Aces High Bulletin Board
General Forums => The O' Club => Topic started by: JBA on May 14, 2003, 08:41:29 AM
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Issues & Insights
Wednesday, May 14, 2003
An economic stimulus plan from IBD Chairman Bill O'Neil
Depressing Ideas
INVESTOR'S BUSINESS DAILY
Fiscal Policy: When it comes to taxes, the two sides of Congress don't see eye to eye. Both have tax plans. But one of them — the Senate's — comes up way short.
We see much to admire and even embrace in the House's tax-cut plan: lower marginal rates for all, cuts in capital gains levies, breaks for small businesses, relief for married couples. In short, the plan, totaling $550 billion, offers a whole slew of things that will help jump-start the economy and build wealth for millions of Americans now left out.
Sadly, the same can't be said for the Senate's plan. It, too, cuts taxes. But at $350 billion, it's too small to pack much punch.
What particularly disappoints us is that the Senate would actually raise taxes on business to "pay for" tax cuts for everyone else. That's exactly the opposite of what it should be doing. Those taxes, or "offsets," as those in Washington like to call them, aren't small. They total some $90 billion.
Why get all in a lather over hiking business taxes? Because right now, Americans justifiably are worried about jobs.
With more than 2 million lopped off payrolls in just over two years, we can't afford another year with no job growth. If you raise taxes on businesses, they will hire fewer workers, not more. That's something no serious economist disputes. Only politicians do.
Yet instead of concern about jobs and healthy businesses, Congress worries about . . . the deficit. Indeed, it's become common to hear senators say we can't afford big tax cuts because it will "blow a hole" in the deficit. It's a case of slogans replacing logic.
At $550 billion, the House tax cut is only 1.8% of the planned $30 trillion or so in government spending through 2013 — and just 0.35% of expected GDP, according to Cato Institute data. If Congress is so worried about the deficit, it could trim spending that much — something businesses and average people do all the time.
But won't deficits cause higher interest rates, the kind that can choke off growth? Absolutely not. President Reagan cut taxes, and the deficit doubled to nearly 6% of GDP. The economy boomed, inflation fell and interest rates dropped. So did the deficit.
More recently, we swung from a surplus of about 2% to a deficit of about 2% in 2002. Again, both inflation and interest rates fell. Why? It may be that the deficit, at $300 billion, is minuscule next to the nearly $20 trillion bond market.
Still, based on their faulty fear-the-deficit logic, Senate Democrats have bashed Bush, even likening him to Herbert Hoover.
Well, here's a quote President Hoover was fond of repeating, even as the economy slid into depression: "Nothing is more necessary at this time than balancing the budget." Whom does that sound like?
In fact, to balance the budget, both Hoover and President Franklin Roosevelt raised taxes. Hoover jacked up the top income rate from 25% to 63%; Roosevelt pushed it up further to 79% in 1936. From 1930 to 1940, they doubled the corporate income tax rate to 24% and laid an "excess profits tax" on top of that.
Small wonder that after the economy tanked in 1930, it took over a decade to get it back to even. Or that the jobless rate hit nearly 30%.
How disappointing it is to hear people today espousing ideas that led to disaster in the past. And how alarming that many of them make economic policy in Washington.
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I can never understand how people can believe that a tax cut 'costs' the country anything. All tax cuts costs the country exactly zero dollars, regardless of how big or small it is. Tax cuts just change who gets to spend the money, the people who earn it or the government. Tax cuts are not magic, but they do help stimulate the economy at the expense of higher deficits or less government spending.
ra
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The biggest stimulant to the American economy is government spending. The Federal Government is the largest entity in the economic US market. No other business has the impact that the Feds do. By cutting taxes, you're essentially removing the funds the Fed has to do its business.
Letting business keep more revenue is no guarantee that it will go to The People and be placed back into the economy. Let's look at a smaller example. American Airlines was going to give a bonus to its CEO and 5 other top-level executives after its employees agreed to pay cuts. Do you think the execs were going to spread that wealth to the same extent those employees would've? Had that money gone to employees, it would've trickled out into the economy at a much faster rate - paying mortgages, credit card bills, school loans, grocery bills. Tax cuts for big business is simply taking wealth from the many and giving it to the few and hoping the few do the right thing with it with no system of checks and balances in place to make sure the money is put to work the way the government planned when it agreed to the tax cut.
