Traitors.

[Dutch Uncle]

You're desperate now....

Why do you think I'm desperate?

Bush didn't cause the Great Recession either by intention or stupidity. The dominoes there were set up about the time Bush the Lesser was still snorting coke and getting shitfaced.

 

[Poor Richard Saunders]

That is, by far, the worst economic and fiscal take I've ever read...and I sat next to real-life supply-siders while getting my advanced degree.

It has nothing to with economics and everything to do with reality. Things happen all the time that are not expected. Simply because something hasn't happened yet in the US is not proof it will never happen. We know it can happen because we have seen other countries that have imploded from this exact thing. Whether it is likely to happen is one question that we don't know the answer to but to stick your head in the sand and declare that it can never happen simply because it hasn't yet is a recipe for disaster if it does happen.

Which is why I said that the debt/deficit is merely just a scorecard of government economic activity. The amount of that activity is immaterial to what that activity actually was. So if we spend $1T but have 5,000,000 jobs to show for it, then the economics of that employment will take care of the revenue gaps because employed people spend money in the economy. If we spend $1T on a tax cut and have nothing to show for it, then we can judge that money was poorly spent.

And the question will always be, How do you measure if it was money well spent?" We all will disagree on that.

Totally agree 100%. Money spent on infrastructure, education, and health care is money we will see back in the economy almost immediately. Money spent on defense and tax cuts is not money we see back in the economy. A tax cut doesn't employ a single person. A bomb dropped halfway around the world doesn't benefit a worker in Wisconsin. But giving everyone health care does.

Therein lies the problem. You reject out of hand any benefit that you don't think is the right benefit. Money spent on defense does benefit the economy in many ways. It creates jobs for almost 2 million people between active duty and reserve. Those people make money and spend it. These people may also be learning skills which they can use to contribute to the economy when they leave the military. Military and defense purchases create more jobs. Here again defense spending is not always money down the drain as it can produce things that help the economy. GPS exists because of the military. Perhaps the money could be better spent on longer term investments but it is not money that just disappears from the economy. Money spent on infrastructure, education and health care is not money we see back immediately. It is money spent that pays for itself over time. The ability to move goods and people more efficiently and cheaper. The lifetime of production from an educated person.

I agree, and most Democratic Socialists like me don't think government should make up the entire economy...we believe in seizing some of the means of production, but not all of them. Things like health care, education, energy...these are things every person needs to participate in the economy, so they should all be publicly owned and funded.

Seizing is a word you should try to avoid. It seemed you missed out on the DSA training of how to find common ground when talking to others. Is there really much difference between publicly owned and publicly regulated? An energy company that has its rates set by the state isn't all that much different from an energy company owned by the state.

Normally, I would agree, however the last decade has really proven that it's not rich people's savings that are being used to lend out to consumers, since their accumulated wealth has doubled in the last 10 years.

Don't confuse wealth with savings. If I bought a share of Apple stock 10 years ago for $100 and that share has now split to become 10 shares at $110 today I haven't saved a penny over that time period but my wealth has increased by 10 fold. But it is just paper wealth. If everyone that owned Apple stock tried to sell their shares tomorrow those shares would be worth less than a penny. It only has as much value as what others are willing to pay for it.

As a whole, we need the majority of consumers to spend, not save. But people are only going to spend if a) they feel safe and b) if they have the money to spend. For 20 years, we haven't increased wages...instead, we've borrowed in order to consume.

Yes. But the flip side of that is if you want everyone to be wealthier than they also need to be able to save. Save for a down payment on a home. Save for retirement. Without a savings plan the economy may be doing great from all the spending but individuals will always be poor.

As you correctly stated, the poors are the ones who spend in the economy when they get money moreso than the wealthy. If a poor person gets a check for $1,000, they're going to spend every last penny of that money in the economy. If a rich person gets a tax cut of $50,000, they're not going to spend every last penny of that money in the economy. In fact, they probably won't spend much more than the poor person would. They may buy more expensive things, but they aren't consuming more. At least, not enough to justify a tax cut.

