I didn't realize how much Bush's tax cut was for. Now that I've seen it I think it is awesome. For one thing, it's huge. For another thing, no matter what the TV pundits say, and they will press the idea that it's a cut for the rich, it's really a middle-class cut more than anything.

Plus, the idea of making it retroactive so that it can help the economy in the near term is beautiful.

I'm very optimistic. This should be a good one if they can get it passed!

Chance of being passed in any form that helps anyone but the rich (Republican rich, defined as those who don't have to work for a living) and those with children... pretty much nil. Single people and DINKS exist only to provide tax money to those with children, don't you know.

[quote]Originally posted by Dagnabit
I didn't realize how much Bush's tax cut was for. Now that I've seen it I think it is awesome.

Well, it's huge. And it's also huge. Did I mention that it's also huge? We've seen this before: Reagan's first tax cut. The end result of that, you may or may not recall, was a decade during which we ran up roughly $5 trillion of national debt. It took 8 years under the "tax and spend liberal" Bill Clinton to fix the damage done by 12 years of rule by the "fiscally responsible" administrations of Reagan and Bush Sr.

Should taxes be cut? Yes, but in a way which is more progressive than the one proposed by Bush, et al. The idea of progressive taxation, for those who have forgotten it, is that the more money someone makes the higher a percentage of that money s/he should pay to the government in taxes. The '80s and '90s saw gradual regressiveness creep into the US tax code, and that would seem to run contrary to simple fairness.

Of course, I'm fighting a nasty cold right now, so I could be wrong,
Z

Well it's not like they are equalizing at all. The bottom folks, middle folks, and top folks all see a reduction in percentage.

And the biggest difference is that Reagan started out with a country in a modest deficit, and grew that to humongous. Now Bush is starting with a small surplus, and might grow that to a modest deficit. We'll see.

I think he'll get the benefit of an age when a combination of economic growth and the end of the old welfare system put a big dent in the era of entitlement. The social budget will shift from the feds to the states and local communities, as people care less and less about national issues and more and more about children and schools.

*reading the Inky*

According to the way this is presented, a single person with no children will save $300 a year (based on an income of $25,000). So I'm going to save just over this amount per year...whoopee freakin do. And they're using $50,000 per year for a two-worker family with two children. But the average family income here is like $34,000. The cut really doesn't seem to add up to much. I guess money saved is money saved...but still.

Actually, only single folks with low incomes would really see a cut, if any. Those with children already get the EITC.

Predicted is what you want to believe rather than using history as a guide. Tax cuts always result in a short term economic boom followed by a recession. Use Kennedy's 1961(?) tax cut (an example that Republicans always reference). It resulted four years later in serious economic recession (that part the Republicans forget to tell you about) followed by this nation's worst problems of stagflation.

Today, even Japan is trying to kick start its economy with 'money grenades'. It is not working in Japan either.

The nature of economics. Any attempt to fix an economy using money games always results in inflation, recessions, stagflation, or other nasty events. Greenspan has it correct. Adjust money supply to meet the needs of economic activity - keep the dollar's value constant. Use economic indicators to determine how many dollars are required AND never try to create economic growth - don't try to improve those economic numbers - using money games.

Growth, wealth, and productive economic activity are only created by innovation. Throwing money at an economy (or at a company) does not create innovation AND has a history of sometimes stifling innovation. Thrwoing too much money at a problem has created less growth associated with more debt.

Silly tax cuts can only mean higher interest rates - to compensate for the inflationary effects of the tax cut.

Even moreso, where is this government surplus? A recent CBS radio columnist (Dave Ross last week) noted that the government debt numbers have "increased" from last year. Correct. The surplus is only a projection that has not yet materialized.

When credit cards are maxed out (Regan), and then some unexpected surplus money arrives (1990s), do you go on a spending spree or do you first pay off the credit cards? Responsible people first pay off those high interest debts so that they are richer during all those 10+ years. To not pay off those debts only enriches the creditors - predominately the rich and at the expense of all other classes.

