Where is the US economy headed?

@okie,

okie wrote:

parados wrote:

Quote:
Fact is, the deficit is being fueled greatly by slowdown of the economy, reducing tax revenue. This seems to confirm the Laffer Curve, does it not?

No, it doesn't confirm the Laffer curve.
The Laffer curve is based on the change in tax rate affecting the revenues.
The tax RATE hasn't changed. So, if anything it would disprove the Laffer Curve since it shows revenues change without a change in the rate.

You forgot one fact, or part of the equation. Tax rates do affect economic output. Do you wish to deny that fact, Parados? To deny that tax rates affect businesses, is to deny that any expense or cost of doing business affects businesses. You are essentially saying you can sell just as many widgets, regardless of the price you charge for them. That is of course utterly ridiculous, and utterly and totally illogical.

Nobody here is claiming tax rates are the only cost of doing business, but it is one cost. It is definitely one value that belongs in the equation, is in the equation, and will always be in the equation. Anybody that tries to claim otherwise is just, well, just nuts.

The Laffer curve tries to claim that tax rates are the only meaningful value, or one that can be used to predict economic output. Which is, as you state, nuts.

Cycloptichorn

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I'm curious: How does one argue that the economy has slowed down because of a tax increase when there hasn't been a tax increase?

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@Thomas,

Easy. It proves that economic output is not independent of economic burdens placed upon the economy, of which tax rates are only one. Some burdens are cyclical, others are artificially placed by legislative action. Burdens may include the cost of energy, the cost of capital, the cost of labor, the cost of raw materials. Then there is the cost of taxes upon business.

Econ0mic burdens affect the economy, that much we have seen proven. Now, I assert that tax rates are a burden on business, and it may affect the price of widgets and thus the number of widgets sold, the profits realized, and the relative financial health of the widget maker, the widget maker stock owners, and the customers of the widgets.

Come on, Thomas, I am surprised you can't figure this out yet.

People that deny the Laffer Curve are essentially denying that economic burdens placed upon businesses have absolutely no effect upon those businesses. Such a belief is nonsensical on its face. As an okie coming onto this forum, arguing with supposedly educated and sophisticated people, I am surprised such a basic fact of common sense is found to be so incomprehensible by the same.

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@Thomas,

Not only that, but conservatives continue to claim Obama will increase taxes all while Obama says 95% of workers will see a decrease in their taxes.

Their minds are so confused, I'm not sure how they reconcile logic and common sense in their lives.

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@okie,

Okie wrote:

Easy. It proves that economic output is not independent of economic burdens placed upon the economy, of which tax rates are only one.

True. But that wasn't your original claim. Your original claim was this:

okie wrote:

Fact is, the deficit is being fueled greatly by slowdown of the economy, reducing tax revenue. This seems to confirm the Laffer Curve, does it not?

Your original claim says nothing about any other burdens on the economy.

More to the point, the Laffer curve predicts that tax hikes can reduce government revenue. Hence, a decline of government revenue cannot confirm the Laffer curve if there has been no tax hike in the first place.

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@Thomas,

okie's problem is not only about his ignorance on Economics 101, but has created his own theories about economics in general that falls outside of any economic theorem.

Not only that, but he claims he graduated at the top of his class! I think he belongs in Ripley's.

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@okie,

Quote:

People that deny the Laffer Curve are essentially denying that economic burdens placed upon businesses have absolutely no effect upon those businesses.

You may want to check the number of negatives in this sentence.

Quote:

Such a belief is nonsensical on its face. As an okie coming onto this forum, arguing with supposedly educated and sophisticated people, I am surprised such a basic fact of common sense is found to be so incomprehensible by the same.

Hmm, I wonder if you realize you wrote the opposite of what you meant to write in the first sentence? Probably ought to double-check stuff like that before you castigate others for a lack of common sense.

Cycloptichorn

1 Reply

@Cycloptichorn,

Re: okie (Post 3705442)
Quote:

Quote:

People that deny the Laffer Curve are essentially denying that economic burdens placed upon businesses have absolutely no effect upon those businesses.

Cyclo wrote:

Quote:

You may want to check the number of negatives in this sentence.

Negative is okie's middle name; that's his view of the world under the Obama presidency. I also don't agree 100% with Obama's initiatives and actions, but my world isn't all bad or good under Obama like okies'.

okie's opinions can't be backed up with any evidence or rational thinking; it's always his imagination over-working with all negatives.

