Where is the US economy headed?

Is the subject of this thread no more relevant?

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The economy is one of a few important issues of our day, but the candidates prefer to spend their time attacking each other. When they're elected, they'll have an excuse why they can't get anything done.

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Of course CI
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But those who are far far awy watch this drama with rapt attention.
Rama

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georgeob1 wrote:

McCain promises to restrain Federal spending, something Bush failed to do. He also promises to sustain the Bush income tax cuts to avoid a significant rise in taxes, just as the economy will be pulling out of a cyclical recession.

The Republicans also have a secret weapon - the daffy duo of Nancy Pelosi and Harry Reid. The public does not trust them to restrain Federal spending - -particularly in a Democrat Administration. And, of course, they are allready committedf to the scheduled tax increase.

There are 6+ months left in the campaign for these ideas to settle in - something they will surely do.

wow i just realised harry reid was like governor or mayor of las vegas, hahahahaha if u guys knew how much drugs he did u would FLIP.

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Obama or Hillary are not going to spend more of the treasury. However, they will shift spending away from the wasteful military expenditures and tax expenditures for the super-rich. Eliminating the latter alone will bring in trillions.

Further, the Dems will balance the budget in relatively short order. Without the Bush vetoes looming, John Spratt, chairman of the House Budget Committee, will insist on pay-as-you just as he did during the Clinton years.

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not good news;

Quote:

CHICAGO (Reuters) - The U.S. Federal Reserve is expected to put an exclamation point on its string of interest- rate cuts with a small reduction this week and may signal that its rate-cutting cycle is done for now. (good news)

Rising global inflation and the Fed's hope that a blend of monetary and fiscal stimulus will shore up the anemic U.S. economy suggest the central bank is ready to pause in the sharp easing cycle it kicked off in mid-September.

Fed Chairman Ben Bernanke and his colleagues have lowered benchmark overnight lending rates 3 full percentage points to 2.25 percent over that span.

Policy-makers meeting on Tuesday and Wednesday look set to lower them by a slim quarter point and then step aside to see whether their handiwork has the desired effect in spurring an economy socked by a housing slump and credit market disarray.

While officials still worry about downside risks for the economy, which they think may be facing recession, they also are concerned forecasts for an ebbing in inflation may prove off track. Soaring prices for oil and food have fed a global inflationary surge, sparking food riots in some countries.

"The Fed's intention to pause its easing cycle may be part of an international effort to stabilize the falling value of the dollar, in light of the deteriorating state of world food prices," said Ashraf Laidi, chief foreign exchange strategist at CMC Markets US in New York.

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georgeob1 wrote:

McCain promises to restrain Federal spending, something Bush failed to do. He also promises to sustain the Bush income tax cuts to avoid a significant rise in taxes, just as the economy will be pulling out of a cyclical recession.

So what specific spending positions is he promising to cut to finance his famous tax cuts? Don't answer "cut the waste and pork barrel spending in Washington", or I'll have to throw smelly rotten vegetables at you.

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Thomas wrote:

georgeob1 wrote:
McCain promises to restrain Federal spending, something Bush failed to do. He also promises to sustain the Bush income tax cuts to avoid a significant rise in taxes, just as the economy will be pulling out of a cyclical recession.

So what specific spending positions is he promising to cut to finance his famous tax cuts? Don't answer "cut the waste and pork barrel spending in Washington", or I'll have to throw smelly rotten vegetables at you.

A major problem here is that it is often a debatable question on what is waste and pork as opposed to valid federal spending.

Also, there is relatively little waste and pork in discretionary programs that are amenable to cuts. Indeed, we need to hear specifics from McCain on what he would cut. But don't hold your breath waiting for this.

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Advocate wrote:

Thomas wrote:
georgeob1 wrote:
McCain promises to restrain Federal spending, something Bush failed to do. He also promises to sustain the Bush income tax cuts to avoid a significant rise in taxes, just as the economy will be pulling out of a cyclical recession.

