ideas that led to disaster

[Scootter]

I have read every post,

I am touch typing this now as my head just exploded.

[Holden McGroin]

Originally posted by gofaster
 But, just because a company (or any other tax payer) has more money (i.e. less tax burden) doesn't mean its going to demand more goods and services.  Believe it or not, there are some of us who manage to save a little at the end of the month rather than spend it just because we have it.

How you gonna save it? Mattress padding?  If you put it in a bank, you invest it home or business loans which spurs economic growth.  If you invest it in stock and bonds, it yeilds money for.... economic growth.

[davidpt40]

I guess it all comes down to how productive each individual American is.  Thats the whole point behind money and the domestic economy right?

[gofaster]

Originally posted by Sabre
... The whole point is, the Government CAN'T control it's demand or its spending.

The government does control its spending by determining which funds go where, and that control is indirectly controlled by We The People during elections.  So, yes, the government does control its demand and its spending.

Originally posted by Sabre

 As for being a consumer, that's only partially correct.  A huge amount of the revenue the Government confiscates from us is simply redistributed to other citizens in various entitlement programs.

[/b]
Only slightly misleading but still correct.  Entitlement programs...such as military, education, highways, park services...I would think more is spent on administration and salaries for public services rather than simply given out for welfare and social security.  You'd be surprised how much federal money goes into local state budgets.

Originally posted by Sabre
In the process, a whole bunch of it is used to run those programs.  ...  If more of that money were to stay in private citizens' hands, it would find its way into the economy, create more jobs, and insure some of those sucking at the government teat could get a job of their own, creating more commerce and so on and so on.  People create wealth and jobs, not the Government.  I can't believe there are schools that still teach Gofaster's backwards view of economics.  Incredable!

True.  And government creates jobs as well.  FDR's New Deal.

Originally posted by Sabre
Some government is necessary.  However, it can become too big.  Anytime government takes over something that should be handled in the private sector, it does so with a loss of efficiency.

[/b]

Agreed.  But some things are best left to the government.  Do a word search on "Aramark" and "prison riot".  A number of state governments decided that privatizing their meal plans would save the state governments money by having the plans run more efficiently.  Some of the hits you'll get will provide fascinating reading.

Originally posted by Sabre
Otherwise, communism and socializm would be huge economic success stories.  Spending must be paid for; tax cuts do not.  The Government simply must spend less.  Say it with me now, class: "It's MY money, not the Government's." Repeat 100 times, please.

Tax cuts are not free.  If they are, I'll take two!

[Martlet]

We aren't talking about a state food program.
We aren't talking about the gov't "finding stuff for people to do, then paying them".
We aren't talking about a huge depression.

We are talking about boosting a slow economy.  The way to fix that is to increase consumer confidence.  Plain and simple.  It's the only way to stimulate growth.  Everything you just posted is said for the sole purpose of trying to keep your solution alive, when it's obviously not the best choice.  Either admit you were wrong, or come up with a real defense to your position.  FDR's New Deal doesn't cut it.  It doesn't apply.

[gofaster]

Originally posted by Martlet
We aren't talking about a state food program.
We aren't talking about the gov't "finding stuff for people to do, then paying them".
We aren't talking about a huge depression.

We are talking about boosting a slow economy.  The way to fix that is to increase consumer confidence.  Plain and simple.  It's the only way to stimulate growth.  Everything you just posted is said for the sole purpose of trying to keep your solution alive, when it's obviously not the best choice.  Either admit you were wrong, or come up with a real defense to your position.  FDR's New Deal doesn't cut it.  It doesn't apply.

My solution is to attack on 3 fronts:

(a) go with the lesser tax cut as proposed by the Senate so as to minimize the government budget deficit;
(b) increase government spending by creating jobs in existing programs or increasing pay for those already in government jobs or increasing demand for goods from the private sector; and
(c) lower interest rates so that people would be more likely to spend what money they have.

Of those 3, we've already seen (c) implemented several times over the past 2 years and we're still sliding.  The jury is still out on how (a) will be structured - tax cuts for individuals would do more to boost consumer confidence than tax cuts for commercial enterprises.  I believe (b) would increase the number of people with money to spend.  Government spending on goods and services would also stimulate the private sector to produce goods by increasing a demand for those services.

If you go back and look at the first post I made, you'll see that I advocated increased government spending.  I was against tax cuts for commercial enterprises but favored tax cuts for individuals.

And I still say that tax cuts aren't free.  If the money doesn't come from taxes, it will come from credit.