Either that unexpected surplus is invested in the economy to create, at most, a 3% growth rate - or it pays off a 6% and 8% debt on government paper. Bush Jr would have you spend money on a tax cut, hopefully, to create at most a paltry 3% growth. He would have you forget the 8% intestest payments to rich investors. Forget? Yes - that is what you must do to like his tax cut.

Responsible government would first pay off its debts. That means government will have more money to use ten years later AND demands on capital markets would be reduced - ie. lower interest rates. Furthermore, paying down the debit today means that a responsible future federal government can raise cash - ie. sell bonds at resonible rates - should an emergency arise.

Notice politicans told you none of this. The above is really too complex for the average reader of the Daily News. Politicans sell tax cuts as it they were power strip surge protection - just another scam they hope you won't understand.

Well, yabbut, a recession is inevitable at some point. If a short bit of growth is followed by a short bit of recession, that's fine, it's almost expected, and the idea I think should be to keep eveverything as smooth as possible.

I don't know if this cut is really gamesmanship. Greenspan said he is in favor of it. If it is leverage for spending cuts in two years that would be just awesome.

Greenspan kept Clinton from proposing major federal programs in the early Clinton era. He told Clinton that he would not cut the interest rate if Clinton would follow through on his spending proposals. Greenspan is the unsung hero of our time.

I would have thought that Bush would let a small recession happen during his first two years in office, then take credit for the following growth period. In making the tax cut retroactive, it looks like he wants to put the recession off even longer.

Re: Bush's tax cut?
 

Of course it is. Please reread what was posted. Greenspan, et al has no control over recession. He or Bush Jr can create one by 'too low interest rates' or a tax cut. But neither man really can avoid a recession. They are created by people we vote for to run the economy.

Recessions are directly traceable to a shortage of innovation. Look at Japan in the 80's. Look at all those killer products - Walkman and the many spin offs, VCRs, computer peripheral devices, CD-Roms, Toyota quality and Honda reliability, superior TV and radio designs, Honda protable generators, innovative battery technologies, world leaders in fiber optics and GaAs semiconductors (what do your think made 24 HBO possible?), electronic games, portable communication devices, high tech steels and other metallurgy and ceramics, tool and die machinery accurate to less than .0001 inches and computerized, high temperature superconductors, etc.

1980 Japan was a booming economy because killer products came out in waves. However, name a killer product from Japan in the last 5 years. PlayStation 2 (other game machines are being discontinued)? Where are all the new, killer, Japanese products? Few to none - which is why Japan is in recession.

Japan also instituted tax cuts and major public works projects to 'stimulate' their economy. IOW they used the same neo-classical economic concepts that are behind Bush's silly, pathetic tax cut. Those money games did not solve Japan's recession and will not stop an American recession.

Recessions are directly traceable to a shortage of innovations typically 4 to 10 years earlier - or traceable to governments who try to stimulate economies using money games.

But for all the possible money games out there, a tax cut is the most interesting. It doesn't mean we have more money -- if *everyone* has more money then the value of money is lowered. It just means that the public is deciding how a larger portion of money is spent, rather than the government.

Since the public is more likely to spend money on items that will result in an increase in productivity, that's where the growth comes.

So I guess the real question is: is the public's more intelligent spending a bigger gain than the debt that would be paid off from that money?

Weird economics.

Maybe this is just me...and yes, I'm a strange one.

I personally don't feel that my taxes are that bad. I don't mind the federal income tax or the FICA taxes that come out of my check. I remember how I was mad at first when I moved out to the East Coast becaue I couldn't claim "0" on my taxes any more (b/c it took too much money out of my check.)

Then it dawned on me that I was making significantly more money and was in a higher tax bracket. (Cut me some slack, I had just gotten out of college and finally had a real job.)

The only tax that I truly have a problem with is Philadelphia's Wage Tax, which I feel is a bit too high. I don't know how the tax set up is here in PA, but I have a suggestion: Give city residents who work in the city a tax exemption, i.e. a free ride. Recoup that lost money by raising the city sales tax to, say 8%, which is still relatively low compared to cities like Chicago and New Orleans (over 10%). With Center City business going well, an extra $1 on a $100 purchase won't hurt anybody.