The question becomes one of how do you convince someone that thinks all taxation is theft so the ideal tax rate is zero that they should pay any taxes? It all comes down to finding what motivates each person when it comes to government spending and trying to expand upon that. How do you convince someone that spending $10 now will save them $100 over the next 10 years when they will look at that $10 and think they can turn it into $1000?

 

[Poor Richard Saunders]

Yeah, so when Conservatives threaten to not increase the debt limit, or threaten not to pass a budget, they are sending that message to the investors for purely political reasons.

They may simply be threatening default to retain political power but as with anything in life they risk that pesky law of unintended consequences. If enough investors think them serious it could result in panic selling which only breeds more panicked selling leading to what you claim can't happen

 

[Dutch Uncle]

They may simply be threatening default to retain political power but as with anything in life they risk that pesky law of unintended consequences. If enough investors think them serious it could result in panic selling which only breeds more panicked selling leading to what you claim can't happen

I love that law! It always adds balance to the Universe.

In the end, it comes down to the investor herd. Which ever they want to go will drive Congress in response.

Right now I'm guessing most investors don't like the Democrats in the White House but they like Trump in the White House even less.

 

[LV426]

Write offs disappeared during the Reagan Tax cut which is part of how they sold that tax cut. You can no longer write off 100% of the cost of going to a strip club thanks to the Reagan tax cut.
Other deductions that disappeared:
You can no longer deduct interest paid on a personal car loan or other personal loan.
There was no threshold to meet before writing off medical expenses prior to the Reagan tax cut so you could write off 100%.
If a vacation had a business purpose you could write off 100% of the travel. (Go to Vegas, spend an hour at a shareholder's meeting for a company you own stock in and write off the entire trip.)

Right, but how many new deductions have appeared since?

Yeah? Never said it didn't. 1% of 11 trillion is 110 billion.

Which was about 1/5 of the deficit when Obama left office.

 

[LV426]

Anecdotal evidence which is nothing more than anecdotal. There are also instances where tax cuts increased growth which is why I don't rely on anecdotal evidence but instead look at the yearly US numbers for a statistical analysis. Cherry picking a year here or there is not the way to find out what really happens.

I don't understand what you mean by anecdotal evidence? The Kansas State of Board Regents raising tuition specifically because of revenue shortfalls isn't anecdotal, it's a thing that actually happened:

Kansas regents and legislature approve 3.6% tuition and fee increase
https://www.kansan.com/news/kansas-...cle_8702d7ac-1889-11e5-a215-7b9ff1522d2d.html

Brownback budget cuts include $56M from KanCare
https://www.khi.org/news/article/brownback-budget-cuts-include-56m-from-medicaid

Both of those things happened in 2014-2015, two years after the tax cuts went into effect and were supposed to pay for themselves with increased spending.

They didn't.

I've never, ever, ever, ever seen tax cuts increasing economic growth. Never. Not once. Not ever. It has never happened in the history of tax cuts. What increases economic growth is increased spending. Tax cuts do not increase spending. They almost universally lead to spending cuts because they are a stealth attack on the institution of democracy and the budget. Tax cuts are essentially the jetliners on 9/11 that Conservatives fly into buildings that are our budgets, and then cry fake tears over the resulting deficit explosion.

 

[LV426]

Let's look at your statement in comparison to reality. If tax cuts result in an economy not growing then we should see a down turn in GDP growth every time we have a tax cut.

