Welcome Guest [Log In] [Register]
Welcome to Round Table Knights Clan. Enjoy your visit!




Username:   Password:
Add Reply
The truth on Reagan tax policy.; Serious discussion to get to the truth
Topic Started: Jul 4 2011, 02:14 PM (520 Views)
galahad of jerusalem
Member Avatar
Retired Knight of the Round Table
I don't know about the rest of you, but Reagans tax policy is a bit muddled. If you listen to some, he never raised a tax, and if you listen to others, he raised them quite a bit....11 times.

The thing that gets confusing here is not if he raised them....it seems certain he did....but why he raised them and the circumstances undr which he was encountering.

I would like to see a discussion on this to eventually get to see some truth on this because it pertains to todays debate.

Let me briefly tell what I have gathered in reading the right and the left view of this.

1. In 1981, he lowered taxes but he increased spending, probably mostly in the military.

2. This seemed to put the economy in the whole.

3. So he then had to raise taxes to compensate.

4. But by the time he left office, he had reduced spending and the taxes and had a booming economy.

So, that is a very simple version, lets put some meat on the bones. What do you all think...and try to be fair and balanced :)
Offline Profile Quote Post Goto Top
 
Elrich of Gaul
Member Avatar
Former Knight and Honored King of Old
Good start Galahad...

However, this is outside of my realm... not familiar enough with it from north of the 49th...

I'll sit this one out.. :unsure:
Offline Profile Quote Post Goto Top
 
Dinadan of Logris
Member Avatar
Master of Spam
That could be mostly true, from what I remember reading, but I'm not sure what was done in which years. Also, Fed policy would be another major factor worth putting next to this.

I don't mind digging into it later in the week. :study:
Offline Profile Quote Post Goto Top
 
Kay of Sauvage
Retired Knight
The count of 11 tax raises or whatever doesn't really matter. All tax changes are not equal. Heck, people will say you raised taxes if you both lower and raise some taxes at the same time and give a net decrease in tax.

What would matter is the overall amount of tax change and where. The 81' tax cuts were about 3% of GDP, while the 82' tax increases were about 1% of GDP. The rest of the tax changes seem to be revenue neutral, though with some shifting of who or what was taxed (which probably accounts for a lot of the counting of tax increases, like the 86 reforms that raised the bottom rate and expand the Alternative Minimum Tax to hit more of the middle class, even though there were tax cut offsets to make it revenue neutral).

As far as the "booming" economy, it doesn't appear to be more than what you'd typically see in a recovery from the hole a recession makes. But supply side economics isn't about recovering from a recession (that's Keynesian). Rather, the claim is that supply side economics will increase the underlying growth rate that exists even when the economy is fully recovered, as in having people be more productive (productivity) or more people working or working more hours (labor supply increases) because of added incentive to work (lower taxes on income). Or an increase in the savings rate because of increased incentive to save due to lower taxes on savings (lower capital gains taxes). But none of that actually occurred.




For starters, read this bit of background information in the link below. I thought it was good because it analyzes the theories in play rather than just throwing around lots of statistics that give no context regarding the other factors that affect those statistics.

http://pages.stern.nyu.edu/~nroubini/SUPPLY.HTM
Offline Profile Quote Post Goto Top
 
tehReal~ChaZZZy
Member Avatar

Gala dunno if President Reagan increased military spending in 1981. He actually tasked his Team of advisors for analysis on dealing with the Soviet Union and that debate lasted pretty much through all 1981 and maybe into 82. His people were actually split on whether to continue the policy of detente or take a more adversarial role.
Offline Profile Quote Post Goto Top
 
tehReal~ChaZZZy
Member Avatar

Kay of Sauvage,Jul 4 2011
01:03 PM
For starters, read this bit of background information in the link below. I thought it was good because...

Gala here's a great article written by Arthur Laffer himself explaining supply side economics and how rates of taxation affect the total amount of government revenues:

Quote:
 
The Laffer Curve: Past, Present, and Future
Published on June 1, 2004 by Arthur Laffer BACKGROUNDER #1765

The Laffer Curve itself does not say whether a tax cut will raise or lower revenues. Revenue responses to a tax rate change will depend upon the tax system in place, the time period being considered, the ease of movement into underground activities, the level of tax rates already in place, the prevalence of legal and accounting-driven tax loopholes, and the proclivities of the productive factors. If the existing tax rate is too high--in the "prohibitive range" shown above--then a tax-rate cut would result in increased tax revenues. The economic effect of the tax cut would outweigh the arithmetic effect of the tax cut.
Moving from total tax revenues to budgets, there is one expenditure effect in addition to the two effects that tax-rate changes have on revenues. Because tax cuts create an incentive to increase output, employment, and production, they also help balance the budget by reducing means-tested government expenditures. A faster-growing economy means lower unemployment and higher incomes, resulting in reduced unemployment benefits and other social welfare programs.
Over the past 100 years, there have been three major periods of tax-rate cuts in the U.S.: the Harding-Coolidge cuts of the mid-1920s; the Kennedy cuts of the mid-1960s; and the Reagan cuts of the early 1980s. Each of these periods of tax cuts was remarkably successful as measured by virtually any public policy metric.
Prior to discussing and measuring these three major periods of U.S. tax cuts, three critical points should be made regarding the size, timing, and location of tax cuts.
Size of Tax Cuts
People do not work, consume, or invest to pay taxes. They work and invest to earn after-tax income, and they consume to get the best buys after tax. Therefore, people are not concerned per se with taxes, but with after-tax results. Taxes and after-tax results are very similar, but have crucial differences.
Using the Kennedy tax cuts of the mid-1960s as our example, it is easy to show that identical percentage tax cuts, when and where tax rates are high, are far larger than when and where tax rates are low. When President John F. Kennedy took office in 1961, the highest federal marginal tax rate was 91 percent and the lowest was 20 percent. By earning $1.00 pretax, the highest-bracket income earner would receive $0.09 after tax (the incentive), while the lowest-bracket income earner would receive $0.80 after tax. These after-tax earnings were the relative after-tax incentives to earn the same amount ($1.00) pretax.
By 1965, after the Kennedy tax cuts were fully effective, the highest federal marginal tax rate had been lowered to 70 percent (a drop of 23 percent--or 21 percentage points on a base of 91 percent) and the lowest tax rate was dropped to 14 percent (30 percent lower). Thus, by earning $1.00 pretax, a person in the highest tax bracket would receive $0.30 after tax, or a 233 percent increase from the $0.09 after-tax earned when the tax rate was 91 percent. A person in the lowest tax bracket would receive $0.86 after tax or a 7.5 percent increase from the $0.80 earned when the tax rate was 20 percent.
Putting this all together, the increase in incentives in the highest tax bracket was a whopping 233 percent for a 23 percent cut in tax rates (a ten-to-one benefit/cost ratio) while the increase in incentives in the lowest tax bracket was a mere 7.5 percent for a 30 percent cut in rates--a one-to-four benefit/cost ratio. The lessons here are simple: The higher tax rates are, the greater will be the economic (supply-side) impact of a given percentage reduction in tax rates. Likewise, under a progressive tax structure, an equal across-the-board percentage reduction in tax rates should have its greatest impact in the highest tax bracket and its least impact in the lowest tax bracket.