In fact, if the government wants to give me social insurance (as they do in Canada), then tax me a bit more. I just can't see the justification for this tax cut that Bush wants to pass. It's too much money to spend to give people a few extra bucks, seeing as it really doesn't help lower-income folks anyway.

You'll have to pardon me as my mind boggles.

This tax cut is straight out of the old, entirely debunked, supply-side economics playbook. In other words, cut taxes wholesale, increase spending, and watch the dollars pour in due to the stimulation you've applied to the economy. Guess what: it didn't work. Reagan and Bush I had 12 years to prove that. It took 8 years of a tax-and-spend liberal, who turned out to be more fiscally responsible than any of his fiscally-responsible conservative predecessors, to get us even partway out of the whole which 12 years of voodoo economics (Bush I's term for them, while he was running against Reagan in the '80 GOP primaries) had dug for us.

And we <b>don't</b> have a "small surplus" right now. In terms of an annual budget, yes, we have a small surplus. But that means that the US national debt is still hovering at around $5 trillion. That's a lot of zeros, and a *long* way from a small surplus.

It's a pretty huge debt, actually,
Z

The table I saw went like this:
<pre>
Taxable income Current Proposed

Under $43,851 15% 10%
Under $105,951 28% 15%
Under $161,451 31% 25%
Under $288,351 36% 33%
Over $288,351 39.6% 33%
</pre>

How could that be determined to be supply-side. Any news item that says "the rich are going to be paying a ton less!" is biased. Of course they're going to be paying less. They pay a ton more right now. But everyone will be paying less. The big cut is in the middle-class, where most of the taxes are paid today, and for whom the fed tax will be almost half what it is today.

Re: Bush's tax cut is a good one
 

A tax cut means "we have more money" AND "the value of money is lowered". A tax cut only works, as claimed, IF government spending is decreased by equal amounts. Instead, Bush is only increasing money supply by maintaining high government spending (no spending cuts) and by INCREASING spending on inflation generating activities such as defense WHILE maintaining high interest payments to rich creditors AND issuing trivial money amounts to the numerous, less wealthy people. IOW Bush wants to bring back inflation.

Tax cuts only work, as claimed, if the money comes from decreased government spending. Bush is not doing wholesale tax cuts. Instead he advocated increased government spending. That could even bring back Stagflation!!

Apparantly Dagnabit does not understand what a tax cut does or carefully learn from what was posted previously. He does what politicans do - ignore the lessons of innovative and advocate money games. Tax cuts do not create more spending "on items that will result in an increase in productivity". Voodoo Economics: by now, every human should have understood those nonsense economics don't work - as demonstrated by history AND as detailed in my above posts.

IOW to even 'think' that a tax cut contributes to a productive economy is to 1) ignore everything I have posted above, 2) ignore the disaster called Reaganomics, and 3) to blindly march, like a leming, to discredited concepts of neo-classical economics.

Scary is that some still preach these failed concepts meaning, unfortunately, George Jr's economic lies are still worshipped - despite the facts. Yes, America does have many who never learned from history. Even FDR's pre WWII economic spending - the New Deal - could not solve a recession. JFK's tax cuts only resulted in recession during Johnson's administration. And yet some still think Voodoo economics works. Go figure. What do they teach in schools these days?

This is the part that extremist, anti-American Republicans will always avoid - the math.

A private investment typically results in only about 1/2 return compared to interest payments on government debt. Voodoo economics falsely claims that private investors create MORE return than the government debt payments. To do that, the private Return on Investment has to be so great that the taxes on that ROI pay the interest on goverment debt. IOW if government debt is 7% and taxes on capital profits is 30%, then private investors and public spending of their tax refunds must earn something exceeding 25% per year! Voodoo economics. IOW that 30% tax must pay the 7% interest. Numbers - blunt and simple - demonstrate that a tax cut concept only works when we forget all mathematics.