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Good evening to yall. So the Dow was up another 100 points today, with all 3 major averages up 1%. Another big bank reported "great" earnings for the quarter ending 6/30 vs last year. I would caution again about "easy comps" in the months ahead. Last year was so bad that many companies this year should be able to report "improvement," particularly with some competitors having folded.
So it looks like CIT will declare bankruptcy tomorrow. Not big enough to qualify as "too big to fail" and get any more Federal assistance beyond the $2.5B received in 2008. Something like $50B in assets. Never heard of CIT? They provide credit to manufacturers of stuff (like shoes) who sell to retailers. Payment by the retailer might be deferred for 90 days and CIT will lend the manufacturer money based on that receivable so they can produce shoes for the next retailer in line.
The head of a competitor warned in an interview that CIT's demise could hobble many retailers, particularly when buying should be going on for the holiday season.

Finally, the Rasmussen Predict the Outcome of a Poll question for today related to economics: "What % of adults believe that Wall Street has benefited more than the average taxpayer from bailouts of the financial industry?"

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@realjohnboy,

Wall street has benefited more than Main street for sure, but some of that Wall street saving was necessary to keep our economy alive. No banks = no economy. Many on main street has gone bankrupt, but our economy is still struggling to stay alive. I think all this good news about the market for this week is a bit premature. However, having said that, there are sparks of good news from some companies like Intel and the banks.

Those of us in the condition to play this waiting game are the lucky ones. There will be more job losses and home losses in our future.

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@cicerone imposter,

I predicted 80% would say Wall Street benefited more, compared to the "average" pick in the low 70% range. The challenge in this Rasmussen "Predict the Outcome" game is to set aside one's personal beliefs and try to think about how 1500 average American adults will respond.

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@realjohnboy,

It's too early for such a poll simply because the stimulus plan monies still hasn't taken effect. All the news thus far has been for banks, finance companies, AIG, the auto industry, and "where's my share?" Americans are impatient about most things in their lives, and want everything yesterday. The "I want it now" mentality is slowly changing, because most have no savings and lived on credit. Those who are getting extended unemployment benefits and food stamps, and those whose mortgages have been adjusted for longer term-lower interest rates are the only ones who understands that our government is really doing something. Those numbers will continue to increase for the near future (six to eighteen months).

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@cicerone imposter,

Quote:

It's too early for such a poll simply because the stimulus plan monies still hasn't taken effect. All the news thus far has been for banks, finance companies, AIG, the auto industry, and "where's my share?" Americans are impatient about most things in their lives

we decided half a year ago to stimulate, so wheretf is the stimulation?? The majority of the money will be spent next YEAR, this is a problem. I would much rather we started a WPA type program, so that anyone who wanted to work could work. Unemployment would be at 3%, and foreclosures would be back to normal. We could also have ended the pimp priming on a few months notice, instead we now run the risk of the stimulus program running up to 18 months beyond what it should.

Blaming the people for being impatient does not pass the BS meter test.

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@hawkeye10,

hawkeye, It's easy to be a backseat driver, but this financial crisis is new; not since the great depression has any government had to deal with such a complex economic system that crashed.

They're feeling their way very deliberately, and that gets it bogged down into longer periods than we would like, but they can't throw $787 billion dollars into the system without some regulations, allocations, and establishing process.

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@hawkeye10,

That's got me wondering too....we're not starting to hear that it looks like things have started to flatten out and we can expect the recovery to start soon........soooooooooo.....why do we need to spend the rest of the stimulus money NOW. We've only spent 10%; great, let's not compound the problem.

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@hawkeye10,

hawkeye10 wrote:

We could also have ended the pimp priming...

Sorry, hawk. I can mis-type with the best on A2K, but that was inadvertently funny.

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@maporsche,

It's been repeated several times now that most of the stimulus plan monies will take effect during the second half of this year and into next year. My thesis about impatience has been proved.

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@cicerone imposter,

CI, you're the one posting about how things are slowing down and maybe even flattening out.

If it turns out to be true, then do you think we should spend the rest of the 700billion, just because?

Surely you not saying that the stimulus money has caused the slowdown, I mean since we've only spent 70 billion, there's no way that it could have had that much of an impact (otherwise why would we have passed a 700 billion bill, when 70 billion would be enough?).

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@cicerone imposter,

Sorry, my "not" was supposed to be a "now".

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@maporsche,

Most of those funds have already been allocated. I doubt very much anyone in government is considering turning that money back to the feds, even those conservatives who riled against it from the very beginning.

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Where is the US economy headed?

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