[Red_Sux]

Economics has never been the Bush family’s thing. The first President Bush was so bored by financial briefings that he sometimes dozed off during them. The second hasn’t been caught napping yet, but it’s fair to say that the economy isn’t his favorite topic. George W. Bush is well aware, however, of the fate that befell his father after he waged a successful war in the Gulf—“It’s the economy, stupid”—so he briefly turned his attention away from foreign policy to defend his controversial tax-cut plan, which is fighting for survival in the Senate.

“With a robust package of at least five hundred and fifty billion dollars in across-the-board tax relief, we will help create more than a million new jobs by the end of 2004,” he declared in his weekly radio address. “Some members of Congress support tax relief but say my proposal is too big. Since they already agree that tax relief creates jobs, it doesn’t make sense to provide less tax relief and, therefore, create fewer jobs. I believe we should enact more tax relief so that we can create more jobs, and more Americans can find work and provide for their families.”

There is a pressing need for more jobs—another forty-eight thousand vaporized last month—but the link between tax policy and payrolls is a lot murkier than the President made it out to be. If tax cuts automatically created jobs, businesses would be scouring the streets for workers right now, and nobody’s twenty-five-year-old children would still have to live at home. Two years ago, after all, President Bush persuaded Congress to pass the biggest tax cuts in a generation. But since then a million and a half jobs have disappeared. By contrast, between 1993 and 2000, President Clinton raised taxes to reduce the budget deficit, and the economy created more than twenty million jobs. Of course, this doesn’t mean that higher taxes create jobs, either. The number of people working is determined by the over-all state of the economy, to which fiscal policy is just one contributor. Other things being equal, tax cuts can help the economy by putting more cash in consumers’ pockets, but they are an expensive and unreliable way to raise employment, especially when they are aimed at people who tend to save their windfalls rather than spend them.

More than half the President’s tax cuts would come in the form of abolishing the taxation of corporate dividends. The primary recipients would be rich people and senior citizens, since they own most of the dividend-yielding stocks. For example, Sanford Weill, the chairman of Citigroup, would get a tax cut of about six million dollars. Based on 2001 figures, Vice-President Dick Cheney would save about a hundred thousand dollars. The dividend plan might persuade yacht builders and assisted-living communities to hire some extra help, but it won’t do much for the rest of the nearly nine million unemployed.


from the issuecartoon banke-mail thisIn view of this problem, the White House has put forward a more subtle rationale for the dividend-tax cut: It will cause the stock market to rise, which will make consumers and businesses feel more confident. This, in turn, will boost spending, which will generate more hiring. But if any of these links fail to materialize, so will the new jobs.

Even taking the President at his word, each new job would cost the government five hundred and fifty thousand dollars in lost revenues, which is about seventeen times the salary of the average American worker. It would be far cheaper for the federal government to give private firms subsidies to hire more people, or to give money to the states, which are facing their worst financial crisis since the Second World War, and which at this moment are being forced to fire teachers, troopers, and health workers. Parks, museums, and libraries are closing; cultural programs are being cut. College-tuition fees are rising, and scholarships are vanishing. Hundreds of thousands of people stand to lose their state-provided health-care coverage. (Meanwhile, taxpayers will be laying out billions of dollars to reconstruct Iraq.)

None of this factors in the Bush tax plan’s impact over the long term. A few years back, the big debate in Washington was what to do with the surplus, which was projected to be five trillion dollars over the coming decade. Now, after the stock-market crash, a prolonged economic downturn, and the 2001 tax cuts, the deficit for this year alone could reach five hundred billion dollars, a figure that even Ronald Reagan and David Stockman failed to match during the last disastrous experiment in “supply-side” economics. And phasing in the tax cuts, which the White House is considering to alleviate the concerns of Republican moderates, will do nothing to reduce their long-term cost. The Center on Budget and Policy Priorities calculates that a dividend-tax cut would deprive the federal government of some seven hundred and fifty billion dollars between 2014 and 2023, just when the baby boomers will be lining up for Medicare and Social Security.

What’s more, the President’s tax cuts may in the end destroy more jobs than they create. As tax revenues fall and the deficit increases, interest rates will rise, and the higher cost of borrowing will impede business investment and hiring. The reborn supply-side economists who devised the President’s plan would dispute this, except that many of them were fired or encouraged to quit in the Administration’s recent purge of its financial team. N. Gregory Mankiw, the Harvard professor who was recently nominated as chairman of the Council of Economic Advisers, is more realistic. In his popular textbook “Principles of Economics,” he explains that when a government runs a budget deficit it “pulls resources away from investment in new capital and, thereby, depresses the living standards of future generations.” Alan Greenspan, whom the President plans to reappoint for a fifth term as Federal Reserve chairman, said essentially the same thing last week. Kenneth Rogoff, the I.M.F.’s chief economist, went even further. He recently told journalists, “Suppose for a minute that we were talking about a developing country that had gaping current account deficits year after year . . . a budget ink spinning from black into red . . . open-ended security costs, and a real exchange rate that had been inflated by capital inflows. With all that, I think it’s fair to say we would be pretty concerned.” When I.M.F. types start talking about the United States as if it were a banana republic on a bad day, it’s probably time to change course.

