Scipio

Here's my simple criticism of supply side economics, as that seems to be the direction that the thread is now taking.

The essence of supply side economics is the trickle down effect. The tax rates that the wealthy pay are lowered, and they take that extra money, grow it, and spread it through the economy.

There are simple economic reasons to think that this isn't a good idea. One, wealthy people have a relatively low marginal propensity to consume. This means that for each extra dollar they get out of a tax cut, they will spend less of it on consumption than middle and lower class people will.

Granted, the wealthy are able to spend their money on things that the poor can't, such as starting companies or investing in captial, human or otherwise. However, the past few years have shown that the wealthy don't always do this. Even after large tax cuts, significant gains in capital investment weren't observed.

There are many reasons that tax cuts that send more money to the lower and middle classes are more desireable. One, they spend the money, and it goes into the economy. When money starts moving, it gets spent multiple times, and drives the economy. Wealthy people are more likely to sit on the money they get for some time, so the economy doesn't benefit as much.

Two, from a welfare standpoint, it's better to give money to people who are having trouble making ends meet than it is to give money to people who are having trouble deciding what options to get on their third BMW.

Three, even though the rich aren't getting the money outright, they have shouldn't have much trouble getting a share of the money that went to those less well off, in that (many of them) make profit off of the purchases made by consumers. (And, as noted, the lower and middle classes will consume when they get tax cuts.)

Finally, I think that it's possible to have a capitalist republic that values keeping the distribution of wealth relatively narrow. I believe that people who work hard have a right to do well or even get quite rich, but no CEO is truly worth tens of millions of dollars a year.

Louis Brandeis put it best:

"We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can't have both. "

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KMA-628

The part that I find really amusing falls under the "can't win" category.

If the economy is improving then it can't be because of Bush, but if the economy starts to go bad in the beginning months of Bush's term it's his fault.

Either way, good or bad economy, the left must come up with some reason that Bush caused all of our problems.

For a guy you people call stupid, you give him a lot of credit.

FYI - Your last statement falls right out the window for me. I am not rich and I benefited from the tax cuts. That's my "real world". So how can it not work for "any but those who are rich" when it worked for me?

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Zeld2.0

The left isn't the one taking credit for other people's work.

And honestly, its not confined to the right or left. Every party says "your economy as good cause of our president, ours is bad because of yours" etc. (unless, of course, there is a string of the same presidents).

As for supply-side economics itself?

I think the core issue is the trickle-down effect. People already with loads and loads of money are less likely to spend that tax cut. If they already have so much money, do they really need a cut to spend on whatever they need? It is highly, highly unlikely they are suddenly going to spend say $10,000 in a cut when their income might pull in over a million in the year even after taxes.

As Scipio stated, its far more likely that the lower and middle class will benefit more from the tax cut, and will influence the economy more directly.

If a poor family is trying to make ends meet and gets a $2000 cut all of a sudden, isn't it more likely they'll spend that money to make ends meet? They'll buy food and whatever they need.

That is more likely to influence the economy directly than a person who already has a ton of money and isn't spending it anyways.

And what is better is that directly buying those products means profits will go up to the owners of those businesses.

This feels more like the "trickle-up" economy - though it defies gravity, it's more likely to happen.

onetime2

The last paragraph is right on. The first sentence seems to oppose the second when you consider that the only response a President can have to the claims outlined in the second paragraph is that he is responsible for the upturns since he is being blamed in the downturns (whichever party they belong to).

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shakran

Gee, sucks when you percieve that a republican trick is being played on the republicans doesn't it?

See, we're not saying that George isn't responsible for the economy improving because the economy is not improving. That would be like saying that a person with alzheimers who has one lucid day and is about to relapse into total memory loss is improving. It's an illusion. A myth.

He's cut taxes (income) while dramatically increasing spending. That's the formula for increasing the government's debt. Sure, that'll pump up the economy temporarilly but it's simply not sustainable. Eventually, this little house of cards that Bush has built out of the economy is gonna collapse, and when it does we're going to be in worse trouble than we can imagine.

Now. Let's look at what's really happening in this country. You say the economy is improving? Then why are court systems across the nation laying off public defenders. It sure as hell isn't because there isn't enough work for them - the courts are overburdened as it is. It's because there isn't enough money to pay them.

Why are various courts and other government institutions in Iowa (and probably other states) being forced to cut back their hours or even close for days on end? Because there isn't enough money to keep them open.

When the government(s), which is supposed to be one of the more stable employers in the country, is having to lay people off because it can't afford them anymore, and is having to close its doors because it can't afford to keep them open anymore, you cannot sit there with a straight face and tell me the economy is good.