Supply Side Economics Is Working.

[aceventura3]

YTD through May '06 tax reciepts to the federal government are up 12.9% over last year. The '05 increase over '04 was 15.5%.

The '06 deficit through May was $227 billion, down from $273 billion during the same period last year, even with spending being up $130 billion or 7.9%.

CBO (Congressional Budget Office) projects a total '06 deficit of $300 billion or about 2.1% of GDP.

At one point the '04 deficit was forcast at $521 billion, the actual came in at $412 billion. It fell to $318 billion in '05.

Those making over $200k/yr now pay 46.6% of total income taxes. That is up from 40.5%.

Corporate tax collections are up 30% from last years pace.

Now we need Washington to get spending under control and find a solution to Social Security and Medicare.

I would love to get the "spin" on these developments from those who thought the tax cuts would hurt the country, hurt the poor, hurt the middle class, and pass on massive national financial burdens on to our children.

[smooth]

I was going to dig through all the past posts about attributing macro-economic developments to particular administrations and specific actions...such as, whether the current tax cuts can really be noted as a causal factor in what you are citing above--but it's not particularly necessary to answer your questions at the end.

Primarily, two things are going on currrently: increased revenue and reduction in the deficit. But these two things are not necessarily connected, although they appear to be on the face of it.

Aside from the issue of how far back governmental action stimulates tax revenue (whether recent supply side policies did it, whether Clinton's policies did it, whether Bush former's policies did it, or if we should go all the way back to Reagan OR notwithstanding that the president has very little to do with the larger economic picture, in general, all of which have been claimed by one side of the aisle or another), this does not indicate whether such action is the cause of increased revenue or whether increasing collection tactics resulted in them.

That is, are tax revenues up because more money is flowing or because the IRS is doing a better job of netting it in. We don't know from the factoids presented in your piece.

Allowing that more money flowing is the cause, or significant factor, that says less about how the deficit is declining without producing hardships for middle/lower classes without looking at a broader picture...

For example, tuitions are sky high and increasing rapidly. Currently, the legislative bodies are marinading over a bill that would lock students into paying a relatively high loan rate. Whereas I locked much of my loans into an historically low rate of 3.5% through a consolidation process, this new bill would lock my current graduate student loans into a %8+ rate. That's not significant, it's massive. One could argue that it's crippling, especially when we consider who takes loans out for school--disproportionately the impoverished classes.

When the feds strip or reduce funding for schools, those with the least amount of money are hit the hardest, regardless of their desire to do right by themselves and become educated and give back to the societies they live within.

Next, we move on to services rendered. When the feds tighten their purse strings, the states and localities must a) pick up the slack by taxing their people more and/or b) reducing services. When we look at a place like California, that has a wide variety of social services funded via taxation, the immediate effect was to raise local and state taxes. The long-term effect has been to systematically strip/reduce funding from "non-essential" agencies and services as well as figure out ways to reduce funding even to the essential ones.

In the case of a place like Oregon, that doesn't have a variety of tax structures, particular things like property tax and for-use fees are raised. Things that some people don't care about, like camp site fees or hunting licenses, are raised along with more visible services--like firefighting, police, and DMV fees. These kinds of changes disproportionately affect classes of people who have relatively low levels of power, such as, elderly home owners, destitute "campers", and low-income people who rely on the police the most (who feel both the economic crunch of demand for more dollars and the policy implications of less patrols in the very areas that need them the most). And since schools depend on federal dollars and local funds, when the federal dollars go away a more wealthy community can afford to pick up that slack in a way that an impoverished community cannot.

One response has been that a number of services I've listed are not fundamental rights, nor obligations for a society to provide for its citizens. Whether one thinks another person has an ethical/moral/legal right to affordable housing or effective policiing is a subjective argument, not objective. It's based on ideological responses, much as my argument laid about above that such services may in fact be "essential" to one group and not another is ideological.

Cumulatively, however, these things present a serious problem for our society. While appearing to "save" money, reams of scientific evidence (empirical research, hard cold facts) indicate that the money we save on the front-end is pennies on the dollar to the money we spend at the back-end in the form of incarceration and crime within impoverished communities perpetrated by those who attended shoddy schools and are presented with bleak prospects in their futures.

This part of my argument is not subjective. The money we save now will have to paid in one form or another. The most prominent supply-side economic proponents don't take issue with my rendition of how this process can play out. That is, they recognize that some people are in yachts, some in boats, some in rubber rafts, and others in inner-tubes. Yet, their response is the entire tide is rising, so everyone benefits as a net result.

[aceventura3]

Originally Posted by smooth

Primarily, two things are going on currrently: increased revenue and reduction in the deficit. But these two things are not necessarily connected, although they appear to be on the face of it.

Two things determine deficit, equilibrium, or surplus spending: Income and expenses. The two are directly related. Looking at the current data, spending is up, income is up more, therefore deficit spending is lower. I don't understand how you can say the above.

Aside from the issue of how far back governmental action stimulates tax revenue (whether recent supply side policies did it, whether Clinton's policies did it, whether Bush former's policies did it, or if we should go all the way back to Reagan OR notwithstanding that the president has very little to do with the larger economic picture, in general, all of which have been claimed by one side of the aisle or another), this does not indicate whether such action is the cause of increased revenue or whether increasing collection tactics resulted in them.

I agree. I think Presidents get too much credit and too much blame. I primarily directed my question to people who strongly believed that Bush's economic policies are on the wrong track. I remember people blaming Bush for the short recession after his election. I would like them to re-visit their doom and gloom predictions.

That is, are tax revenues up because more money is flowing or because the IRS is doing a better job of netting it in. We don't know from the factoids presented in your piece.

I look at the data and I look at real world behaviors to draw my conclusions. To me it is obvious - if you lower tax rates, tax avoidance becomes less attractive. If my marginal tax rate is 110%, I do everything to avoid earning an additional taxable dollar. If my marginal tax rate is 50%, I do less to avoid earning that additional taxable dollar. If my marginal tax rate is 10%, I do almost nothing to avoid making that additional taxable dollar (annd I might work harder to make more taxable dollars since I get a 90% benefit).

The IRS is not doing a better job, at lower tax rates people hide less income, work harder to make more income, invest more and spend more - classic supply side economics. Clearly there is a point of diminishing returns from lowering tax rates, but we are not there yet.

Allowing that more money flowing is the cause, or significant factor, that says less about how the deficit is declining without producing hardships for middle/lower classes without looking at a broader picture...

We are not playing a zero sum game, where there has to be a winner and a loser. Historically our strong economy has been a benefit to everyone. But, we can look at your specific examples below.

For example, tuitions are sky high and increasing rapidly. Currently, the legislative bodies are marinading over a bill that would lock students into paying a relatively high loan rate. Whereas I locked much of my loans into an historically low rate of 3.5% through a consolidation process, this new bill would lock my current graduate student loans into a %8+ rate. That's not significant, it's massive. One could argue that it's crippling, especially when we consider who takes loans out for school--disproportionately the impoverished classes.

Government secured loans are not the only source of financing higher education. For example- I worked and went to a low tuition state school - I did not finance any of my education. Some can use home equity loans from thier parent's homes, savings, etc.
Also, more "impoverished" people have an opportunity for higher education than ever in our history. All motivated individuals have access to higher education, however, not everyone will get a "free" education. What is wrong with people paying the real cost of their education. The primary benefactor of higher education is the individual not society - in my opinion the individual should pay.

When the feds strip or reduce funding for schools, those with the least amount of money are hit the hardest, regardless of their desire to do right by themselves and become educated and give back to the societies they live within.

What is the percent of school funding comes from federal government? Could the school be run more effeciently? Why has there not been any productivity gains in higher education? Why are the costs going up faster than inflation? Some schools have billions in endowments and still get federal funds, why?

There are many complex issues with higher education. I think the level of federal funding is insignificant in regard to access.

Next, we move on to services rendered. When the feds tighten their purse strings, the states and localities must a) pick up the slack by taxing their people more and/or b) reducing services. When we look at a place like California, that has a wide variety of social services funded via taxation, the immediate effect was to raise local and state taxes. The long-term effect has been to systematically strip/reduce funding from "non-essential" agencies and services as well as figure out ways to reduce funding even to the essential ones.

I think it is more effecient for local services to be paid for from local funds. Also, local officials can be held more accountable than the big Washington bureacracy.

When you look at California ( my state), we have billions of more tax dollars going to Washington, than come back in the form of services.

I also think the Federal government has gotten involved in more areas than it should be in, like education.

In the case of a place like Oregon, that doesn't have a variety of tax structures, particular things like property tax and for-use fees are raised. Things that some people don't care about, like camp site fees or hunting licenses, are raised along with more visible services--like firefighting, police, and DMV fees. These kinds of changes disproportionately affect classes of people who have relatively low levels of power, such as, elderly home owners, destitute "campers", and low-income people who rely on the police the most (who feel both the economic crunch of demand for more dollars and the policy implications of less patrols in the very areas that need them the most). And since schools depend on federal dollars and local funds, when the federal dollars go away a more wealthy community can afford to pick up that slack in a way that an impoverished community cannot.

If we you your logic going to the extreme, why not have a single central government controling all activity, like a communist state.