http://www.heritage.org/research/reports/2...sent-and-future
Offline Profile Quote Post Goto Top
 
Dinadan of Logris
Member Avatar
Master of Spam
Well, as we aren't discussing Reagan after all...

...while it has proven somewhat useful as a PR tool, this concept is one of the most useless ideas in macroeconomics. Neither Laffer nor anybody else has ever been been able to dig up proper evidence supporting the theory of a particular curve shape, much less draw a useful Laffer-curve upon which policymakers could base decisions. You just don't know when your taxes are in that mythical "prohibitive range". The "tip" of the curve (if there's a curve at all) is at an unknown position - in fact it's not even proven that there is one tip.

Which is why moderately renowned American sceptic, Martin Gardner, proposed his satirical "neo-Laffer-curve". B)

Posted Image

BTW, a key part from the posted Laffer-quote,
Quote:
 
People do not work, consume, or invest to pay taxes. They work and invest to earn after-tax income, and they consume to get the best buys after tax. Therefore, people are not concerned per se with taxes, but with after-tax results.

is only fuzzy-true, as businesses see owners and employees use business property for private purposes all the time. Which in fact has them consume to get the best buys before tax. Not to mention flat-out tax fraud. Therefore, people are less concerned with proper after-tax results than Laffer purports - "without-tax" results are the thing. Never has tax reduction stopped people from trying to trick, evade and defraud. Policies that have been useful were increased enforcement and more equalized rates on different income types, but these come with costs too.
Offline Profile Quote Post Goto Top
 
Kay of Sauvage
Retired Knight
Let's break this down into plain English. Supply-side is all about incentives. That Heritage article claims "tax cuts create an incentive to increase output, employment, and production." So, let's take a look at how exactly it claims to do so.

Think of real people as you look at this. Think of your own mental processes.

Supply-side theory

1. Productivity. That is how much value or output a person creates in a given number of hours. They assume that people don't work as hard as they would due to a portion of their incomes going towards taxes. The more their income in taxes, the less hard that they work. With lower taxes, they work harder to increase their less-taxed incomes.

2. Labor supply. Very much a similar thing to productivity, but has to do with willingness to work and willingness to work more hours (rather than output per hour). The theory is that lower taxes would encourage more people to work and existing workers to work more hours. This increase in available labor supply would then push worker wages down as there are more workers and longer-working workers competing to be employed. This would make business find it fit to hire more workers, in the same way that business would hire low income 3rd world workers for a particular job but wouldn't find it profitable to hire Americans for the same job at high wages.

To make up for the government revenue lost by having lower tax rates, they say the losses will be mitigated by the fact that people work harder and earn more income (so taxable income increases, though it is taxed at a lower rate). Also, people will be receiving less means-tested government social welfare benefits like unemployment benefits because more of them will be working and earning more income so that they no longer qualify.

3. Savings. Supply-side thinks that less tax on capital gains would lead to more incentive to save/invest, and that this would provide capital for business growth.




So that's the theory. But if you think about it, do you really see this occurring in reality? Look at it piece by piece:

Supply Side Reality

1. Work incentives. Do you think workers don't work as hard or as much because of the tax rate? Actually, what I see is that workers are much more motivated by not having as much income as they want. For example, if they want 80k income and those damn taxes cause them to earn only 60k, they work more hours, more jobs, or work harder in order to get that last 20k they want. And they are more inclined to work less hours or less hard when they are getting what they need. People who work multiple jobs are doing so because they really need the money. Lowering their tax rates would make them more likely to cut back hours worked because then they would get enough money with less hours than before.

It's not a stretch to argue that tax cuts would lead to less incentive to work for this reason, let alone just breaking even in terms of incentive.

And of course there are all the other reasons people work hard or not... Like to not get fired. This is likely a much more significant factor on workers than anything tax related. I mean, I know the marginal tax rate doesn't even factor into my own decisions about what job to take or how hard to work, and I don't know anybody who actually does consider marginal tax rates in their decisions.



At the high income side of things, it is slightly different but similar. Someone earning 2 million is just earning what they can, what the free market will pay. A-Rod won't work harder if his taxes are cut, nor will he be offered more money by teams. Bill Gates won't work evenings at the McDonalds drive through if his marginal tax rate were cut to 0%.

