Redstate

NCLB had never seen the light of day. Not to mention the transportation and farm bills.
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CongressCritter™: Never have so few felt like they were owed so much by so many for so little.

It's war -- so when can we start shooting back at the enemy Democrats?

A) We're going to get a tax hike. And this tax hike will, in the short term, produce a burst of revenue but will, in the medium and long term, dampen economic performance and, eventually, tax receipts along with it.

B) Even she says that we can't afford all the ideas she has in store. I'm not sure we can afford any of them, myself.

But there's no question that we're in a spending mood right now. What's tragic about that is that we're operating as if we don't have a coming shortfall of tens of trillions of dollars approaching us.

Ironically, a huge portion of that is going to come from Medicare. And what public healthcare financing issue are we talking about most? Why adding yet more and more people to the public healthcare financing infrastructure, of course.

We don't know how we're going to pay for what we're on the hook for now....and our only serious response is to talk about how to end up on the hook for even more.

It's tragic.

We need to start encouraging people to smoke again, or the increased cigarette taxes won't be adequate for us to get and keep people healthy.

And the rich are not paying their fair share.

It's war -- so when can we start shooting back at the enemy Democrats?

Your point seems to be that we have runaway inflation - and that is what is responsible for the deficit decline. But, point-of-fact, we have moderate-to-low inflation.

That is what they tell us.. but I don't believe that.

How do you explain the price of gold vs the dollar (or the cost of really anything you like.)

How do you explain the dollar being at an all time low?

I think this is exactly attributed to the ever increasing spending and ever increasing debt in America. We are going broke.

I love it.

“I think we are the team to beat in the NL East -- finally.” - Jimmy "MVP" Rollins, 1/23/07

The Fuzzy Puppy of the VRWC. I've been usurped!

Are you suggesting that the same group of people own all the banking institutions AND all the mainstream press outlets, which are the people who give us the historical record of inflation?

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It's a conspiracy! :-)

Since I'm a mere computer programmer and not a macro-economist, please explain why any of that matters to the topic of the diary?

Regardless of how much paper is in print, 1.2% of the GDP as a deficit is STILL BETTER than (the historical average of) 2.4% of the GDP -- and that is current dollars vs current dollars.

If I'm wrong about that, then spill the beans.

It's war -- so when can we start shooting back at the enemy Democrats?

You say everything's up thanks to inflation... except that the deficit is DOWN. not UP. DOWN.

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because its mesured in dollars. Mesure it in gold.

Being one of the Jooooooooooos and all.

It's not nearly as big of a problem, and it's very comforting. Especially on a cold night in the cave, you should try it.
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CongressCritter™: Never have so few felt like they were owed so much by so many for so little.

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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman

______________________________
"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777

The deficit is simply outlays minus revenues. Outlays and revenues are going to be inflated by the same amount! Therefore you can factor that out of the whole equation, therefore the sign of the deficit CAN'T change by inflation!

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economy, only one of which is monetary. And in China, India et al, where gold plays more of a monetary/emergency savings/hidden-from-the-taxman income role than it does here, prices go up in response to market forces that have nothing to do with the US Fed or the banks.

The chart is misleading.

It's not mealy added to the sum, it should be an exponential curve.

And its not a conspircy of any kind, but when they (the fed) say we have 1% inflation I say B*** fricken S***.

If you're sick of the Ronulans, Red Staters, I think Erick has a shirt for you.

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That's an awesome site! I made up a shirt about Comrade Clinton being a Communist D...[something which I have been strongly advised not to allege about Sen. Hillary Clinton ever again here without "proof."]

I can't wait to receive it in the mail!!! LOL. It's going to be a big hit in Montrose, I think. :-)

then that would argue that our deficit of $120bil is ACTUALLY even less than it appears to be, no? Ie, that represents less purchasing power (in DEFICIT) than it would have been, expressed in 1998 dollars. Yes? No?

It's war -- so when can we start shooting back at the enemy Democrats?

It's war -- so when can we start shooting back at the enemy Democrats?

printing more money won't make the deficit go down, far from it. Printing more money implies that something will be done with that money and since we can safely assume burying it in a mason jar in the backyard ain't one of them, we have to assume it will be spent.

Receipts are also up.

Inflation is down, which should be a clue that a lot more money isn't going into circulation.

As the value of the dollars, whether they are deficit dollars or receipt dollars are comparable I don't see what point you are trying to make.

"A man can never have too much red wine, too many books, or too much ammunition." -- Rudyard Kipling

of combat ready Army divisions?

Oops, wrong thread.
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CongressCritter™: Never have so few felt like they were owed so much by so many for so little.

n/t

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CongressCritter™: Never have so few felt like they were owed so much by so many for so little.

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CongressCritter™: Never have so few felt like they were owed so much by so many for so little.

I thought you were going to say, "Yeah, but when we revert to the gold standard under President Paul..."

I don't know about President Paul, but I absolutely support the gold standard. I think its dangerous to let government control the value of the dollar.

If there is any question as to how competent they are at it you can look at its current value. Is there really an argument on this? Our money should be backed by gold, case closed.

Look at it this way.. Your dollars value is exactly the reverse of the gold chart. (as gold is typically used to measure currency value)

I'm just pointing it out, like it or not, thats how it is.

There is another way to look at this if you like.. When the Dems complain about all the billions CEO's make you can mention the decline of the dollars value to them.

So the "excess" of greed is really an illusion.

pull your head out of your ...
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CongressCritter™: Never have so few felt like they were owed so much by so many for so little.

Yea...looks real constant to me. I guess I missed the massive deflation we were experiencing 15 years ago. If you bought gold in 1988 you would be really sad after holding onto it for a dozen years and watching it not only fail to keep up with inflation, but decline in value.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman

remains a mystery for Sherlock Holmes.

The values on the chart are derived from the equation

Y= (Revenues-Expenditures)/GDP

Changing the scale by revaluing the dollar causes us to multiply both the numerator and the denominator of the fraction by the same scaling factor.

The scaling factor becomes an identity at that point. You've demonstrated quite brilliantly that we should multiply every single value on the chart by one. Thanks, and keep up the hard work!

“The path of the righteous man is beset on all sides by the inequities of the selfish and the tyranny of evil men."

Oh damm.

You got me.. oh wait just kidding.. you didn't.

What I am saying is the government is counterfeiting money and giving it wall street. (The Fed bailout last month.) This causes the GDP to raise against the debt making the appearance that the deficit is dropping BECAUSE there is a higher GDP, but that GDP is funded on debt.. the reason it doesn't equal out right away is takes time for inflation to catch up.

You need to educate yourself on the difference between the national debt and the budget deficit. They are not the same thing. That chart does not deal with the debt.

You might also want to explain what happened to the price of gold (you know, with its magical powers of never changing value and total immunity to the forces of supply and demand) over the course of the decade or two before your chart.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman

I know the difference tyvm. Bush's tax cuts *are* GOOD, I they should do more, it has increased the tax revenue by good amount and tax cuts will always help the economy as people have more money to spend.

Gold is not immune to the forces of supply and demand this is why I sourced other investments as well, and if you don't like gold we can use something else.. like wheat. Wheat is $9.53 a bushel a, you guessed it, record high.

The reason, and I should have made this more clear, that I don't believe the economy is doing well is because that growth is fueled prepetually by corporate and private debt. This debt is expressed by the devaluation of our currency that the charts show. You can cite gold in the 80's as being higher (as it was horded since the money was in gold and not stocks, this time the money is in stocks and gold is also high) but you can't compare it to anything and everything the dollar buys.

..and this is all well an fine if you think our entire economy should run at an ever increasing debt.. but when we run out of people to borrow from, and this will be sooner rather than later we are going to be in serious trouble.

The chart you were so eager to find fault with does not deal with the debt at all. You were the one who brought debt into it. So either you are changing the subject, since you realized your original complaint about the chart was utterly clueless, or you were mistaken in the first place and confusing the two. Which is it?

Gold is not immune to the forces of supply and demand this is why I sourced other investments as well, and if you don't like gold we can use something else.. like wheat. Wheat is $9.53 a bushel a, you guessed it, record high.

Yea, or rather than randomly picking and choosing commodities, we could just take EVERYTHING households spend money on and roll it into a number we could call something like... CPI. Oh, that's right. The black helicopter squad are the guys that come up with that number, so it can't be trusted.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman

The chart I find fault with is being trumped as an example that the economy is doing good. I don't think it is and pointed out the drop in the dollar in my original post. That not a change in the subject. Your the one who started the straw man argument that gold prices do not matter thus my point is void.

More government spending, thus more corporate revenue, thus more tax revenue, thus higher GDP, thus lower budget deficit, is only a valid point if you ignore the inflation on the original money created.