I don't think people who don't camp should subsidize those who do. When someone goes camping they should pay for the services they recieve (park rangers, camp sites, rescue services, maint, etc.) to the degree that society benefits from green space I would agree that we should incur some kind of tax for that, but otherwise there should be no subsidy.

One response has been that a number of services I've listed are not fundamental rights, nor obligations for a society to provide for its citizens. Whether one thinks another person has an ethical/moral/legal right to affordable housing or effective policiing is a subjective argument, not objective. It's based on ideological responses, much as my argument laid about above that such services may in fact be "essential" to one group and not another is ideological.

I agree. As a society we have an obligation to care for the old, chidren and those mentally il.

Cumulatively, however, these things present a serious problem for our society. While appearing to "save" money, reams of scientific evidence (empirical research, hard cold facts) indicate that the money we save on the front-end is pennies on the dollar to the money we spend at the back-end in the form of incarceration and crime within impoverished communities perpetrated by those who attended shoddy schools and are presented with bleak prospects in their futures.

I think we have to look at history. Many of the things the federal government has assumed responsibility for, were handled in the past without government involvment. In my view government involvment does not always mean improvement.

The money we save now will have to paid in one form or another.

Not true. Let's say we simplify the tax code and eliminated the IRS and the need to spend billions on CPA's, tax software, H&R Block, and lost productivity filling out tax forms. That savings could be put to procuctive use or increase leisure. That's nothing but money saved.

[filtherton]

Dear Economics Enthusiast,

I am happy that you have found something economic to be excited about. It's great that you feel that your philosophy has born some fruit. I would be interested if you had any idea as to when your successful economic policy will actually translate to an increase in my quality of life or the quality of life in my community(I don't live near many investors). Currently i have less and less time to spend with my family because wage increases don't keep up with inflation. We don't have enough money to hire enough police officers and consequently violent crime has gone up recently in my area. The fire department could use more funding too, as could the dmv, the public schools, and my local department of transportation. I think my state colleges and universities could probably use some more money too, since tuition has gone up every year for the last decade. Any idea when your healthy economy might actually mean something significant to anyone who isn't an economist?

Sincerely,


The Average American

[aceventura3]

Originally Posted by filtherton

Dear Economics Enthusiast,

I am happy that you have found something economic to be excited about. It's great that you feel that your philosophy has born some fruit. I would be interested if you had any idea as to when your successful economic policy will actually translate to an increase in my quality of life or the quality of life in my community(I don't live near many investors). Currently i have less and less time to spend with my family because wage increases don't keep up with inflation. We don't have enough money to hire enough police officers and consequently violent crime has gone up recently in my area. The fire department could use more funding too, as could the dmv, the public schools, and my local department of transportation. I think my state colleges and universities could probably use some more money too, since tuition has gone up every year for the last decade. Any idea when your healthy economy might actually mean something significant to anyone who isn't an economist?

Sincerely,


The Average American

Dear Mr Average American:

How many cars do you have?
How many television sets?
What is the square footage of your residence?
How many hours a week do you work?
How much do you spend on TV?
How many times per week do you eat out?
How many computer devices do you have (PC's, Ipods, Xboxs, DVD players)?
Do you eat healthy foods? Get excercise?
How many prescription drugs do you take?
How much time or money do you donate to good causes?
How much do you save?
Do you vote? Ever run for an elected office?
Involved in the PTA?
How frequently do you read to your children? Go to the library?
Do you go to you city councel meetings? School board?
Have you taken time to enhance your work skills? Or, taken the time to learn something new?

I could go on and on with the questions.

Mr. Average American, if you actually chose to answer them or at least think about them, you will find that your life is not so bad. And on top of that, you will find that the things you complain about are in your control.

[filtherton]

Originally Posted by aceventura3

Dear Mr Average American:

How many cars do you have?
How many television sets?
What is the square footage of your residence?
How many hours a week do you work?
How much do you spend on TV?
How many times per week do you eat out?
How many computer devices do you have (PC's, Ipods, Xboxs, DVD players)?
Do you eat healthy foods? Get excercise?
How many prescription drugs do you take?
How much time or money do you donate to good causes?
How much do you save?
Do you vote? Ever run for an elected office?
Involved in the PTA?
How frequently do you read to your children? Go to the library?
Do you go to you city councel meetings? School board?
Have you taken time to enhance your work skills? Or, taken the time to learn something new?

I could go on and on with the questions.

Mr. Average American, if you actually chose to answer them or at least think about them, you will find that your life is not so bad. And on top of that, you will find that the things you complain about are in your control.

Nobody's life is that bad. If "Oh, your life isn't so bad" were sound economic policy we wouldn't have to come up with complicated ways to shrink the middle class such as "supply side economics". We could embrace socialism and our lives wouldn't be all that bad compared to the lives people wallowing in disease and famine in third world countries. All i'm wondering is when the economic "achievements" of late will actually start to mean anything significant to the majority of americans in an economic sense. Otherwise, i don't really feel like much has been achieved at all.

[aceventura3]

Originally Posted by filtherton

Nobody's life is that bad. If "Oh, your life isn't so bad" were sound economic policy we wouldn't have to come up with complicated ways to shrink the middle class such as "supply side economics". We could embrace socialism and our lives wouldn't be all that bad compared to the lives people wallowing in disease and famine in third world countries. All i'm wondering is when the economic "achievements" of late will actually start to mean anything significant to the majority of americans in an economic sense. Otherwise, i don't really feel like much has been achieved at all.

I think I get the "spin".

The middle class is shrinking, eventhough the American lifestyle is better than it has ever been.

People in the world are doing worse than we are and this is bad, eventhough we do what we can to provide economic aid and support to those countries (In some cases even when the leaders of those countries are corrupt and steal food from starving children).

The majority of Americans are not getting any benefit from economic achievements, eventhough the folks across the street just bought a brand new SUV that gets 10 miles to the gallon while they complain about the price of gas.

Thanks for helping me understand the way the other side thinks.

[filtherton]

Originally Posted by aceventura3

I think I get the "spin".

I actually don't think you do. You are the spin.

The middle class is shrinking, eventhough the American lifestyle is better than it has ever been.

What does the quality of the american lifestyle have to do with the size of the middle class? Do you have any indicators concerning the quality of the american lifestyle that actually apply directly to the quality of the american lifestyle or am i to believe that any of these:

YTD through May '06 tax reciepts to the federal government are up 12.9% over last year. The '05 increase over '04 was 15.5%.

The '06 deficit through May was $227 billion, down from $273 billion during the same period last year, even with spending being up $130 billion or 7.9%.

CBO (Congressional Budget Office) projects a total '06 deficit of $300 billion or about 2.1% of GDP.

At one point the '04 deficit was forcast at $521 billion, the actual came in at $412 billion. It fell to $318 billion in '05.

Those making over $200k/yr now pay 46.6% of total income taxes. That is up from 40.5%.

Corporate tax collections are up 30% from last years pace.

actually mean much of anything in terms of american quality of life.

People in the world are doing worse than we are and this is bad, eventhough we do what we can to provide economic aid and support to those countries (In some cases even when the leaders of those countries are corrupt and steal food from starving children).

Don't know where this is coming from. In post #5 you seemed to dismiss my position because my "life is not so bad." I then attempted to implicitly say that if the relative quality of life was the bar by which economic success is measured, then we wouldn't need supply side economics. We could just use any old economic system and then, regardless of the outcome, take comfort in the fact that compared to other countries our quality of life wouldn't be that bad. It's a flawed notion, i know, but you're the one who brought it up.

The majority of Americans are not getting any benefit from economic achievements, eventhough the folks across the street just bought a brand new SUV that gets 10 miles to the gallon while they complain about the price of gas.

So being able to take out a loan to buy an automobile is now a sign of a glowing economy?

Thanks for helping me understand the way the other side thinks.

But you don't understand how the other side thinks because i speak for myself and myself alone.


Your problem is that you're completely myopic when it comes to relevant economic indicators. I already knew this about the "other side".

[aceventura3]

Originally Posted by filtherton

I actually don't think you do. You are the spin.



What does the quality of the american lifestyle have to do with the size of the middle class? Do you have any indicators concerning the quality of the american lifestyle that actually apply directly to the quality of the american lifestyle or am i to believe that any of these:



actually mean much of anything in terms of american quality of life.



Don't know where this is coming from. In post #5 you seemed to dismiss my position because my "life is not so bad." I then attempted to implicitly say that if the relative quality of life was the bar by which economic success is measured, then we wouldn't need supply side economics. We could just use any old economic system and then, regardless of the outcome, take comfort in the fact that compared to other countries our quality of life wouldn't be that bad. It's a flawed notion, i know, but you're the one who brought it up.



So being able to take out a loan to buy an automobile is now a sign of a glowing economy?



But you don't understand how the other side thinks because i speak for myself and myself alone.


Your problem is that you're completely myopic when it comes to relevant economic indicators. I already knew this about the "other side".

Personal attacks, how creative.

Perhaps you are correct and I don't understand the "spin". I present facts in the OP, you present a letter from "The Average American", I respond to "The Average American", and now you speak for yourself and your self alone. Yes, this is difficult for my "myoptic" mind. Or, maybe rather than being "myotic", I simply live on the sunny side of the street.