Once again, rather than the marginal tax rate being the biggest driver of behavior, I would think it is your personal wealth accumulation that is more important. Like Reagan once claimed that he wouldn't find it worth it to do another movie because the tax rate on his income was too high. Oh really, a couple million dollars partially taxed at 70% is the reason, or is it the millions of dollars you've already accumulated that is making you not care about money anymore? Lowering the tax rate in order to get him to work is basically begging the wealthy to continue to work after they've acquired more money than they could possibly need to be happy. It tries to compensate for the diminishing return on the value of money by adding more money, which only speeds the accumulation of the money.



2. Labor supply and employment. As I stated earlier, supply-side seeks to increase total employment by providing business with more competing lower wage workers. If a business would employ an additional worker if only such a worker were available for $10 an hour, but currently the workers are going for $11, supply side hopes that the incentive from the tax cut would cause more workers to enter the workforce, and for existing workers to work longer so that fewer workers are needed so that some get fired and are available other businesses. The increase in supply of workers pushes wages down, opposite of how a shortage of workers makes businesses compete for labor by raising wages. If this happens, it would cause slightly more total employment, though not a decrease in the unemployment rate (you get more workers employed total, but from having a greater pool of workers looking for employment).

First of all, I've already discussed how questionable it is that tax cuts would lead to more workers looking to work and looking to work longer and harder. In fact, the economic numbers indicate no change. The labor force grew at the same rate as it had previously, and productivity growth remained the same as well.

2nd, does this seem like it's a great way to increase employment? It's basically the same idea behind why a recession leads to lower wages because of lots of people competing for jobs, which then leads to more employment overall because that workforce is cheaper than before.



3. Savings. The idea is that lower taxes on capital gains increases incentive to invest. First of all, for the majority of people, all of the investment they could possibly afford to do will already be tax free due to tax laws already on the books like 401k plans. 2nd, you only have really 2 choices of what to do with money, invest or spend. The wealthy invest a lot because they have a lot. Almost by definition, they have everything they want and need. Extra spending does little to improve their situation, so they might as well invest and turn the money into more money. 3rd, investment isn't always what we need. Except in cases where the economy has high demand, we need spending to create the need for jobs and the good investment opportunities. What good is more money chasing a return on investment when businesses are downsizing? Plus, the extra spending improves returns on investments, which itself is an incentive to invest. Higher tax and better returns is better than crappy returns with a low tax.
Offline Profile Quote Post Goto Top
 
tehReal~ChaZZZy
Member Avatar

Let's actually take Laffer's own explanation kay:

Quote:
 
Theory Basics
The basic idea behind the relationship between tax rates and tax revenues is that changes in tax rates have two effects on revenues: the arithmetic effect and the economic effect. The arithmetic effect is simply that if tax rates are lowered, tax revenues (per dollar of tax base) will be lowered by the amount of the decrease in the rate. The reverse is true for an increase in tax rates. The economic effect, however, recognizes the positive impact that lower tax rates have on work, output, and employment--and thereby the tax base--by providing incentives to increase these activities. Raising tax rates has the opposite economic effect by penalizing participation in the taxed activities. The arithmetic effect always works in the opposite direction from the economic effect. Therefore, when the economic and the arithmetic effects of tax-rate changes are combined, the consequences of the change in tax rates on total tax revenues are no longer quite so obvious.
Offline Profile Quote Post Goto Top
 
tehReal~ChaZZZy
Member Avatar

Here you go gala:

Quote:
 
Prior to the tax cut, the economy was choking on high inflation, high Interest rates, and high unemployment. All three of these economic bellwethers dropped sharply after the tax cuts. The unemployment rate, which peaked at 9.7 percent in 1982, began a steady decline, reaching 7.0 percent by 1986 and 5.3 percent when Reagan left office in January 1989.
Inflation-adjusted revenue growth dramatically improved. Over the four years prior to 1983, federal income tax revenue declined at an average rate of 2.8 percent per year, and total government income tax revenue declined at an annual rate of 2.6 percent. Between 1983 and 1986, federal income tax revenue increased by 2.7 percent annually, and total government income tax revenue increased by 3.5 percent annually.
The most controversial portion of Reagan's tax revolution was reducing the highest marginal income tax rate from 70 percent (when he took office in 1981) to 28 percent in 1988. However, Internal Revenue Service data reveal that tax collections from the wealthy, as measured by personal income taxes paid by top percentile earners, increased between 1980 and 1988--despite significantly lower tax rates (See Table 8).


http://www.heritage.org/research/reports/2...sent-and-future

Offline Profile Quote Post Goto Top
 
Kay of Sauvage
Retired Knight
The Keynesian Approach:

While supply side focuses on supply through incentive (supply of labor, supply of capital), the Keynesian side focuses on demand.

Demand is the driver of the economy. Too many people unemployed? It's not a lack of capital (and certainly not a lack of labor supply). Businesses aren't employing people because the consumer demand doesn't justify hiring more people, not because they don't have the money to expand. If you increase demand and cause that business to boom to the point where they need to hire to keep up with demand, I guarantee there will investors lining up at the door to get a piece of that action.

Supply-side isn't even about recessions or the business cycle. It's supposed to be a revenue neutral way of increases overall employment and output. Where they claim that supply-side actions are what the economy needs in a recession (which I think is a misrepresentation of what supply side is which they use for political reasons), they are half claiming a Keynesian stance (put money in people's hands through tax cuts) and half claiming something that is completely wrong, which is that businesses just need more capital and/or tax incentive to expand (when what they really need is demand). And they cancel out their Keynesian part by suggesting something that is pro-recession, which is the cutting of government spending. They just assert that government spending is basically waste, that money spent by government just disappears or is somehow less efficient in creating demand, but this a pure baseless lie. Must I explain why that is the case, or is it obvious?