So what specific spending positions is he promising to cut to finance his famous tax cuts? Don't answer "cut the waste and pork barrel spending in Washington", or I'll have to throw smelly rotten vegetables at you.

A major problem here is that it is often a debatable question on what is waste and pork as opposed to valid federal spending.

Also, there is relatively little waste and pork in discretionary programs that are amenable to cuts. Indeed, we need to hear specifics from McCain on what he would cut. But don't hold your breath waiting for this.

I know. That's why I threatened George with rotten vegetables if he gives "waste and pork" as an answer.

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In the first place the phrase I used was "reduce Federal spending". I meant exactly that. Such reductions would necessarily include elements that some would describe as "waste and pork" and, as well others that many might call worthwhile federal expenditures.

I have the impression that neither of you has much experience with our Federal government, or with the inherent wastefulness of the huge bureaucracies which it operates - including many that might appear lean and perhaps even efficient judging by the rundown, tawdry appearance of their offices.

Though much attention has been paid to the phenomenon of "earmarked expenditures" in the budgets of the various Federal departments, I doubt that many people (or either of you) fully understand the breadth and depth of it, or the pernicious effects it usually creates. Most government programs enacted by law establish bureaucracies intended to become expert in optimizing its operation and the application of federal funds for it - all to accomplish the generally worthwhile goals established in the legislation and described in rather high-sounding rhetoric (even in the words of the enacting legislation) that create them.

In fact what happens is that, in the annual spending authorizations from Congress (and even attached to utterly unrelated legislation), the Congress ends up specifying, in detail, exactly how the authorized funds should be spent, often calling for programs and expenditures only remotely related to the legislative program in question. This has far reaching effects: (1) It corrupts the bureaucracy by short-circuiting its decision-making apparatus and preempting its real functions. The result is that the bureaucracy becomes merely a focal point for the self-serving activities of Congressional aides, lobbyists and the companies that provide the services the bureaucracy nominally provides. (2) It generally frustrates the intended purpose of the legislation, leaving whatever social or economic issue that motivated its creation unresolved. (3) The direct involvement of the Congress in the management of such expenditures creates the opportunity for corrupt legislators to enhance their own political power (and worse), and that process itself further corrupts the Congressional Committees involved and beyond, the basic processes of the institution itself. (4) Finally the whole thing creates a self-sustaining and reinforcing structure of venal legislators and their staffs, lobbyists, bureaucrats and their local government counterparts that has so far resisted all efforts to even limit the expansion of their harmful activities.

In the aftermath of hurricane Katrina in Louisiana there was much furor over the supposed failures of the Army Corps of Engineers in (1) under designing the levees that protected New Orleans, and (2) maintaining them properly as the city expanded. Lost in all that were the basic facts that the levees are the property of the State of Louisiana and that responsibility for land use in their vicinity and the maintenance of the levee system was theirs. More to the point here is that there were indeed ample Federal funds specifically authorized over the preceding decades to the Corps of Engineers for services to the state Levee district in maintaining and upgrading the levees. Unfortunately, specific earmarks attached to various pieces of legislation by corrupt Louisiana Senators and Congressmen caused most of those funds to be diverted by the Corps of Engineers to the construction of new canals and waterways (the J. Benett Johnson canal most prominently among them) that were themselves later found to be a contributing cause for the dysfunction of the Mississippi delta water system.

These earmarks have for decades contributed to the enduring political power and prominence of various Louisiana legislators (a notably corrupt crew). However, they also brought great harm to the people of their state and contributed to corruption in local government there and the corruption of the Corps of Engineers.

This is but one of hundreds of similar examples. They reach nearly every activity of the government and have similar effects wherever they are found.

