Where is the US economy headed?

AP sources: Obama to seek freeze on part of budget
By BEN FELLER and ANDREW TAYLOR, Associated Press Writers Ben Feller And Andrew Taylor, Associated Press Writers 1 hr 35 mins ago

WASHINGTON " Facing voter anger over mounting budget deficits, President Barack Obama will ask Congress to freeze spending for some domestic programs for three years beginning in 2011, administration officials said Monday. Separately, Obama unveiled plans to help a middle class "under assault" pay its bills, save for retirement and care for kids and aging parents.

The spending freeze would apply to a relatively small portion of the federal budget, affecting a $477 billion pot of money available for domestic agencies whose budgets are approved by Congress each year. Some of those agencies could get increases, others would have to face cuts; such programs got an almost 10 percent increase this year. The federal budget total was $3.5 trillion.

The three-year plan will be part of the budget Obama will submit Feb. 1, senior administration officials said, commenting on condition of anonymity to reveal private details. They said Obama was expected to propose the freeze Wednesday night in his State of the Union address.

The Pentagon, veterans programs, foreign aid and the Homeland Security Department would be exempt from the freeze.

The savings would be small at first, perhaps $10 billion to $15 billion, one official said. But over the coming decade, savings would add up to $250 billion.

The White House is under considerable pressure to cut deficits " the red ink hit a record $1.4 trillion this year " or at least keep them from growing. Encouraged by last week's Massachusetts Senate victory, Republicans are hitting hard on the issue, and polls show voters increasingly concerned.

Hey, maybe Obama is listening to the American people. Let's see if he truly does control spending during the next three years, or this is just another one of his lies

Rachel Maddow is angry over proposed spending freeze (because it was a campaign pledge of John McCain?)

if [Obama] trys to get the books in order by cutting spending only the economy will be in the tank....he needs to cut spending and raise taxes.

http://www.freerepublic.com/focus/f-news/2051527/posts
Partial History of U.S. Federal Income Tax Rates
Highest and lowest Income Tax Rates 1971 to 2009
...
1971-1981: minimum = 14%; maximum = 70% [CARTER 1977-1981]

1982-1986: minimum = 11%; maximum = 50% [REAGAN 1981-1989]

1987-1987: minimum = 11%; maximum = 38.5%

1988-1990: minimum = 15%; maximum = 33% [BUSH 41 1989-1993]

1991-1992: minimum = 15%; maximum = 31%

1993-2000: minimum = 15%; maximum = 39.6% [CLINTON 1993-2001]

2001-2001: minimum = 15%; maximum = 39.1%

2002-2002: minimum = 10%; maximum = 38.6% [BUSH 43 2001-2009]

2003-2009: minimum = 10%; maximum = 35%

http://www.ncpa.org/sub/dpd/index.php?Article_ID=18914&utm_source=newsletter&utm_medium=email&utm_campaign=DPD
THE GOLDEN QUARTER
In the nine quarter-century periods since the American republic was founded in 1789, the one with highest economic growth and job creation was the period from 1983 through 2007. Particularly remarkable -- there were just four quarters (out of 100) of negative economic growth in that entire interval, says Richard W. Rahn, a Senior Fellow at the Cato Institute and Chairman of the Institute for Global Economic Growth.
• That period of time was characterized by a reduction in government spending from 23.5 percent of gross domestic product (GDP) to 20 percent (the low point was 18.4 percent in 2000), and a reduction in marginal tax rates.
• Despite the reduction in tax rates, tax revenues both in absolute terms and as a percentage of GDP grew in the 1983-2007 period because of the improved work and investment incentives.
• As a result, the deficit fell from 6 percent of GDP in 1983 to just 1.2 percent in 2007.
For many years (until 1983), the Federal Reserve implicitly followed the Taylor Rule (a formula that provides central bankers with information about whether they are creating too much or too little money) to guide monetary policy, which gave the United States both a falling and relatively stable rate of inflation, says Rahn.
During that golden quarter-century, both the presidency and Congress switched parties a couple of times. Thus, it should be politically possible to go back to the policies that gave us the golden quarter. Most people understand that if the government is growing faster than the economy (as it has been for the past two years) disaster ultimately will occur, but if the economy and the private sector grow faster than the government, as they did from 1983-2007, almost everyone can be far better off, says Rahn.
As noted, the golden quarter was characterized by a long-term trend toward lower tax rates. The current Congress and administration have been enacting tax increases and proposing many more, which will only cause more economic misery. Many tax rates, particularly on capital, such as the capital gains tax and corporate income tax, are well above their revenue and welfare-maximizing rates and should be reduced, not increased, says Rahn.
Source: Richard W. Rahn, " Recouping the golden quarter," Washington Times, January 27, 2010.

How idiotic can you be? A huge amount of the 'growth' of the economy leading up to 2007 evaporated in 2008 when the bubble burst in the financial market. If you carefully choose the dates to exclude huge problems, why, anything looks good!
This comment has zero to do with whether the tax reductions that began in 1982 did or did not reduce federal tax receipts. Those tax reductions did in fact occur WITH fed revenue increases.

