Where is the US economy headed?

@okie,

okie wrote:

Also, the libs have told us the Laffer Curve is also a figment of our imagination, it does not exist, so don't even suggest that higher tax rates can suppress the economy and suppress tax revenues either!

Yup, that's about correct. The 'laffer curve' is a theoretical construct which doesn't match reality.

Cycloptichorn

2 Replies

@okie,

okie wrote:

Also, the libs have told us the Laffer Curve is also a figment of our imagination, it does not exist, so don't even suggest that higher tax rates can suppress the economy and suppress tax revenues either!

Yep, the libs have a tough time facing reality and they prefer the dumbmasses not know the truth.

0 Replies

@okie,

Quote:

Also, the libs have told us the Laffer Curve is also a figment of our imagination, it does not exist, so don't even suggest that higher tax rates can suppress the economy and suppress tax revenues either!

almost all levels of government MUST BOTH raise taxes and cut spending, both of which will make the economy smaller. The alternative is default on our loans. To be fair neither the libs nor the conservatives have been honest with the American people about what is ahead, nor about the fact that trying to grow (bubble) our way out of this mess has failed. Cutting spending, our expectations, our standard living, and our quality of life is now not avoidable. The longer we wait to start the medicine the harder the recovery will be. We are a nation in denial.

1 Reply

The Laffer Curve is a valid indication of the probable consequences of tax increases and decreases. It indicates that when taxes are increased up to a point, federal revenues will increase. It also indicates that when taxes are increased beyond that point, federal revenues will decrease.

Quote:

http://www.ncpa.org/sub/dpd/index.php?Article_ID=19325&utm_source=newsletter&utm_medium=email&utm_campaign=DPD
EXTEND THE BUSH TAX CUTS -- FOR NOW

This is not the time for a tax increase. But unless Congress acts, under current law the existing income tax rates will rise sharply at the beginning of next year. Congress should vote now to extend all of the current tax rates for two years, including the tax rates on dividends, interest and capital gains. Limiting the resulting tax-rate cuts to two years would reduce the projected future fiscal deficits. The sooner Congress acts, the stronger our prospects for continued economic recovery, says Martin Feldstein, chairman of the Council of Economic Advisers under President Ronald Reagan, a professor at Harvard University and a member of the Wall Street Journal's board of contributors.

A tax increase next year could easily derail the current fragile expansion.

The economic upturn since last summer has been nurtured by Federal Reserve credit like the mortgage purchase program and by the fiscal incentives such as the tax credits for car buyers and first-time home buyers that are now coming to an end, says Feldstein:
• Eighty percent of the latest quarterly gross domestic product (GDP) increase consisted of a rise in consumer spending that was the result of an unrepeatable sharp drop in the saving rate.
• Without that decline in the saving rate, the first-quarter annual GDP growth rate would have been less than 1 percent.
• A 2011 tax increase that reduces economic incentives and household spending would raise the risk of a new economic downturn.

President Obama proposes to increase tax rates on high income households while making the existing tax rates permanent for taxpayers below the top tax brackets. While the increase would hit only a relatively small fraction of all households, that group represents a large share of total taxes and of private spending, says Feldstein.

Raising their tax rates would be a substantial blow to overall spending and therefore to GDP growth. Small business investment and hiring would also be adversely affected because half of all profits, including most of small business income, is taxed at personal rates rather than at the corporate rate, says Feldstein.

Source: Martin Feldstein, "Extend the Bush Tax Cuts -- For Now," Wall Street Journal, May 12, 2010.