As far as when we are out of recessions and have full employment, Keynesian starts to look a little bit like supply side. It is possible to have too much demand and not enough labor and/or capital to meet that demand. But there are a whole number of ways to correct that, not just using tax cuts in hopes of increasing labor supply and capital (which may actually make the problem worse by increasing demand).

One way is to simply cut government spending. This reduces demand from the government (government employees become available to the private sector, private contractors working for the gov become available for private entities, cuts to entitlements reduces the money people have so that they are forced to consume less in the economy). This is basically reducing "crowding out," which is where resources are limited (only so much labor available to produces things) and it is being used for government purposes instead of private purposes).

Raising taxes also works, and does so by reducing incomes and thus reducing spending in the economy. Both spending cuts and tax increases lead to government surpluses, which in turn lead to those loans to government having to be reinvested elsewhere. In other words, more capital becomes available to private entities.


So as you can see, when the economy is strong, supply-side and Keynesian will basically end up trying to do mostly the same thing. That is, cutting spending, increasing available capital, maybe cutting high income tax rates. But supply-side is attempting to do it based on a flimsy theory about incentives, while Keynesians are trying to do it based on more solid theory about supply and demand that we all pretty much agree on (as I said, politicians sell supply side by telling us something that has nothing to do with supply-side theory... that it has a stimulative effect from stopping government waste of money and giving it to people to use effectively instead, meaning we all agree about the need for promoting economic demand, and that is Keynesian, not supply-side).




Also, as Keynesian theory looks to balance demand and supply, it focuses on behaviors that supply side doesn't even care about, those related to spending and aggregate demand. For example, there's the fact that lower income people spend a greater portion of what they earn and spend it faster than high income people who will save much more. Also, there's the fact that that much of government spending is even more stimulative to growth than most tax cuts. So while Keynesians are trying to stimulate demand in the economy, supply-siders are doing the opposite by cutting government spending in order to give inefficient tax cuts to the rich (inefficient for created demand, that is, which supply side doesn't care about).

Supply-side's demand-cutting policies combined with the fact that a significant portion of government spending will benefit lower income more than higher incomes means that lower income earners are always being put under more pressure, which hurts the economy, which hurts low earners the most. It's a bad cycle and is the reason that income inequality is at it's highest since the great depression, and it's also the reason why the middle class isn't as resilient and able to bounce back from the latest recession. They are more tapped out than in other periods.



The way Keynesian policies would work is to favor those things that give the biggest boost to demand with the fastest turnaround per dollar spent, until the economy reaches its capacity. This means they try to help middle and lower income people who will spend their greater income quickly, creating demand in the economy and creating jobs which further increases income available for spending. If you and I are the economy, and there is 10 dollars, we could keep buying good and services from each other as soon as we got the money. We would immediate be at our full capacity, working as fast as we can to earn the payment and then spending it once we had it. That sort of how low and middle income earners act. On the contrary, if I save $5 and spend only $5, then you save your $5 when you get it, our economy comes to a standstill, each of us sitting on $5. That is more like how the highest income earners act. And over time, they have kept gaining a larger share of the money, especially since having money gets you more money just by buying into a slice of corporate profits.
Offline Profile Quote Post Goto Top
 
Kay of Sauvage
Retired Knight
tehReal~ChaZZZy,Jul 5 2011
06:24 PM
Let's actually take Laffer's own explanation kay:

Quote:
 
Theory Basics
The basic idea behind the relationship between tax rates and tax revenues is that changes in tax rates have two effects on revenues: the arithmetic effect and the economic effect. The arithmetic effect is simply that if tax rates are lowered, tax revenues (per dollar of tax base) will be lowered by the amount of the decrease in the rate. The reverse is true for an increase in tax rates. The economic effect, however, recognizes the positive impact that lower tax rates have on work, output, and employment--and thereby the tax base--by providing incentives to increase these activities. Raising tax rates has the opposite economic effect by penalizing participation in the taxed activities. The arithmetic effect always works in the opposite direction from the economic effect. Therefore, when the economic and the arithmetic effects of tax-rate changes are combined, the consequences of the change in tax rates on total tax revenues are no longer quite so obvious.

You apparently didn't read a goddamn word I wrote. What the heck do you think I just analyzed? You can make the assertion that lower taxes rates provide a positive impact on work, output, and employment simply through the incentive it should provide, but don't you think it's important to look into how exactly those claims work in reality? I took each one of those claims separately. At best, we'd be talking a minuscule gain in those areas, which would be nothing compared to the effects of demand-side events. At worst, you'd get unintended negative results in those areas.

The claim is basically that productivity and the labor force will grow to give gains in the underlying max GDP potential for any given time compared to without the policies. Like instead of having 98% of people working at 98% of their maximum effort level for 35 hours average, you'd have 99% of people working at 99% of maximum effort for 36 hours average. How on earth can you say it was successfully achieved when the things you say would cause the gains, productivity and labor force, remained absolutely unchanged? :wall:



Quote:
 
Prior to the tax cut, the economy was choking on high inflation, high Interest rates, and high unemployment. All three of these economic bellwethers dropped sharply after the tax cuts.
Wow, how nice that that period also coincides with the recession. Surely it was the tax cuts that dropped inflation, not the recession, right? lol.
Quote:
 
The unemployment rate, which peaked at 9.7 percent in 1982, began a steady decline, reaching 7.0 percent by 1986 and 5.3 percent when Reagan left office in January 1989.
Oh, so employment behaved as if we entered a recession and then recovered? Amazing. Ya know, I don't recall supply-side economics having anything to do recovering from recessions. Do you really expect us to believe that there was a recession just because people didn't have enough incentive to work or whatever it is you think they lacked incentive for?
Quote:
 
Inflation-adjusted revenue growth dramatically improved. Over the four years prior to 1983, federal income tax revenue declined at an average rate of 2.8 percent per year, and total government income tax revenue declined at an annual rate of 2.6 percent. Between 1983 and 1986, federal income tax revenue increased by 2.7 percent annually, and total government income tax revenue increased by 3.5 percent annually.
Get outta town! You mean to tell me that the period of entering the recession and to its peak resulted in lower tax revenues, and the period of recovery saw revenues increase? Whodathunkit!?
Quote:
 
The most controversial portion of Reagan's tax revolution was reducing the highest marginal income tax rate from 70 percent (when he took office in 1981) to 28 percent in 1988. However, Internal Revenue Service data reveal that tax collections from the wealthy, as measured by personal income taxes paid by top percentile earners, increased between 1980 and 1988--despite significantly lower tax rates (See Table 8).
Well clearly this means those in the higher income bracket were so incentivized to work harder that they increased their their incomes by more than double! I'm sure nothing else is at work here.