[filtherton]

Originally Posted by aceventura3

Personal attacks, how creative.

Where? I didn't do anything you didn't implicitly do yourself.

Perhaps you are correct and I don't understand the "spin". I present facts in the OP, you present a letter from "The Average American", I respond to "The Average American", and now you speak for yourself and your self alone. Yes, this is difficult for my "myoptic" mind. Or, maybe rather than being "myotic", I simply live on the sunny side of the street.

I'm sorry. The letter wasn't actually from the average american. It was actually from me. It was kinda like a way for me to say something general. You would be correct to assume that i was speaking only from my perspective and not this "other side" that you mentioned.

I'm confused. At first you simply put me in the "other side" category, which apparently you did as a response to me claiming to speak on behalf of the average american. Does this mean you see the average american as having a perspective counter to yours? What exactly did you mean by "the other side"?

Why the trouble with the word myopic? It means shortsighted. As in "Relying on economic indicators that are many times removed from any kind of relevance to the vast majority of americans as proof of the well-being of the vast majority of americans is short-sighted."

I don't live on the sunny side of the street when it comes to economic theory. I have as much faith in economists as i do in pat robertson's ability to divine the intentions of jesus christ. I don't think supply side economics are working because i don't see any actual proof that very many people are better off because of supply side economics.

[aceventura3]

Originally Posted by filtherton

Where? I didn't do anything you didn't implicitly do yourself.

Not that important to me. "The otherside" refers to people who think supply side economics doesn't work or is harmful.

I don't mean to imply my disagreement - I openly disagree with those who don't share my views on real economic trends. If my disagreement or tone is offensive - I can't help it. Its my nature to have "bite" in the way I communicate.

I'm sorry. The letter wasn't actually from the average american. It was actually from me. It was kinda like a way for me to say something general. You would be correct to assume that i was speaking only from my perspective and not this "other side" that you mentioned.

Don't be sorry. I enjoyed the letter and your point of view as illstrated in the letter. I sincerly thought the letter was creative. I did not understand how you have that point of view, but that is what I am looking for. I want to better understand how good news is viewed as bad news. I want to understand how when economic issues complained about, when the economic issues then turn positive, how people fail to acknowledge the positive.

I'm confused. At first you simply put me in the "other side" category, which apparently you did as a response to me claiming to speak on behalf of the average american. Does this mean you see the average american as having a perspective counter to yours? What exactly did you mean by "the other side"?

On one hand we have strong economic growth, virtual full employment, low inflation, highest home ownership rates in history, low crime rates, more poor going to college than ever before, more material goods than ever in history, more home equity than ever, more people invested in corporations than ever - yet people only focus on bad news. So, yes if the average American fails to see the positives, their views are counter to mine. And I would argue their views are wrong.

However, if you get enough people thinking bad things are going to happen in the economy, bad things will happen. On a selfish note, I need to understand this way of thinking and anticipate trends to avoid getting burned. For example if there is no "housing bubble" but everyone thinks there is one, eventually the market will crash simply because of attitudes. If I can sell and buy at the right time, I can build financial security. You could too.

Why the trouble with the word myopic? It means shortsighted. As in "Relying on economic indicators that are many times removed from any kind of relevance to the vast majority of americans as proof of the well-being of the vast majority of americans is short-sighted."

If we look at homeownership statistics that is not removed from reality. If we look at new car sales that is not removed from reality. If people are buying homes and cars, things can't really be that bad.

Also think about SUV sales and gas prices. Why are SUV's still being sold if gas prices are soooo bad? I would bet you know someone who purchased one in the last 6 months. I know i have. There are hundreds of contradictions like this that make no sense to me.

No proble with the word myoptic. I do get defensive when someone starts with "Your problem is...", i got problems - but only my wife knows what they are.

I don't live on the sunny side of the street when it comes to economic theory. I have as much faith in economists as i do in pat robertson's ability to divine the intentions of jesus christ. I don't think supply side economics are working because i don't see any actual proof that very many people are better off because of supply side economics.

The sunny side of the street refers to a positive outlook. Even when I was a kid and the few times my mom sent me to the store with food stamps, becuase my dad was laidoff or on strike, I had a positive outlook.

I don;t have faith in economists either. I look at raw data and come to my own conclusions. I conclude supply side works.

[filtherton]

Well, my thing is that though it may seem like good news to you, it doesn't amount to a whole heckuva lot because things are still getting worse. Crime, arguably a relevant economic indicator, is going up. In my area this is due to the "starve the beast" policies of our supply side minded governer. Police funding is such that the police don't even really patrol anymore. They just move from one call to the next. Libraries are closing down. The costs of a higher education are constantly increasing, also due to funding cuts indirectly related to supply side philosophy. Nationally wages aren't keeping up with inflation. Locally, the largest decreases in unemployment come from people deciding that they aren't going to seek employment anymore. I hear about the "good news" and it doesn't really seem all that significant to me.

I guess it also depends on what you mean by "working" when you say supply side economics is working. I think that in a very general sense our economy works, but that there are a great many people for whom it does very little. Their are plenty of things that our economy is horrible at and until we find a way to deal with these things i'll be hard-pressed to concede that the economic plan du jour, whatever it happens to be, is successful.

[SteelyLoins]

Originally Posted by aceventura3

I also think the Federal government has gotten involved in more areas than it should be in, like education.


I think we have to look at history. Many of the things the federal government has assumed responsibility for, were handled in the past without government involvment. In my view government involvment does not always mean improvement.

I assume you wrote this BEFORE seeing that FEMA, at the urging of politicians fretting over their re-election prospects, gave away over a BILLION dollars to fraudsters. For, among other things, tattoos, a sex change, a $200 bottle of Dom Perignon at Hooters, bail, and $150 worth of products at Condoms To Go.

Points I think can not be seriously argued re the above:

1. It was the urging of our elected officials that created the mad rush to throw money around, not the incompetency of FEMA.
2. If elected officials did not think they had the right to redistribute wealth, such fiascos would be rare to nonexistent.
3. Whenever a government giveaway program exists, fraud such as this will occur again.

Originally Posted by aceventura3

Personal attacks, how creative.

Perhaps you are correct and I don't understand the "spin". I present facts in the OP, you present a letter from "The Average American", I respond to "The Average American", and now you speak for yourself and your self alone. Yes, this is difficult for my "myoptic" mind. Or, maybe rather than being "myotic", I simply live on the sunny side of the street.

I believe the person you are responding to is somewhere between the ages of 20 and 22. It is hard for me to subscribe to his philosophy, i.e. by now, other people's money should have provided much loftier circumstances than he presently enjoys.

I realize that my response involves personal information; it will be interesting to see if it is regarded as a personal attack, when the statements you referenced were not.

[ASU2003]

I wouldn't say everything is great yet.

The savings rate is negative, and most Americans have some credit card debt. But this isn't the governments fault, it is people want to keep up with people around them. There is a lot of stocks being bought on margin right now as well. We are addicted on borrowing money and hoping that everything will work out in the end. It has for the past 40 years, but we never hear about how many people lose their jobs and have to foreclose on their homes (or get bought out at 50% before it goes to the bank).

There are a lot of people who have lost money in their homes now. Some people bought them at the high, and would owe tens of thousands of dollars if they couldn't sell it at the same price. And people can't easily buy and sell houses they need to live in.

Our government might not be running as big of deficits, but our national debt isn't getting any smaller. And that accounts for 15% of the taxes we pay.

What other type of economic theory is there that doesn't work?

There is some need for government regulations. Look at Mexico and India as examples of what happens when there is little regulation. People might say, car manufactures will ensure that they sell the safest car, because consumers won't buy one that isn't safe. But why would any car maker add in safety features, if the Wal-Mart of the auto industry came out with a $4,000 car that was unsafe, but had extremely high sales. If the big auto makers thought that is what the market wanted, would they produce that car and save a ton of money? Or would government regulations protect the consumer from it's own stupidity?

Why do any of the fast food restaurants need to switch cooking oils in the US like they have in other countries? The consumer wants food at the lowest price, regardless if it will result in gaining weight and having massive health bills later in life. I have very few choices if I want to get healthy fast food right now. But, the government can step in and say raise the prices .25 cents, but use the better cooking oil.

[aceventura3]

Originally Posted by filtherton

Crime, arguably a relevant economic indicator, is going up. In my area this is due to the "starve the beast" policies of our supply side minded governer. Police funding is such that the police don't even really patrol anymore. They just move from one call to the next. Libraries are closing down. The costs of a higher education are constantly increasing, also due to funding cuts indirectly related to supply side philosophy. Nationally wages aren't keeping up with inflation. Locally, the largest decreases in unemployment come from people deciding that they aren't going to seek employment anymore. I hear about the "good news" and it doesn't really seem all that significant to me.

Police funding is mostly local

Library funding is mostly local

Higher Education is mostly State funded, costs are increasing due to waste and ineffeciency.

Employment statistics don't take into account people who choose to work in the underground economy, and the statistics are inadequate in measuring people choosing business ownership or becoming independent contractors.

Crime is generally down, it depends on time periods measured. Crime rates are more closely connected to the illegal drug culture not the economy.