This balance of spending vs growth only works when we can actually find people to borrow money from to finance it, as the dollars value drops more and more that cycle will become more and more difficult to maintain.

See you downthread in about 400 posts from now.

It's war -- so when can we start shooting back at the enemy Democrats?

their prior months' stuff!

This is kinda clueless but I'll bite.. The reverse, is *ta da* federal spending. (that's growth %, the government never really gets smaller..)

Read the comment threads from BrooksRob, zuiko, and Myself.. I think it was a good discussion of whats really going on with the economy. I don't want to start hashing over the same old points again.

Is spending too high? Does it need to be cut / frozen / handled?

Yes. Period. Now. Forevermore. Agreed.

Do tax cuts decrease government revenues? Not lately, it seems. That is what the graph addresses.

And trust me, my brother, you have no idea how many times these points have been hashed over, and how little desire I have to go through it again.

Well, in your case, at least by discussing it again people could know what your latest position is. You flipped and flopped a few weeks ago, remember? (of course not). So what's your position, that the Bush tax cuts (2001, 2003, or the two combined) have not had a net negative impact on revenues (i.e., that revenues would not have been higher if the tax cuts had not taken place)? And the grand total of your supporting evidence is that revenues have been increasing over the last few years? You observe that correlation and assume causation? Is that what you're saying (at least as of tonight, 10/11/07 at 9:40pm EST)?

Tax receipts have been going down. Sorry.

I would, however, like to see the grand total of your supporting evidence that revenues have DECREASED. Even a silly little ol' graph would be fine.

On second thought, I have not been able to take enough tomato juice baths to get the smell off of me from the last time we tangled, so forget I asked.

Thank you for showing a more recent example of not getting it. I'll type real slow-like for ya so maybe -- just maybe -- you'll finally get it (but I'm not betting on it). Ready?

No one disputes that revenues have been increasing the last few years. No one disputes that the Bush tax cuts occurred in 2001 and 2003. With me so far?

ok, now, do you understand the simple concept that just because tax cuts are up, it doesn't mean that tax cuts are up BECAUSE of the tax cuts rather than DESPITE the tax cuts? Or have I lost you already?

Are you aware that there is consensus among well-credentialled economists -- including conservative economists and Bush's own current and former top economists -- that the Bush tax have had a NEGATIVE impact on revenues? If not, you obviously have not researched it. I have. And there is.

Do you have some rational reason to think that they are all wrong and you're right? Have they all missed something that Jack Savage sees so clearly?

ok, now, do you understand the simple concept that just because tax cuts are up, it doesn't mean that tax cuts are up BECAUSE of the tax cuts rather than DESPITE the tax cuts? Or have I lost you already?

HUH?

ok, obviously a typo (at least it would have been obvious to me in that context if someone else had written it). I meant "just because revenues are up". Glad you pointed it out, whatever your intention.

You have a consensus among well credentialed economists. I have increased tax receipts, beginning with the tax relief act passed in 2003. You're right in that I am certainly not able to see how increased total tax receipts are proof that tax cuts decrease total revenue. I guess we'll leave it at that.

Off the subject, and just for kicks - if your economists are able to predict, say, ONE economic statistic over the next few months - like PPI, GDP, jobs - you know, basic stuff - please feel free to let us all know, and I will start paying a lot more attention to them. Not all, not most - just ONE stat.

In the meantime I will read a certain post by Martin A. Knight again and draw my tomato bath. And re-read your third paragraph. Maybe you were typing too slow, huh?

Thanks for showing how impenetrable you are to reason. Just for kicks, I'll try again.

You have a consensus among well credentialed economists. I have increased tax receipts, beginning with the tax relief act passed in 2003. You're right in that I am certainly not able to see how increased total tax receipts are proof that tax cuts decrease total revenue. I guess we'll leave it at that.

No, Jack, "increased total tax receipts" are NOT "proof that tax cuts decrease total revenue". My point -- and here comes a reeeeal difficult distinction, so get ready -- is that increased revenues does NOT prove that the tax cuts have caused those increases, as opposed to the increases occuring despite the negative net impact of the tax cuts. You REALLY can't understand that it's possible that revenues could go up for reasons other than the tax cuts, and that revenues would have been even higher if the tax cuts had not taken place (even if GDP growth were lower)?? Do you really assess everything in life that way -- observe an anecdotal correlation and assume both a strong correlation and causation? I doubt you do (and I certainly hope not).

Off the subject, and just for kicks - if your economists are able to predict, say, ONE economic statistic over the next few months - like PPI, GDP, jobs - you know, basic stuff - please feel free to let us all know, and I will start paying a lot more attention to them. Not all, not most - just ONE stat.

You say "off the subject", but sure seems that you're making the point that because economists are not particularly good at predicting those figures, that means they lack any substantial credibility on the question of the Bush tax cuts' net impact on revenues, which would be absurd...well, if that's what your point was...but of course it wasn't...because you said "off the subject".

And re-read your third paragraph. Maybe you were typing too slow, huh?

As I said in comment above, it was obviously a typo, and anyone with any sense would have figured out quite quickly what I meant to type.

You forgot to adjust your graph for inflation. If inflation is exponential, as you claim, I would suspect that the rate of growth would be level or negative.

True. Same would apply to the revenues graph above it, which I presume is in nominal dollars. As an additional note, the Y axis on the revenues chart doesn't start at the origin (zero), which creates the visual illusion of a more dramatic rise.

Oh no the heritage foundation has been infiltrated by cultists

That chart was produced on a macintosh.
______________________________
"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777

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Wow! So since 1999 government spending has almost doubled?! What has it been from 2004 til now? Any more spify graphs?

I've got to post on this again because I think your missing the picture.

The claims that the economy is doing well simply because the budget deficit is lower are, in my opinion, false and misleading ..above I cite our declining and record low currency as an indication of that. Government has resorted to printing the money to pay the bills and have destroyed the currency. You know why counterfeiting is illegal, right? Why are you letting the government do it?

You need to understand that the government doesn't have a thing that it did not take from *us*. So its revenue going up means people must have more government burden on their shoulders in some form or fashion. I want to see government revenue go down as in.. we don't need to collect it anymore because there is simply less government.

And you need to understand that. The sub-issue was tax cuts and effect on revenue.

You wouldn't happen to be a Ron Paul fan, would you?

OOOPS - halftime's over - see ya Monday...

It's too complex for me to say, there are a lot of factors, and its too late in the day for me to use my brain.

Ron Paul, I dunno.. he is right on economy, but wrong on the war. Let's say I don't hate Ron Paul, but I'm not voting for him.

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Not everyone, Neil. Now go refill your cup.

Welcome back

...a long habit of not thinking a thing wrong, gives it a superficial appearance of being right...

---Thomas Paine---

just stopping by, but thanks (I think).

2001: Capital Spend Collapse + Stock Market Implosion + National confidence shaken by 9/11 Attacks (and Anthrax Letters) = The table was set for a massive and sustained recession.

2002-2003: Bush takes a page out of Econ 101 and tries to stimulate the economy by cutting taxes (most importantly marginal and cap gains) and yes, by ramping up govt spending.

Result: Recession is relatively mild, sustained recovery has the economy roaring back. And bonus happy ending - the deficit we had to run is coming back down at a healthy clip.

Is that synopsys oversimplified - yes, certainly. But give Bush at least a modest amount of credit for doing exactly what he should have done during a recession and at least partially contributing to things turning out relatively well.

If you want to fault him for not dialing back spending more, once the recovery was underway, fine. And if you want to lament the entitlement problems we are going to have in 2016, that's fair too.

But give Bush and his tax cuts (and recession spending) a break. He did what needed to be done, things are going in the right direction now. I don't get why its so hard to be pleased about that.

You know I probably agree with that. With working in the system it was probably the right call, but the looming danger and ever dropping dollar will not be good overall to the economy.

(and I don't see how Bush alone can stop this without massive cuts to the federal government)

My point is what it is: The impact of his policies/decisions has been higher spending (even aside from war/homeland security) and lower revenues than we would have had without his tax cuts, so if revenues are up and deficits down, it is DESPITE him, not BECAUSE of him, so he deserves zero credit for those trends. If you reject my premise that his tax cuts have most likely had a net impact on revenues, you're incorrect, and if you accept my premise but still think he deserves credit for these trends, you're being illogical. Take your pick.

eh?

And just like I have argued FOR Clinton's success here, despite his tax increases in 1993 before Newt, from the argument that we would have had higher growth sooner sans the tax hikes, shouldn't you give Bush some credit for such great growth despite the tech bubble and 911?

Mike Gamecock DeVine @ The Charlotte Observer
www.race42008.com
www.hinzsightreport.com
www.theminorityreportblog.com
"One man with courage makes a majority" - Andrew Jackson

It's not *ALL* Bush or the tax cuts.