Is this really what I gotta deal with? :wall: :wall: :wall: Where is a facepalm emoticon when you need it?
Offline Profile Quote Post Goto Top
 
tehReal~ChaZZZy
Member Avatar

Kay of Sauvage,Jul 5 2011
04:54 PM
You apparently didn't read a goddamn word I wrote.
Is this really what I gotta deal with? :wall: :wall: :wall: Where is a facepalm emoticon when you need it?

kay please quit being so angry and insulting all the time. :)
Offline Profile Quote Post Goto Top
 
Kay of Sauvage
Retired Knight
tehReal~ChaZZZy,Jul 5 2011
08:30 PM
Kay of Sauvage,Jul 5 2011
04:54 PM
You apparently didn't read a goddamn word I wrote.
Is this really what I gotta deal with? :wall:  :wall:  :wall: Where is a facepalm emoticon when you need it?

kay please quit being so angry and insulting all the time. :)

Don't waste my time by not bothering to read what directly answers the thing you about to post. If this was something new from you, I'd be polite. But it's the norm, not the exception. The way you avoid and ignore the points you don't want to deal with... Are you sure you're not running for office?
Offline Profile Quote Post Goto Top
 
tehReal~ChaZZZy
Member Avatar

Kay of Sauvage,Jul 5 2011
06:50 PM
Don't waste my time by not bothering to read what directly answers the thing you about to post. If this was something new from you, I'd be polite. But it's the norm, not the exception. The way you avoid and ignore the points you don't want to deal with... Are you sure you're not running for office?

You're rude to every conservative who disagrees with you. Your tone is abrasive and demeaning which is why I choose not to respond to you.

I sent you an re-conciliatory message 2 weeks ago so we could reset the tone of these discussions and never got a message back. Based on how you choose to conduct yourself on threads, I suppose I should have expected that.

Offline Profile Quote Post Goto Top
 
galahad of jerusalem
Member Avatar
Retired Knight of the Round Table
Hey all, thanks for the posts...i will read them intently and comment. :D
Offline Profile Quote Post Goto Top
 
Kay of Sauvage
Retired Knight
tehReal~ChaZZZy,Jul 5 2011
10:22 PM
You're rude to every conservative who disagrees with you. Your tone is abrasive and demeaning which is why I choose not to respond to you.

I sent you an re-conciliatory message 2 weeks ago so we could reset the tone of these discussions and never got a message back. Based on how you choose to conduct yourself on threads, I suppose I should have expected that.

Obviously you couldn't have chosen to not respond to me simply because my tone was abrasive and demeaning because your post was BEFORE I chided you for ignoring everything I wrote. I doubt anything before that was offensive.

You know, Galahad has strong conservative beliefs too. But he doesn't go around doing whatever it takes to "win" the debate through dishonest tactics like playing dumb, distracting from the points you want to avoid, insulting some strawman of what you think "libs" are or what they think or want, or spamming quotes to burden the debate with quantity rather than quality, etc. Galahad seems interested in the debate and the ideas offered, while you have always been interested just in fending off what you don't like and piling on what you do, not unlike what you'd see in comments on news sites or on forums full of partisans seeking to promote the "team" using any methods at their disposal.

I understand people are often initially in the habit of using that type of behavior because they see it everywhere they go and have learned to react in-kind. The more politically involved/interested, the more likely their convictions lead them to be so aggressive in defending their "team" and attacking the opposition. But I would hope it would wear off after some time of dealing with calmer, more reasonable people, even more so when your debate tactics are occasionally pointed out to you. But in your time here, it looks to me like you've only learned to continue to use your tactics while mostly maintaining just the demeanor of politely debating. Maybe you just can't shake the unconditional loyalty to the team, or you fear admitting one point would break the impenetrable flawlessness of the whole ideological package, or maybe it's just that you've just dug yourself a hole by being uncompromising and confident for so long that you are resigned to just stick with it eternally.

It's really frustrating to deal with, you know? Can you recall a time where you have ever said something along the lines of "fair point, but" or "that may be true, however", rather than doubling down on tactics to change the focus?

The reason I didn't respond to your message is because I don't feel I can trust you. I mean, I'm sure you can maintain the polite demeanor. But for you to show true interest in the debate rather than just interest in making your side look as good as possible and the other side as bad/ridiculous as possible, only seeing is believing for me.
Offline Profile Quote Post Goto Top
 
Dinadan of Logris
Member Avatar
Master of Spam
@Chazz, let's get serious. Kay wasn't even being rude, AND you posted an "answer" that had nothing to do with his points... for the umpteenth time :joker:

Thanks for posting data though. You didn't offer interpretation - does that mean that even you disagree with the idea that this was a supply-side economics "victory"? ;)

@Kay, nice summary. I do disagree with the some of the anecdotic evidence you posted about labour (or rather, I could give anecdotic evidence to the contrary) but it's not really worth going into, as your conclusions seem to be in line with standard labour supply theory. :)

So I'd like to emphasize on these two points Kay made:

1) hardcore supply-side economics is not intended to deal with recessions

2) politicians have other goals than increasing output through the supply-side logic, meaning they will use a de-facto Keynesian mix of tools

Therefore

3) clean supply-side economics has never been able to prove itself and probably never will

(good thing IMO because:)

4) the tax and redistribution system also being about social justice, purely output (GDP) -based tax considerations aren't even desirable in theory.