Originally Posted by ASU2003

I wouldn't say everything is great yet.

Nor would I.

The savings rate is negative, and most Americans have some credit card debt. But this isn't the governments fault, it is people want to keep up with people around them.

Savings statistics often fail to account for home equity and the value of pensions. I generally agree Americans need to save more.

... but we never hear about how many people lose their jobs and have to foreclose on their homes (or get bought out at 50% before it goes to the bank).

We don't hear about it much because it doesn't happen much. I read some where a while ago the forclosure rate was less than 1%. Even if today its 2%, that is nothing to worry about, unless you are in that 2%.

There are a lot of people who have lost money in their homes now. Some people bought them at the high, and would owe tens of thousands of dollars if they couldn't sell it at the same price. And people can't easily buy and sell houses they need to live in.

There is a long post on the housing bubble that argues the point above.

I don't agree that a lot of people have lost money on their homes. In my view loss or gain is only measured when you sell. If a person has negative equity in a home they will live in for a long time, the short-term negative equity is meaningless.

Our government might not be running as big of deficits, but our national debt isn't getting any smaller. And that accounts for 15% of the taxes we pay.

I agree. We need to reduce spending. However, the national debt as a percentage of GDP is in-line with historical averages.

What other type of economic theory is there that doesn't work?

I used to think Keynesian Economics was the best way to manage national economies. I don't think it works longterm. In the end you have big government and a lot of inefficiencies.

There is some need for government regulations. Look at Mexico and India as examples of what happens when there is little regulation. People might say, car manufactures will ensure that they sell the safest car, because consumers won't buy one that isn't safe. But why would any car maker add in safety features, if the Wal-Mart of the auto industry came out with a $4,000 car that was unsafe, but had extremely high sales. If the big auto makers thought that is what the market wanted, would they produce that car and save a ton of money? Or would government regulations protect the consumer from it's own stupidity?

I generally agree. There is a fine line between the correct amount of regulation and over-regulation.

Why do any of the fast food restaurants need to switch cooking oils in the US like they have in other countries? The consumer wants food at the lowest price, regardless if it will result in gaining weight and having massive health bills later in life. I have very few choices if I want to get healthy fast food right now. But, the government can step in and say raise the prices .25 cents, but use the better cooking oil.

The best fries are cooked in lard. Healthy minded people should eat baked potatoes. Government need to stay out of the kitchen.

[filtherton]

Originally Posted by SteelyLoins

Points I think can not be seriously argued re the above:

1. It was the urging of our elected officials that created the mad rush to throw money around, not the incompetency of FEMA.

Probably.

2. If elected officials did not think they had the right to redistribute wealth, such fiascos would be rare to nonexistent.

Perhaps, but they do have the right to redistribute wealth.

3. Whenever a government giveaway program exists, fraud such as this will occur again.

3a. The extent of the fraud will be repeatedly overstated by ideological opponents of social safety nets.

I believe the person you are responding to is somewhere between the ages of 20 and 22. It is hard for me to subscribe to his philosophy, i.e. by now, other people's money should have provided much loftier circumstances than he presently enjoys.

What kind of circumstances do i currently enjoy?

I realize that my response involves personal information; it will be interesting to see if it is regarded as a personal attack, when the statements you referenced were not.

It's hard for me to take things personally when you don't even know me.

Originally Posted by aceventura3

Police funding is mostly local

Library funding is mostly local

Higher Education is mostly State funded, costs are increasing due to waste and ineffeciency.

All of these things are at least indirectly related to funds handed out by the federal government. Even if they weren't, supply side economics as a philosophy doesn't solely exist on a national scale. It is quite in vogue amongst the local republicans in my state.

Waste and inneficiency certainly do exist. But to look at the way higher education has been funded, at least in my home state, for the past decade and then to claim that costs are increasing due solely to waste and ineffeciency is silly.

Employment statistics don't take into account people who choose to work in the underground economy, and the statistics are inadequate in measuring people choosing business ownership or becoming independent contractors.

Suddenly you're more discriminating about the economic information on which you base your decisions. Look, all of the statistics you quoted in the original post have their flaws too. All economic indicators are flawed; none of them give you a complete picture.

Crime is generally down, it depends on time periods measured. Crime rates are more closely connected to the illegal drug culture not the economy.

Crime is most definitely not generally down. At least not where i live. Crime rates are more closely connected to the illegal drug culture not the economy? I'd be very be interested to see your methods for quantifying illegal drug culture in terms of its effects on crime.

It isn't the economy directly effecting crime that is the problem in my city. It's the "starve the beast" philosophy, held by SSE proponents among others, that ultimately results in an underfunded police force.

[aceventura3]

Originally Posted by filtherton

Waste and inneficiency certainly do exist. But to look at the way higher education has been funded, at least in my home state, for the past decade and then to claim that costs are increasing due solely to waste and ineffeciency is silly.

The Feds don't control the costs. Increasing costs is attributed to those who run the schools. If the complaint is that the Feds are cutting support thats one thing, if costs are going up thats another. I think a reason costs go up is because universities know they have a "sugar daddy", or the federal government to make it affordable for the average person. The schools have had no incentive to improve and cut costs. Perhaps this is a good topic for a new thread.

Suddenly you're more discriminating about the economic information on which you base your decisions. Look, all of the statistics you quoted in the original post have their flaws too. All economic indicators are flawed; none of them give you a complete picture.

Here is how it works:

I present facts supporting my point of view.
You challenge those facts or present facts supporting the opposing point of view.
I support my position with more facts or defend my original facts.
Etc
Etc.
Until you conceed to my point of view.

Crime is most definitely not generally down. At least not where i live. Crime rates are more closely connected to the illegal drug culture not the economy? I'd be very be interested to see your methods for quantifying illegal drug culture in terms of its effects on crime.

It is common knowledge that the prisons are filled with people who have commited drug related crimes. Check out this site: http://www.ojp.usdoj.gov/bjs/ It is the Bureau of Justice Statistics. Look at the long-term trends.

Also just think about it. When a UAW worker gets laid off, he doesn't start stealing cars. A drug addict steals cars to get money for drugs. With the exception of postal workers, people don't generally kill co-workers for more money, a promotion or a job, but a drug dealer will kill another drug dealer to control a drug territory to make more money.

It isn't the economy directly effecting crime that is the problem in my city. It's the "starve the beast" philosophy, held by SSE proponents among others, that ultimately results in an underfunded police force.

What was the crime rate during the Great Depression in your city compared to today. After you look come back and tell me if you still think crime is mostly correlated to the economy.

[filtherton]

Originally Posted by aceventura3

The Feds don't control the costs. Increasing costs is attributed to those who run the schools. If the complaint is that the Feds are cutting support thats one thing, if costs are going up thats another. I think a reason costs go up is because universities know they have a "sugar daddy", or the federal government to make it affordable for the average person. The schools have had no incentive to improve and cut costs. Perhaps this is a good topic for a new thread.

Well, increasing costs could also be associated with inflation, and when funding doesn't keep up with inflation, which is the case where i live, tuition increases are inevitable. I agree that some sugar daddy-ish action goes on, but i don't think it is the sole reason behind tuition increases.

Here is how it works:

I present facts supporting my point of view.
You challenge those facts or present facts supporting the opposing point of view.
I support my position with more facts or defend my original facts.
Etc
Etc.
Until you conceed to my point of view.

Okay, here we go. The original premise of the thread is that SSE is working. Well, what does that mean exactly? I already said clear as day why i don't think SSE is working very well on a micro level. Maybe you could tell me why it is working on a micro level(besides the ability of people to get deeper into debt through financing for houses and cars), because i look around and i don't see an economy that is necessarily "working" in the greatest possible sense.

It is common knowledge that the prisons are filled with people who have commited drug related crimes. Check out this site: http://www.ojp.usdoj.gov/bjs/ It is the Bureau of Justice Statistics. Look at the long-term trends.

Also just think about it. When a UAW worker gets laid off, he doesn't start stealing cars. A drug addict steals cars to get money for drugs. With the exception of postal workers, people don't generally kill co-workers for more money, a promotion or a job, but a drug dealer will kill another drug dealer to control a drug territory to make more money.

According to http://www.ojp.usdoj.gov/bjs/dcf/duc.htm

"In 2002 about a quarter of convicted property and drug offenders had committed their crimes to get money for drugs, compared to 5% of violent and public order offenders.

In 2004 of the 14,121 homocides 3.9% were drug related."

Nationally, violent crime is up:
http://www.boston.com/news/nation/wa...s_spike_in_us/

Why for?
"The jump could also represent a lingering effect of the Sept. 11 2001, attacks, some experts said, because governments at all levels have diverted resources away from traditional crime fighting in favor of antiterrorism and homeland security programs."

As i said before, in my state money has been diverted from traditional crime fighting directly as a result of 9/11 and indirectly as a result of the SSE philosophies of the current party in power.

The stats above would seem to imply that most of the increases in violent crime aren't, in fact, due to "illegal drug culture". Some of the increase is no doubt due to increased gang activity. Increased gang activity has a lot to do with a general lack of money available to give potential gang members something more productive to do. The lack of money is a direct result of budget cuts that were a direct result of SSE endorsed tax maneuvering.