No respectible economist - even neo-classical economist - believe Voodoo economics. Dagnabit makes claims that even supply side economists discredit. George Jr is only mortgaging the economy's future. The only 'weird economics' is why people believe failed concepts and never do the math. Math? The younger generation cannot even make change without a calculator? Maybe that explains why so many believe a lying politican and his Tax Cut.

"A private investment typically results in only about 1/2 return compared to interest payments on government debt."

I'm skeptical, because otherwise there would be no reason to have stock exchanges and everyone would just buy treasury bonds. But assuming that you're on point --

Just don't let the government go into debt (except at wartime). Recognize what William Jefferson Clinton stated in, what, his third State of the Union address? "The era of big government is over." If that's so, we should stop paying for it.

The tax cut has ten years to operate. The spending cuts will have to match in kind. Plenty of advance warning.



[Edited by Dagnabit on 02-09-2001 at 12:35 AM]

Re: Bush's tax cut is a good one
 

Look at the growth rates for the world: Austrailia 2.6%/4.2%; Austria 1.2%/1.9%; Belgium 2%/3.2% ... US 1.4%/3.5%; and Euro area 2.8%/3.4%.

IOW for every dollar invested in the US, the growth rate return was 1.4% in the past three month and 3.5% for the year. But T-bills must pay their creditors about 6%. Are growth rates suddenly going to increase to 10% because we cut taxes and sell more T-bills? Of course not.

You may get an 8% ROI on a good, ioslated investment in a new, upcoming growth investment. But overall, money including depreciations, obsolecence, bankruptcy, etc all taken into account, the US and any other country grows at well less than 6%.

When debts are high, only the rich prosper. They are the creditors who do nothing but live off money they have loaned/invested. In good times, all classes prosper because there is less demand on capital - interest rates fall. Interest rates, properly controlled, are a measure of capital demands vs capital availability. Bad times are characterized by high interest rates.

If government does not pay down its debts, then there is a shortage of capital - higher interest rates. When government pays down their debts, then capital is freed - made available to all - lower interest rates. The best investement anyone can make - government or private individual - is to first pay down the debts.

Look - how does a man get rich? He borrows no money on disposable items. For example, he has no car loans and no outstanding balances on credit cards. Correct. You will be less wealthy and less well off if you borrow money to buy a disposible item such as a car (or lease it).

There are people who play money games. They take out car loans, then use the money saved to buy securities. Go figure. They make 8% on their investments and pay 12% on a car loan? Typical bad financing. Before you invest in anything else, first invest in yourself - pay off your debts. Same applies to government and economy.

You read my original post incorrectly. A tax cut cannot be, in and of itself, supply-side economics. Combining a tax cut with spending increases, with the hope that the tax cut will combination will stimulate the economy, is the very definition of supply-side economics. And that is precisely what President Bush <i>fis</i> proposes.

Is the tax cut, as laid out above, as regressive as many had feared it would be? No. But neither is is as progressive as it should be. The definition of a progressive tax structure is one in which higher earners pay a higher percentage of their earnings than lower earners. By lowering the top end of the scale from, I believe, 36% to 33%, he has reduced the tax rate on that end of the scale by 8%. Unless, therefore he reduces lower brackets by *more* than 8%, this tax cut is regressive.

Since I don't have the current tax structure in front of me, I can't do the math myself.

Z

You're looking at real productivity growth numbers there, not monetary rates of return. Apples/Oranges.

The whole idea behind borrowing money (except when the government does it) is that you can use that money to build something more useful. The whole idea about the private money world is that people who can't leverage money well give money to people who can.

To put it into the realm of the personal as you have done. I can't afford a car if I start at zero. Now I have two choices. I can borrow the money at - let's say your 12% - and pay an extra $1000 for that car today, so that I can buy it with money I'll have tomorrow. OR, I can save up the money I get today because the car will cost $1000 less by the time I can actually afford it.

If you can afford it, you shouldn't take out that car loan. But if you can't afford it, it's not THAT expense to finance it - $1000 isn't exactly the difference between rich and poor. And the biggest difference is that you will have the car NOW, instead of four years from now when you can afford it. To be carless for four years just so I can afford to buy a car and save $1000? What, are you out of your mind?