Which we did after the Bush Tax Cuts in 2001-2003, and then again this past February after the Russia Tax Cut from 2018. We also saw a massive downturn after the first Reagan tax cuts of the 1980's, and then we saw yet another downturn at the end of the 20th century when we cut Capital Gains Taxes, which prompted the dotcom bubble:

To provide more compelling evidence that the 1997 tax cut affected volatility (and mitigate concerns about omitted correlated variables), we focus on cross-sectional tests which are designed to detect the differential responses in return volatility of stocks with different characteristics. We hypothesize that the effect of a capital gains tax change on stock return volatility should vary depending upon dividend policy and the size of the unrealized capital losses (or gains). Consistent with expectations, we find that non- and lower dividend-paying stocks experienced a larger increase in return volatility than high dividend-paying stocks. We also find that stocks with large unrealized capital losses had a larger increase in return volatility after a capital gains tax rate reduction than stocks with small unrealized capital losses. However, we do not find a similar relation with unrealized capital gains.
https://www.businessinsider.com/heres-why-the-dot-com-bubble-began-and-why-it-popped-2010-12

Tax cuts have never once resulted in increased economic growth. Never. Not once. The result of every modern tax cut going back to at least 1980 is a recession within 2-3 years after.

But more importantly, what you also see from tax cuts are increased deficits...and those manufactured deficits are then used as an excuse to cut spending, which in turn results in economic contraction. I call it fiscal terrorism because Conservatives know that their hatred and attacks on social programs are extremely unpopular, so they sabotage the budget to force through cuts they otherwise wouldn't be able to do because they lack the courage, will, and support.

 

[LV426]

The average GDP growth after a tax cut isn't any different from when taxes stay the same or when taxes are raised. The increase in wealth isn't coming out of GDP growth.

Well, I guess it depends on how long after the tax cut you're looking, because going back at least 20 years this century, recessions have almost always followed tax cuts. The reason is because, as I said before, tax cuts increase deficits which results in spending cuts, and when you pull spending out of the economy, and aren't replacing it with any new spending, the inevitable result is an economic contraction. That's why we entered a recession in February this year.

Also, since 1980, every time taxes have been cut, the personal savings rate decreases while the Household Debt rate increases. This is universal. What this means is that "putting more money in the pockets of workers" usually results in the workers going into debt. We saw it happen throughout the 2000's as borrowers had easy access to credit, which -combined with an increase to after-tax income- was being used as the replacement for higher wages. How'd that work out for everyone?

 

[Peace n Safety]

There is no compromising with Conservatism. It is an anti-democratic cult. Its members have no loyalty to the country, just to their race.

https://twitter.com/x/status/1337135543373733889

Tee Hehehehe


Blessings

 

[Peace n Safety]

Well, I guess it depends on how long after the tax cut you're looking, because going back at least 20 years this century, recessions have almost always followed tax cuts. The reason is because, as I said before, tax cuts increase deficits which results in spending cuts, and when you pull spending out of the economy, and aren't replacing it with any new spending, the inevitable result is an economic contraction. That's why we entered a recession in February this year.

Also, since 1980, every time taxes have been cut, the personal savings rate decreases while the Household Debt rate increases. This is universal. What this means is that "putting more money in the pockets of workers" usually results in the workers going into debt. We saw it happen throughout the 2000's as borrowers had easy access to credit, which -combined with an increase to after-tax income- was being used as the replacement for higher wages. How'd that work out for everyone?

View attachment 18346

In the richest land of opportunity since the dawn of mankind only 6 in a hundred become wealthy. Why is that? Because you follow the wrong crowd.

Don’t follow the followers kids. If they failed to attain independence why listen to them? SMDH


Blessings

 

[LV426]

Wealth isn't a zero sum game. Wealth is the value of what people own which is affected by many things other than GDP growth. Wealth can grow much faster or much slower then GDP because it is not really tied to GDP. Much of US wealth is tied into owning real estate or companies. Those values can be all over the place. Tesla would be a good example. The company has no profit but the stock has gone through the roof. That creates a lot of wealth compared to its small contribution to GDP from buying parts and selling cars. The flip side of that might be GE which has lost a lot of wealth while contributing more to GDP than Tesla does

Or Netflix, for that matter. They haven't run a profit since switching to streaming, though their stock price has shot through the roof.

One thing to keep in mind is that only about 50% of all Americans own stock, and 80% of all stock is owned by just the top 10% of people, and about 40% of all stock is owned by just the top 1%.

So when we talk about the stock market or investing "creating wealth", what we're really talking about is how that wealth is really being created and hoarded by a small group of people.

