac, and the graphs show that their GROSS income is the same, and the amount of customers have risen. That's pretty much what Bond's chart illustrates.

GDP (On his chart would equal the cusotmers on the mcdonalds chart) went up, while taxes (which would be the price of the big mac on the Mcdonalds chart) went down. And GROSS revenue stayed the same. If you posted a chart like this, it makes it seem like its favorable to drop the price of the big mac because you service more customers.

But wait!

Since you have more customer's you have to hire more people, and you need more equipment to service them. So while your gross income stayed the same, and your customer amounts went up, your SPENDING went up also. So that chart suddenly is deemed pointless by the fact that yor NET income went down.

What the goverment is doing now, is like what would happen when Mcdonalds goes bankrupt. Now the spending jumps up a ton, because they're trying to save their asses by taking out loans to get themselves out of their current bad situation.

That's why a chart that shows gross income while ignoring spending is bullshit and misleading. Have a nice day and see you guys in 9 hours.

Game, none of anything you have posted has any meaning at all when faced with the fact that regardless of tax rates government revenue remains a constant percentage of GDP. KNOWING this is the ONLY CONSTANT OVER 100 YEARS, shouldn't we manage our SPENDING not our TAXES RATES? Your anecdotal evidence holds no water here. Please find real evidence from an equal sample base. All I ask is quid pro quo.

And I'm sorry, but your McDonalds metaphor makes absolutely no sense. Your assumptions are incorrect, since the added cost of hiring and developing product is absorbed by the private businesses we tax, and not by the government itself. When a company hires an employee, it is because they want to INCREASE REVENUE. If it does not profit, they don't do it or as we have seen they cut the spending (unemployment rising). When was the last time you heard of the government laying people off when their revenues dropped?

To continue your business example, we are in trouble because we borrow more money than we bring in and invest them in areas that have no chance to grow revenue. I'm not saying that the government should spend to make money back, but knowing this is the case we can't make the same decisions that a business would. We have to base spending on revenue, and not attempt to increase revenue by increasing spending. The nature of government spending is to support the public, not profit from them. We tried to profit from investing in bailouts once during the late 80's and took a bath on the investment, selling the investment for pennies on the dollar.

Government revenue is currently plummeting due to a lower tax base and a lack of pressure on wages, and to respond we are hiring more government employees and spending more money than at any point of our history.

HENCE WHEN YOU SPEND MORE THAN YOU BRING IN YOU GO BANKRUPT. To use your languagem you shouldn't need a high school example to understand this. All you need is a credit card.

Clinton was able to balance the budget on historically lower taxes, so why are you so convinced that the idea is a myth?

[Professor S]

Hopefully the following will put this very frustrating argument to rest.

The results of this more reliable test indicate that tax changes have very large effects: an exogenous tax increase of 1 percent of GDP lowers real GDP by roughly 2 to 3 percent.

http://www.nber.org/digest/mar08/w13264.html

OECD in Figures (2003) shows total taxes as 45.3 percent of GDP in France, compared with 29.6 percent in the United States. But it would be a mistake to conclude that the higher average tax burden in France is a result of that country’s more steeply graduated income tax. French income tax rates claim half of any extra dollar at incomes roughly equivalent to $100,000 in the United States, and exceed the highest U.S. tax rates at even middling income levels. Yet these high individual income taxes account for only 18 percent of revenues in France, about 8.2 percent of GDP, while much lower individual income tax rates in the United States account for 42.4 percent of total tax receipts, or 12.5 percent of GDP. Countries such as France and Sweden do not collect high revenues from high marginal tax rates, but from flat rate taxes on the payrolls and consumer spending of people with low and middle incomes. Revenues are also high relative to GDP partly because private GDP (the tax base) has grown unusually slowly, not because tax revenues have grown particularly fast

http://www.econlib.org/library/Enc/M...-105_table_032

[TheGame]

And I'm sorry, but your McDonalds metaphor makes absolutely no sense. Your assumptions are incorrect, since the added cost of hiring and developing product is absorbed by the private businesses we tax, and not by the government itself.

My point wasn't to illustrate that the government goes through the exact same cycles as a single buisness. My point was to illustrate that a GROSS INCOME CHART by its very nature is meant to be misleading.

[BreakABone]

Quotes and words following them scare me, but saw this...

http://www.treehugger.com/files/2009...brid-buses.php

Stimulus money in action.
Basically
-It saves money with the switch especially with the summer coming up.
-Reduces noise pollution
-And creates/sustains jobs.


http://edition.cnn.com/2009/POLITICS...lus/index.html
* New highway resurfacing project in Maryland is expected to support 60 jobs
* President Obama: Highway spending will create or save 150,000 jobs by end of 2010
* Another 200 construction projects to be launched in next few weeks

http://www.sacbee.com/topstories/story/1659989.html
-The effects of energy efficiency part of the stimulus.