My "Marxist" 2 cents :D
Offline Profile Quote Post Goto Top
 
Elrich of Gaul
Member Avatar
Former Knight and Honored King of Old
Question of the day now is.... will both sides stop bickering and make a decision on increasing the debt cap now.???
Being their neighbours, if they reneg on their debt.. me thinks we'll get sucked down with them.... gah.!!!
Offline Profile Quote Post Goto Top
 
Brennus of Tintagel Castle
Member Avatar
Retired Knight
"Different (opinions) doesn't mean wrong." Grandpa Brennus
Offline Profile Quote Post Goto Top
 
tehReal~ChaZZZy
Member Avatar

Kay I truly wish to change the tone of the political dialogue on the forums here. You have my sincere apology for any intentional or perceived slights in the past from me. Although we disagree fundamentally on virtually everything political I want the discussions here has to be as respectful in tone as possible for everyone you and I included.
Offline Profile Quote Post Goto Top
 
galahad of jerusalem
Member Avatar
Retired Knight of the Round Table
Ok.....lots to read here. You know a lot more about this stuff than I do. I guess what I am wondering is......given the supply/demand side debate and where we are now in the U.S. econ....I am wondering how much tax revenue needs to be raised vs spending cuts.

I am sure a little of both, or am I sure...not really....but anyway, it seems to me, as I listen to the rhetoric on cspan, which I listen to most of the day, and not to mention deep down I want the conservatives to be right :) .......it does seem that the U.S. has a spending problem more than a revenue problem.

Now, I am fine with blaming Dubya on this, cause you can't cut taxes and increase spending and you need to have a war tax if you must fight a war. So, I agree with that.

However, Obama seems to be Bush on steroids with his spending. So, at the very least, I can't say he is any better.

This is why I am looking to Reagan as he had a democratic congress but was able to do some good things. The situation he inherited is simular to what Obama got. However it seems like they are approaching it differently....but whoa...thats not my point here. My point/question is, when the Bowles/Simpson report came out, they had a fairly balanced approach. The one thing I learned in this was that Simpson was very close to Reagan in those days and he is the one saying taxing a little along with a lot of cuts is OK. Reagan did just that over his 8 years.

So, I hear the right saying...no taxes raiosed at all...and the democrats saying tax more, cut less...essentually raise taxes to pay for all the govment programs.

As I see it, it's to extreme sides. Semmed like Reagan was more balanced. Seemed like he cut too much, had to to rebound and raise taxes somewhere 11 times to pay for the deficet spending needed to build military and perhaps stimulate economy....then once that was achieved, cut taxes and spending again.

Well, seems like we can't spend any more, it is time to cut a lot more than tax now...though closing loopholes would broaden the base and produce revenue I hear.

So, while I want to side with the Tea Party, me thinks Simpson knows his stuff the best here.....I really wish Obama would have just gone with that, sent it to congress, amend it and pass it. Instead he comes out with a budget his own party couldn't even vote for. It was not a cut, but a rise in the budget!!! I swear I couldn't believe it.

Anyway...I have a klot to learn and will read more of the details you all wrote bits at a time.

Offline Profile Quote Post Goto Top
 
Dinadan of Logris
Member Avatar
Master of Spam
galahad of jerusalem,Jul 8 2011
12:23 AM
However, Obama seems to be Bush on steroids with his spending. So, at the very least, I can't say he is any better.

Yep. Obama had a 1-hour Twitter answering session this week, and acknowledged the need for spending cuts (in fact semi-offered to review even the "entitlement" programs) while insisting on raising back taxes "on the rich".

He also made the point that US taxes are currently on a historical low, i.e. a below-Reagan level. Supposedly not letting the Bush cuts expire was the deal with Republicans for his package of spending and 1K payroll tax relief.

About the recovery, i.e. where the spending goes: according to Obama's rough numbers, 4 million jobs were lost to the recession before he took office and another 4 million in his first months before actions took effect. Only 2 million have been regained, though he puts the job growth rate above hundred thousand per month now.
Offline Profile Quote Post Goto Top
 
Mercurius of Cappadocia
Member Avatar
King of the Round Table Knights
Supply side economics got us to today. Bush did everything Reagan did... dropping interest rates down to zero, deregulating, and dropping taxes.... 6 trillion of our current debt is the Bush tax cuts. Reagan tripled the national debt, and bush doubled it.

What is the difference between massive defense spending and any other spending? We can build roads or tanks.... gov't jobs are gov't jobs. Bush's error wasn't in not following the Reagan blueprint.

Not sure if this is responding to your post, Gala....



Chazz.... We appreciate the change of tone. Thanks. HOpe we can continue. I do agree with Kay and Din that you ignoring 98% of posts is understandably infuriating.
Offline Profile Quote Post Goto Top
 
Cole Stark of WinterFell
Member Avatar
Retired Knight's Apprentice
Explain the reason why Clinton says it was okay to raise the corporate tax rates when he was in, but finds it very bad that Obama would be willing to do it now.

I think it depends on who clinton is talking to ;)

If a Tax increase is warranted, then I think it should be a Flat tax across the board, and a slightly higher tax for the super wealthy. We cant get out of this with just a Huge tax increase on the rich, sorry, its just not going to work. Im in the top 8% as far as the tax bracket, and it ticks me off that nearly half of the country's workforce dosent pay taxes, and think that all the tax money should come from the rich.