What was the crime rate during the Great Depression in your city compared to today. After you look come back and tell me if you still think crime is mostly correlated to the economy.

Let me quote myself with certain key parts bolded.

It isn't the economy directly effecting crime that is the problem in my city. It's the "starve the beast" philosophy held by SSE proponents, among others, that ultimately results in an underfunded police force.

I don't think SSE works because it takes funds that have the potential to do a great deal of good and it puts them in the hands of people who aren't necessarily inclined to do anything to help their fellow human being. Shit, if they're good capitalists they won't do anything to help their fellow human being.

[aceventura3]

Originally Posted by filtherton

Well, increasing costs could also be associated with inflation, and when funding doesn't keep up with inflation, which is the case where i live, tuition increases are inevitable. I agree that some sugar daddy-ish action goes on, but i don't think it is the sole reason behind tuition increases.

Increasing costs can be off-set by funding increases or (really really big or) increases in effeciency and increases in productivity. Example if the costs of professors increases, you can use less of that resource and still teach more students. Most other industries do this all the time, especially with today's technology. Why not more virtual classrooms/video conference learning/IPOD lectures/books on tape, anything. One professor could teach a million students. why don't they move into the 21st century?????

Okay, here we go. The original premise of the thread is that SSE is working. Well, what does that mean exactly? I already said clear as day why i don't think SSE is working very well on a micro level. Maybe you could tell me why it is working on a micro level(besides the ability of people to get deeper into debt through financing for houses and cars), because i look around and i don't see an economy that is necessarily "working" in the greatest possible sense.

O.k. I give.

You da the man! You outlasted me.

<font size=4>SSE doesn't work, <font size = 1> on a micro level, for you.

<font size=3>

According to http://www.ojp.usdoj.gov/bjs/dcf/duc.htm

"In 2002 about a quarter of convicted property and drug offenders had committed their crimes to get money for drugs, compared to 5% of violent and public order offenders.

In 2004 of the 14,121 homocides 3.9% were drug related."

Nationally, violent crime is up:

<font size=2>The data I saw showed violent crime peaked in 1993 and property crime peaked in 1973. Drug arrests are trending up and at the peak in 2004.

This seems like it could be a topic on its own.

I will end the issue with two rhetorical questions:

Who will do a betteer job spending your money - Government or you?
If you wanted more/better local police protection who would better address that need - Washington or your local government?

[ASU2003]

Originally Posted by aceventura3

The best fries are cooked in lard. Healthy minded people should eat baked potatoes. Government need to stay out of the kitchen.

This is a small example of where a free market kind of works, but kind of doesn't work.

Let's say a minority (20%) of buyers of fast food french fries would choose the healthy restaurant, if given the option. The big fast food companies don't want to change and buy a second machine to offer both varieties, because that takes up space and money. There is also the risk that people won't like the new style of fries (although they have implemented test stores and it has worked out). In a perfect market, a small company would start up and offer the healthy fries, but a fast food store won't get very far just selling fries.

The scientists and health industry comes in and says that 90% of people should be eating the healthy fries. It will reduce obesity, heart disease, and a bunch of other good things. The consumers want to pay 99 cents still, and might even not buy healthy fries at all. The businesses don't want to take the risk and like the stability and known profits of the current method.

I think that the government should protect the consumers and keep them safe from harm, when corporations don't want to change or allow greed to take over and not do what is in the best interest for society.

[filtherton]

Originally Posted by aceventura3

O.k. I give.

You da the man! You outlasted me.

That's too bad. I was really hoping someone of your philosophy could tell what it actually means when you claim that the economy is "working".

So much for
"I present facts supporting my point of view.
You challenge those facts or present facts supporting the opposing point of view.
I support my position with more facts or defend my original facts.
Etc
Etc.
Until you conceed to my point of view."

Who will do a betteer job spending your money - Government or you?
If you wanted more/better local police protection who would better address that need - Washington or your local government?

As i was saying above, neither. My local government has embraced the tax cutting philosophy of supply side economics with little regard to the way the resulting lack of funds will ultimately effect their ability to provide an effective police force. Which sucks. Especially since they did manage to find space in our pocketbooks to fund two new stadiums, but i suppose there's a certain supply side econ aspect to that little deal too.

[hiredgun]

Originally Posted by aceventura3

Those making over $200k/yr now pay 46.6% of total income taxes. That is up from 40.5%.

Um, doesn't that just signify increased economic inequality?

[hannukah harry]

Originally Posted by hiredgun

Um, doesn't that just signify increased economic inequality?

especially considering they're paying less taxes (%) then they used to be...

[kutulu]

Originally Posted by hiredgun

Um, doesn't that just signify increased economic inequality?

Not anymore than the fact that there are people who work just as hard for 5% of that.

[reconmike]

Originally Posted by aceventura3

Dear Mr Average American:

How many cars do you have?
How many television sets?
What is the square footage of your residence?
How many hours a week do you work?
How much do you spend on TV?
How many times per week do you eat out?
How many computer devices do you have (PC's, Ipods, Xboxs, DVD players)?
Do you eat healthy foods? Get excercise?
How many prescription drugs do you take?
How much time or money do you donate to good causes?
How much do you save?
Do you vote? Ever run for an elected office?
Involved in the PTA?
How frequently do you read to your children? Go to the library?
Do you go to you city councel meetings? School board?
Have you taken time to enhance your work skills? Or, taken the time to learn something new?

I could go on and on with the questions.

Mr. Average American, if you actually chose to answer them or at least think about them, you will find that your life is not so bad. And on top of that, you will find that the things you complain about are in your control.

Sure I'll bite,

Cars we own 5 for 2 people,
tv's 6
3800 sq foot 100 yr old farm house
45 hours a week working, plus a retirement pension from the Marine Corps
eat out 2-3 times a week
6 computers 2 ps2's and a xbox
work out eat reasonable
0 meds
donate time as a head football coach for a 11-12 yr old pop warner team
vote yes, run, no friggen way
read to kids, often includes library trips.

My life is fine, I am doing better than expected at this point in my life, everyone in my family is healthy.
Dam its good to be an American, or should I say its good not to be a lazy american.

[aceventura3]

Originally Posted by ASU2003

I think that the government should protect the consumers and keep them safe from harm, when corporations don't want to change or allow greed to take over and not do what is in the best interest for society.

Government intrusion into personal choice could get very dangerous real fast using the above as an example.

Who is best able to determine how consumers need to be protected?

Do you take away my 330 hp car?
Do you stop me from moutain biking?
Do you stop me from pecan pie - made with a touch of Jack Daniel's and topped with a warm dark chocolate sauce?
Do you take my collection of adult erotic art?

All in the name of my protection.

I guess I would want to be on that committee. I would protect what I like, and to prevent you from the things that you like that are "harmful".

Originally Posted by hiredgun

Um, doesn't that just signify increased economic inequality?

Yes.

Life isn't fair.

Life will never be fair.

You can either make the most of your situation or make things worse by doing nothing.

Originally Posted by filtherton

That's too bad. I was really hoping someone of your philosophy could tell what it actually means when you claim that the economy is "working".

So much for
"I present facts supporting my point of view.
You challenge those facts or present facts supporting the opposing point of view.
I support my position with more facts or defend my original facts.
Etc
Etc.
Until you conceed to my point of view."



As i was saying above, neither. My local government has embraced the tax cutting philosophy of supply side economics with little regard to the way the resulting lack of funds will ultimately effect their ability to provide an effective police force. Which sucks. Especially since they did manage to find space in our pocketbooks to fund two new stadiums, but i suppose there's a certain supply side econ aspect to that little deal too.

I just don't know where to go with the discussion with you. You seem to ignore data that contradicts your point of view. Example: More people own homes than ever in our history. That is a macro statistic that translates to millions of individuals (micro) enjoying the security of homeownership. More people have access to higher education than ever (macro) that translates to individuals (micro) enjoy greater career and income success. I personally know lots of people who have gone from nothing to graduating/getting good jobs/getting promotions/buying homes/enjoying life etc. Even the guy who handles the towels at my gym is saving money and talking about buying a home.

[Nimetic]

Nicely put.

You didn't mention though that all those people in prisons and in security jobs help bring down jobless figures. I'd be curious re the actual net effect - it's something that was mentioned once here by an Aust economist (bullshit or not, I don't know).

One other thing about public education and community services generally, is that I think they do reinforce the "contract" between an individual and the society. If I hadn't ever received a (mainly) state funded education or benefits - personally I'd feel a lot freer morally, to commit crime if I fell on hard times.

[Yakk]

Don't be silly. The US Debt has gone down over Bush's tenure.

The value of the US dollar has dropped by about 33% since early in Bush's office. (compared against the Euro, CND, Oil, and (I suspect) many other currencies.)

The debt was about 5.5 trillion dollars at that time. While it is now about 8 trillion dollars, given the collapse of the US currency, this is only worth 5.3 trillion dollars in constant hard currency value.

Bush has cut taxes, increased spending, and reduced the size of the debt when measured by a hard currency.

US GNP is currently about 13 trillion dollars -- or 8.7 trillion in hard-currency 2000 values. In 2000, US GNP was about 10.5 trillion. That means the US only has to become 20% richer to recover to 2000 values of wealth, measured in hard currency.