[miko2d]

ra:  Tax cuts are not magic, but they do help stimulate the economy at the expense of higher deficits or less government spending.

 Economically speaking, saying that tax cuts stimulate the ecomony is semantically incorrect. Tax cuts reduce suboptimal allocation of resources and disincentives to production.

 One would not say that untying a runner's legs stimulates his performance, or reducing a doze of poison stimulates patient's health.

 Unless, of course, one is accustomed to accept that runner having legs ties or patient receiving poison is the normal state of affairs.
 In this case untying legs or reducing poison or reducing taxes may sound like a big favor...

miko

[Martlet]

Originally posted by miko2d
ra:  Tax cuts are not magic, but they do help stimulate the economy at the expense of higher deficits or less government spending.

 Economically speaking, saying that tax cuts stimulate the ecomony is semantically incorrect. Tax cuts reduce suboptimal allocation of resources and disincentives to production.

 One would not say that untying a runner's legs stimulates his performance, or reducing a doze of poison stimulates patient's health.

 Unless, of course, one is accustomed to accept that runner having legs ties or patient receiving poison is the normal state of affairs.
 In this case untying legs or reducing poison or reducing taxes may sound like a big favor...

miko

Congratulations.  That is about as far from the truth as you can get.

[Sabre]

An apt anology, Miko.  I'll take the smaller poison dose, if you please.  GoFaster, you're a shoe-in for the Democratic party of today (not of FDR's, and certainly not of JFK's, but definitely today's).  I was watching a news program where the two anchors were discussing the tax cut with a prominent Democratic senator (can't remember which one).  There were only two ways to "pay" for a tax cut (see, you even have the lingo down, GF): (1) raise taxes on some other sector, or (2) increase the deficit.  The first time he said this, one of the hosts said, "But Senator, what about the third option?"  The guest looked genuinly baffeled.  The anchor helped him out by adding, "What about the third option of reducing spending?"

"Well of course, that has to be a part of the equation," he mumbled in response.  He went on to repeat his mantra two or three more times in the course of the interview, each time only mentioning option 1 and 2...never option 3, having to be reminded each time.  I say again, they (congress) CAN NOT control either their demand for our money or their spending.  At the very least they can only make it go up, never down.  That money will create growth much faster and more efficiently in the private sector (both in business and in the top 50% of tax payers that pay 96.6 % of all taxes) than the US federal government can ever manage.  Those are IRS numbers, btw, from the year 2000 returns.

Gofaster, I'll give you higher marks for honesty than the Senator.  To a man (and woman), these Democratic law makers will deny they're for increasing government spending, even while they're proposing huge increases for health care or other entitlement programs (by the way, the Military is not considered an entitlement program by anyone; it is one of the few legitamate functions of a central government).  At least you're honest enough to say you believe in higher government spending.  You're wrong, but honest.

[gofaster]

http://story.news.yahoo.com/news?tmpl=story&u=/uclickcomics/cx_db_uc/latest

Re-read your post. If I understand, what you're saying is rather than having the government spend the money, then the taxes should go to the corporations and the upper percentile of the taxpayer population to spend the money.  Right?  And the anticipated effect of this is that the corporations would make the right choices and be able to boost the lagging economy by getting that money into circulation in the most efficient manner - investments in other companies.  This implies that the reason why the economy fell off in the first place was because the investment money ran out (which is an opinion I support).  Where do you think the investment money came from back in the late '90s?  My opinion: individual consumers who were investing their retirement money because corporations killed the company pension plans.  As those consumers lost their savings, they became conservative spenders.

So, ideally, the government would get less income, and rather than take a loan to cover its deficit spending, it would simply spend less.

Ok, so the next question: which programs get cut?

[miko2d]

Taxes or anything that acts as taxes - regulations, tariffs, subcidies, monetary actions, etc. reduce production or cause it to increase less than it otherwise would in a free market. Anyone needs an explanation on that?

 There may be good reasons to collect taxes despite loss to production - military, political, etc. but it is a logical fallacy to collect taxes in order to cause and increase in production.

 Since increase in taxes causes loss of production, after certain point increase in revenue due to increasing tax rates ceases to compensate an decrease in revenue due to loss of production. After that point, the more you tax, the less you get and vice versa - the famous Laffer curve. And of course demand for revenue grows at the same time due to increase in unemployment/poverty/crime due to drop in production while trying to increase revenues.

 You do not get any revenue at 0% tax rates because nobody pays taxes while ecomony is producing full steam and you do not get revenue at 100% tax rates because nobody is producing anything. The optimal (for the rax revenue) point is somewhere between those two extremes and it varies depending on circumstances and time.