The Fed dropping the interest rate to 1% had a lot to do with it too, so Alan Greenspan needs to receive a fair share of the credit.

Mike Gamecock DeVine @ The Charlotte Observer
www.race42008.com
www.hinzsightreport.com
www.theminorityreportblog.com
"One man with courage makes a majority" - Andrew Jackson

n/t

I dont get it, what does n/t mean? (I'm new here)

and properly done, it's in the subject line, signifying that the reader need look no further....

It's war -- so when can we start shooting back at the enemy Democrats?

the reason many of us here have taglines (like mine below) is because the RedState gods force you to have some text in the comment portion. In other words, you'll need some sort of pithy tagline to use properly.

It's war -- so when can we start shooting back at the enemy Democrats?

They need an edit button like dig or something.

the subject line has the whole message. It means "no text"-i.e. no additional message.

The comment field requires an input. Many use the n/t, others some kind of signature phrase, others a period or other punctuation mark.

You know my answer because I've told you many times.

Tax cuts are generally stimulative -- i.e., they generally generate incremental growth of the economy, and in turn, the tax base, which is why there are revenue feedback effects (which mean that the revenue loss will be less than what static scoring calculates).

Roughly speaking, Revenues = tax base X tax rates. If rates go down by some percentage, the tax base must grow (mainly from incremental GDP and reduced tax avoidance) by the reciprocal of the whatever percentage the new tax rate is of the old (just divide old rate by new rate and subtract one to get required incremental growth for revenue-neutrality). In simplified terms, if you go from a flat 30% rate to a flat 20% rate, the tax base has to grow 50% to produce the same revenues as before the tax cut (i.e, 30/20 minus 1). So the question of net revenue impact isn't "Does this tax cut generate incremental growth?" but rather "Does this tax cut generate ENOUGH incremental growth to compensate for the rate reduction?"

I have a document with quotes out the wazoo of conservative economists -- including Bush's own current and former top economists -- who all say what I'm saying about the net impact on revenues of the Bush tax cuts. And very, very few well-credentialled economists disagree. But for a simple explanation from someone other than me, I offer the following. GC, you may have seen this before because I emailed links to it to you about a week ago, but it seems that you may not have read it.

Charles Wheelan writes on economics, and is author of "Naked Economics" http://www.amazon.com/gp/product/0393324869/ref=sip%5fpdp%5fdp%5f0/002-7..., although he has no economics degree. His Ph.D. is in public policy from the Harris School at the University of Chicago. His favorite economist is Gary Becker, favorite economics writer is Milton Friedman and favorite economics blogger is Greg Mankiw, all conservative economists)

March 13, 2007:
The Biggest Economics Charlatans: The supply-siders who continue to insist, in the face of all evidence and academic opinion to the contrary, that a country like the United States can boost tax revenues by cutting taxes. Based on my past skepticism of the supply-siders, I know that I'll soon be bombarded by angry comments and emails pointing out government revenues went up after some favorite tax cut, such as the Reagan or Bush tax cuts. But that alone tells us nothing, as government revenues always trend up due to inflation and economic growth. The appropriate question is not whether government revenues were higher after the tax cut than before, but rather whether revenues are higher than they would have been in the absence of the tax cut. All credible evidence on this subject says that there are a lot of good things about tax cuts, but raising extra revenue is not one of them. http://finance.yahoo.com/expert/article/economist/26418

Wheelan, May 2, 2006:
Debunking One of the Worst Ideas in Economics
I'm going to write about what I consider to be the two worst economic ideas -- or at least ideas that pass as economics, though both have been thoroughly repudiated by nearly all credible thinkers…the most pernicious bad ideas in economics are those that have a ring of truth. They're hard to debunk because they have a certain intuitive appeal. As a result, they stick around, providing bogus intellectual cover for bad policy, year after year, decade after decade.

Laffer…supposition: If tax rates are high enough, then cutting taxes might actually generate more revenue for the government, or at least pay for themselves.…In fairness to Mr. Laffer, there's nothing wrong with this theory. It's almost certainly true at very high rates of taxation…. But here's the problem when we take Laffer's theory and try to apply it in the U.S.: We don't have a 99 percent marginal tax rate. Or 70 percent. Or even 50 percent. So cutting the tax rate from 36 percent to 33 percent is not going to give you the same kind of economic jolt as slashing a tax rate from 90 percent to 50 percent. There's no huge black market to be shut down, no big supply of skilled workers to be lured back into the labor market, and so on. Will it generate new economic activity? Probably. And that will generate some incremental tax revenue for the government. But remember, it also means that the government will be taking a smaller cut of all the economic activity that we already have.

Think about a simple numerical example: Assume you've got a $10 trillion economy and an average tax rate of 30 percent. So the government takes $3 trillion. Let's cut the average tax rate to 25 percent and, for the sake of example, assume that it generates $1 trillion in new economic growth (a Herculean assumption, by the way). So now, what does Uncle Sam get? One quarter of $11 trillion is only $2.75 trillion. The economy grows, government revenues shrink. That's basically what happened with the large Reagan and George W. Bush tax cuts… In both cases, government revenue was lower than it would have been without the tax cuts.

Neither the Reagan nor the George W. Bush tax cuts were "self-financing," as the Laffer disciples like to argue…the bottom line from the Bush Administration itself is that tax cuts reduce Uncle Sam's take.
http://finance.yahoo.com/expert/article/economist/4065

I think we would probably have a 50% or more tax rate in the US if we include all the corporate taxes that get passed on to us, Social Security tax that is 14% not 7% because part comes from the employer that they would pay you and all the fees.. Hell, it might be around 60%

I don't know for sure if your wrong however because its hard to tell, I would think government spending would be more effective, but that has a negative impact as well.

lets see..

IRS 33%
SSI 14%
State sales tax 9%
Medicare 3%

That's 59% right there alone, there is a lot more that are harder to count..

I'm suddenly feeling very depressed that I hit that number so easily. I'm going to go cry somewhere for a while.

Brooksie. Welcome back.

Sometimes it's hard to tell if someone's being sarcastic or not in writing. I'll assume not, so thanks. But I'm not going to spend that much time on RS. Just kickin' around a bit tonight because I saw this diary on the deficit that drew me in because fiscal policy is very important to me and I feel strongly that there are some things people need to understand for the benefit of the nation (yeah, sounds grandiose, but no, I'm not under any illusion that I'm contributing much to the nation by doing so, particularly given the responses I typically get on this subject here on RS).

The net of both of them is: "It doesn't matter how much revenue growth there was after tax cuts, it's a KnownFact that it would have been greater without the cuts."

Yeah, it's those quotes that are silly.

So we can all get ourselves on the same page by buying the same make and model? It would be really handy to know with such certainty what would have happened if x, y, and z happened 5 years ago instead of a, b, and c.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman

Learn the difference between probability and certainty. Learn what "ceteris paribus" means. And by the way, I took a vacation in 2003 and spent some cash. Is it likely that my vacation spending was responsible for the increases in Federal revenues since then? If you think not, I guess you're not entirely divorced from the sensible world of relative magnitudes and the possibility that, depending on one's expertise, some folks can have a good sense of probabilities of the net effect of one particular economic change (incremental growth of the tax base) and another change that has the opposite effect (lower rates applied to the whole tax base). But I guess Bush's entire economic team could all simultaneously scream in your ear the same thing that I'm saying and you'd still reject it. I'm probably wasting my time, but I thought I'd try again for some reason.

Yea, I've heard that all before. The vacation and all.

You weren't talking about probability a second ago. You didn't say that you believed it was more likely than not that the tax cuts hurt revenue. You know for a fact that the tax cuts have hurt receipts and that any increase in receipts has to be DESPITE those cuts.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman

Ahh, zuiko. You don't get much, do you? (I mean concepts, not "get much" in any other sense) It is overwhelmingly likely that the Bush tax cuts have had a negative net impact on revenues. Happy now? When you state your belief about something do you distinguish between what is 100% certain (which is almost nothing) vs. what is overwhelmingly likely? Didn't think so. I was reacting to your nonsensical implication that unless one has a "crystal ball" no one can know the answer to this question of net revenue impact of the Bush tax cuts. Yeah, no one can know with 100% certainty, but that doesn't mean people with appropriate expertise can't determine what is highly likely or highly unlikely. Get it? Probably not. Not the first time I've tried (in vain) to get you to apply reason.

What, in your opinion, stimulates the economy? Is it natural market gyrations that are beyond tax policy? The level of taxation does not affect the economy and overall tax revenue?

Isn't that like a shop owner raising his prices any time he wants more revenue? Most shops wanting to raise total revenue have a sale.

Ask not what I can do for my country, ask what my country can do for me. Washington Elected Elite

The question is very complex to answer, I've shown above that we do have a very high tax rate.. more so on people likely to take advantage of lower capital gains but the boom to the economey is probbly more government spending and the 1% intrest rates much more so than the tax cut. All that "free" debt money in the system.