Yeah, I'm just a little cynical when it comes to CEOs raping companies and misleading investors. I've been burned too many times by my own employer.
FDR had it right.
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Tax cuts cost the country a great deal. The government will have to borrow the money to give it back to the tax payer, because spending is not going down by $550 billion.
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The biggest stimulant to the American economy is government spending.
Possibly the dumbest thing I've ever read. So, if we let the government spend ALL the money, we'll all get rich?
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Originally posted by ra
Possibly the dumbest thing I've ever read. So, if we let the government spend ALL the money, we'll all get rich?
Agreed. Consumer spending drives the economy. The idea behind tax cuts is to give consumers extra money to spend.
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Originally posted by Martlet
Agreed. Consumer spending drives the economy. The idea behind tax cuts is to give consumers extra money to spend.
Read the rest of that paragraph.
Name a single consumer that spends as much as the US federal government, on as many different things, to as many different people. Not even Bill Gates can spend that much. Name a single company that's as big as the US federal government. Microsoft? GM? Not even close. All that spending goes towards salaries, wages, goods, and assistance. When the government doesn't spend, the people suffer.
Yes, consumer spending drives the economy, but the US federal government is the biggest consumer of them all.
Raise taxes = more money for government spending.
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The following 19 months will bring irony, lies and deceit at a level never before seen in US political history.
Just watch and see.
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"Yes, consumer spending drives the economy, but the US federal government is the biggest consumer of them all.
Raise taxes = more money for government spending."
Ok, now that WAS the dumbest thing I've ever read. Democrat, or just a Troll?
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Has anyone seen an estimate from any of the tax cut advocates (such as the author of the article, Bill O'Neil) saying how long it will take for the positive effects of the tax cut to appear?
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Originally posted by ra
"Yes, consumer spending drives the economy, but the US federal government is the biggest consumer of them all.
Raise taxes = more money for government spending."
Ok, now that WAS the dumbest thing I've ever read. Democrat, or just a Troll?
What's your counter argument? Deficit spending, reduced government spending, or program cut-backs? Those are the only 3 options available and the money's gotta come from somewhere.
If you want to see the effects of program cuts, take a look at the education system.
Corporations don't spend money on highways, schools, police, defense, judicial, military, parks, and public assistance. Businesses spend money on 1 thing: business. I wouldn't count on things good for business necessarily being things good for We The People.
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Take cover JBA, the socialists are coming. :)
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Originally posted by gofaster
What's your counter argument? Deficit spending, reduced government spending, or program cut-backs? Those are the only 3 options available and the money's gotta come from somewhere.
If you want to see the effects of program cuts, take a look at the education system.
Corporations don't spend money on highways, schools, police, defense, judicial, military, parks, and public assistance. Businesses spend money on 1 thing: business. I wouldn't count on things good for business necessarily being things good for We The People.
My only argument is that tax cuts don't cost anything. The government can't (unfortunately) change its budget as fast as the economy fluctuates, so deficit spending is the way to go.
You don't seem to understand that the wonderful government gets nearly 100% of its income from the evil private sector. So any tax increases add a burden the private sector and put drag on economic activity, thus reducing government revenues. How a particular rich CEO spends his income is a non-issue.
Any economy can only support so much government, and I think we are way past that point. It is just more obvious now because of the economic downturn.
Most states were able to maintain balanced budgets during the Federal deficit years of the 80's, but in the go-go 90's they lost all fiscal discipline an allowed their spending to grow with the bubble. Now, many states (and local governments) are in deep poop, with huge budgets and declining revenue. There is no way to tax your way out of that situation.
ra
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Originally posted by ra
My only argument is that tax cuts don't cost anything.
Wrong. Tax cuts cost government revenue. Less government revenue = less government spending = less pay for government programs and the employees and people affected by those programs. Ask a teacher. Better yet, ask an assistant principle (if you can find one still employed).