McCain has been very vocal and persistent in his criticism of this pernicious system - even alienating members of his own party in the process. Moreover, he has been virtually alone in doing this. I believe a president who would be willing to take on the Congress in this matter, vetoing legislation polluted with such earmarks and getting public support for legislation limiting them, could do more to reduce the cost and improve the effectiveness of our government than almost anything else. Certainly we have seen & heard nothing whatever from any of the other candidates on this or any related matter. The new Democrat leadership in the Congress opened its reign with a few encouraging words on the subject but within days caved in and went on to business as usual.

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Fair enough. So which budget positions is McCain intending to cut to finance his $500 billion/year tax cuts?

Let me clarify why I asked this question in the first place: It's because you're supporting the man, and I never heard him say anything more specific than "cut waste and pork barrel spending". I'm not saying that you yourself used those terms, so I'm obviously not holding these terms against you personally.

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Thomas wrote:

Fair enough. So which budget positions is McCain intending to cut to finance his $500 billion/year tax cuts?

Where did you get the $500Billion/year tax cut figure? On what is it based? Are you utterly ignoring the effect of economic activity on anticipated tax revenue? (I'm not at all interested in more argument about whether some tax cuts "pay for themselves" (or not) due to the potential for economic stimulus. The truth is there are such effects in many cases, but whether they are sufficient to "pay for themselves" or not is a question that in my view is beyond the ability of the protagonists on either side of the debate to answer.)

I hope you are not stooping to the rhetorical device of characterizing an extension of the current reductionis in the top tiers of the income tax rates as a "tax cut". That is a rather indefensible evasion of the truth in my view. We do know where we stand today in terms of economic activity and tax receipts. We can only speculate about where we might be if these tax rates are increased.

Perhaps you would be equally inclined to examine the (often rather indefinite) new spending proposals of the Democrat candidates and the degree to which they might be met by the equally vague and indefinite "tax the rich" (i.e. not you) they also acknowledge.

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georgeob1 wrote:

Where did you get the $500Billion/year tax cut figure? On what is it based?

I got it from a blog at the non-partisan Tax Policy Center. It takes the proposals Mc Cain made in his Tax Day speech, subtracts the taxes under current law, and arrives at a difference of $500k. McCain, according to their summary of his tax day speech, wants to "make President Bush's tax cuts permanent, repeal the Alternative Minimum Tax, double the dependent exemption, raise the estate tax exemption and lower its rate, make permanent the research credit, and suspend federal gas taxes this summer. He'd also cut the top corporate tax rate from 35 to 25 percent and allow companies to deduct machinery and equipment immediately, rather than amortizing them. He also plans to close corporate tax loopholes worth $30 billion per year." Their $5 trillion in 10 years figure for this, or $500B a year, seems plausible to me.

georgeob1 wrote:

Are you utterly ignoring the effect of economic activity on anticipated tax revenue?

Yes I am. If I did account for them, the tax cuts would burn a budget hole of maybe $400 a year instead of $500 a year -- which wouldn't substantially change my point.

georgeob1 wrote:

I hope you are not stooping to the rhetorical device of characterizing an extention of the current reductionsd in the top tiers of the income tax rates as a "tax cut".

That's not a rhetorical device, it's the law. By current law, the tax cuts are to expire, so extending them is a tax cut. It may well be that neither the Bush administration who proposed the current law, nor the Republican Congresses who enacted it, had any intention of following their own legislation. It may well be that they used it as a mere rhetorical device to defraud the public about the true cost of the tax cuts they intended. But just because Republicans are no respecters of law, not even their own, that doesn't mean I have to do the same.

Rhetorical device or not, I choose to take the law seriously. Consequently, I consider current tax law law as the baseline, and every deviation from it as a tax cut or a tax increase. You, of course, are free to make your own choices and to dismiss the laws of your own parties as the fraud Republicans always intended them to be. You are also free to brand me as naive for taking a different approach. I just don't understand why you would consider that a persuasive defense of Republican tax policies.

georgeob1 wrote:

Perhaps you would be equally inclined to examine the (often rather indefinite) new spending proposals of the Democrat candidates and the degree to which they might be met by the equally vague and indefinite "tax the rich" (i.e. not you) they also acknowledge.

