Tax Cuts verse Food StampsFollow

His numbers assume short term and temporary spending only. And if Dems were sticking to that, I don't think there'd be nearly as much opposition to the proposed bill going through congress right now.

My biggest problem with those numbers is that they are used in ridiculously out of context arguments (on the aforementioned blog sites) as support for broader comparisons between supply and demand side economic positions. Outside of knee-jerkers on the Right, you'll be hard pressed to find economists who don't acknowledge that short term direct spending produces more direct "bang for buck". But that's an inherent aspect of that type of monetary policy. In exactly the same way that increasing your spending on your home budget will produce a greater increase in your personal "GDP". Um... But if you had to borrow the money to do that, or cut into future growth, the long term effect is going to kill you.


The argument is always about short versus long term economic policies. And the problem facing us is the tendency for Liberal politicians to stretch what should be short term policies into "permanent" policies. Spending money today to get through something right now and then returning to lower spending when you're done is good. Again. Conservative economists are not opposed to Demand side spending when it's necessary. They oppose it when it's done in a way that results in more long term spending trends.

Using this data to support exactly that sort of "We should do this all the time" mentality is counter productive IMO.


Oh. And I happen to personally think that Zandi has become a victim of the Peter Principle. His ideas have become the "theory of the moment", and he's enjoying massive support and visibility as a result. I'm always skeptical of latching onto one single guy with one single idea so much. While his initial assessments were surely based purely on economic ideas, he's become politicized and now has a vested interest in telling the folks in power what they want to hear. It's like trying to set policy based on a current craze. They come and go and people almost always look back and ask what the hell they were thinking back then...

Tax cuts have small short term benefits, but produce larger long term benefits when maintained over time. Increased spending has a large short term benefit, but actually hurts you over time if maintained.

You want to make tax cuts as permanent as possible so as to gain the greatest benefit from them. Similarly, you want to make spending increases as short term and temporary as possible so as to gain the most benefit while reducing the long term negatives.

There is no correlation between GDP gain and tax rate since the end of World War II.

You say this every time this subject comes up, and every time I show you that you are incorrect. You are looking at only one tax indicator. It's a contrived statement based on a tiny fraction of what is meant by "tax cuts".

It seems you don't understand what the word "correlation" means.


Tax cuts have small short term benefits, but produce larger long term benefits when maintained over time.

False. Not only false but moronic. It's given that a total tax rate of zero would be detrimental to GDP. No one seriously argues for this. It's given that a total tax rate of 100% would be detrimental to GDP, no one seriously argues for this, either. Arguing in an absolute sense that either raising or lowering taxes with no context is going to benefit of harm GDP is stupid and ignorant to a degree almost beyond the ability of the human mind to grasp. If you'd like to argue that some particular tax rate is set at a less efficient rate than it could be, do so. If you want to drool and shout TAX CUT GOOD!! ALWAYS GOOD! go ********** to a picture of Grover Norquist instead.

Gee...you figured out on your own why you were wrong, so why did you make the statement in the first place?

And it's not just absurd because we want a government for ***** & giggles, it's absurd because the economy would collapse without it. So it doesn't even work conceptually.



Edited, Feb 11th 2009 10:50pm by trickybeck

The big issue with tax cuts as the only solution is that people have to have jobs for tax cuts to work.

Giving me a 10% tax cut won't help me jack squat if my job gets downsized next week.



Edited, Feb 12th 2009 9:01pm by catwho

Um. Hey, have you ever heard of the Bush administration?

The reason our office has already downsized (three managers took demotions back to marketing level yesterday rather than get pink slips) is because our business depends on other businesses spending lots of money on expensive infrastructure upgrades. Giving my bosses a 10% tax cut isn't going to save any jobs when we can't sell million dollar enterprise systems to schools, because the schools had a straight up 10% budget cut -- because the states had a 10% tax cut, meaning less money for the universities, meaning less money for them to spend on infrastructure upgrades.

The revenue stream is more complicated than just business -> consumer - business.

I'm for anything that makes the job market friendly for when I graduate in a year....the ways things are looking its hard to find an internship...

Dow Jones Close 1/20/09: 7,949
Dow Jones Close 2/12/09: 7,932

LERN2MATH

The point I was getting at is that both of those come from the same source. The loss of direct donations occurred because mostly wealthy people who otherwise would donate, found themselves losing a bunch of money in the investment market (mostly), and didn't donate as much. Those same wealthy people, because they lost money instead of making it, didn't pay as much taxes. Thus, the states were strapped and had to cut spending.

I was just illustrating an example of how trickle down economics works. Those donations and higher tax revenues occur because of the wealthy making money. You might normally argue that those people do "nothing" to help you, but your now finding that your own livelihood is tied to those people doing well financially.

Just hoping that maybe the next time we have a debate about whether "the rich" do anything with their money to benefit the rest of the people, maybe some of the posters here will remember this.





Absolutely. That's exactly the kind of spending that Conservatives would like to see. Simply replace funds that are temporarily reduced due to the economic situation. But that's not even in the ballpark of what the Democrats tossed into the economic stimulus package. While I'm sure there is some good stuff, there's a whole lot of just plain garbage. They could likely have spent about a third of what this bill will cost if they'd only spent money on the stuff they need.


The Dems are treating this as a way to get new spending programs out the door. We're going to be paying for this stuff for generations...