So when so much wealth is concentrated at the top, not being spent in the economy, it falls on everyone else below them to subsidize that wealth hoarding by spending more in the consumer economy by going into debt. We saw this most clearly during the 00's. Wages didn't grow, even though after-tax income did slightly for most people...but that was eaten up by inflation and debt. It's why the personal savings rate plummeted and the household debt rate increased. People were using credit to bridge the gap between what they have to spend, and what they need to spend.

I always like to say that if you give a poor person $1,000, they are going to spend every penny of that money in the economy...but if you give a rich person $50,000, they probably won't spend any more in the economy than the poor person will spend, and will almost assuredly put that money into savings or offshore, where it does no good.

The misconception is that savings translates to investment or loans, but that's not been the case the last decade. The wealthy have also insulated their savings, so when you get a loan from a bank, that bank ain't using the rich person's savings to lend to you.

One of the problems with the income tax system is as it was originally set up the intention was to help tax wealth because most wealth earns income through rents or manufacturing. Income is no longer as tied to wealth as it used to be. It is possible to retire on $200K a year and not pay a dime in income tax because the wealth is protected.

I would actually prefer if we replaced the Income Tax with a Carbon Tax. We shouldn't be taxing income, we should be taxing waste.

 

[LV426]

Bush didn't cause the Great Recession either by intention or stupidity.

According to the Federal Reserve Board of Governors and Bush's Working Group on Financial Markets, the turmoil was triggered by the dramatic weakening of underwriting standards for subprime loans, beginning in 2004 and extending through 2007.

“The Presidents Working Group’s March policy statement acknowledged that turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007.”
https://www.treasury.gov/resource-center/fin-mkts/Documents/q4progress update.pdf

"Since 1995 there has been essentially no change in the basic CRA rules or enforcement process that can be reasonably linked to the subprime lending activity. This fact weakens the link between the CRA and the current crisis since the crisis is rooted in poor performance of mortgage loans made between 2004 and 2007. "
https://www.federalreserve.gov/images/20081203_analysis.pdf

Who do regulators work for? The Executive Branch. Bush's regulators dramatically weakened underwriting standards for subprime loans with the intention of creating a housing bubble to give the impression that the economy was growing as a result of tax cuts, when it was really growing as a result of debt. That's why Bush the Dumber tied his tax cuts to his housing policy while campaigning in 2004:

Bush Ties Policy to Record Home Ownership
Touting his tax cuts as the economy's savior — and pointing to the strong housing market as proof — Bush said "more people own their own home now than ever." More than 50 percent of minorities owned their own homes in the last three months of 2003 for the first time ever, the president said.
https://www.foxnews.com/story/bush-ties-policy-to-record-home-ownership

You are not going to win this debate.

 

[LV426]

he dominoes there were set up about the time Bush the Lesser was still snorting coke and getting shitfaced.

This is a dumb conspiracy theory not backed by any realities.

The fact of the matter is that what caused the turmoil were the garbage subprime loans, and those garbage subprime loans had weakened standards in 2004-2007.

No one set this up for Bush...he did it all on his own, with deliberate and direct actions. Like how his regulators ceased the enforcement of lending standards on subprime loans, as his own Working Group says.

You want to socialize the blame for what is clearly Bush and Conservatism's attempt to make tax cuts look good, but Bush is the one who took every action necessary to create a housing bubble where one didn't appear before.

As I said, this is a debate you are not going to win. You're not even going to come close to winning.

As the Federal Reserve said:

"Since 1995 there has been essentially no change in the basic CRA rules or enforcement process that can be reasonably linked to the subprime lending activity. This fact weakens the link between the CRA and the current crisis since the crisis is rooted in poor performance of mortgage loans made between 2004 and 2007. "
https://www.federalreserve.gov/images/20081203_analysis.pdf

 

[Dutch Uncle]

According to the Federal Reserve Board of Governors and Bush's Working Group on Financial Markets, the turmoil was triggered by the dramatic weakening of underwriting standards for subprime loans, beginning in 2004 and extending through 2007.