Quote:

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% [BUSH41 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% [BUSH43 2001-2009]
2002-2002: minimum = 10%; maximum = 38.6%
2003-2010: minimum = 10%; maximum = 35%

Quote:

http://www.whitehouse.gov/omb/budget/fy2008/pdf/hist.pdf
Table 1.1
Year…….$Receipts……$Outlays…$ReceiptsMinusOutlays
…
1977….355,559,000….409,218,000….- 53,659,000 [CARTER 1977-1981]
1978….399,561,000….458,746,000….- 59,195,000
1979….463,302,000….504,029,000….- 40,726,000
1980….517,112,000….590,941,000…..- 73,830,000
1981….599,272,000….678,241,,000…..- 78,968,000 [REAGAN 1981-1989]
1982….617,766,000….745,743,000….- 127,977,000
1983….600,562,000….808,364,000….- 207,802,000
1984….666,486,000….851,853,000….- 185,367,000
1985….734,068,000….946,396,000….- 212,308,000
1986….769,215,000….990,441,000….- 221,227,000
1987….854,353,000….1,004,083,000….- 149,730,000
1988….909,303,000….1,064,481,000….- 155,178,000
1989….991,190,000….1,143,829,000….- 152,639,000 [BUSH41 1989-1993]
1990..1,032,094,000..1,253,130,000….- 221,036,000
1991..1,055,093,000..1,324,331,000….- 269,238,000
1992..1,091,328,000..1,381,649,000….- 290,321,000
1993..1,154,471,000..1,409,522,000….- 255,051,000 [CLINTON 1993-2001]
1994..1,258,721,000..1,461,907,000….- 203,186,000
1995..1,351,932,000..1,515,894,000….- 163,952,000
1996..1,453,177,000..1,560,608,000….- 107,431,000
1997..1,579,423,000..1,601,307,000…..- 21,884,000
1998..1,721,955,000..1,652,685,000….+ 69,270,000
1999..1,827,645,000..1,702,035,000…+ 125,610,000
2000..2,025,457,000..1,789,216,000…+ 236,241,000
2001..1,991,426,000..1,863,190,000…+128,236,000 [BUSH43 2001-2009]
2002..1,853,395,000..2,011,153,000…- 157,758,000
2003..1,782,532,000..2,160,117,000…- 377,585,000
2004..1,880,279,000..2,293,006,000…- 412,727,000
2005..2,153,859,000..2,472,205,000…- 318,346,000
2006..2,407,254,000..2,655,435,000…- 248,181,000
2007..2,568,239,000..2,730,241,000…- 162,002,000
2008..2,521,175,000..2,931,222,000…- 410,047,000(estimate)
2009..2,699,547,000..3,107,355,000…- 407,408,000(estimate) [OBAMA 2009 - ?]

1 Reply

@ican711nm,

Your argument is demonstratively false, it is the exact same argument that the crooks on wallstreet use to create bubbles and imaginary benefit to the collective so that they can take a skim, all the while creating situations that are harmful in the long run. We used low taxes to the effect of hollowing out the economy, moving a good chunk of our jobs overseas, and increasing the separation between the classes as the rich got richer and everyone else lost ground. A couple of years of good tax revenue does not make up for all the damage that was done, that will take a generation or more to fix.

1 Reply

An Associated Press article this afternoon (using data from the likes of the BLS and Moody's Analytics) had this premise:
Two Industry Sectors Where Jobs Won't Be Coming Back-
> Retailing. 1.2M jobs (7.5% of total) disappeared in 2008 and 2009, with an estimated 20% perhaps gone forever. Whole chains like Circuit City and Linens and Things went totally belly up while Starbucks, for example, shuttered 800 stores. All told, some 52,000 retail outlets of all sorts are estimated to have closed.
Many retailers are shifting away from brick and mortar stores to on-line sales and others, like Gap, have embraced robots to make warehousing more productive.
> Manufacturing. 2.2M jobs (16% of total) were eliminated during the recession, with an estimate of 1M not returning. Companies are discovering new ways to make operations more productive; needing fewer people.
I have said nothing new here. We have talked about this before. But it seems to me that rather than spending an inordinate about of time blaming Presidents' Bush or Obama, both of whom deserve criticism, strikes me as absurd to ignore the structural changes in our work places.

2 Replies

@realjohnboy,

I think that a study of distances from home to workplace over the last 100 years will show a structural change of more significance and one that it is almost unthinkable to even attempt reversing.