One could claim that the increased GDP after 1982 caused tax revenues to increase. Ok, but then it is obvious that the tax reductions in that period facilitated more investment and buying which inturn facilitated the higher GDP.

It is a fact that:
Reagan in 1982 cut Carter's maximum income tax rate from 70% to 50% and then to 38.5% and then to 33%. Since then, the maximum tax rate has remained below 40%. Since 1982, total jobs grew from less than 100 million to more than 145 million in 2008. In 2009, jobs decreased to below 140 million. Even though since 1987 the maximum tax rate has remained below 40%, the fed's tax receipts have increased annually since 1987 up to and including 2008. Furthermore, GDP has increased annually up to and including 2008.

I would also remind you that another huge chunk of that growth took place in the 92-00 period - in a higher-tax environment. In fact I'd be willing to be that the vast majority of the growth took place in that time period.
Because the higher tax environment created under Clinton's maximum tax rate was only 39.6%. Clinton did not raise the maximum tax rate back up to Carter's 70% or to a point that would harm growth, so fed tax receipts continued to increase during Clinton's and Bush43's terms.

Quote:

Highest and lowest Income Tax Rates 1971 to 2009
...
1971-1981: minimum = 14%; maximum = 70% [CARTER 1977-1981]

1982-1986: minimum = 11%; maximum = 50% [REAGAN 1981-1989]

1987-1987: minimum = 11%; maximum = 38.5%

1988-1990: minimum = 15%; maximum = 33% [BUSH 41 1989-1993]

1991-1992: minimum = 15%; maximum = 31%

1993-2000: minimum = 15%; maximum = 39.6% [CLINTON 1993-2001]

2001-2001: minimum = 15%; maximum = 39.1%

2002-2002: minimum = 10%; maximum = 38.6% [BUSH 43 2001-2009]

2003-2009: minimum = 10%; maximum = 35%

I don't need some asshole from the Cato institute fiddling with numbers to back up my position, ICan. You can and never will be able to point to a single tax cut which lead to higher federal tax receipts, ever. And why would you be able to? It defies common sense.
Of course I can "point to a single tax cut which lead to higher federal tax receipts. I just did again! Lower taxes facilitate more money available in the private sector to finance greater investment, purchases, greater incomes, and greater wages. The incomes and wages rise by an amount that leads to higher fed tax receipts despite lower tax rates.

Quote:

FEDERAL RECEIPTS & %CHANGE PER TERM 1976 - 2008
1976 " 379,292 --
1977 -- 355,559 CARTER
1978 -- 399,561
1979 -- 463,302
1980 -- 517,112 -- +36.3
1981 "- 599,272 REAGAN
1982 "- 617,786
1983 "- 600,562
1984 "- 666,486 -- +28.9
1985 "- 734,088
1986 "- 769,215
1987 "- 854,353
1988 "- 909,303 -- +36.4
1989 "- 991,190 BUSH 41
1990 "- 1,032,094
1991 "- 1,055,093
1992 "- 1,091,328 -- +20.2
1993 "- 1,154,471 CLINTON
1994 "- 1,258,721
1995 "- 1,351,932
1996 "- 1,453,177 -- +33.2
1997 "- 1,579,423
1998 "- 1,721,955
1999 "- 1,827,645
2000 "- 2,025,457 " +39.4
2001 "- 1.991,426 BUSH 43
2002 "- 1,853,395
2003 "- 1,782,532
2004 "- 1,880,279 -- -7.2
2005 "- 2,153,859
2006 "- 2,407,254 -- +28.0 (over 2 years)
2007 "- 2,540,096
2008 "- 2,662,474 -- +41.6 (over 4 years)

Quote:

Total Civil Employed 1980 - 2008
1980...................... 99,302,000 [CARTER 1977-1981]
1981...................... 100,397,000 [REAGAN 1981-1989]
1982..................... 99,526,000
1983..................... 100,834,000
1984..................... 105,005,000
1985..................... 107,150,000
1986..................... 109,597,000
1987..................... 112,440,000
1988..................... 114,968,000
1989..................... 117,342,000 [BUSH 41 1989-1993]
1990..................... 118,793,000
1991..................... 117,718,000
1992..................... 118,492,000
1993..................... 120,259,000 [CLINTON 1993-2001]
1994..................... 123,060,000
1995..................... 124,900,000
1996..................... 126,708,000
1997..................... 129,558,000
1998...................... 131,463,000
1999..................... 133,488,000
2000..................... 136,891,000
2001..................... 136,933,000 [BUSH 43 2001-2009]
2002...................... 136,485,000
2003..................... 137,730,006
2004..................... 139,252,000
2005..................... 141,730,000
2006...................... 144,427,000
2007..................... 146,047,000
2008..................... 145,362,000
2009..................... 139,959,000 [OBAMA 2009 - ?]