In many people's cases, they won't be able to have a job and afford that car in four years... unless they have a car to use to get to the job!

Furthermore, a solid marketplace in consumer debt with the backing of a tangible asset, ie a CAR, has made those loans very cheap indeed.

So. If I have the working capital today, I can get a much better rate of return than the government. I could become a leasing company and give out my cash for other tangible assets. I could become a loan company and give out loans on cars. I could put my money in the stock market and expect a long-term rate of return better than the treasury. But none of my own personal rates of return is tied indefinitely to the rates of productivity growth.

I agree that it would be a smart thing to do to reduce the overall government debt. And I agree that the government pays too much for its money, just as it pays too much for almost everything that it does. Frankly a bad ROR on government loans is better (IMO) than a bad ROR on DOD toilet seats, and if it's going to buy money rather than toilet seats, let it buy money.

Re: Bush's tax cut is a good one
 

Government, like everyone, pays too much for the money they borrow - as they should. And government gets money at better rates than anyone else! IOW loans only enrich the creditors at great expense to the debtor - be it government or the car buyer who did not save.

You are on the right track. If one lived off the fat of the land (did not save), then one must be punished - pay high interest rates to get the equipment necessary for living - the car loan. Paying off all debts today has a better 'rate of return' (ROR) than does a tax cut followed by more bond interest payments.

Tax cut nonsense from anti-humanity hyperster continues today. They now claim that 100% of the tax cut will be used to invest in the economy - a lie. If Americans are investing 4% of their income in capital investments, then only 4% of the tax cut will also appear as capital. Let's see, 4% of a $100 tax cut means another $6 increase of government debt. In the meantime, only $4 of that tax cut is invested resulting in a 'return on investment' (assume ROI of 10%) of maybe $0.40. Of that $0.40, government received $0.10 some years later when the investment eventually is cashed out. Those are not numbers that stop recessions. Those are numbers that say 'Recession' years later. How concidental. That is what so many previous tax cuts did - create recessions later by forcing up interest rates and creating unproductive economic activity.

With that extra $100 in the economy, Greenspan now must maintain higher interest rates - less jobs and less capital investment - just another reason why tax cuts do not create long term economic growth.

Provided was not apples and oranges. People actually think 10% and 20% growth rates in the stock market represent economic growth. If the economy only grows at 4%, then the stock markets, et al, must crash back from 20% to average near 4% growth - because that is what the economy grows at. $100 in today's economy only produce 1.3% or 3.2% economic growth - regardless of irrational exerburance in currently ending in the markets.

IOW all $100 tax cut spent in the economy will only return about 1.3 or 3.2% or $1.30 to $3.20 while government pays creditors another $6. These are not anti-recession numbers.

It is 'Apple and Oranges' to ignore what the real ROI on $100 will be in the economy. During boom times, we actually earned as a country growth of about 6%, or $6 for every $100 out there. Those were extraordinary times.

Good times are over. The stock market took 20% profits. We now pay for our irrational exuberence as, for example, Cisco stock price must drop to about 1/2 today's closing price - a price today that dropped 20% from last week. The economy did not grow at 20%. The economy only grew at something like 6%. Irrational exerburance will be punished in this and future years. Once it is all done, the average ROI on last years $100 will be only 6%; and will be much less in the following years as growth rates return to 1-3%. Creditors will get greater ROI and debtor will pay $100,000 over ten years for new cars purchased using car loans.

Yes, creditors will have ROI higher than growth rates only because others will suffer growth rates less than the economic 1.3% and 3.2% growth rates.

Maybe 4% of a Bush $100 tax cut will be invested. And that $4 will only return about $0.10 in economic growth while government pays another $6 on debts that $100 did not eliminate. IOW the tax cut will only enrich the rich creditors at everyone else's expense. They forget to tell you that in Daily News interpretations. They try to tell you that there is no realtionship between economic growth (1.3% and 3.2%) and the ROI on tax cut money. Hoowey. They have everyone worshipping a new Reagonomic money game.