Not that I would say the tax cut hurt anything, I don't believe that.

Lots of factors can stimulate the economy. Tax cuts, spending increases, reductions in short or long-term interest rates, growth the global economy, technology advancements that raise productivity, globilization (in terms of lowering costs and expanding in foreign markets), a somewhat "natural" turn of the economic cycle from recession toward expansion (perhaps due to rebounding from previous overreaction to the recession in terms of businesses reducing capacity, delayed consumption, etc.), etc., etc., etc. Much more than I could list here, and much more than I even know off the top of my head.

As for the shop owner, actually he wants profit, cash flow and ROI and ROA, not revenue per se (except insofar as revenue is conducive to or indicative of those other financials). But in any case, raising prices could either raise or lower revenues, ceteris paribus, depending on the price-elasticity of demand among customers/prospects. If a 20% price increase results in only 10% decrease in volume over some time horizon, revenues go up. If the result is a 30% decrease in volume, revenues go down. Conversely, a price reduction -- like tax cuts -- may either raise or lower revenues, again depending on the magnitude of the reaction to that incentive.

ok?

When you state your belief about something do you distinguish between what is 100% certain (which is almost nothing) vs. what is overwhelmingly likely?

Well, when I state my beliefs about anything I don't call those who don't agree with my position idiots or uninformed cult members. I would think you'd want the threshold to be at 100% before you start to engage in that. Well, maybe not you, but most people would.
---
Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman

lol. You've got to be kidding. There are some people, including some here on RS, who express certainty that tax cuts always cause increased revenues and/or who make such statements regarding the Bush tax cuts, and who have ridiculed me (e.g., calling me "insane") for saying otherwise. It is overwhelmingly likely that the Bush tax cuts have had a net negative impact on revenues, based on the strong consensus among experts (including top conservative economists and Bush's own current and former top economists) who have no incentive to be biased or insincere in reaching that conclusion (and actually have an incentive to reach the opposite conclusion). If people repeatedly refuse to accept that likelihood simply because they've made a couple of crude, conveniently selected anecdotal observations of correlation or because some other non-economist said so, the only explanation is that they simply do not wish to be rational. And if a bunch of people approach the issue that way, and constantly reinforce that irrational belief by repeating it back and forth to one another, then that's drinkin' the ol' Kool-Aid (or simply being ignorant on the issue, but in the case of many on RS with whom I've shared info, that excuse doesn't fly).

growth that directly causes higher receipts.

Personally, I think tax cuts help but don't cause it. They form part of an overall mindset that promotes optimism and expansion.

On a historical note, the capital gains tax cut of 1997 triggered enormous receipts. Which then contributed to the internet bubble, which then fostered massive bad investments, which then contributed to a bust.

As Roseanne Rosannadanna would say, it's always something.

how technological advances can cause massive change. But what we know from 1776 on, is that low taxes makes all the good more possible than not.

Mike Gamecock DeVine @ The Charlotte Observer
www.race42008.com
www.hinzsightreport.com
www.theminorityreportblog.com
"One man with courage makes a majority" - Andrew Jackson

OK, what do you think spurred the higher economic growth that directly causes higher receipts.

I don't know, nor do I know if economists know precisely nor to what extent they agree on the key drivers, although I would assume a very aggressive Fed cutting rates sharply helped quite a bit and the tax cuts (particularly the 1993 cuts) probably helped somewhat. I've seen explanations out there, but haven't really researched it. The answer to that question involves enormous complexity, since so many factors contribute to GDP. But not having that answer does not mean that economists cannot reasonably conclude that the Bush tax cuts have most likely had a net negative impact on revenues.

As for Clinton tax policy:

Look at this chart: http://www.heritage.org/research/features/BudgetChartBook/charts%5fR/r2.... Revenues started going up substantially following the 1993 tax INCREASE. As for the 1997 cap gains cut, it most likely had a negative impact on revenues (i.e, revenues would have been higher without them), other than perhaps over the very short-term due to the "unlocking effect" as people sell more assets that have appreciated and realize the gains at that time (and thus pay taxes on them at that time). I'm not sure how long that "short-term" would be, but I would assume it is just in the first year that the cap gains tax cuts take effect. Of course, to some extent it is merely shifting revenues from future years to the year following the tax cut, since without the cut investors would have held the assets longer and realized the gain later (if it were still there). Mankiw estimated that only 50% of the static revenue loss due to a cap gains tax cut would be recovered from revenue feedback effects http://www.nber.org/digest/jul05/w11000.html (obviously it would depend on the particular rate levels, but I assume Mankiw is speaking of a range of tax rates that we've had in recent years and that general ballpark)

typo correction: "net impact" should be "net negative impact".

When Bush was finally declared the winner in December 2000, the expectation was still for continuing high surpluses (with the concomitant threat that the Federal Treasury would begin taking ownership of far too many private assets).

The fly in the ointment at that moment was the stock market crash, which began in the spring of 2000 and by late in the year had become a full-fledged rout, with trillions of dollars in assets values wiped out. This, and the recession it resulted in, were the effects that actually led to the Federal budget going into deficit, which indeed was apparent by tax season in spring 2001, surprising all the forecasters and necessitating a mad scramble to modify fiscal policy.

Bush campaigned on across-the-board tax cuts. They weren't an idea that he had by way of responding to the recession that Bill Clinton bequeathed to him. He was bound and determined to pass them when he came to office no matter the economic circumstances. One could make the case that the Bush tax cuts were "the right thing to do," and the fulfillment of the President's pledge to the people who elected him.

Orthodox Keynesianism would have the government raising taxes in times of high inflation and overinvestment. Neither effect has been in evidence in the United States at any point in the Bush Presidency, with the exception of the now-exploded housing bubble that extended from roughly when the Federal Reserve began raising interest rates in late 2003 (if memory serves) until sometime in 2006.

Money creation has been sedate and generally in line with the real growth in the economy. The long burst of above-trend (and mostly technology-driven) productivity increases that characterized the Nineties ended about seven years ago, for still-unexplained reasons.

I'm far more inclined to the view that the US has been experiencing deflation rather than inflation. Much of this is due to globalization, and is benign. Some of may be due to the Federal Reserve not creating enough money, and may be a big problem.

The reason the US dollar is at historic lows is because economic growth in the US now underperforms that of the rest of the world (including Europe). This is a secular trend and arises from the maturity of our economy, and not from mismanagement by policymakers. No magic, no voodoo, nothing hard to understand here.

The individual who has been on and on about the price of gold in this thread is not in command of basic economics, or of simple facts. I would advise all the rest of you to remember basic netiquette and not feed the trolls.

Well, seeing that you seem to hate the Bush tax cuts things look like they may change. We are going to get a double dose of those tax increases you claim are so good for revenues.
Heck, after 8 years of Hillarys tax increases we will have our pockets so full of cash we will be wondering why we ever supported those stupid Bush tax cuts.

And don't come back crying that I am mistaken about your position. Your comments above clearly show that you favor increases to cuts. Not conservative in my book.

Yeah, I guess "in your book" it's conservative to disregard the best information available regarding economic assumptions (likely degree of revenue feedback effect from particular tax increases) and instead base policy on "feel-good" assumptions that let us believe (erroneously) that we can have our cake and eat it, too. I thought feel-good economic assumptions were supposed to be for the left (e.g., just keep raising the minimum wage and we'll solve the problem of the working poor, or just stop imports and outsourcing and we'll all have high-paying jobs, etc.). But I guess you think it's a conservative approach to economics.

And I guess you think it's conservative to ignore the fact that there is a fiscal disaster on the horizon due to unfunded entitlement liabilities, or to just assume that Congress and the president in a decade or two will just slash entitlement benefits in half or more rather than raise a lot more taxes at that time than we'd have to now in conjunction with beginning to phase in cuts in entitlement benefits and eligibility.

Probably the latter paragraph is over your head, but the point is that, based on your statement that I'm not a fiscal conservative in your book, you have no idea what true fiscal conservatism is.

Tax revenue growth is irrelevant if that growth pales in comparison to the growth in spending. The GOP went nuts on spending, while the Dems are standing back and saying we weren't spending oops I mean investing enough. I dread what it'll be like if we have President Hillary and a Democratic Congress.

Both tax policy and spending are relevant. The only thing worse for us right now than "tax and spend" is more "borrow and spend".

I agree with you re: Dems. I have no doubt that spending would have been even worse if Dems had been in control of Congress and the White House over the past seven years, and the same goes for the future (Dems will spend even more if they get the chance than would Republicans). Even Medicare Part D, the most fiscally irresponsible move in a long time, would have been even worse under a President Gore and a Dem Congress.