Indeed I would, and I did -- but since you're a supporter of McCain, not of Obama or Clinton, I'm asking you to explain McCain's tax proposals, not Obama's or Clinton's.

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I believe your "Tax cut" characterization is self-serving, and your somewhat pompous defense of it, unworthy. Additionally your adjusted $400 Billion for the net effect on tax collections is, at best, a very rough approximation ( even 20% is a significant portion).

I won't play any games asking you to reciprocate with "explanations" of the tax and spending proposals of the other candidates - mostly because the exercise is, at best futile. No candidate has outlined either spending or taxation plans in sufficient detail to accomplish this. In particular, while some have outlined this or that new policy proposal from which the horde of "non partisan" analysts might have deduced cost estimates, no one has provided any assurances about taxation or spending across the board. Finally none of the 'expert' analysts has (or can) deal with the hugh uncertainties implicit in our legislative process. (While we talk about the health plans of the various candidates, the truth of what may emerge will be far more complex and will be influenced by many other independent actors.)

In this situation the isolated estimates of tax or spending policies in some areas, limited as they may be in accuracy, still provide no assurance whatever about the whole. I think you know this to be true and am surprised by your pointed persistence on this matter.

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georgeob1 wrote:

In this situation the isolated estimates of tax or spending policies in some areas, limited as they may be in accuracy, still provide no assurance whatever about the whole. I think you know this to be true and am surprised by your pointed persistence on this matter.

Well, I remember similar verdicts from you about my failure to appreciate the case for the war in Iraq. You did eventually come a long way on that point. So I remain optimistic that on taxes, too, you will someday overcome your knee jerk reflex of defending Republican executives no matter what.

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Thomas wrote:

georgeob1 wrote:
In this situation the isolated estimates of tax or spending policies in some areas, limited as they may be in accuracy, still provide no assurance whatever about the whole. I think you know this to be true and am surprised by your pointed persistence on this matter.

Well, I remember similar verdicts from you about my failure to appreciate the case for the war in Iraq. You did eventually come a long way on that point. So I remain optimistic that on taxes, too, you will someday overcome your knee jerk reflex of defending Republican executives no matter what.

You are mischaracterizing my positions on both.

I really have no "knee jerk reflex" with respect to the positions of Republican executives. You may not believe this, but it is true. One could well make a case for knee jerk like opposition to the proposals of many Democrats - I'll confess to that.

I believe the McCain's proposed gas tax holiday was at best silly and at worst, absurd. I support the proposed permance of the Bush cuts on the income tax rates, and the reduction of our corporate tax rate (currently higher than that in any EU nation), and the retention of the long-term capital gain and qualified dividends rate. I believe all of these are well-merited in terms of their likely effects on the economy and the incentives they provide. I believe McCain's proposal to increase the dependency exemption is also well-merited. I think his proposal to eliminate the AMT was merely a cynical sop to taxpayers who had just finished wading through the labarynthine arithmetic of that grotesque feature of the cose. I believe what is needed here is a more far-reaching simplification of the code that will effectively plug the loopholes for which the AMT was originally intended while eliminating the current side effects that were not originally intended. In this context I would support a higher marginal income tax rate on incomes higher than (say) $500K/year.

In short my preferences are much closer to McCain's proposals than they are to those of the other candidates.

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georgeob wrote: I believe the McCain's proposed gas tax holiday was at best silly and at worst, absurd.

Wouldn't you also agree that Bush's tax rebate of $600 per taxpayer is also silly AND absurd? LOL

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But one must acknowledge McCain's wonderful sense of humor. For example, this wealthy republican recently accused Obama of being insensitive to the suffering of the nation's poor.
Laughing

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Most bills in congress are initiated by the president. Moreover, as opposed to what George said, few result in added bureaucracies. The vast majority change the Internal Revenue Code, which changes may subsidize, punish, or regulate. Katrina was a once in a century storm that required special legislation.

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Where is the US economy headed?

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