“The Presidents Working Group’s March policy statement acknowledged that turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007.”
https://www.treasury.gov/resource-center/fin-mkts/Documents/q4progress update.pdf

"Since 1995 there has been essentially no change in the basic CRA rules or enforcement process that can be reasonably linked to the subprime lending activity. This fact weakens the link between the CRA and the current crisis since the crisis is rooted in poor performance of mortgage loans made between 2004 and 2007. "
https://www.federalreserve.gov/images/20081203_analysis.pdf

Who do regulators work for? The Executive Branch. Bush's regulators dramatically weakened underwriting standards for subprime loans with the intention of creating a housing bubble to give the impression that the economy was growing as a result of tax cuts, when it was really growing as a result of debt. That's why Bush the Dumber tied his tax cuts to his housing policy while campaigning in 2004:

Bush Ties Policy to Record Home Ownership
Touting his tax cuts as the economy's savior — and pointing to the strong housing market as proof — Bush said "more people own their own home now than ever." More than 50 percent of minorities owned their own homes in the last three months of 2003 for the first time ever, the president said.
https://www.foxnews.com/story/bush-ties-policy-to-record-home-ownership

You are not going to win this debate.

Nice post. Notice the word "triggered". It's like "lit the fuse". Both simply set off a sequence already in existence. It was a boobytrap waiting to be triggered. Sure, the triggering happened under Bush II but it was just a boobytrap waiting to be triggered. Congress should never have let the trap be set in the first place.

ENJOY YOUR IMAGINARY WIN. LOL

 

[LV426]

It has nothing to with economics and everything to do with reality. Things happen all the time that are not expected. Simply because something hasn't happened yet in the US is not proof it will never happen. We know it can happen because we have seen other countries that have imploded from this exact thing. Whether it is likely to happen is one question that we don't know the answer to but to stick your head in the sand and declare that it can never happen simply because it hasn't yet is a recipe for disaster if it does happen.

Here's the problem with this argument: it's a distraction. We have never, ever, ever reached a point in this country, even when the top tax rate was 94%, that high taxation harms growth. In fact, there isn't a single real example of that happening anywhere, even outside the US.

It has never, ever happened. Ever. So concerning yourself with something that has never happened before, and will never happen, is a nice and easy way to avoid the discussion of what needs to be done. We could increase the top tax rate to 99.9999%, and we still wouldn't see any impact on economic growth. That's because once you reach a certain income level, you no longer have the capacity to spend more. You've bought everything you can. You've consumed everything you can. So any excess of that is just sitting outside the economy, not doing anything.

 

[LV426]

And the question will always be, How do you measure if it was money well spent?" We all will disagree on that.

Not necessarily because we can all agree that 5,000,000 jobs is better than 0 jobs, right?

What have tax cuts given us besides debt? They haven't created a single job. No business hires based on a tax cut...they hire based on demand. And if demand is low because we are in a recession and/or people don't have high enough wages, then a business isn't going to hire anyone. No one hires a worker just because...people are hired to meet demand. The only way to increase demand is to give consumers more to spend. You can accomplish that any number of ways, but slightly improving their after-tax income ain't one of them.

 

[LV426]

Therein lies the problem. You reject out of hand any benefit that you don't think is the right benefit.

How does a tax cut benefit anyone other than the rich when we know that after tax cuts, personal savings declines and household debt increases?

Money spent on defense does benefit the economy in many ways. It creates jobs for almost 2 million people between active duty and reserve. Those people make money and spend it. These people may also be learning skills which they can use to contribute to the economy when they leave the military. Military and defense purchases create more jobs. Here again defense spending is not always money down the drain as it can produce things that help the economy. GPS exists because of the military. Perhaps the money could be better spent on longer term investments but it is not money that just disappears from the economy. Money spent on infrastructure, education and health care is not money we see back immediately. It is money spent that pays for itself over time. The ability to move goods and people more efficiently and cheaper. The lifetime of production from an educated person.