 The specifics of the last century is that fiat creation of money by state and inflation (actively encouraged by keynesian and monetarist theories) were for the first time combined with strongly progressive tax rates.
 Basically, the creation of money - intended to stimulate the economy - causes inflation and increase in all prices - which is not a big deal after brief period of adjustment.
 But that pushes incomes into higher income brackets (unless they are adjusted to inflation every year) despite real incomes staying the same. Taxes are increased and production drops. The fed pumps more money and production drops further. You have both rising unemployment and raising inflation. The keinesians are paralysed because that is theoretically impossible according to their views and venerable Phillips curve, while monetarists are just bewildered.
 The right move -  cutting taxes or adjusting brackets upward is often not done. Quite the opposite, the rates are increased to compensate for teh loss of the revenue, which at teh top of Laffer curve causes even less revenue.

 The countries that lowered their taxes below the critical point or adjusted brackets with inflation experienced robust growth even while most of the world around them was in government-caused recession. England after WWI stagnated while US grew becasue it did not cut wartime taxes while US did.
 Japain grew in 70 while world experienced crisis of "stagflation". Itw as called a miracle but all they did was adjusting tax brackets to inflation every year to keep on the bottom of the Laffer curve.
 German "miracle" in the 50s - exactly the same.
 Great Depression is the most obvious crisis caused and prolonged by pushing up the Laffer Curve (Smoot-Hawley tariff act equivalent to huge tax hike that caused it, then wage and price controls, raise in tax rates, etc. that prolonged it).

 miko

[Sabre]

Budget cuts is a misleading term in and of itself, Gofaster.  Spending “limits” is more correct, as it involves both reductions in budgets as well as limiting spending growth.  Remember that the economy IS growing…just too slowly.  Therefore, revenues would go up if no tax cuts were made.  Of course, a favorite semantic trick of the left is to call a reduction in the size of an increase a “cut.”  The necessary spending limits to offset the temporary loss in revenue do not have to equal $550 billion, nor must they come all in the first year.  Remember, the $550 billion proposed by the house is spread out over a number of years.  

The mistake so many people make (intentionally in the case of some Democratic politicians, through ignorance in the case of Joe Voter) is to assume that revenue and spending is a zero sum game.  The point, proven numerous times throughout our history, is that tax cuts stimulate economic growth, which in turn creates new wealth.  This leads to increased revenues…if the tax cut is sufficient to get a sluggish economy moving, and if short term limitations in spending growth accompany them.  

So, to answer your question, I’d look first for programs with automatic growth built into their budgets, evaluate the real need, and reduce that growth where appropriate.  Then I’d look at the “pork;” programs benefiting very small segments of the population, but with little to no impact on the economy as a whole.  Next I’d look at planned projects in the out-years, and either slow the pace of those projects or move them back a year or two.  Finally, I’d tighten up endowment-type programs that are “feel-good” things but not truly the purview of the central government.

As for whether or not people and business will “do the right thing,” some will and some won’t, according to their concerns and motivation.  If a citizen finds they suddenly have money, he/she will likely spend some (or all) of it.  If they have less money, they will be less inclined to do so.  Businesses exist to succeed.  To do so, they need capital to invest in new products, new markets, and to improve their ability to do what they do.  Once again, if they have more of their money available, many companies will do so; many more so than would if the Government took more of their money.

The idea that tax cuts must be paid for is false…period.  I re-iterate: Spending must be paid for; tax cuts do not.  Limit spending growth, trim the pork, and let people keep more of their]/I] money.  The economy will grow, revenues will rise, and people will continue to realize the American dream (which is not to have the Government run our budgets or our lives).

[ra]

You do not get any revenue at 0% tax rates because nobody pays taxes while ecomony is producing full steam and you do not get revenue at 100% tax rates because nobody is producing anything. The optimal (for the rax revenue) point is somewhere between those two extremes and it varies depending on circumstances and time.

That is assuming the government is even entitled to optimal revenue.  A government which is limited by Constitutional restrictions should be able to accomplish it's job with much less than the maximum potential revenue.  Career politicians don't want to hear about that, so they constantly propose government solutions to problems, and pretend that some alien species called "the rich" will be the ones to pay for it.

ra

[Sabre]

Amen, brother Ra, Amen.

[miko2d]

The ancient pagans beilieved that any disagreable things occured in the world only because not enough prisoners were sacrificed to various deities.

 The modern republicrat politicians believe that any bad things occur in the world only because not enough legislation is enacted.

 miko