The only thing that will avoid a recession - innovation. Tax cuts will only encourage a recession some years later.

We don't have a shortage of capital. So why is Bush claiming that a tax cut will create more Jobs? Because many of use are so poorly educated as to believe that capital creates jobs. We know innovation only creates jobs. But a politican says otherwise, so bow down and worship the burning Bush... or see the tax cut for the scam and money game that it is.

" Provided was not apples and oranges. People actually think 10% and 20% growth rates in the stock market represent economic growth. If the economy only grows at 4%, then the stock markets, et al, must crash back from 20% to average near 4% growth - because that is what the economy grows at."

4% plus inflation, and speculation about future growth. Speculation which powers the market of available capital. (Sometimes even intelligently.)

Moreover, the stock market only represents one set of public companies, and doesn't cover changes in the price of commodities, etc.

There are a lot of reasons why the stock market - productivity is not a zero-sum game.

[quote]Originally posted by adamzion

Quote:

Originally posted by Dagnabit I didn't realize how much Bush's tax cut was for. Now that I've seen it I think it is awesome. Well, it's huge. And it's also huge. Did I mention that it's also huge? We've seen this before: Reagan's first tax cut. The end result of that, you may or may not recall, was a decade during which we ran up roughly $5 trillion of national debt. It took 8 years under the "tax and spend liberal" Bill Clinton to fix the damage done by 12 years of rule by the "fiscally responsible" administrations of Reagan and Bush Sr. Should taxes be cut? Yes, but in a way which is more progressive than the one proposed by Bush, et al. The idea of progressive taxation, for those who have forgotten it, is that the more money someone makes the higher a percentage of that money s/he should pay to the government in taxes. The '80s and '90s saw gradual regressiveness creep into the US tax code, and that would seem to run contrary to simple fairness. Of course, I'm fighting a nasty cold right now, so I could be wrong, Z

Yow! Now just what was the makeup of the house and Senate under Reagan? (Here's a hint: Democratic!) Did the House and Senate then approve a spending spree of a nearly unprecented nature (Yes!). Simply noting that Reagan presided over a tax cut and this was followed by a program of deficit spending does the facts no true justice!

Also, what was the makeup of Clinton's house and senate, the very same one that (finally) passed a balanced budget program (Hint: Republican!).

Therefore a simplistic look at the "tax cut to deficit spending" theory you propose just does not hold much water!

If I recall correctly, the Senate was Republican controlled for at least 2 years during Reaganomics.

Quote:

Also, what was the makeup of Clinton's house and senate, the very same one that (finally) passed a balanced budget program (Hint: Republican!).

But who took the fall for the Budget Battle in the mid-90s? And who honestly got the most credit for that balanced budget (deserved or not)?

Yes, I do remember that the House was majority Democratic in '71. The Senate, however, was majority GOP. And, if Reagan was the great, fiscally-responsible conservative that he claimed, then you'd think that once- not even more than once, but only once- he could have submitted to Congress a budget which wasn't more out of balance than the previous fiscal year's. To my knowledge, every Reagan- and perhaps every Bush Sr.- budget was more in the red than the one previous to it. As I noted, it took a tax-and-spend liberal (Booga! Booga! Booga!) to show the GOP some fiscal responsibility.

Does the post-'94 GOP-dominated Congress get some credit for the run of balanced budgets turned in in the '90s? Absolutely- after all, if they had wanted to lard down each of Clinton's balanced budgets with pork, then there was little which could have been done about it (pre line-item veto at least, and that might not pass Constitutional muster anyhow). But, the fact remains: Clinton submitted balanced budgets to Congress, while Reagan and Bush Sr. never even came close to doing so. Saying otherwise indicates a complete denial of reality.

Not unusual in the US political realm, I'll admit,
Z

Reagan's term was 8 years. Even if the Senate was Repub for 1/4 of this, my point still stands.

Also, I believe that the fall was largely assigned to congress and Clinton repeatedly takes credit for "balancing the budget" - and gets it from the media.