We need to fight for spending cuts, and also demand that one way or another, the folks in D.C. set fiscally responsible policies. We can't let them keep on acting like there's some free lunch on either the taxation or the spending side.

...there's no question but that, in the short-term anyway, tax cuts reduce revenues (I think the long-term is a bit murkier).

But that certainly doesn't mean they're undesirable fiscal policy. For some reason, we've come to think that higher tax revenues are a panacea....what we always need to aim for, etc.

I tend to agree more with Dr. Friedman who said that if a tax cut results in an increase in revenues, we didn't cut taxes enough.

Being a small government guy, I want taxes to be as low as they can responsibly be....but the first, and harder, part is to get spending where it needs to be.

Bush has been a bad spender, no question about it. But there's really no telling where revenues would've ended up had he not lowered taxes when he did....because I tend to think that the reduced taxes really, really helped with not only the recession but also with the post-9/11 stabilization.

All things considered, the Bush tax cuts have been a marvelously successful fiscal policy -- whether they had a net increase or a net decrease in revenues.

Ultimately, growth is the panacea for tax rates...deficits are more the result of irresponsible spending policies. And the deficits we've had lately have been tinkertoys compared to what's coming. And there is no tax policy which will be able to fund our liabilities and, at the same time, keep the economic engine running well.

In other words, we need to start getting our erasers out for the spending ledger...and something fierce.

been without the tax cuts yet? No?

Well have you determined the exact revenue figures the government would have had without the tax cuts? Of course not because you need to answer the first question before you can answer the second one.

Our argument is that the tax cuts stimulated the economy which allowed the revenues to be higher than they were before the cut. There's no "higher than they would have been otherwise" in that statement.

And you can keep your Kool Aid, thanks.

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

You are just not getting it.

Have you figured out what the growth of the economy would have been without the tax cuts yet? No?

No, nor is that necessary for my point to be valid.

No, nor is that necessary for my point to be valid.

You're not even getting your own position, however strange that sounds. First, I'm not disputing that the tax cuts provided some stimulus to the economy. I assume that's probably the case. Now, you seem to be saying that stimulus caused revenues to be higher "than they were before the cut", but not necessarily higher than they would have been without the cut. That's just nonsensical. If you're saying that the tax cuts caused -- or even contributed to -- the higher revenues, then you must be arguing that they had a positive net effect, meaning that revenues are higher than they would have been otherwise. If they had a negative net effect (revenues lower than they would have been without the cuts), than the higher revenues are occurring DESPITE the negative effect of the tax cuts (i.e., due to other factors), not due, even in part, to the effects of the tax cut. Get it?

And you can keep your Kool Aid, thanks.

I obviously screwed up formatting big time. I'll try again.

You are just not getting it.

Have you figured out what the growth of the economy would have been without the tax cuts yet? No?

No, nor is that necessary for my point to be valid.

Well have you determined the exact revenue figures the government would have had without the tax cuts?

No, nor is that necessary for my point to be valid.

Our argument is that the tax cuts stimulated the economy which allowed the revenues to be higher than they were before the cut. There's no "higher than they would have been otherwise" in that statement.

You're not even getting your own position, however strange that sounds. First, I'm not disputing that the tax cuts provided some stimulus to the economy. I assume that's probably the case. Now, you seem to be saying that stimulus caused revenues to be higher "than they were before the cut", but not necessarily higher than they would have been without the cut. That's just nonsensical. If you're saying that the tax cuts caused -- or even contributed to -- the higher revenues, then you must be arguing that they had a positive net effect, meaning that revenues are higher than they would have been otherwise. If they had a negative net effect (revenues lower than they would have been without the cuts), than the higher revenues are occurring DESPITE the negative effect of the tax cuts (i.e., due to other factors), not due, even in part, to the effects of the tax cut. Get it?

If you can't tell me the size of the economy without the cut, how can you predict the revenues without the cut? How can YOU say that revenue would have been higher than it is now without know what the revnue would have been?

It may have been higher, it may have been lower. It depends on the size of the economy.

There is a VERY good chance we would have been in a sustained recession without the cut. In that case we may well have had reduced revenues for several years.... then again we may not. I don't know and I suspect you don't either.

I DO know what the actual revenues were before the cuts and I know what the actual revenues are now. I also know that revenues are higher now. IE: The tax cut did not cause a substantial long term decrease in revenues.

Tell me with certainty what the revenues would have been without the cut and I'll agree with you.

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

There's probably no sense in going back-and-forth with you. You're not getting it. Just because I (and perhaps even the economists) can't tell you what GDP and revenues would have been without the tax cuts, much less "exactly" and "with certainty", doesn't mean they can't validly conclude that the Bush tax cuts have most likely had a negative net effect on revenues. You are not grasping the concept that the economists can have some sense of proportion of one effect vs. another, and you are not grasping the concept of ceteris paribus (check Wikipedia). Let me give you an example: If we had a flat tax of 15% and then cut it to 5%, the tax base would have to TRIPLE (mainly via incremental GDP and secondarily via reduced tax avoidance) to result in the same revenue as we would have had at the 15% rate. Not very likely that that would happen, and that determination can be made without calculating (much less "exactly" and "with certainty") what GDP and revenues would be in that scenario. An economist could reasonably conclude that it's highly unlikely that that change in tax rates would generate that much growth. Get it? If not, how about a change from a flat tax of 20% to a new rate of 2%, which would require a TENFOLD increase in the tax base. Surely (ok, hopefully) you see my point now. If not, I don't think I can help you.

than Target and makes less profit per item, yet they make far more money than Target overall. Why? Because they sell more.

Your tax argument is essentially "If Walmart had sold those items for the same price as Target, they would have made still more than they do at the low price." Which is only true if they still sold more items. But your argument fails to take into account that some people only bought those items from Walmart because they were priced lower than Target. Many of those people would have gone to Target instead and some would not have purchased the item at all because the price was too high. Walmart may still have made more than Target, but it also may not have. We can speculate on the effects on revenue and profit with a hypothetical price, but we can't KNOW the answer.

It's the same with the tax cuts. We can speculate on what the size of the economy might have been (and therefor revenue), but we don't really know.

I suspect that the economy grew faster than it otherwise would have due to the lower rates. You say it didn't grow enough due to the tax cuts to create the increased revenue, but that other forces caused the growth and it would have grown nearly as much anyway. Which is it? I don't know, but I do know that the revenues are higher today than they were 5 years ago and that it is primarily due to the growth of the economy and it is likely that the tax cuts were responsible for at least a part of the growth.

Again, it's a simple statement of fact. Tax revenues are higher now than they were before the cut.

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

ok, I'll try again but not much, if at all, more because you're simply not getting it and I don't know how much clearer I can make it.

Your tax argument is essentially "If Walmart had sold those items for the same price as Target, they would have made still more than they do at the low price." Which is only true if they still sold more items. But your argument fails to take into account that some people only bought those items from Walmart because they were priced lower than Target.

No, no, no. You are totally misrepresenting my argument (or more precisely, the conclusion of the economists). That's not what I'm saying at all. To use your analogy, I'm saying that Walmart lowered its price and that probably generated incremental sales volume, but it the case of this particular price cut, all the Walmart pricing (and other relevant) experts know from all their analyses that it's highly unlikely that this kind of price cut will generate ENOUGH incremental sales volume to result in higher revenues (or gross profit or whatever). If sales volume actually did go up so much that revenue was higher than before the price cut, it doesn't necessarily prove that the price cut had a net positive impact on revenues. There could be plenty of other, much more likely factors.

We can speculate on the effects on revenue and profit with a hypothetical price, but we can't KNOW the answer.

You wanna bet that Walmart has a decent idea of the LIKELIHOOD (probability) of a particular hypothetical price cut resulting in higher revenue or profit? Let's say Widget X is priced at $1.00 and their gross margin is $0.20 and you ask them if they think cutting the price to $0.85 would result in higher gross profit. They'll tell you that that would require sales volume to more than quadruple, and you better believe they'll have some idea if that's likely or not. Get it?

It's the same with the tax cuts. We can speculate on what the size of the economy might have been (and therefor revenue), but we don't really know.

Yeah, the analogy is fine. Do you get it?

I suspect that the economy grew faster than it otherwise would have due to the lower rates. You say it didn't grow enough due to the tax cuts to create the increased revenue, but that other forces caused the growth and it would have grown nearly as much anyway. Which is it?

"Which is it"?? Those are not contradictory statements. I, too, think the economy probably grew faster than it otherwise would have due to the lower rates, and I've already said so.

I do know that the revenues are higher today than they were 5 years ago and that it is primarily due to the growth of the economy

Yeah, no disagreement there. I've said nothing to the contrary.

and it is likely that the tax cuts were responsible for at least a part of the growth.

Yeah, agree. I've said nothing to the contrary.