On the plus side, measured at hard-currency values, the income of most of the lower classes in the USA has plummetted. So the lower total GNP doesn't reduce the number of lower class servants and domestic workers the upper class Americans can hire for an hours wages. In addition, cheaper labour for the production of imported luxuries for the upper class can be purchased in other nations. So the standard of living of the upper classes isn't really impacted by this massive drop in the real GNP of the USA.

Note that while a 20% drop in GNP over 6 years seems like alot, note that it would take 150 to 200 years for the US GNP to fall below current North Korean GDP. And given that North Korea, and other nations with similar economic power, are currently the #1 threat to the USA, it will take a long time before economic shrinkage at this rate will prevent the USA from defending itself from it's military enemies. So don't worry about the defence implications.

[filtherton]

Originally Posted by aceventura3

I just don't know where to go with the discussion with you. You seem to ignore data that contradicts your point of view. Example: More people own homes than ever in our history. That is a macro statistic that translates to millions of individuals (micro) enjoying the security of homeownership. More people have access to higher education than ever (macro) that translates to individuals (micro) enjoy greater career and income success. I personally know lots of people who have gone from nothing to graduating/getting good jobs/getting promotions/buying homes/enjoying life etc. Even the guy who handles the towels at my gym is saving money and talking about buying a home.

So your saying that all this is the result of SSE? You expect me to just believe you? Why is SSE even relevant? Didn't that sweet little economic boom of the 90's follow a tax increase?

I would argue that all the stats you opened the thread merely support the idea that those who already have bunches of money, rich folk and businesses, are making more money. That's great for them. That's what SSE is all about; giving people with a lot of money even more money because they might at some point have an interest in letting the little guy have some, maybe. How does the saying go? "If you feed the horse enough oats, eventually the crows will be able to pick some oats out of its shit"? It was probably more eloquent in its original form. This is actually a very apt analogy. The horse extracts every last little bit of nutrition from the oats. Digests them. The horse benefits as much as it possibly can. The crows are left to pick whatever nuggets of nourishment they can find off of the horse's waste. Sounds great if you're a horse, or if you fancy yourself a horse in the future. I bet you fancy yourself a horse, ace. It's hard to embrace a philosophy that has you picking through someone else's shit to get by. It does lend itself well to delusions of capitalist grandeur a la ayn rand, though.

According to your stats, the well off are getting weller offer. Very good. SSE must be working. But wait, how do tax cuts for the wealthy translate to more money for the wealthy? That's one place you lost me.

Even if you were to ignore the costs associated with implementing SSE policies, you know, like cutting funding for services like the police, the fire department, your local department of transportation, etc, i still don't think that you really have any kind of justification for SSE based on notions of what's good for the little guy.

I think claiming that those stats are due to SSE is wrong. Your attribution of the abovementioned statistics to SSE assume that SSE is actually a relevant economic force. How could it be? How could giving more money to people who already have an overabundance of money somehow result in a brighter economy?

If you really wanted to use tax cuts to help the economy, you'd drasticly cut the taxes of people(small businesses too) who would then use that extra money to directly contribute to the health of the economy through consumer spending, not the people who already have the money to get whatever the hell they want.

What really happens with SSE is that the people who already have a lot of money pay less taxes. However they spend that money might at some point have some sort of positive effect on something relevant to the economy, but perhaps not.

It seems more likely to me that the capitalist class are getting richer because of increased consumer spending? Isn't most of our economic vitality due to consumer spending? Couldn't your stats be due to increased consumer spending? You said it yourself. More and more people are able to get financing for a house and a car and some furniture and a nice vacation and a pool and a higher education etc. People are spending more. This doesn't actually meant that they're making more. It just means that they're getting more into debt. It also means that bankruptcy is now perpetually on the rise. Woohooo.

[aceventura3]

Originally Posted by filtherton

So your saying that all this is the result of SSE? You expect me to just believe you? Why is SSE even relevant? Didn't that sweet little economic boom of the 90's follow a tax increase?

I would argue that all the stats you opened the thread merely support the idea that those who already have bunches of money, rich folk and businesses, are making more money. That's great for them. That's what SSE is all about; giving people with a lot of money even more money because they might at some point have an interest in letting the little guy have some, maybe. How does the saying go? "If you feed the horse enough oats, eventually the crows will be able to pick some oats out of its shit"? It was probably more eloquent in its original form. This is actually a very apt analogy. The horse extracts every last little bit of nutrition from the oats. Digests them. The horse benefits as much as it possibly can. The crows are left to pick whatever nuggets of nourishment they can find off of the horse's waste. Sounds great if you're a horse, or if you fancy yourself a horse in the future. I bet you fancy yourself a horse, ace. It's hard to embrace a philosophy that has you picking through someone else's shit to get by. It does lend itself well to delusions of capitalist grandeur a la ayn rand, though.

According to your stats, the well off are getting weller offer. Very good. SSE must be working. But wait, how do tax cuts for the wealthy translate to more money for the wealthy? That's one place you lost me.

Even if you were to ignore the costs associated with implementing SSE policies, you know, like cutting funding for services like the police, the fire department, your local department of transportation, etc, i still don't think that you really have any kind of justification for SSE based on notions of what's good for the little guy.

I think claiming that those stats are due to SSE is wrong. Your attribution of the abovementioned statistics to SSE assume that SSE is actually a relevant economic force. How could it be? How could giving more money to people who already have an overabundance of money somehow result in a brighter economy?

If you really wanted to use tax cuts to help the economy, you'd drasticly cut the taxes of people(small businesses too) who would then use that extra money to directly contribute to the health of the economy through consumer spending, not the people who already have the money to get whatever the hell they want.

What really happens with SSE is that the people who already have a lot of money pay less taxes. However they spend that money might at some point have some sort of positive effect on something relevant to the economy, but perhaps not.

It seems more likely to me that the capitalist class are getting richer because of increased consumer spending? Isn't most of our economic vitality due to consumer spending? Couldn't your stats be due to increased consumer spending? You said it yourself. More and more people are able to get financing for a house and a car and some furniture and a nice vacation and a pool and a higher education etc. People are spending more. This doesn't actually meant that they're making more. It just means that they're getting more into debt. It also means that bankruptcy is now perpetually on the rise. Woohooo.

The main point is that our most recent tax cuts did not result in lower federal tax dollars collected, tax dollars collected went up. I also argue that tax cuts help economic growth. In a growing economy the "rich" do get "richer". I also believe that generally all people who productively participate in the economy benefits. There are exceptions, but generally everyone is better off.

We have gone off on a few tangents, but if focused on the core issue, I would agree that there are many variables that drive the economy and affect the tax dollars collected by the federal government. We could clearly debate that one issue alone.

I think the most recent tax cuts lead directly to increased total tax dollars collected, others could argue that other factors lead to increased tax dollars collected. You kind of touch on that in your post above. However, if you visit Clinton's economic plan as he presented it, he says he lowered taxes in the 90's. I think he added layers of complexity. I think complex tax laws benefit smart people, i.e. "the rich".

[host]

Originally Posted by aceventura3

YTD through May '06 tax reciepts to the federal government are up 12.9% over last year. The '05 increase over '04 was 15.5%.

The '06 deficit through May was $227 billion, down from $273 billion during the same period last year, even with spending being up $130 billion or 7.9%.

CBO (Congressional Budget Office) projects a total '06 deficit of $300 billion or about 2.1% of GDP.

At one point the '04 deficit was forcast at $521 billion, the actual came in at $412 billion. It fell to $318 billion in '05...........

Those making over $200k/yr now pay 46.6% of total income taxes. That is up from 40.5%.

Corporate tax collections are up 30% from last years pace.

Now we need Washington to get spending under control and find a solution to Social Security and Medicare........

aceventura3, hasn't the federal debt actually increased by
$2,125246,249,523.44, (that's $2.125 TRILLION) since the first Bush administration sponsored budget year began, between Sept. 29, 2001, and Sept. 30, 2005? (a span of 48 months.....)
And....wasn't the total federal deficit for fiscal year 2005, which ended on
Sept. 30, 2005, actually in the amount of $553,656,965,393?

If you'll agree that this amount, a figure that is actually $235 billion higher than the $318 billion fiscal year 2005 deficit that you quoted, was "spent", what is your opinion on the "stimulative effect" of federal spending that increased the treasury debt by an average $531 billion in each of the last 4 years.....on the economy and on amounts of personal income and on corporate taxes collected ?