[Red_Sux]

here is a chart to illustrate

[thegreatdiatchi]

Originally Posted by Red_Sux

here is a chart to illustrate

Very good illustration. It is so bad that some states don't have funds to pay for the health insurance that people on welfare get. While one would first assume this is the fault of the particular state the fact that it is happening across the board shows that money that would normally be placed in the healthcare fund (remember when Clinton was president and compare it to now) is being placed into the War on Terror (aka Top Level Oil Execs Anal Raping Poor & Middle Class).

[slacker00]

1 trillion dollars spent on Iraq could've done a lot of good right here at home. It doesn't take a rocket scientist to realize 1 trillion dollars shipped over and pumped into Iraq is going to hurt the U.S. Econonomy. Sure, the U.S. has a lot of wealth. But, 1 Trillion is a lot of money. Plus, we aren't even done yet over there.

I don't blame Bush, because he's an idiot. I blame the people the put him in power. I blame the people that rubber stamp his agenda. There's gotta be more smart people in Washington seeing this idiocy and screaming, "No!".

[RageWizard]

You pretty much hit it on the head with that observation. Glad to someone else thinks the same way I do.

[thegreatdiatchi]

Yes I agree. The sad thing is that most politicians - regardless of party - are bought out these days. Not voting for Bush is still the better alternative but even if Kerry had won in 04 there would still be things going on that shouldn't.

[curious]

Unfortunately, your economics is wrong. There is not a one to one correlation between tax rates and budget deficits (surplus). When tax rates are raised incentive to engage in productive economic activity is reduced, raise the rates high enough and taxpayers either stop engaging in productive economic activity entirely or they go underground. Reducing tax rates gives people an incentive to engage in more economic productive activity. So, companies invest more, people work more.

There have been many studies done which show that federal revenues pretty much stay the same as a percentage of GDP as tax rates go up and down. What leads to the budget deficits is the Congress' insatiable thirst to spend.

You are blaming the tax cuts for the deficits, please take a look at the SPENDING increases that Congress passes year after year.

This propaganda that tax cuts = budget deficits is used by the DemoCong in their class warfare rhetoric to take taxpayer's minds of the real issues.

[Thor4140]

That is hilarious Curious. I think they call it Voodo economics. clinton raised taxes on the upper teir and somehow 22 million jobs were created and now we are back in the dumpster with another Bush at the helm with his garbage tax cuts. Please give it a break. When you give rich people money they don't go and invest it in this country. some do but most don't. You give the middleclass or the poor a huge tax cut they will spend it which creates jobs. In essence its the middle class that creates jobs. Are you aware that 1/3 of our taxes collected goes right to the deficit. The one the so called tax cutters created with their bullshit wars and bullshit tax cuts? How is that bailout of the banks going anyhow? another 30 billion in corporate welfare just being pissed away but god forgive it if someone gets some free cheese.

[curious]

Originally Posted by Thor4140

That is hilarious Curious. I think they call it Voodo economics. clinton raised taxes on the upper teir and somehow 22 million jobs were created and now we are back in the dumpster with another Bush at the helm with his garbage tax cuts. Please give it a break. When you give rich people money they don't go and invest it in this country. some do but most don't. You give the middleclass or the poor a huge tax increase they will spend it which creates jobs. In essence its the middle class that creates jobs. Are you aware that 1/3 of our taxes collected goes right to the deficit. The one the so called tax cutters created with their bullshit wars and bullshit tax cuts? How is that bailout of the banks going anyhow? another 30 billion in corporate welfare just being pissed away but good forgive it if someone gets some free cheese.

The 22 million jobs were created as a result of the fiscal reforms that Reagan began and Clinton continued (much to the dismay of the liberal wingnuts who voted for Clinton).

Not sure what free cheese has to do with the fact that decreasing or increasing tax rates do not change the revenue as a % of GDP. There have been many studies done which prove this out. http://www.ncpa.org/studies/s159/s159.html

And it isn't "vodoo economics", it is statistics. Just look at a chart of federal tax revenues as a % of GDP per year and compare that to the tax rates for the same year. Use a period long enough to be meaningful, say 20 years. The data speaks for itself. To get you started here is a chart showing the federal income tax rates for the years 1913 to 2008. http://www.taxfoundation.org/taxdata/show/151.html I'll leave it to you to find a chart showing federal revenues as a % of GDP.