1 Reply

@spendius,

Perhaps you are being wry, Spendi. But I don't disagree with the thrust of your argument. I would put the time frame as being more like 60 years.

1 Reply

@realjohnboy,

Quote:

But it seems to me that rather than spending an inordinate about of time blaming Presidents' Bush or Obama, both of whom deserve criticism, strikes me as absurd to ignore the structural changes in our work places.

This is really correct and highlights a problem which, having long been anticipated, we are now truly facing: the old model of employment is dying in the digital era and we don't have anything new to replace it with.

This is one of the reasons I like Obama's Green Jobs/Weatherization (Homestar) program; it takes warm bodies on the ground, easily trained, to test and install a lot of renewable energy stuff. And the benefits are greater efficiency, lower bills, and less pollution and carbon emissions. Not only that, it gives us a big incentive to start building technologies which are marketable around the globe. It's a win-win.

Cycloptichorn

2 Replies

@hawkeye10,

Hawkeye 10, if your claim my argument is "demonstratively false" is true, then DEMONSTRATE that my argument is false.

How did our use of low taxes move a good chunk of our jobs overseas, and increase the separation between the classes as the rich got richer and everyone else lost ground?"

How did lower tax rates hollow out our economy?

How did a couple of years of good tax revenue do damge?"

How do you know that all the rich got richer and everyone else "lost ground?"

How do know whether or not some of the non-rich got rich?

How do you know whether or not some of the rich "lost ground?"

Those who lost their jobs in 2008 and 2009 did not lose them because of lower taxes. They began to lose them because Fan&Fred's bad loans and demands that private loaners make bad loans, too!

Quote:

ftp://ftp.bls.gov/pub/suppl/empsit.cpseea1.txt
Year………………………..USA Total Civil Employed
...
2001………………..............136,933,000 [BUSH43 2001 TO 2009]
…
2007...........................146,047,000
…
2008:
August........................ 145,273,000
September................... 145,029,000
October....................... 144,650,007
November................... 144,144,000
December.................... 143,338,000

2009: [OBAMA 2009 TO ?]

January.................... 142,221
February................... 141,687
March......................140,854
April...................... 140,902
May........................ 140,438
June....................... 140,038
July....................... 139,817
August..................... 139,433
September.................... 138,768
October.................... 138,242
November................... 138,381
December................... 137,792

2010:
January (3)................ 138,333
February................... 138,641
March...................... 138,905

0 Replies

@Cycloptichorn,

Obama's Green Jobs/Weatherization (Homestar) program is a bottomless
money pit and it kills incentives to create new and marketable technologies.

1 Reply

@H2O MAN,

Could be, H2O. But do you see any innovations that could be brought to market that would conserve energy and create jobs in the next year or so?
Is that a worthy goal?

1 Reply

@realjohnboy,

Quote:

Perhaps you are being wry, Spendi. But I don't disagree with the thrust of your argument. I would put the time frame as being more like 60 years.

I wasn't being wry at all. If I wanted to be wry I would re-energise the 140 year old statement that all this debate is a sham putting on Ignore the "coarse supremacy of wealth".

Does anybody think that a Value Added Tax at 30% will have any effect on that?

0 Replies

As usual, Spendi, much of what you say sort of goes over my head. Sort of.
Guess what?
IT'S STORY TIME!
Please feel free to skip over the rest of this post right now. It could be long and probably repeats some stuff I have talked about before.
Anybody still here?
When World War 2 ended and then after Korea, we had the advent of television and people had drilled into them that a home on an acre of land in suburbia with a 2-car garage was the dream. Highways would be built to allow many people to escape from the inner cities. Inner cities and all that that suggested.
And thus began the sprawl with more suburbs, more highways, more addiction to cars and more inner city decay.
I note, Spendi, from an article I saw recently that that happened in Ireland.

But then the price of oil soared and the price of homes collapsed. Which brings us to now.

Many young people have no desire for a house far away from where they work on land they have no interest or time in maintaining. They want to live downtown in much smaller residences.