Again, it's a simple statement of fact. Tax revenues are higher now than they were before the cut.

Yeah, that's all it is, a simple statement of fact. Not substantial support for your argument.

Good luck with all this. Think about it and maybe it will start to make sense to you.

Instead of cutting the gross margin to 1/4 of the original amount, try cutting the gross margin by 10%. How much growth in sales does it take to make up for that? It sure isn't quadrupled, get it?

"Yeah, that's all it is, a simple statement of fact. Not substantial support for your argument."

Not substantial support? That IS my argument. It's been my argument from the beginning.

I have never said they're higher than they otherwise would have been, only that tax cuts do not cause decreased revenue except for a short time after they are initially enacted. The growth of the economy has replaced the "lost" revenue and that was the prediction that was made.

As for your argument. I'd say "you don't get it". It's as possible that we would have had lower revenues as a result of a recession as it is that we would have had higher revenues without the tax cuts. Many models support your version with the economy recovering without the cuts. Others show a recession. I don't really know which is right and frankly I don't care that much since we don't get a "do over" to prove it either way.

Think about it and maybe this will start to make sense to you.

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

ok, I'll try yet again.

Yeah it makes sense, but your numbers are exaggerated. Instead of cutting the gross margin to 1/4 of the original amount, try cutting the gross margin by 10%. How much growth in sales does it take to make up for that? It sure isn't quadrupled, get it?

No kidding. You missed my point entirely (again). The point is that we're talking about the likely relative magnitudes of opposite effects, and that economists (or the Walmart pricing experts) CAN have a good sense of likelihoods of net effects based on the particulars. Yeah, there could be a price cut at which it would be hard to predict the net impact on gross profit, just like there could be a tax rate from which economists would be uncertain as to the net revenue impact of a cut (i.e., moving way, way up on the Laffer Curve). But the whole friggin' point is that there is a consensus among economists that tax rates prior to the Bush tax cuts were nowhere near high enough that there would be much doubt as to the likely net impact on revenues. In other words, economists are saying the Bush tax cuts are more like the equivalent of MY hypothetical Walmart example, if quadrupling sales volume of that product seems highly unlikely. Please tell me you get it at this point?

Not substantial support? That IS my argument. It's been my argument from the beginning.

Listen, your argument was that revenues are higher BECAUSE of the Bush tax cuts, at least in part (i.e, the Bush tax cuts have had a net positive impact on revenues), was it not? Simply pointing out the fact that revenues are up is not substantial support for that argument. It's a simple, anecdotal observation of a coincidence, which is far, far, far from establishing causality.

I have never said they're higher than they otherwise would have been, only that tax cuts do not cause decreased revenue except for a short time after they are initially enacted. The growth of the economy has replaced the "lost" revenue and that was the prediction that was made.

I've already explained to you in a previous comment why that type of statement is nonsensical. Tell me, please, are you saying that the Bush tax cuts have had a net positive impact on revenues cumulatively since being implemented or even now (2007)? If so, you must be saying that revenues are higher than they would have been without the Bush tax cuts, right (that's what net positive impact means)? If not -- if you think the Bush tax cuts have had a net negative impact on revenues -- then you are saying that revenues are up DESPITE the Bush tax cuts, which caused taxes to be lower than they would otherwise have been, rather than due even in part to the tax cuts. So which is it? Sounds like the former, yet you keep saying that you've never said that revenues are higher than they would have been without the tax cuts, which, as I've explained, makes no sense.

It's as possible that we would have had lower revenues as a result of a recession as it is that we would have had higher revenues without the tax cuts.

No, it's not a toss-up, so to speak. Almost all the folks who know a lot more about this stuff than you or I agree that it is unlikely that the Bush tax cuts have had a net positive impact on revenues, or have come anywhere close to it. If you want to simply disregard that expert consensus on this matter, go ahead, but don't kid yourself into thinking you're being rational.

frankly I don't care that much since we don't get a "do over" to prove it either way.

You should care if you care about your country, which I assume you do. We have to make some VERY important decisions (our political leaders, that is) about taxation and spending to avoid a fiscal meltdown in a couple of decades, and being realistic regarding the relationship between tax cuts and revenues is very important if we are to craft wise policy.

Listen, if you have access to a macroeconomist, print out our dialogue and show it to him/her and maybe he/she can get you to understand these concepts. I'm not trying to sound snarky; I mean that as a sincere suggestion. Apparently I'm unable to get through to you, perhaps because a blog is often a combative environment, perhaps because you don't want to admit you were mistaken. I don't know. Good luck.

The tax cuts have had a net positive effect on the economy.
I think we were agreed on this point.

The growth of the economy has caused federal revenues to be higher now than they were before the tax cut.
I think we're agreed on that point as well.

The size of the economy without the tax cuts is not known. It may have expanded anyway and thus produced even more revenue than we have now. OR!!! it may have contracted and thus caused a reduction of the revenue. There are economic models that show it both ways.

I think this is where we have a problem.

My belief is that much of the expansion of the economy was (and continues to be) due to the reduced drag of taxation and that without the tax cuts, we may well have had the recession. But that's speculation and I have no way to prove it as a certainty. Likewise you have no way to prove that the economic expansion was NOT due to the tax cuts, but was primarily due to other factors.

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

YOU going "Real SLOW" for ME? That's humorously ironic, considering how you have repeatedly misunderstood basic concepts, my arguments and even (somehow) your own arguments.

Anyway, listen:

1. You believe the tax cuts have caused enough incremental economic growth that the net effect on revenues has been positive. You don't claim certainty, but you also seem to be arguing that no one can have a good sense of likelihood either way.

2. There is a broad consensus among economists to the contrary, with very few exceptions (and none highly credentialled as economists that I've seen in my research). This consensus includes very prominent conservative economists and Bush's own current and former top economists. They all say that it is unlikely that the Bush tax cuts have had a net positive impact on revenues, or even come close.

Why do you think it's rational to believe that #1 is more likely to be valid than #2? Do you doubt that there is the consensus I'm describing? Do you doubt their expertise and their ability to reach such a conclusion regarding likelihood? Do you think they're all biased toward that conclusion or are being insincere in pursuit of some agenda or self-interest? I can tell you that none of the above are plausible, but help me out here. Why would all those economists say they hold that view if no one can really have a good idea one way or another? If they are pretending to be able to determine more than they really can, why wouldn't they express the same view as you, since that would ingratiate themselves with fellow-conservatives and with their boss in the Oval Office, and make their track record sound great?

My reasons for supporting the tax cuts were:
1. To let people keep more of their own money to spend any way they wish.
2. To stimulate the economy to keep us out of a major recession that seemed likely at the time.
3. To maximize employment.

Note that maximizing federal revenue is not on that list. We supporters of the tax cuts had predicted that the Democrat predictions of doom, gloom and massive reduction in federal revenues were wrong. Not that the claims of the Democrats were wrong.

Again, I don't really care what you THINK the federal revenues might have been without the cuts. In fact you even admit that you have no clue.

The facts are:
1. The tax cuts gave people more of thier own money to spend.
2. The economy is stronger now than it was before the cuts.
3. Employment is higher now than before the cuts.
4. Federal revenue is higher than before the cuts.

You can speculate all day on hypotheticals, but you can't make the FACTS go away.

I suggest you quit relying on appeals to authority and instead use your own brain.

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

"Not that the claims of the Democrats were wrong."

Should be "NOTE that the claims of the Democrats were wrong."

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

are to a ghost?

Now there's no more oak oppression,
For they passed a noble law,
And the trees are all kept equal
By hatchet, axe, and saw.

No I hadn't realized it. Too bad. Sometimes debating him was like debating a wall, and his personality was grating at times (like above), but still....

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

They spend...which you correctly noted. Government "investing" is a deception invented by government types to justify more of it.

The Constitution was very clear on the duties of our Federal Government. "Investing" was not one of them. It's time we got back to following the Constitution.

“We have forgotten in America that a democracy is the most difficult kind of government to maintain. It is the hardest kind of government under which to live. It is hardest to maintain because of the widespread political corruption to which it so easily lends itself. Our drift today toward complete totalitarian bureaucracy is one that threatens immediately the very freedoms for which our own boys are dying.”

Ernest R. Palen, D.D.

>>>The Constitution was very clear on the duties of our Federal Government. "Investing" was not one of them.

I'm thinking this and what Blackhedd had to say a few comments up are the first comments on this thread you wouldn't also hear from a witch-doctor in Brunai.

“The path of the righteous man is beset on all sides by the inequities of the selfish and the tyranny of evil men."

What I mean when I say government invests is not actually investing my money for me as in retirement. Rather, invest as in more of a business attitude looking at the most efficient place to put money to work as a resource. There should be some justification of a "return" for each expenditure and each program the government funds. Explanation of each expenditure to live up to their fiduciary responsibility. It may not be in strict $$ return but at least make them justify spending our money. What real tangible or intangible benefit will this program create?