Originally posted by ra
You don't seem to understand that the wonderful government gets nearly 100% of its income from the evil private sector. So any tax increases add a burden the private sector and put drag on economic activity, thus reducing government revenues. How a particular rich CEO spends his income is a non-issue.
No, I understand that completely. The money has to come from somewhere, either taxes or credit. I prefer to have it come from taxes. Credit bills come due eventually, with interest. As for creating a drag on economic activity because of a burden on the private sector, I would agree that its a drag on business, but it doesn't necessarily impede economic growth. The real question is, which has a bigger economic impact - $550billion in tax cuts or $550billion in government spending? I'll guess government spending.
Originally posted by ra
Any economy can only support so much government, and I think we are way past that point. It is just more obvious now because of the economic downturn.
You're confusing taxes with regulation.
In my opinion, the economic downturn was caused by two things:
(a) a change in the pension regulations that allowed corporations to cancel their employee pension funds and replace them with cash-balance plans, which forced workers to invest their savings in businesses that may or may not have been based on sound business principles. Once that pool of investment money dried up when the pension money ran out, companies started to drop off (Pets.Com is a good example). A lot of people lost a lot of money and will never be able to recoup that sort of loss. With less money in their bank accounts, people became very conservative with their spending. The decreased consumer spending initiated the slowing of the economy.
(b) Tuesday, September 11, 2001, 8:45am, which really just accellerated an economy that was stalling from (a) above. Tourism dropped off, which impacted airlines, hotels, theme parks, and retailers. States that relied on the tourism industry suffered the most, particularly Florida.
Originally posted by ra
Most states were able to maintain balanced budgets during the Federal deficit years of the 80's, but in the go-go 90's they lost all fiscal discipline an allowed their spending to grow with the bubble. Now, many states (and local governments) are in deep poop, with huge budgets and declining revenue. There is no way to tax your way out of that situation.
ra
That's a popular misperception. State budgets aren't impacted by business profit growth (other than the stocks the governments buy to fund worker pensions and bond issues). If state budgets were impacted by business growth, then teachers and police and firemen would've been dancing in the streets under Reagan and Bush. State budgets, believe it or not, operate on a different set of principles, namely, spending. They have a goal and are awarded a budget suitable for meeting that goal. There is no profit/loss measurement in a government program.
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No, I understand that completely. The money has to come from somewhere, either taxes or credit.
State budgets aren't impacted by business profit growth
I give up now.
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Corporations don't spend money on highways, schools, police, defense, judicial, military, parks, and public assistance. Businesses spend money on 1 thing: business. I wouldn't count on things good for business necessarily being things good for We The People.
WRONG! Only reason why highways are now built by government, is because the govt has monopolized that for himself. You seriously suggest, that without government there wouldnt be any highways, schools or other infrastructure?
Hint: Everything that is wanted equals business.
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HMMM companies don't pay for freeways or roads? Tell that to 1/2 my clients who squeak about having to extend or widen such roads when they impact the area. The ammount of money companies spend on roadway construction bogles my mind. A project that would cost 1 or 2 hunred thousand dollars ends up costing 2 million because of the improvements required to roads and utilities.
Guys you can argue with gofaster all day long and at the end of the day he would still be wrong and you guys might be angry, why ruine a good day :)
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Originally posted by Tuomio
WRONG! Only reason why highways are now built by government, is because the govt has monopolized that for himself. You seriously suggest, that without government there wouldnt be any highways, schools or other infrastructure?
Hint: Everything that is wanted equals business.
So, nobody wants a military then, right? Or are you suggesting that instead of the 3rd Armoured, it should be the Ford Mobile Division and the Boeing Air Force? And how would such commercial armies turn a profit? Go mercenary, or worse, turn pirate? Businesses exist to turn a profit, and there's not much profit in defending the country.
Its not illegal to build a road so long as you get the permits and furnish impact reports, same as building a factory. Housing developments do it all the time, as a way to sell the homes adjoining the road.
Disney built its own roads, but only from the interstate to Disney. Disney didn't build I-4 from Tampa and Daytona and they sure aren't paying for the widening of I-4 now.
Show me a business whose goal is to provide charity and I'll show you a business that relies on donations. Anybody here an investor in the United Way? What was their profit this quarter? What was your stock dividend this year?