09/30/2005 $7,932,709,661,723.50
09/28/2001 - $5,807,463,412,200.06
____________________
$2,125246,249,523.44 = 48 months total federal deficit
<b>Vs.</b>

Total Deficit Spending in the 4 fisscal years prior to 9/28/2001=
09/28/2001 $5,807,463,412,200.06
09/30/1997 $5,413,146,011,397.34
___________________
$ 394,317,400,802.72 48 months total federal deficit

Are you saying that "off-budget" deficit spending by the federal government does not effect GDP growth and the growth in tax collection, in a way that is similar to the "stimulus" of tax cuts or of "on budget" deficit spending?

http://www.publicdebt.treas.gov/opd/opdpenny.htm
<b>The Debt To the Penny</b>
......Prior Fiscal
Years

09/30/2005 $7,932,709,661,723.50 Increase = $553,656,965,393
09/30/2004 $7,379,052,696,330.32
09/30/2003 $6,783,231,062,743.62
09/30/2002 $6,228,235,965,597.16
09/28/2001 $5,807,463,412,200.06
09/29/2000 $5,674,178,209,886.86
09/30/1999 $5,656,270,901,615.43
09/30/1998 $5,526,193,008,897.62
09/30/1997 $5,413,146,011,397.34
09/30/1996 $5,224,810,939,135.73
09/29/1995 $4,973,982,900,709.39
09/30/1994 $4,692,749,910,013.32
09/30/1993 $4,411,488,883,139.38

<b>How about the effect of the economic "stimulus" of</b> <a href="http://calculatedrisk.blogspot.com/2005/12/gdp-growth-with-and-without-mortgage.html">"MEW" ?</a>
<center><center><img src="http://photos1.blogger.com/hello/243/2888/640/GDPMEW.jpg">

http://www.moneyweek.com/file/3091/a...le-u-turn.html
Alan Greenspan’s Property Bubble U-Turn

10.04.2005

.......But on another level, it reveals the full force of one of the key drivers of the Asset Economy – equity extraction from residential property.

According to the Greenspan-Kennedy framework, US homeowners tapped the ever-expanding home equity till to the tune of about $600bn in 2004 – <b>equivalent to about 7% of disposable personal income, or more than double the 3% share recorded in 2000.........</b>

Column #23 in the page at the following link, shows quarterly "MEW" figures from Q2 1990 thru Q2 2005:
http://www.federalreserve.gov/pubs/f...eds200541.html
See Column 2) 1-4 mortgage debt outstanding, end of quarter (FOF)
2001 Q3 5,506.5 2005 Q2 8,528.4

equity extraction, or "MEW" 4RD qTR. '01 THRU 2ND qTR. '05 In Billions of Dollars:
05Q2 138.4
05Q1 121.0
04Q4 126.9
04Q3 206.3
04Q2 119.1
04Q1 146.3
03Q4 85.5
03Q3 122.6
03Q2 125.7
03Q1 105.6
02Q4 112.1
02Q3 120.2
02Q2 98.7
02Q1 66.7
01Q4 59.1
01Q3 69.7

16 Qtr. total= $1823.9 billion

equity extraction, or "MEW" 3rd qTR. '97 THRU 2ND qTR. '01 In Billions of Dollars:
01Q2 87.7
01Q1 45.0
00Q4 40.3
00Q3 62.3
00Q2 70.2
00Q1 31.3
99Q4 42.4
99Q3 77.3
99Q2 52.4
99Q1 44.1
98Q4 59.4
98Q3 40.6
98Q2 42.9
98Q1 39.8
97Q4 8.5
97Q3 53.6

16 Qtr. total= $797.8 billion

I'll concede that, for comparison here, we cannot quantify the "stock market wealth" during the tech stock "bubble" that peaked in March, 2000, that was injected into the economy via the conversion of stock "gains" into actual equity that flowed into the GDP spending stimuli, as we more easily can with federal deficit spending and with "MEW". Folks do not take "mortgage equity withdrawals" and "park" the proceeds in savings accounts, for the most part.
Those funds arw mostly used to "pay down" credit card and car loan debt, to remodel the home, pay college tuition, or to generally increase living standards, via vacations, purchases of second homes, or restaurant meals.

I've demonstrated that in the 48 months prior to Sept. 28, 2001, federal deficit spending of $394,317,400,802.72 combined with "MEW" of $797.8 billion, totalled $1.192 trillion, and in the 48 months after Sept. 28, 2001, federal deficit spending of $2,125246,249,523.44 combined with "MEW" of $1823.9 billion, totalled $3.948 trillion.

My point is that I see no point to the core premise of this thread, because, on average, the increase in fiscal stimulation that was added to the economy, via increased federal deficit spending, combined with increased "MEW", in the 48 months before Sept. 30, 2005, was $2.756 trillion greater than in the 48 month period before Sept. 28, 2001. The effect of Bush era "tax cut" policy, diluted by a $2.756 trillion spending "injection", in the four year period, should produce a positive effect on federal revenue streams from personal income and corporate taxes, but it seems disingenuous and rather one sided to try to "credit" the same folks who managed our treasury into a huge new deficit amount, for increases in the amount of taxes collected in the same period, or with deficit "reduction" that simply places part of the increasing debt, "off budget".

This week, the news media reported that there have been 9 "off budget" appropriations approved by our elected federal officials for war expenses and disaster relief. There were also defeated proposals to actually budget for Pentagon war expenses. If that happened, it would be impossible for claims to be made that falsely imply that the rate of new federal borrowing is "dropping"....the actual increase in total debt proves that this is not true.

[filtherton]

Originally Posted by aceventura3

The main point is that our most recent tax cuts did not result in lower federal tax dollars collected, tax dollars collected went up.

But can you actually link the tax cuts with increases in tax collections? I know you know that corellation doesn't equal causation. This doesn't amount to a vindication of SSE.

I also argue that tax cuts help economic growth.

This is the crux of SSE, except that you have to make a distinction when you talk about tax cuts and SSE. In SSE it's only tax cuts that directly benefit the supply side, not tax cuts that directly benefit the consumers, that are supposed to help economic growth. The suppliers then use their mythical wisdom to raise the tide and the boats of all the little people. That sounds great, if you're a supplier.

If you ask me, if you want economic growth, why waste time filtering the money through the suppliers? It just doesn't seem all that efficient to me if your goal is ultimately to raise the tide and the boats of the little people. Why not give more money to the consumers and let them use the power of the dollar to decide which suppliers are worthy of more money? Why can't you give the money to the little boats and let them raise the tide? Tell me why this doesn't make sense in light of the fact that consumer spending drives our economy?
(The answer to this question probably has something to do with the fact, and i'm going out on a limb here, most proponents of SSE think poor people are stupid. I think it has something to do with some sort of fantasy involving a brilliant capitalist who has the plan and the cunning to blow the business world wide open, if only those damn tax and spenders would let him keep enough of his money to do what he has to do. Something ayn rand would write.)

In a growing economy the "rich" do get "richer".

But do they always have to do so at a much higher rate than the nonrich like they are right now in america? Are you looking forward to the U.S. becoming the next brazil in terms of the rich/poor gap?

I also believe that generally all people who productively participate in the economy benefits.

Perhaps. My problem is that with SSE, the people who benefit the most happen to be the people who need to benefit the least.

There are exceptions, but generally everyone is better off.

Generally, maybe. I still don't see how everyone getting more and more into debt amounts to them being better off. It is clear from the stats you posted initially that the wealthy and the corporate are better off. Beyond that, everyone else just seems to owe the wealthy and the corporate more money.

We have gone off on a few tangents, but if focused on the core issue, I would agree that there are many variables that drive the economy and affect the tax dollars collected by the federal government. We could clearly debate that one issue alone.

If you know this than how can you possibly make the claims you made in the original post?

I think the most recent tax cuts lead directly to increased total tax dollars collected,

I know you do. I just haven't heard any kind of elaboration on how.

From what i can tell, SSE can be summed up by these three steps:

1.Cut taxes for the wealthy
2.???????
3.Everyone is better off.

Until you can come up with a good explanation of step two i'll have a hard time agreeing with you on the basic assumptions of SSE. I think it could just as easily happen like this:

1.Cut taxes for the wealty
2.The wealthy then use this money in ways that have little to no benefit for society at large
3.The wealthy are much better off, the nonwealthy marginally so.

I think complex tax laws benefit smart people, i.e. "the rich".

Don't make the mistake of equating intelligence with wealth. I know it's an unwritten tenet of SSE that those with money are inherently more worthy of it than those who are poor, but it's not really true. Look at paris hilton. Look at our president. The accumulation of wealth has more to do with who your parents are then your intelligence.

As for complexity, do you think bill gates does his own taxes? If the wealthy benefit from complexity, it's only because they can afford to hire other people to do their taxes.

[Rodney]

I have my own ideas, but we'll all have a pretty good idea of how well the economy is really working in about a year, when interest rates (ever rising, apparently) have well and truly ended the real estate boom.

So, what might happen then?

* No more home equity loans to support a consumer lifestyle in the face of falling income
* Falling retail sales and employment
* Falling new- and -existing home sales and employment in real estate, construction, and home furnishings
* Diminished "wealth effect" from people whose homes are now worth less than they perceived them to be, and thus also reduce theirspending.
* Rising rent because of more demand for rental property, which is already happening in some areas.

An economy can look pretty active if you pump enough liquidity into it (ie, the Fed lets the banks loan freely at low rates, with minimal reserve, and there's foreign capital as well). But it's kind of like cocaine; gives you a lot of energy for a while, but leaves you in worse shape than when you started. Because we used all that money to buy and sell houses from each other, and buy stuff that's increasingly made overseas. Not to build more productive capacity here.

Instead, corporate profits are being used for stock buy-backs to run up stock prices, and to invest in "emerging markets" (Brazil, Russia, Indian, China -- the BRIC countries) where many of their new job openings are.