Prime example is light rail in Minneapolis. The huge investment does not survive any scrutiny on payback justification especially considering alternatives of more roads, more buses etc... especially for our lack of density.

Ask not what I can do for my country, ask what my country can do for me. Washington Elected Elite

Well, I would say you are. Do you a 401k or rely on Social Security?

As noted above, its not the government job to invest -your- money.

huh?? "admits"? What's your premise? What's your point? My guess: some invalid premise and some point that doesn't even logically follow from the invalid premise.

Try to crack a smile now and then. Laughter is chicken soup for the soul.

And Rightly So!

I laugh an average of 3.4 times per day. I set 2 times per day as a goal, I keep a careful log and track my performance vs. quota. I take laughter very seriously.

You don't want to fall behind on your quota - and RedState doesn't seem to be helping you much tonight.

And Rightly So!

RedState doesn't seem to be helping you much tonight.

You'd be surprised. Yeah, sometimes I get annoyed, but other times people say things that are just so dumb that I do get a chuckle. I mean, sometimes it seems as if someone is just pretending to be thick as some kind of spoof of debate.

And Rightly So!

Larry Kudlow vs. Steve Liesman debate. I trust both of you, as Kudlow and Liesman themselves, are still on the side of prosperity.

lesterblog.blogspot.com

Kudlow -- UGH! Please, on this question of the impact of the Bush tax cuts on revenues, Kudlow is in a tiny minority of "economists" who expresses a view (or at least makes implications) contrary to the consensus view (whether he believes it or not, and I don't know which). I say "economists" because I don't think Kudlow even has a degree in economics, even though he's certainly worked as an economist and (I think) has had some notable success in financial markets. And remember, Kudlow's main profession now is entertainment, and he knows what his audience wants to hear.

I, too, believe that free markets are the best road to prosperity :)

It's OK, BR. You wouldn't be here at RedState if you were any kind of central-planning type. :)

lesterblog.blogspot.com

I'm not familiar with Liesman or his views on this question. I just checked his bio and he has no economics degree, either. English undergrad and Masters in journalism.

As for free markets, I'm a HUGE free marketer. For example, http://www.redstate.com/blogs/brooksrob/2007/may/08/my_question_for_lou_...
and
http://www.redstate.com/blogs/brooksrob/2007/may/02/the_immorality_of_co...

I'm also a budget hawk. I want big spending cuts. Big.

I just think that we should base fiscal policy on realistic assumptions rather than feel-good myths like the myth that the Bush tax cuts have had a positive impact on revenues. We need realistic assumptions so we know how much spending we have to cut and if -- and how much -- we may need to raise taxes, given our unfunded entitlement liabilities, related demographics (projected worker-to-retiree ratio) and our debt-to-GDP ratio.

that he doesn't believe there's any causal relationship between lower taxes and increased revenues, and I'm sure he'll elaborate on that more in the future. Still, he's one of the crackerjack staff of CNBC committed to "keeping America great," as their latest motto goes, and I think he, you, I and every other reasonable person would agree that Congress needs to control its spending if we want to keep government solvent.

lesterblog.blogspot.com

Hey you know what, we ALL want big spending cuts. Why I could cut at least half of all descresionary spending in just one afternoon if I had the power, but I don't.

I will not rehash our old arguments, suffice it to say that just like global warming some of us remain skeptical of the consensus opinion. But the key thing is that TAX CUTS ARE ALWAYS A GOOD THING!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Even if they lead to deficits. Why? because the deficits at least act as somewhat of a damper of increased spending.

You understand I am making a political not an economic argument. Better learn it because you will end up being another David Stockman, beating your head against a wall trying to be the tax collector for the Democratic Party.

"Nothing works like freedom, Nothing succeeds like liberty"
Kyle

Thanks. I understand the "starve the beast" argument. As I've noted in previous threads, there is debate among economists and the jury is out among economists on whether or not lower taxes induce lower spending. It may seem intuitive that lower revenues would induce lower spending, but an intuitive argument is made the other way as well -- that borrowing to spend rather than taxing to spend shields taxpayers from the pain of spending and reduces the incentive to curb spending. In addition to this intuitive aspect, the empirical evidence is debated. A debate emerged among some economists after this piece by William A. Niskanen, Chairman of the Cato Institute and former member and acting chairman of President Reagan's Council of Economic Advisers. He holds a Ph.D. in economics from the (famously free-market) University of Chicago, which has honored him with a lifetime professional service award. http://www.cato.org/pubs/policy_report/v26n2/cpr-26n2-2.pdf . Niskanen concluded that tax cuts led to HIGHER, not lower spending. Now, supply-side economist Gregory Mankiw, who was Chairman of W Bush’s Council of Economic Advisors and is an economics professor at Harvard, noted that another prominent economist reached the opposite conclusion, with some differences in methodology (with perhaps some advantages), albeit with less recent data vs. Niskanen's analysis. Mankiw concluded that the jury is still out on which is correct -- it's just not clear if "starve the beast works" (i.e., if tax cuts lead to lower spending). http://gregmankiw.blogspot.com/2006/06/starving-beast.html .

Of course, belief in "starve the beast" with regard to taxes in general or some particular tax cuts is incompatible with the belief that those tax cuts generate higher revenues, because the result can't be higher AND lower total revenues (over a given time horizon). So you have to take your pick, but can't assert both. Either you believe the result will be higher revenues or lower, and either you believe that higher revenues are good or lower revenues are good.

they could lead to higher revenues in the long term and lower revenues in the short term. They could be a good idea in some markets and a bad idea at other times.

But most of the time I am for tax cuts. Because, well first of all it's our money, not theirs.

"Nothing works like freedom, Nothing succeeds like liberty"
Kyle

Oh, I forgot to comment on:

just like global warming some of us remain skeptical of the consensus opinion

My understanding is that skeptics believe that the consensus opinion on global warming either doesn't really exist to the extent some claim (the degree of consensus on particular conclusions, that is) or that the consensus has resulted from some bias or reflects insincere statements made in pursuit of some agenda. I won't comment on any of the above premises, but I will say that none of them apply to the consensus among economists that I'm talking about re: the net impact of the Bush tax cuts on revenues. The consensus exists (i.e., with very few exceptions), and it includes economists (conservative economists and Bush's own current & former top economists) who have no plausible reason to all be biased or have some agenda that would lead them in toward the conclusion they've all reached.

Also, I'm not suggesting that even sincere, unbiased expert consensus can never be wrong, just that if there is such a consensus, particular in a matter in which sophisticated analysis and insights increase the likelihood of a valid conclusion, we should at least conclude that the consensus view is much more likely to be valid than the opposite view held by laypeople and perhaps a few isolated contrarians (particularly if those contrarians have less expertise than many in the consensus and more reason to be biased and/or have an agenda). Such is the case with the consensus to which I've been referring.

"OK, what do you think spurred the higher economic growth that directly causes higher receipts.

I don't know, nor do I know if economists know precisely nor to what extent they agree on the key drivers, although I would assume a very aggressive Fed cutting rates sharply helped quite a bit and the tax cuts (particularly the 1993 cuts) probably helped somewhat. I've seen explanations out there, but haven't really researched it. The answer to that question involves enormous complexity, since so many factors contribute to GDP. But not having that answer does not mean that economists cannot reasonably conclude that the Bush tax cuts have most likely had a net negative impact on revenues."

Let's repeat that last sentence:

"But not having that answer does not mean that economists cannot reasonably conclude that the Bush tax cuts have most likely had a net negative impact on revenues."

YES IT DOES

AND THAT IS THE GRAVAMEN OF THE ARGUMENT WE HAVE HAD FOR WEEKS.

PERIOD

IT'S TOO COMPLEX TO KNOW

SO ME AND MY PEOPLE AREN'T WILLING TO TAKE THE CHANCE AND RAISE TAXES

Mike Gamecock DeVine @ The Charlotte Observer
www.race42008.com
www.hinzsightreport.com
www.theminorityreportblog.com
"One man with courage makes a majority" - Andrew Jackson

First of all, it simply doesn't make sense to jump from the premise that economists may -- may -- not be able to explain and agree on precisely why the economy has grown at a certain rate to the conclusion that they can't assess the likelihood that the Bush tax cuts have had a net negative impact on revenues.

Now, here are a couple of questions you didn't want to answer by email, so I'll try here (not that asking you questions publicly has proven effective at getting you to answer, but what the heck).

1) If you're right, why do you think Bush's economists and other conservative economists would claim that the Bush tax cuts have had a negative impact on revenues? If they really had no clue and were willing to pretend otherwise (lets say, to disingenously justify their existence), wouldn't they claim the opposite conclusion so they'd be more popular with their boss (Bush) and with other fellow conservatives?