I'm not suggesting that there wouldn't be private schools - there certainly are those around - but there would be fewer schools in general and fewer people with a high school education. And, a whole lot fewer people with a university degree, particularly if they had to pay for the whole tuition expense themselves.
Believe it or not, there was a time when private companies did build roads with the goal of turning profits off of them. They were called toll roads and toll bridges. Nothing illegal with that. Might even be a few still out there. I think Palm Beach still has a privately-owned bridge (mostly as a tool to keep out the riff-raff). Most of the toll roads and bridges were bought out by - ta da - the government by voter referendum!
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Originally posted by Udie
HMMM companies don't pay for freeways or roads? Tell that to 1/2 my clients who squeak about having to extend or widen such roads when they impact the area. The ammount of money companies spend on roadway construction bogles my mind. A project that would cost 1 or 2 hunred thousand dollars ends up costing 2 million because of the improvements required to roads and utilities.
Let me guess - those roads lead into their businesses, right? So who paid for the road leading from the airport to the interstate that leads to the road that leads to their businesses?
A road that leads from a business to a public thoroughfare is called - a driveway. Multilane driveways, but still a driveway. If it has no termination point, then its a road. What business then, is building a road? I can think of one: Disney, which looped its driveway into a road. You can try to drive from one end of Disney's road to the other, but you'll still end up paying the gate admission price. The only privately-funded roads that you can drive on for free are the ones running through the new housing developments, in which case those homeowners paid for those roads.
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And isn't Texas largely controlled by the pro-business Republicans at the moment? Maybe 1/2 your clients should take their complaints to government.
It would be if the Democrat legislators were still in the state.
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Originally posted by gofaster
Let me guess - those roads lead into their businesses, right? So who paid for the road leading from the airport to the interstate that leads to the road that leads to their businesses?
A road that leads from a business to a public thoroughfare is called - a driveway. Multilane driveways, but still a driveway. If it has no termination point, then its a road. What business then, is building a road? I can think of one: Disney, which looped its driveway into a road. You can try to drive from one end of Disney's road to the other, but you'll still end up paying the gate admission price. The only privately-funded roads that you can drive on for free are the ones running through the new housing developments, in which case those homeowners paid for those roads.
Go take an economics class and THEN come back and speak your mind. You can argue all day that tax cuts isn't going to help, that's a legitimate, albeit wrong, argument. Saying that increasing gov't spending is a better solution is just nuts.
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Originally posted by ra
Most states were able to maintain balanced budgets during the Federal deficit years of the 80's, but in the go-go 90's they lost all fiscal discipline an allowed their spending to grow with the bubble. Now, many states (and local governments) are in deep poop, with huge budgets and declining revenue. There is no way to tax your way out of that situation.
I agree totally. Most (all?) States/Local governments can not run deficits either, whereas the feds can borrow as much as they wish, apparently. The Ohio Governor and Legislature has spent money the last 5 years like a drunken sailor, now they are in deep **** and cutting everything.
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Let me guess - those roads lead into their businesses, right?
Why, of course. Do you understand the consept of a road being the business itself? If road = wanted, then road = business. Its very simple.
There is however some need for government in planning the road network. Its purpose would be only to look the big picture of functionality, since when the road is built, it stays there for a long time. Same goes for all static long lasting structures.
So, nobody wants a military then, right?
You just dodged my point. Where i said military is not wanted?
Without government involvement there would be highways and street lights, but in many cases not in the places and forms that they are currently. Many roads out there could be simply taught as a charity roads, as their users would never be able to uphold road maintainance costs by themselfs.
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Originally posted by Martlet
Saying that increasing gov't spending is a better solution is just nuts.
Not really, it worked for Reagan. Basic Keynesianism.
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Originally posted by Martlet
Go take an economics class and THEN come back and speak your mind. You can argue all day that tax cuts isn't going to help, that's a legitimate, albeit wrong, argument. Saying that increasing gov't spending is a better solution is just nuts.
Been there, done that. Got a degree in it and everything. And I studied history. FDR had it right. Tax cuts help, but getting money in people's pockets via jobs and government spending helps more. Tax cuts only help those that already have jobs.