I have said nothing too new so far but here is where you might get interested.
I am involved in a property (called 10.5) on Main St in Cville. It is 3 blocks from the academic area of UVA, 6 blocks from downtown and 2 blocks from the bulk of the UVA Med Center. We can do 6 stories of mixed use (retail, office and residential) on an 18,000 sq ft footprint.
Across the street is another property (Syc House) that is on 27,000 sq ft and can handle 9 stories of mixed use or, another option, a hotel.
A big issue in either project is parking. The code requires 1 parking space per 400 sq ft of office and 1.5 spaces per unit of residential and 1 per hotel room.. And each space requires about 250 sq ft at a cost (if above or below grade) of $25K.
I have been musing with my partners, architects, developers and the city about how cars and the attitudes towards cars might change in the next decade or so and how that might change the requirements re parking.
Are you familiar with the ZIP car program? You can go on line and reserve a car from a pool in your neighborhood to run errands beyond the boundaries of public transport. And, in the future, do we need parking spaces that are 250 sq ft for much more compact cars?
I wish I had a crystal ball.
Thanks.

2 Replies

@Cycloptichorn,

Cycloptichorn wrote:

okie wrote:

Also, the libs have told us the Laffer Curve is also a figment of our imagination, it does not exist, so don't even suggest that higher tax rates can suppress the economy and suppress tax revenues either!

Yup, that's about correct. The 'laffer curve' is a theoretical construct which doesn't match reality.

Cycloptichorn

I hate to be blunt here, but the Laffer Curve is a perfectly logical mathematical equation based upon human nature, math, and economics. I have posted this simple truth so many times, it makes my head spin, but libs do the math, 0% of something is 0, no matter how large that something would be, and 100% tax on something that will approach zero certainly isn't much, so the only logical graph between the two points would be a parabolic curve, similar to what Laffer drew very quickly. Its a matter of common sense, economics, and human nature. Anyone that cannot understand this has to be just plain dumb, and mathematically and economically deficient.

1 Reply

@hawkeye10,

hawkeye10 wrote:

Quote:
Also, the libs have told us the Laffer Curve is also a figment of our imagination, it does not exist, so don't even suggest that higher tax rates can suppress the economy and suppress tax revenues either!
almost all levels of government MUST BOTH raise taxes and cut spending, both of which will make the economy smaller.

Any evidence that cutting spending will make the economy smaller? I doubt it. I do not believe it makes any sense whatsoever to believe that the task of balancing a federal budget is much different in principle than balancing the budget of a household, and I can tell you one thing, you do not balance a household budget by not cutting spending first and foremost.

Raising taxes, I take it you mean raising tax rates? You surely realize raising tax rates does not by any means insure that tax revenues will increase, in fact they may not, and even if revenues do increase, they will very likely not be proportional to the rate increase, because any tax rate increase will in fact have a dampening effect upon the overall economic output. This is the Laffer Curve effect, essentially meaning that tax revenues are not a straight line product of tax rates, because tax rates are one very significant component or influence upon the economy, along with many other influences.

1 Reply

@realjohnboy,

realjohnboy wrote:

Could be, H2O. But do you see any innovations that could be brought to market that would
conserve energy and create jobs in the next year or so?
Is that a worthy goal?

Innovation and job creation from the Obama administration?

No.

2 Replies

@H2O MAN,

Something that could be brought to market in the next year by private industry that would reduce energy consumption and create jobs. How about in 3 years or 5? What new technologies do you see coming on line in that time frame?
Or is it no big deal?

1 Reply

@H2O MAN,

H2O MAN wrote:

Innovation and job creation from the Obama administration?

Isn't that an oxymoron?

0 Replies

@realjohnboy,

realjohnboy wrote:

Something that could be brought to market in the next year by private
industry that would reduce energy consumption and create jobs.

How do you see this happening when the Obama administration is so anti-small business?

Private industry is small business and all of it is run by free market capitalists.

Obama hates free market capitalists and his policies punish private industry, Obama loves big government and government jobs.

0 Replies

Where is the US economy headed?

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