2) If you're saying that it's all just too complex to know the net impact on revenues of the Bush tax cuts, are you saying that all the folks who claim that the Bush tax cuts have had a POSITIVE impact on revenues, and that the increases in revenues are at least partly attributable to those tax cuts, don't really have any good reason to reach that conclusion, since no one can really have any idea if that's likely or not?

as to 1), the best guess is like all the other books, ie egos mad that Bush didn't fee it enough

but let's get some more info

ie

links to these "Bush economists" proving a) they are "bush" economists and b) what they say in quotes

Mike Gamecock DeVine @ The Charlotte Observer
www.race42008.com
www.hinzsightreport.com
www.theminorityreportblog.com
"One man with courage makes a majority" - Andrew Jackson

2) knowing that taxing less spurs growth is axiomatic

Either you misunderstood my question (somehow) or that was an obvious straw man. Needless to say (or so one would think), I didn't ask you about people who claim that "taxing less spurs growth", I asked you about "the folks who claim that the Bush tax cuts have had a POSITIVE impact on revenues, and that the increases in revenues are at least partly attributable to those tax cuts". Any chance you'll answer MY question instead of a convenient substitute you fabricated?

Not sure I understand your assertion re: #1, but sound like you're saying they're all probably expressing that view because they are disgruntled in some way and expressing that view out of spite even if they don't believe it. Is that it?

I'll post a loooooong diary packed with quotes and accompanying links when I have the chance (I actually have the document with quotes, but I want to write an intro in anticipation of some of the common points of, let's say, confusion that I've encountered from many on RS). Of course, I've already posted quite a bit in past threads, and most people on those threads still chose to stay in denial (some with the ridiculous mantra that I was just "appealing to authority" or something like that).

Mike / GC, second request (ok, actually third) re: question in comment above (#2). I hope you don't plan to just blatantly evade the question via straw man and then go running again to the support group to assure you that you answered my question and give you a big group hug.

And willful ignorance is pretending we can't have any clue on some question when in fact we can. And willful ignorance for the purpose of maintaining beliefs that make us feel good is often irresponsible, immature, and harmful.

Oh, and feel free to answer my questions. Or not, if you'd rather avoid tough questions again.

---
Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman

Actually, nothing is knowable, not even in a probabilistic sense (i.e., that any one thing is more likely than another), ask Zuiko and GC

1) effort and $$$ expended to get laid

2) no effort and no $$$, still get laid

apply that to tax rate cuts vs tax rate hikes

Mike Gamecock DeVine @ The Charlotte Observer
www.race42008.com
www.hinzsightreport.com
www.theminorityreportblog.com
"One man with courage makes a majority" - Andrew Jackson

I find that analogy a bit alienating. I'm sure you don't mean it that way. Just saying...

lesterblog.blogspot.com

Mike Gamecock DeVine @ The Charlotte Observer
www.race42008.com
www.hinzsightreport.com
www.theminorityreportblog.com
"One man with courage makes a majority" - Andrew Jackson

Language I can grasp?? Give me a break. Maybe you were just trying to be funny. In any case, what you've just illustrated is something I've been saying all along, which is that the reason some people are so resistant to what I'm saying here is that if FEELS much better to hold a "free lunch", "have your cake and eat it, too" belief than to acknowledge the reality of a trade-off. That's where maturity and responsibility are supposed to come in.

You're absolutely right that we need to find ways to make healthcare more efficient/cost-effective. Very important. Looks like some of the candidates on both sides have presented some kind of plans, although I haven't read up on them and don't know if they are just political campaign baloney or if they are sound plans.

In this day and age tax cuts are needed to cut off the supply to government to eventually force spending cuts.

So, Common Cents, you believe that tax cuts have a NEGATIVE effect on revenues?

Borrowing more money to the government is giving an alcoholic another drink. The government is an insatiable bottomless pit of spending with no end in sight. If we gave the government 40 trillion a year they'd find a "worthwhile" home for it.

As I explained in another comment on this thread, economists are divided regarding the effectiveness of the "starve the beast" approach for reducing spending (ceteris paribus), and it doesn't seem to have been all that effective in this decade (although it's possible that spending would have been even higher if the tax cuts hadn't taken place -- again, a subject of debate among economists). It might work, might not, and it's enormously risky, because if we cut taxes and DON'T cut spending accordingly, but rather borrow more to make up for the lost revenue, we end up with a higher national debt.

What I don't hear in tax cut debates is what happens to those tax cut dollars? It sounds like tax cuts are a danger to society. What happens to that dollar that stays in your pocket that the government doesn't get? Does it go to Mars never to be seen again? Does it disappear? Do we need an amber alert for missing money? Or does that dollar get spent, saved, or invested?

Yes, of course it means the people keep a larger share of their income and can spend, save or invest it, and obviously there are big benefits to that. Generally speaking the private sector will allocate resources more efficiently than government, and also, on a philisophical level, people have a legitimate claim on the money they earned rather than having it confiscated by the government and spent on different societal/political priorities or simply transfered to others. But there is a "danger", and that is that people are generally either ignorant of, or don't understand well, the consequences of the debt and the liabilities our government is incurring on our behalf. It's like a parent not knowing that he's got two kids that will be going to college in a couple of years (or having no sense of how large the cost will be) AND not knowing of (or not knowing the extent of) someone piling up massive debt on the parents' credit cards. The danger is that, due to unfunded entitlement liabilities, our projected worker-to-retiree ration, and our current debt-to-GDP ratio, we are on an unsustainable fiscal course that will end in disaster if we don't change course (there's a strong, across-the-board consensus among economists on that, too), and the longer we wait, the more painful the ultimate solution will be (again, consensus). We need to be realistic about the relationship between tax rates and tax revenues so that we can determine how much spending we need to cut how fast, and whether or not we need to increase tax rates, and if so, which ones and how much. Wishful thinking regarding tax cuts and revenues can only get in the way of crafting wise policy. http://www.redstate.com/blogs/brooksrob/2007/sep/19/fiscal%5fresponsibil...

This is a oversimplification of his argument I think, as tax cuts always stimulated economic growth. Think about it, if taxes were zero today people would be raking in the revenue that -would- have otherwise gone to government.

His point seems to be.. is the increase in revenue collected by the government attributed to the tax cuts?

I can't really answer that because there are too many factors involved. I think the Fed had a lot to do with it as well with 1% interest rates. There is also greater government spending that stimulates the economy too. BrooksRob had brought up a lot of interesting points on this. Frankly, we can say no to that question as there are other factors involved but yes, we can argue as to the degree that the tax cuts helped or hurt.

My point on this has been this news is being used to promote that the economy is doing well.. and I have serious concerns with the value of the dollar being at an all time record low. (that is primarily due to government spending.) So I would say this news is trivial to the real state of the economy.

When you consider points like this, a comeback of "He is just in denial." is rather foolish.

First, I haven't commented on the net impact of the Reagan or Kennedy tax cuts. One quote I posted on this thread and one other quote I've posted on previous threads (among many other quotes) did state that the Reagan tax cuts, too, had a net negative impact on revenues, and I'm inclined to believe that, but haven't researched it thoroughly, as I have the Bush tax cuts, and so I haven't argued that re: the Reagan cuts. The Kennedy cuts were from a very high top marginal rate and, although that wasn't really the effective tax rate due to deductions/loopholes that were taken away in conjunction with the rate reduction, it's quite possible that the Kennedy tax cut had a net positive impact on revenues. As I've said many times, at high enough tax rates, a tax cut is likely to have a net positive impact on revenues.

Now, to say that I'M a lost cause on this issue is ironic. I'm the one who's NOT in denial here. Most others I've discussed this issue with are apparently either stuck in "free lunch" mode and seem unable to deal with the discomfort of acknowledging that there actually is a trade-off involved, or are simply unable to grasp the common sense notion that anecdotal observations of conveniently selected coincidences don't trump the consensus conclusions of experts who have conducted far more sophisticated analyses and who have a far deeper understanding of the dynamics involved (and usually it's those same people who actually act like they are being MORE reasonable, MORE realistic, MORE rational, and MORE intelligent, not realizing how embarrassed they should be to take such an attitude while spewing nonsense). This is the kind of stupid crap that really lowers the value of participating on RS for anyone not just looking for a support group to mutually reinforce YOUR KnownFacts without really thinking things through and discussing them rationally and trying to be objective even if doing so means leaving a comfort zone.

This is the kind of stupid crap that really lowers the value of participating on RS

You were referring to your own posts in this blog entry, right?
---
Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman

thanks for the illustration of my point. But don't worry -- you have company. Ya' know, the support group. If a bunch of you agree that you're making sense and I'm not (or agree on any other point), well then you MUST be right, right? I'm surprised some of you guys aren't for same-sex polygamy so you can all get hitched.