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Tax cuts only help those that already have jobs.
So where did you get this degree in economics?
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Originally posted by Tuomio
Why, of course. Do you understand the consept of a road being the business itself? If road = wanted, then road = business. Its very simple.
There is however some need for government in planning the road network. Its purpose would be only to look the big picture of functionality, since when the road is built, it stays there for a long time. Same goes for all static long lasting structures.
Without government involvement there would be highways and street lights, but in many cases not in the places and forms that they are currently. Many roads out there could be simply taught as a charity roads, as their users would never be able to uphold road maintainance costs by themselfs.
Ok, I misunderstood your point. I thought you were saying that business justifies the existence of something - "everything that is wanted equals business." I.e. - if its not commercially feasible, then its existence isn't justified.
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Originally posted by ra
So where did you get this degree in economics?
Public education, public college, public university, and no way I could've afforded it if government hadn't paid for the overhead. Tuition doesn't even begin to cover the costs of a university education.
So explain to me how a tax cut will help the unemployed. I'm always looking to expand my education.
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Originally posted by gofaster
Let me guess - those roads lead into their businesses, right? So who paid for the road leading from the airport to the interstate that leads to the road that leads to their businesses?
A road that leads from a business to a public thoroughfare is called - a driveway. Multilane driveways, but still a driveway. If it has no termination point, then its a road. What business then, is building a road? I can think of one: Disney, which looped its driveway into a road. You can try to drive from one end of Disney's road to the other, but you'll still end up paying the gate admission price. The only privately-funded roads that you can drive on for free are the ones running through the new housing developments, in which case those homeowners paid for those roads.
LOL, I can see now that you know as much about civil engineering as you do about economics, squat. If you call a 6 lane, 70mph, highway a "driveway" that's news to me. I always called them "highways"
And about tax cuts only benefiting those who already have jobs, that's the whole point isn't it?
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So explain to me how a tax cut will help the unemployed. I'm always looking to expand my education.
You must have slept through a few semesters.
1) taxes are a burden to the private sector
2) the private sector generates the economic energy which creates ALL jobs, including government jobs (which leach off the private sector)
3) cutting taxes allows more private sector activity, so the unemployed can find jobs.
But, assuming your view of government's benificient effects is accurrate, tell me why we shouldn't send 100% of our income to the government and let them pay all of our bills?
ra
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Originally posted by Udie
LOL, I can see now that you know as much about civil engineering as you do about economics, squat. If you call a 6 lane, 70mph, highway a "driveway" that's news to me. I always called them "highways"
And about tax cuts only benefiting those who already have jobs, that's the whole point isn't it?
Where are the endpoints? Highways have numbers. Which ones are you talking about? I'll look them up on the Internet and get back to you. I'm gonna go out on a limb here and assume that either (a) Texas forced the companies to pay for that highway because the state didn't have the funds to do it themselves (a good reason not to cut taxes) or (b) that highway terminates.
Its great that the employed get more cash (assuming the businesses choose to pass the money along to its employees as bonuses rather than saving) through tax cuts, but I'd rather see us get more cash through increased production and sales to consumers (and we know who the biggest consumer is).
Tax cuts aren't free. If they were, why stop at $550 billion?
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Originally posted by ra
You must have slept through a few semesters.
1) taxes are a burden to the private sector
2) the private sector generates the economic energy which creates ALL jobs, including government jobs (which leach off the private sector)
3) cutting taxes allows more private sector activity, so the unemployed can find jobs.
But, assuming your view of government's benificient effects is accurrate, tell me why we shouldn't send 100% of our income to the government and let them pay all of our bills?
ra
You're trying to paint me as being pro-government. Rather, I'm pro-government spending. If we cut taxes that help the private sector, where's the rest of the economic activity? Private sector alone is not a measure of true economic growth; its like measuring stock market success using only 1 index. Cutting taxes does allow more private sector activity, but its no guarantee that the private sector will become more active.