YET, they want all the entitlements they can stick up their palms for, you see where im going with this? I dont want them to raise taxes, but if thats what we have to do then do it right. Class warfare, Dont roll your eyes because thats what it is.

Our ability to generate revenue isnt a problem! Our spending is ALL the problem.....(Governments Fault) and I dont see how ppl can point and name call a company that employes them, and then spit at them because they spend their own money on stuff they enjoy. Right, right....if we cant do it then nobody should right? Plateau society is what I think those ppl want. They dont want to put in the effort of starting a business, or the hard work it takes to maintain a business. They just want a check....

Most of those ppl win the lottery and are broke year later. Pathetic
Offline Profile Quote Post Goto Top
 
galahad of jerusalem
Member Avatar
Retired Knight of the Round Table
Mercurius of Cappadocia,Jul 9 2011
06:14 AM
Supply side economics got us to today. Bush did everything Reagan did... dropping interest rates down to zero, deregulating, and dropping taxes.... 6 trillion of our current debt is the Bush tax cuts. Reagan tripled the national debt, and bush doubled it.

What is the difference between massive defense spending and any other spending? We can build roads or tanks.... gov't jobs are gov't jobs. Bush's error wasn't in not following the Reagan blueprint.

Not sure if this is responding to your post, Gala....



Chazz.... We appreciate the change of tone. Thanks. HOpe we can continue. I do agree with Kay and Din that you ignoring 98% of posts is understandably infuriating.

By the time Reagan left, did he lower the size of federal government, both in influence and numbers of dollars used? I ask cause I don't know.

I know that you need to lower the federaal's government output if you lower taxes as well, they must go hand in hand. Bush didn't do that...he spent like a "Cainzian" :D

My buddy who just got his PhD in Finance said Bush is a Keyneasian..or however you spell it. :study:
Offline Profile Quote Post Goto Top
 
Dinadan of Logris
Member Avatar
Master of Spam
galahad of jerusalem,Jul 11 2011
07:19 AM
I know that you need to lower the federaal's government output if you lower taxes as well, they must go hand in hand. Bush didn't do that...he spent like a "Cainzian" :D

No Gala, Bush kept deficit spending in the wrong part of the business cycle for a "Keynesian". He was just "Bushian". :D
Offline Profile Quote Post Goto Top
 
Mercurius of Cappadocia
Member Avatar
King of the Round Table Knights


tripling the national debt to get out of a recession is no different than doubling the national debt to get out of a recession. A tax cut while running a deficit is stimulus, just like giving companies subsidies or unemployment benefits, or building roads. Spending on defense is no different than spending on education.

So, if Bush was Keynsian, then Reagan was too. These labels are just a way to color how you feel about the facts.
Offline Profile Quote Post Goto Top
 
Pete of Yorkshire
Member Avatar
Knight
Posted Image
Offline Profile Quote Post Goto Top
 
tehReal~ChaZZZy
Member Avatar

galahad of jerusalem,Jul 10 2011
11:19 PM
Mercurius of Cappadocia,Jul 9 2011
06:14 AM
Supply side economics got us to today. Bush did everything Reagan did... dropping interest rates down to zero, deregulating, and dropping taxes.... 6 trillion of our current debt is the Bush tax cuts. Reagan tripled the national debt, and bush doubled it.

What is the difference between massive defense spending and any other spending? We can build roads or tanks.... gov't jobs are gov't jobs. Bush's error wasn't in not following the Reagan blueprint.

Not sure if this is responding to your post, Gala....



Chazz.... We appreciate the change of tone. Thanks. HOpe we can continue. I do agree with Kay and Din that you ignoring 98% of posts is understandably infuriating.

By the time Reagan left, did he lower the size of federal government, both in influence and numbers of dollars used? I ask cause I don't know.

I know that you need to lower the federaal's government output if you lower taxes as well, they must go hand in hand. Bush didn't do that...he spent like a "Cainzian" :D

My buddy who just got his PhD in Finance said Bush is a Keyneasian..or however you spell it. :study:

Under President Reagan domestic spending was cut. To try and paint Presidents Reagan and and Bush 43 with the same broad brush just is not an accurate assessment.

Quote:
 
In his first budget plan, Reagan proposed a “dramatic
downward shift in federal spending growth rates” by
“eliminating federal activities that overstep the proper
sphere of federal government responsibilities.”4 Table 1
shows that real spending fell in most departments in
Reagan’s first three years. Certainly, overall nominal
spending was not cut under Reagan, but his domestic
proposals were nonetheless a sharp change from prior
policy. By contrast, Table 1 shows that real spending in
nearly every department has increased substantially,
sometimes exorbitantly, under Bush.
Entitlement Spending
President Reagan’s first budget plan promised to
“overhaul the nation’s overgrown $350 billion entitlements
system.” He proposed numerous spending reductions to
Medicare and Medicaid and was able to make some
modest reforms to slow program growth rates.
By contrast, President Bush seems intent on making
entitlement spending even more overgrown. While Bush
has proposed some reforms for Medicare, that has been
pushed aside in favor of adding a huge unfunded $400
billion prescription drug plan. If enacted, it would be the
largest expansion of Medicare since its inception in 1965.
Many analysts are projecting that the $400 billion cost
over 10 years will be an understatement of the drug bill’s
actual cost. For one thing, supporters are sure to begin
pushing for an expansion in benefits as soon as the ink is
dry on the initial drug benefit law. Also, costs of a drug
benefit will be much higher next decade as baby boomers
begin retiring in droves.