No, defense spending doesn't help the economy because what defense produces isn't used in this country. It's exploded overseas, where it doesn't benefit the people over there, nor does it benefit the people over here. A bomb dropped in Syria doesn't help Syrians, it doesn't help a worker in Ohio, and mere employment is not what we're striving for here if that employment is a black hole that sucks up taxpayer dollars on ordinance that is used overseas. We don't see any benefit from tanks and planes here. And if the only reason we do is to keep 2-3 million people employed, then I think we need to reexamine our priorities. Because war for the sake of employment is horseshit. It's exactly what Ike warned about.

You don't need to join the military to learn new skills.

 

[LV426]

Seizing is a word you should try to avoid. It seemed you missed out on the DSA training of how to find common ground when talking to others. Is there really much difference between publicly owned and publicly regulated? An energy company that has its rates set by the state isn't all that much different from an energy company owned by the state.

I really don't give a shit what others think of my verbiage.

I'm not here to make friends.

I'm not here to persuade anyone.

I'm not here to find common ground with people who wholesale reject democracy.

I'm also not here to placate lazy people by giving their lazy ideas any attention.

We are so far removed from the faked ignorance and sophistry that I just don't have the patience for it anymore. Both sides are not the same, and I really do not care about trying to persuade troglodytes. I'm just here to lay down harsh truths...and one of those harsh truths is that we don't need everyone in this country to buy into progress, in order for progress to happen.

Remember, the same people pushing tax cuts today were defending segregation 50 years ago. It's all connected, and they've since admitted that their dogmatic direction towards tax cuts is rooted in their racist Conservative beliefs:

You start out in 1954 by saying, “N*gger, n*gger, n*gger.” By 1968 you can’t say “n*gger”—that hurts you, backfires. So you say stuff like, uh, forced busing, states’ rights, and all that stuff, and you’re getting so abstract. Now, you’re talking about cutting taxes, and all these things you’re talking about are totally economic things and a byproduct of them is, blacks get hurt worse than whites.… “We want to cut this,” is much more abstract than even the busing thing, uh, and a hell of a lot more abstract than “N*gger, n*gger.”

You can draw a line straight from the Klan, through the John Birch Society, through Goldwater, through Nixon, through Reagan, through Gingrich, through Bush the Dumber, through Palin, through to Trump.

How does it feel to know that tax cuts are a racist Conservative policy choice and not a sound fiscal belief system? Cause when I learned that, it pretty much upended all my conventional wisdom and thinking....to discover that the impetus of tax cuts was rooted in racism, not fiscal policy, certainly changed the way I see Conservatism today. Will you follow suit, knowing that tax cut policy is not rooted in any sound fiscal theory, but rather unbridled and unabashed racism?

 

[Flash]

Nice post. Notice the word "triggered". It's like "lit the fuse". Both simply set off a sequence already in existence. It was a boobytrap waiting to be triggered. Sure, the triggering happened under Bush II but it was just a boobytrap waiting to be triggered. Congress should never have let the trap be set in the first place.

"The Presidents Working Group’s March policy statement acknowledged that turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007.”

This also assumes the Working Group is correct in their analysis which is much too simplistic compared to analyses by economic studies. They "acknowledge" something that is not necessarily true.

 

[LV426]

Don't confuse wealth with savings. If I bought a share of Apple stock 10 years ago for $100 and that share has now split to become 10 shares at $110 today I haven't saved a penny over that time period but my wealth has increased by 10 fold. But it is just paper wealth. If everyone that owned Apple stock tried to sell their shares tomorrow those shares would be worth less than a penny. It only has as much value as what others are willing to pay for it.

Ahem...

Only about 50% of people in this country own stock, and the top 1% owns about 40% of all stock...the top 10% owns about 80% of all stock.

So yeah, it's savings and wealth...it's the same thing in this context. And pretending like your little 401k or whatever is material to the market as a whole is just that egocentric thinking that most middle aged folks have.

The truth is, the market wouldn't even notice if you left it.