A company expands not because it has more profits at the end of a quarter; it expands because it has increased demands for its' products. Profits are passed along to employees and shareholders, who can then spend the money and drive consumer spending or, conversely, save it, in which case the economy is still stagnant. Tax cuts alone won't help, which is probably why the Senate doesn't want to give the full $550billion. There's got to be a demand in the marketplace that will stimulate the private sector activity, as well as the tax cuts that will allow the private sector to respond to that demand. The government can't control consumer demand, but it can control its own demand, and its own spending. More government spending would drive the economy by placing more demand for products and suppliers.
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Let me guess - those roads lead into their businesses, right? So who paid for the road leading from the airport to the interstate that leads to the road that leads to their businesses?
Ohhh...ohhhh...I know the answer!!!!
I design, build, lease and manage retail shopping centers/office developments.
This is how it works....
A Traffic Impact Analysis is done and paid for by guess who?
The City then requires all improvements(widening, turnlanes, new roads) to be built...and again, guess who pays for it all?
Need a new off ramp to relieve congestion on a state highway? The Private Developer pays the costs.
I hear where you're comin from, but to believe that government spending is the answer to our economic woes is ridiculous. Since overall government spending is up the past three years, where is the economic windfall you seem to think should follow?
The state budgets suffer only because of fiscal irresponsibility and overspending. Any budget, be it federal, state or private sector, all suffer from the same decease....if we don't spend it all, then we won't get it in next years budget....that is a fact and being a graduate of economics, it wouldn't suprise me that you were never taught that truth regarding real working budgets.
Feed the private sector, and jobs will be created....I do it everyday for a living...to tell me otherwise just won't balance:)
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Originally posted by gofaster
Where are the endpoints? Highways have numbers. Which ones are you talking about? I'll look them up on the Internet and get back to you. I'm gonna go out on a limb here and assume that either (a) Texas forced the companies to pay for that highway because the state didn't have the funds to do it themselves (a good reason not to cut taxes) or (b) that highway terminates.
Its great that the employed get more cash (assuming the businesses choose to pass the money along to its employees as bonuses rather than saving) through tax cuts, but I'd rather see us get more cash through increased production and sales to consumers (and we know who the biggest consumer is).
Tax cuts aren't free. If they were, why stop at $550 billion?
Inerstat 35, I-10, I-45, I-59, RM620 (the one I was refering to) Toad has it right when he said "Ohhh...ohhhh...I know the answer!!!!
I design, build, lease and manage retail shopping centers/office developments.
This is how it works....
A Traffic Impact Analysis is done and paid for by guess who?
The City then requires all improvements(widening, turnlanes, new roads) to be built...and again, guess who pays for it all?
Need a new off ramp to relieve congestion on a state highway? The Private Developer pays the costs. "
And as far as tax cuts go, I could care less what the company does with IT'S money that it gets back, it doesn't belong to me. I'm worried about the money that I earn, I think that's a big difference between conservatives and liberals. You guys worry too much about what somebody else is doing with their own stuff, be it cash in this instance...
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Here's another example of a project I'm working on right now. 2 months ago we designed a street improvement for the city (to be paid by the city with a bond referendum) We finished the design and submitted it for aproval. 1 month later enter our new client who is building some apartments at the end of that other street improvement job. Enter the city into our negotiations with our client. BOOM city anexxed the lots and now the developer has to pay for part of the cost to the street improvements, this case being the wastewater improvements. An additionall $500,000.00 to his cost.
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Originally posted by gofaster
The government can't control consumer demand, but it can control its own demand, and its own spending.
Gofaster, gotta hand it to you - you've been eloquent and unflappable with your opinions and assertions. BZ. But, in the quote lies the problem with this argument - The citizens should be in control of what the government spends. The US government is by and for the people, not the other way around. The government is also not, nor should it be, an entity unto itself at the exclusion of its people.
MiG
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Here in Florida we do the same thing with commercial developments - ecological impact analysis, impact fees, offramp construction - but in the end its the same thing - a road the leads to a terminal point: shopping mall, industrial park, apartment complex. Offramps into commercial developments are driveways (even if things are bigger in Texas).
In a sick, devious way, I'm glad to see the city stuck the apartment developer with the impact fee, but in all fairness the city should've alerted him to that prior to granting the building permit. Doing it ex post facto stuck the guy unfairly. I'm surprised he didn't sue for relief.