I find it interesting that you call cutting the tax rate on "the rich" as 'giving them money'. I am guessing that you are one of those liberal wingnuts who believes that the tax rate on '"the rich" should be 100% and anything less than that is a gift from the Mandarins? How is it 'giving them money' to reduce the % of the money which is stolen from them? Don't quite see the logic there. I guess I just don't understand how the cheese fits in.

I found your post to be quite funny as you brought up several issues that you seem to be very upset about which had absolutely nothing to do with the point I made that fluctuations in the tax rate do not change gross revenues as a % of GDP.

I guess you are one of those "we have to punish the rich by stealing their money from them because they had the audacity to be successful" types.

[Oscar]

Originally Posted by curious

The 22 million jobs were created as a result of the fiscal reforms that Reagan began and Clinton continued (much to the dismay of the liberal wingnuts who voted for Clinton).

Not sure what free cheese has to do with the fact that decreasing or increasing tax rates do not change the revenue as a % of GDP. There have been many studies done which prove this out. http://www.ncpa.org/studies/s159/s159.html

And it isn't "vodoo economics", it is statistics. Just look at a chart of federal tax revenues as a % of GDP per year and compare that to the tax rates for the same year. Use a period long enough to be meaningful, say 20 years. The data speaks for itself. To get you started here is a chart showing the federal income tax rates for the years 1913 to 2008. http://www.taxfoundation.org/taxdata/show/151.html I'll leave it to you to find a chart showing federal revenues as a % of GDP.

I find it interesting that you call cutting the tax rate on "the rich" as 'giving them money'. I am guessing that you are one of those liberal wingnuts who believes that the tax rate on '"the rich" should be 100% and anything less than that is a gift from the Mandarins? How is it 'giving them money' to reduce the % of the money which is stolen from them? Don't quite see the logic there. I guess I just don't understand how the cheese fits in.

I found your post to be quite funny as you brought up several issues that you seem to be very upset about which had absolutely nothing to do with the point I made that fluctuations in the tax rate do not change gross revenues as a % of GDP.

I guess you are one of those "we have to punish the rich by stealing their money from them because they had the audacity to be successful" types.

Well done curious.

[Thor4140]

i figured it was Reagan that created that 22million jobs. Yet not one republican signed onto Clintons first budget. Oh and Bush Jr inherited the myth of the Clinton Recession right? ah whatever im not gonna answer you back. Not about you its to tough to get involved in all of this with the Tournament going on. I will say this tho. Im sick of where my tax dollars are going and i don't care who is in charge. Dem or republicans. I call a spade a spade.

[curious]

Originally Posted by Thor4140

i figured it was Reagan that created that 22million jobs. Yet not one republican signed onto Clintons first budget. Oh and Bush Jr inherited the myth of the Clinton Recession right? ah whatever im not gonna answer you back. Not about you its to tough to get involved in all of this with the Tournament going on. I will say this tho. Im sick of where my tax dollars are going and i don't care who is in charge. Dem or republicans. I call a spade a spade.

It wasnt the Clinton budget that created the jobs, it was the FISCAL POLICIES that Reagan instituted to stop the Carter Depression. Clinton continued these fiscal policies and even improved them. Fiscal policy does not mean budget. Not sure what you are talking about when you say "Clinton Recession".

You say it is too tough to "get involved in all this". All I asked you to do is find a chart that shows federal tax revenues as a % of GDP and compare the tax rates year by year over some meaningful time period and you will see that tax rate decreases do not reduce the tax revenues. Would take maybe 15 minutes.

Still can't understand why you keep bringing up totally irrelevent issues when this is such simple data to find and understand.

You assume I am a Republican and a supporter of Bush the Lesser, since you keep attacking them. I'm not either, so you can stop trying to upset me by attacking them.

Not sure what how the federal budget is spent has to do with tax rates.

[Saunders FTW]

Originally Posted by curious

It wasnt the Clinton budget that created the jobs, it was the FISCAL POLICIES that Reagan instituted to stop the Carter Depression. Clinton continued these fiscal policies and even improved them. Fiscal policy does not mean budget. Not sure what you are talking about when you say "Clinton Recession".

You say it is too tough to "get involved in all this". All I asked you to do is find a chart that shows federal tax revenues as a % of GDP and compare the tax rates year by year over some meaningful time period and you will see that tax rate decreases do not reduce the tax revenues. Would take maybe 15 minutes.

Still can't understand why you keep bringing up totally irrelevent issues when this is such simple data to find and understand.

You assume I am a Republican and a supporter of Bush the Lesser, since you keep attacking them. I'm not either, so you can stop trying to upset me by attacking them.

Not sure what how the federal budget is spent has to do with tax rates.

good post

[TexansFan]

Originally Posted by curious

You are blaming the tax cuts for the deficits, please take a look at the SPENDING increases that Congress passes year after year.

This propaganda that tax cuts = budget deficits is used by the DemoCong in their class warfare rhetoric to take taxpayer's minds of the real issues.

Exactly. Spending is out of control. Tax cuts are good for this country.