Table 1. Spending by Department
Percent Change in Real Outlays in First Three Years
Department Reagan Bush
Agriculture -13.2% 8.5%
Commerce -29.0% 9.6%
Defense 18.6% 27.6%
Education -21.8% 60.8%
Energy -19.6% 22.4%
Health & Human Services 9.0% 21.4%
Housing & Urban Dev. -3.7% 6.1%
Interior -4.6% 23.4%
Justice 1.2% 11.0%
Labor -29.4% 56.0%
State 9.5% 32.5%
Transportation -13.0% -1.3%
Treasury 31.1% -7.0%
Veteran Affairs -3.9% 29.4%
Total Outlays 6.8% 15.6%
Sources: Budget of the U.S.


http://www.cato.org/pubs/tbb/tbb-0308-16.

These numbers are from just the first 3 years but over the course of the Reagan Presidency as a % of GDP non-defense discretionary spending decreased.
Offline Profile Quote Post Goto Top
 
tehReal~ChaZZZy
Member Avatar

galahad of jerusalem,Jul 5 2011
09:06 PM
Hey all, thanks for the posts...i will read them intently and comment. :D

:D
Offline Profile Quote Post Goto Top
 
tehReal~ChaZZZy
Member Avatar

Quote:
 
Reagan cut the budget of eight out of 15 agencies in his first term and 10 out of 15 in his second, De Rugy's study found. Among the larger domestic spending cuts in real terms were: 29.1 percent for the Commerce Department and 33.4 percent for the Labor Department in Reagan I; and 40.1 percent for the Department of Housing and Urban Development and 24.9 percent for the Department of Agriculture in Reagan II.


http://www.bloomberg.com/apps/news?pid=new...redirectoldpage

Reagan differed sharply in approach from the tact of GWB on domestic spending and cuts.
Offline Profile Quote Post Goto Top
 
Dinadan of Logris
Member Avatar
Master of Spam
According to your data Chazz, Reagan increased spending by 6,8% over infation in those years. Just saying. :P
Offline Profile Quote Post Goto Top
 
Kay of Sauvage
Retired Knight
galahad of jerusalem,Jul 7 2011
07:23 PM
Ok.....lots to read here. You know a lot more about this stuff than I do. I guess what I am wondering is......given the supply/demand side debate and where we are now in the U.S. econ....I am wondering how much tax revenue needs to be raised vs spending cuts.

I think those are somewhat separate issues. The supply/demand issue is economics, as in how to get the most output and value out of the economy. The taxes/spending issue is just a traditional liberal-conservative question of whether we are better served by spending on a particular government spending item or returning that equal amount to taxpayers via a particular tax cut. Third is the issue of debt and deficits, which I think is very strongly connected to the supply/demand economics issue but not to the spending vs taxes issue.

Let me start with the taxes/spending issue. Look at it this way. We start with everyone earning 100% of their income, no taxes, and no government. We can then try to decide what things could be accomplished by pooling money together that would serve us better than what we would have used that amount of income on as individuals.

So as a basic example, we would probably agree that in general we'd be better served by paying to have police protection than we would by using that money however we would as individuals. The value exceeds the cost. So that means that it's something we should do, but that is only the spending side of it, and doesn't answer the tax side.

A poor person may very well not be better served by using his money for police protection since he has more pressing personal needs. If his share of the police cost would be $10, he may be better off with the money rather than police. A very rich person, however, might be much better served using his money for police even if he had to foot the entire bill as if he were hiring private security. A middle income person might find it worth it to pay a few hundred or even a few thousand dollars a year for police if they had to.

Or to look at it another way, money has a diminishing value to you, per dollar, the more of it you have. It makes luxuries more worthwhile the more money you have, which is why dirt poor nations would be better off without luxuries such as paved roads, parks, an FDA or EPA, or a military that is capable of more than just keeping the peace internally. The populace's money is already being used for high-value basic needs of individuals. In that same respect, our spending wouldn't be worth it if was paid for out of the incomes of our poor. So that is the tax side of the spending issue.



So then the question of whether we need spending cuts or tax increases is a matter of the comparative value lost/gained from each choice. Tax cuts for the rich gives low value, tax cuts for lower incomes gives more value, and spending items differ. We can try to rank all spending items on the table in terms of their value per dollar in cost, but the roadblock would quickly turn out to be that conservatives believe, on an ideologically level, that most government spending is a waste, or that the individuals would make better choices personally, etc. So it seems like such a discussion might only be feasible between non-conservatives... Though, maybe we could agree on some cuts to defense. I think there is probably very little additional value to having as many weapons, defenses, and research as we do, but a very high cost. For some reason, we'd pay out the ass to POSSIBLY help avoid a scary isolated terrorist attack or WW3, but have difficulty paying for very high value comparatively cost-effective things that can greatly improve lives and save lives from things that affect us a lot more as a whole but are less scary... medical conditions like heart disease (or even non-fatal conditions), air/water/food pollution, crime, job training/assistance and education.



Then there is the debt/deficit issue. This for me is fairly simple: The economy is much more important. I would not want the deficit to decrease right now because that would hurt the economy. I understand political pressure to curb the deficit. I don't mind making changes that affect the long term or that kick-in in a few years to eliminate the long-term budget shortfalls. But cuts that affect us now are just setbacks for our return to full employment. There won't be as much complaint about tax increases and spending cuts when the economy is where we want it. I haven't been following exactly what has been proposed in congress, but they have been talking about 4 trillion reduction in deficits over 10 years. I don't know how much of that is weighted towards the back end of the 10 years...



Last is the economic issue regarding our deficit reduction plans. I'd be perfectly happy with tax and spending changes that replaces things that have smaller positive effects on the economy with things that have larger positive effect. I'd be happy with that even if it reduced the short-term deficit overall. But this wouldn't go over well with conservatives, because those things that are most ineffective are high income tax cuts, and most effective is spending or low-income cuts like payroll taxes.
Offline Profile Quote Post Goto Top
 
ZetaBoards - Free Forum Hosting
ZetaBoards gives you all the tools to create a successful discussion community.
« Previous Topic · The Portcullis · Next Topic »
Add Reply

The Round Table Knights