Numbers and stuff is fun, but at least we are getting some practical signs now.

[KillerGremlin]

We shoulda let the banks/stupid people crash and burn. It might have been rough for a few years, but from the looks of things...it's going to be rough for a few years.

Bailing out the auto industry...okay not totally bad.

We should have bailed the porn industry out though, I heard they took a shot to the face.

[Professor S]

Originally Posted by TheGame

My point wasn't to illustrate that the government goes through the exact same cycles as a single buisness. My point was to illustrate that a GROSS INCOME CHART by its very nature is meant to be misleading.

And I posted far more than you quoted that dispoved much of your apples vs. oranges reasoning.

I'm sorry the charts are not misleading because:

1) Your example that is meant to disprove them equates the way businesses treat investment and debt with how the government treats revenue and debt, and the two are completely different, as I illustrated throughout the entirety of my post. Companies borrow to eventually see a return on their investment that is greater than the deficit and debt they accrue. If they can't do that, they FAIL. The problem is that the government does not gain any revenue now or ever from it's spending, and the last time it tried in the late 80's (S&L crash) the government, meaning the taxpayer, got HOSED on the deal.

2) You continue with the incorrect assumption that taxing and spending are connected at the hip and when one goes up, the other must also. I have yet to see anything beyond anecdotal evidence from you to support this specious reasoning and overly simplistic rationale. Clinton already proved you wrong in the 90's by balancing the budget with relatively low tax rates.

What did you think of the last two resources I posted? They are directly related to our discussion.

I will repeat my question: Since the government has been shown to consistently garner the same percentage tax revenue regardless of tax rate, why do you believe that we should mess with taxes and not spending?

At this point, we've begun to go in circles, so unless you address the specific points I've raised I think it's safe to end the dialogue as all opinions have been addressed.

We shoulda let the banks/stupid people crash and burn. It might have been rough for a few years, but from the looks of things...it's going to be rough for a few years.

KG, I'm not of the opinion that we shouldn't have helped at all, but I think enough is enough. I also think the help we gave was blindly handed out with no expectations attached. AIG is getting bailed out again, and every financial expert I've heard only talks about how poorly run that company is. Plus, the banks that have been bailed out are sitting on the money, and I think that until the government states "Hey, thats all, folks!" they'll continue to sit on it hoping for more and not begin the businss transactions that will get us back on our feet. Funny how corporate welfare has the same effect as personal welfare...

Yesterday Gordon Brown gave a speech that claimed that one bad bank can corrupt all of them, and I think he's exagerrating. Regardless of cross-investment and information connectivity, businesses that were run well are survivinga dn some still doing well. I fear our politicians have become so populist in this crisis that they aren't looking to find a thoughtful solution, but instead simply out to give universal help and then condemn them for taking it, all the while passing social programs that they've purposely mislabeled stimulus, taking advantage of the crisis to push through an otherwise unpalatable agenda.

Throughout all of this from Bush/Paulson to Obama/Geitner, I've never felt confident that anyone knows what the hell they're doing, but instead simply taking wild risks with trillions of our dollars in the HOPES that it will do something or if they keep messing with the money, they'll eventually get it right.

In my mind, if we are going to take wild risks, I'd rather us put the risk in the hands of the businesses as they were on the ground floor of this mess and I believe most want to work they're way out of it. But that will never happen because we are still in the blame-game faze of this financial disaster, and mistaking what was for the most part negligence and a failure of proper planning for malice and abuse.

And meanwhile we still ignore the government's role in this whole mess, and instead of reevaluating the same regulations that helped cause it, we look to be expanding those failed programs.

[KillerGremlin]

Wow you summed up how I feel pretty good....

I don't think we should stop helping the banks completely, but bailing out companies who ran on unethical (or...unregulated) policies...I think stricter rules should be imposed, or they should be left to be bought out by the honest companies that like you said, are making it.

I don't really know anymore. Throwing money at the problem...even if we recover from this recession, won't we be back to where we started, thus perpetuating the problem?

As I previously stated, I know NOTHING about finance and money. So I'm trying to remain fairly passive here....

[BreakABone]

http://www.recovery.gov/?q=node/202

More of the stimulus money is being yet into the wild.
This to help with transportation.

Not that I'm surprised, but New York receives the most money. IT helps that we have the best and at the same time most complex transportation system.

From what I read in newspapers around these parts, this should stop the MTA from rising prices drastically (though I assume a fare hike is still in order) which in turn keeps down the cost of going to work, which gives people more money to spend. It also allows for more jobs to complete projects and repairs that would have been cut due to the ballooning deficit.