Which company built I-10? I was under the impression the Feds did it during Eisenhower's administration.
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Originally posted by CMC Airboss
Gofaster, gotta hand it to you - you've been eloquent and unflappable with your opinions and assertions. BZ. But, in the quote lies the problem with this argument - The citizens should be in control of what the government spends. The US government is by and for the people, not the other way around. The government is also not, nor should it be, an entity unto itself at the exclusion of its people.
MiG
Agreed. If it were up to me, less money for social security and Medicare, more money for schools, military personnel benefits, and INS. Unfortunately, bringing the budget up for public vote each year isn't cost effective. In a way, we do control what gets spent where because we're the ones that elect the Reps and Senators.
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Originally posted by gofaster
Here in Florida we do the same thing with commercial developments - ecological impact analysis, impact fees, offramp construction - but in the end its the same thing - a road the leads to a terminal point: shopping mall, industrial park, apartment complex. Offramps into commercial developments are driveways (even if things are bigger in Texas).
In a sick, devious way, I'm glad to see the city stuck the apartment developer with the impact fee, but in all fairness the city should've alerted him to that prior to granting the building permit. Doing it ex post facto stuck the guy unfairly. I'm surprised he didn't sue for relief.
Which company built I-10? I was under the impression the Feds did it during Eisenhower's administration.
hehe well he's a month away from any kind of permit. The city of Austin is even worse. The've anexxed land after construction began and made the client re-apply for all permits before continuing construction. And then made them change designs that were already built costing a year of construction time....
Best thing the gov can do for the economy is stay the hell away, IMNSHO :D
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pass it on in bonuses? You're missing the whole point.
More money in the private sector means more consumer spending. That means more business expansion. That means more jobs. That means more money in the private sector. Following me?
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Originally posted by Martlet
pass it on in bonuses? You're missing the whole point.
More money in the private sector means more consumer spending. That means more business expansion. That means more jobs. That means more money in the private sector. Following me?
Not really. How does a higher corporate return equal an increase in demand for goods and services? Just because a company has the funds to expand doesn't mean that it will. They could just as easily sock it away as a cash fund for future expansion when demand is there for their product.
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Originally posted by gofaster
Not really. How does a higher corporate return equal an increase in demand for goods and services? Just because a company has the funds to expand doesn't mean that it will. They could just as easily sock it away as a cash fund for future expansion when demand is there for their product.
What part of "increased consumer spending" doesn't equal an "increase for goods and services"?
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Originally posted by Martlet
What part of "increased consumer spending" doesn't equal an "increase for goods and services"?
Correct. Increased consumer spending does indicate an increase in demand for goods and services. 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.
So, again, how does having more money at the end of the month mean there's going to be more spending? Having more money certainly means you could spend more, but it doesn't mean you're going to.
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Originally posted by gofaster
Having more money certainly means you could spend more, but it doesn't mean you're going to.
Sure it does. Some people will save more, which is good. It gives them more of a comfort zone so they can spend more. Most people will spend a good portion of it. Does a person that makes 100k a year live the same as a person that makes 30k a year? Heck no, he spends more. He doesn't bank the 70k more he makes, he raises his standard of living.
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The government can't control consumer demand, but it can control its own demand, and its own spending.
Oh, Gawd! I can't resist, as hard as I've tried. The whole point is, the Government CAN'T control it's demand or its spending. 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. In the process, a whole bunch of it is used to run those programs. In case no one's mentioned it, the Government is incredibly inefficient in running any endeavor. I know...I worked for Uncle Sam for 20 years, and still work for a military contractor. 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!
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. 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.
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I have read every post,
I am touch typing this now as my head just exploded.
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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.
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I guess it all comes down to how productive each individual American is. Thats the whole point behind money and the domestic economy right?
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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.
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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.
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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!
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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.
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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.
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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
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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.
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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.
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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?
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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
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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).
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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
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Amen, brother Ra, Amen.
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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
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I'd go with the pagans on this one.
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Originally posted by ra
A government which is limited by Constitutional restrictions should be able to accomplish it's job with much less than the maximum potential revenue.
ra
Have you even read the Constitution?