Yes, I've found it relatively easy to find work in this economy -- half time work with no benefits. It's not like any recovery I've seen before, and I've seen three, _plus_ stagflation.

Last couple of paragraphs aside: when we stop buying and building houses at a furious clip, much of our economic growth of the last few years may disappear. And a weaker US economy could also mean a weaker dollar, and thus even higher fuel costs to us, leading again to a weaker economy, and so on.

I could be wrong. But let's talk again next year.

[aceventura3]

Originally Posted by host

aceventura3, hasn't the federal debt actually increased by
$2,125246,249,523.44, (that's $2.125 TRILLION) since the first Bush administration sponsored budget year began, between Sept. 29, 2001, and Sept. 30, 2005? (a span of 48 months.....)
And....wasn't the total federal deficit for fiscal year 2005, which ended on
Sept. 30, 2005, actually in the amount of $553,656,965,393?

If you'll agree that this amount, a figure that is actually $235 billion higher than the $318 billion fiscal year 2005 deficit that you quoted, was "spent", what is your opinion on the "stimulative effect" of federal spending that increased the treasury debt by an average $531 billion in each of the last 4 years.....on the economy and on amounts of personal income and on corporate taxes collected ?

09/30/2005 $7,932,709,661,723.50
09/28/2001 - $5,807,463,412,200.06
____________________
$2,125246,249,523.44 = 48 months total federal deficit
<b>Vs.</b>

Total Deficit Spending in the 4 fisscal years prior to 9/28/2001=
09/28/2001 $5,807,463,412,200.06
09/30/1997 $5,413,146,011,397.34
___________________
$ 394,317,400,802.72 48 months total federal deficit

Are you saying that "off-budget" deficit spending by the federal government does not effect GDP growth and the growth in tax collection, in a way that is similar to the "stimulus" of tax cuts or of "on budget" deficit spending?

Yes the total debt has increased and I don't question the numbers above.

Off budget spending has an impact on total debt, but one imortant question regarding off budget spending is - is it appropriate to classify certain items as "off-budget"? For example using general accounting practices spending on capital items are depreciated over time and not fully deducted against income in the year of accuisuition and is like "off budget" government items. We can debate specific "off-budget" items, but perhaps we can agree that generally it is appropriate that "capital" spending on some items should be charged against yearly budgets over time rather all in a single year.

The next question is - what is the impact of "off budget" (or debt spending) spending on GDP or tax collections? A Keynsian economist would say debt spending stimulates the economy or contributes to economic growth. I used to believe that, now I don't. In my view government spenting does not create growth nor does government debt spending. In order for the government to spend a dollar it has to take a dollar and generally the net affect is zero. When government spends a dollar before collecting a dollar in taxes, debt spending, I beleive productive resources get reallocated from the private to the public sector. I think this shift is actually harmful to economic growth. On one hand it is inflationary and on the other government is not as capable of emloying resources as the private sector is. I could give anecdotal support of my view but I have no idea how to prove it using published statistics on the economy.

Column #23 in the page at the following link, shows quarterly "MEW" figures from Q2 1990 thru Q2 2005:
http://www.federalreserve.gov/pubs/f...eds200541.html
See Column 2) 1-4 mortgage debt outstanding, end of quarter (FOF)
2001 Q3 5,506.5 2005 Q2 8,528.4

I'll concede that, for comparison here, we cannot quantify the "stock market wealth" during the tech stock "bubble" that peaked in March, 2000, that was injected into the economy via the conversion of stock "gains" into actual equity that flowed into the GDP spending stimuli, as we more easily can with federal deficit spending and with "MEW". Folks do not take "mortgage equity withdrawals" and "park" the proceeds in savings accounts, for the most part.
Those funds arw mostly used to "pay down" credit card and car loan debt, to remodel the home, pay college tuition, or to generally increase living standards, via vacations, purchases of second homes, or restaurant meals.

I think you answered your own question. If you take "MEW" out of GDP, why not take out stock market gains, income spent from black market activity, pension spending, inheritance spending, welfare spending, etc, etc. Also, we have to consider investment cycles and trends. Often an investment that does well in one economic condition may do poorly in another, while another investment may run counter to the first, i.e, stocks v. real estate v. bonds v. gold, etc. Then I agree, when home prices go up, interest rates are low, and people have equity, and the access to that equity is easy, people will use it. I don't think that is necessarily bad. But I still think Americans need to save more.

I've demonstrated that in the 48 months prior to Sept. 28, 2001, federal deficit spending of $394,317,400,802.72 combined with "MEW" of $797.8 billion, totalled $1.192 trillion, and in the 48 months after Sept. 28, 2001, federal deficit spending of $2,125246,249,523.44 combined with "MEW" of $1823.9 billion, totalled $3.948 trillion.

My point is that I see no point to the core premise of this thread, because, on average, the increase in fiscal stimulation that was added to the economy, via increased federal deficit spending, combined with increased "MEW", in the 48 months before Sept. 30, 2005, was $2.756 trillion greater than in the 48 month period before Sept. 28, 2001. The effect of Bush era "tax cut" policy, diluted by a $2.756 trillion spending "injection", in the four year period, should produce a positive effect on federal revenue streams from personal income and corporate taxes, but it seems disingenuous and rather one sided to try to "credit" the same folks who managed our treasury into a huge new deficit amount, for increases in the amount of taxes collected in the same period, or with deficit "reduction" that simply places part of the increasing debt, "off budget".

This week, the news media reported that there have been 9 "off budget" appropriations approved by our elected federal officials for war expenses and disaster relief. There were also defeated proposals to actually budget for Pentagon war expenses. If that happened, it would be impossible for claims to be made that falsely imply that the rate of new federal borrowing is "dropping"....the actual increase in total debt proves that this is not true.

Did you think Bush's tax cuts would lead to less total tax dollars collected? Or did you think the cuts would have no impact at all because of the other factors as you point to? If you say no impact, why not support lower taxes?

Originally Posted by filtherton

But can you actually link the tax cuts with increases in tax collections? I know you know that corellation doesn't equal causation. This doesn't amount to a vindication of SSE.

We have a standoff. The data shows increased tax collections even after tax cuts. Logic says that at lower tax rates people do less to avoid taxes. Logic also says that when tax rates are lower taxpayers get more benefit from each dollar earned and have a greater incentive to make more dollars. I am just a regular guy and I don't know how to present a more compelling case.

This is the crux of SSE, except that you have to make a distinction when you talk about tax cuts and SSE. In SSE it's only tax cuts that directly benefit the supply side, not tax cuts that directly benefit the consumers, that are supposed to help economic growth. The suppliers then use their mythical wisdom to raise the tide and the boats of all the little people. That sounds great, if you're a supplier.

I own a small business. I a previous post I talked about the first Bush tax cut. I got a check for $600. I used the money to buy a new FAX/Copy machine. The machine allowed one of my employees to become more productive. We trained him on additional duties, we gave him a raise. My customers benefited, I benefited, my employee benefited and the government(local, state and federal) benefited. I remember writing that and suggested that it be multiplied by the millions of business owners who would invest tax saving back into their businesses. You and others want to suggest this would have no impact.

If you ask me, if you want economic growth, why waste time filtering the money through the suppliers? It just doesn't seem all that efficient to me if your goal is ultimately to raise the tide and the boats of the little people. Why not give more money to the consumers and let them use the power of the dollar to decide which suppliers are worthy of more money? Why can't you give the money to the little boats and let them raise the tide? Tell me why this doesn't make sense in light of the fact that consumer spending drives our economy?

You want money in the hands of people who create wealth. For example if you go back in time and you could give a tax break to Bill Gates, Microsoft, or give a few bucks to a guy on wealfare, who would do best for the country with the money? sure Bill Gates is the wealthiest man in the world today, but how many others has he helped become rich, how much has his company paid in taxes, how much is he going to give back through his foundation?

(The answer to this question probably has something to do with the fact, and i'm going out on a limb here, most proponents of SSE think poor people are stupid. I think it has something to do with some sort of fantasy involving a brilliant capitalist who has the plan and the cunning to blow the business world wide open, if only those damn tax and spenders would let him keep enough of his money to do what he has to do. Something ayn rand would write.)

Let's be clear. It is not a question of intellect. It is a question of ability. Just like I would give Micheal Jordan the basketball, I would give a guy like Warren Buffett capital to invest. If you suggest everyone is equal, I don't know what to say.

But do they always have to do so at a much higher rate than the nonrich like they are right now in america? Are you looking forward to the U.S. becoming the next brazil in terms of the rich/poor gap?

A guy like Edward Kennedy has an army of accountants and lwayers. His family passes billions from one generation to the next. He can do things to sheltor his income that you and I can not even dream of doing. Tax laws are overly complicated but he has the resources to keep and grow his wealth while minimizing taxes. Take the average guy, 7% state taxes, 20% federal, 7.5% FICA, x% medicare, perhaps local taxes, property tax, sales tax, and you wonder why there is an increasing gap between the rich??? the average guy can't get ahead.

Perhaps. My problem is that with SSE, the people who benefit the most happen to be the people who need to benefit the least.

I recommend reading the "Millionaire Next Door". The people who you think are the "rich" may be a bit different than reality. Also, read the book and try to understand what the "millionaire next door" did to get rich.