Where is the US economy headed?

cicerone,
You are demanding proof of a very widely accepted observation of statistical fact.

What other "proof" do you seek?

Economic panel says recession ended in June 2009
AP

Economics Writer Jeannine Aversa, Ap Economics Writer – 47 mins ago

WASHINGTON – The longest recession the country has endured since the Great Depression ended in June 2009, a group that dates the beginning and end of recessions declared Monday.

The National Bureau of Economic Research, a panel of academic economists based in Cambridge, Mass., said the recession lasted 18 months. It started in December 2007 and ended in June 2009. Previously the longest post World War II downturns were those in 1973-1975 and in 1981-1982. Both of those lasted 16 months.

The NBER decision makes official what many economists have believed for some time, that the recession ended in the summer of 2009. But it won't make much difference to most Americans — especially the nearly 15 million without jobs.

Americans are coping with 9.6 percent unemployment, scant wage gains, weak home values and the worst foreclosure market in decades.

President Barack Obama saw little reason to celebrate the group's finding that the recession had ended.

CANTOR'S CONFUSED CASE.... House Minority Whip Eric Cantor (R-Va.) takes his case for more tax breaks for the rich to the Wall Street Journal today, hoping the public realizes why he and his Republican cohorts are going all out to protect millionaires from 1990s-era top rates.

Quote:

Lest there be any doubt why we are so determined to fight -- instead of going quietly and giving President Obama his way before Congress bolts for the elections -- the GOP has two primary motivations. The first concerns the pain that tax increases threaten to inflict on our economy over the short term. The second is to stop the slide under our current leadership towards becoming a stagnant European-style welfare state with limited individual opportunity and entrepreneurship.

This is, by the way, the same dimwitted conservative who thought the debt crisis was so serious, the United States ran the risk of becoming Greece. Now, however, Cantor is on board with throwing billions of dollars onto the debt, just so long as it comes in the form of tax breaks for people who don't need them.

Cantor may or may not realize this, but what he's "determined to fight" is a modest increase in the top marginal rate. The tax burden facing all Americans would still be lower -- in many cases, quite a bit lower -- than during the Clinton era. Indeed, the Democratic plan to give the middle class a break would even benefit the rich on the first $250,000 of their income.

I don't imagine Cantor wrote the op-ed himself, but I'd be curious to see him defend it. A Clinton-era top rate would inflict "pain" so severe that it threatens the economy? No serious economist believes this. Indeed, if a Clinton-era top rate is such a killer, why did the economy thrive in the 1990s? For that matter, under the Obama tax policy, rates would still be lower than they were for most of Reagan's presidency. Does Cantor think Reagan-era tax rates were so confiscatory that they crushed America's economic dynamism?

What's more, Cantor's silly rhetoric about "a stagnant European-style welfare state" is just so tiresome. If Cantor wants to sit at the big kids' table, he's going to have to get over these cliches. A 39.6% top rate will not stifle "individual opportunity and entrepreneurship." I can say this with confidence because this and higher rates never undermined "individual opportunity and entrepreneurship" before.

I'd also love to know how Cantor explains the lost decade of the Bush/Cheney era. Republicans got the tax rates they wanted, the regulatory structure they wanted, the economic policies they wanted, and there was no hint of a "stagnant European-style welfare state." Nearly a decade of weak growth, stagnant wages, and non-existent job creation later, we know that Cantor's way simply doesn't work.

We tried it; it failed; there's no point in repeating failure and hoping for a different result. The fact that Cantor wants to hold middle-class breaks hostage in order to protect ineffective breaks for millionaires and billionaires tells us a great deal about his priorities, values, and understanding of the world around him.
—Steve Benen 2:10 PM Permalink | Trackbacks | Comments (0)

Quote:

What other "proof" do you seek?

Actual links to statistical proof rather than banal generalities and assertions.

Cycloptichorn

Cycloptichorn wrote:

Quote:

What other "proof" do you seek?

Actual links to statistical proof rather than banal generalities and assertions.

Cycloptichorn

Then why don't you provide it?

You can term the experience of generations of people across Europe and Asia whose standard of living and freedom were suppressed by command economies which precluded individual economic activity as banal generalites, but you reveal your ignorance and lack of understanding in doing so.

Unfortunately, Joe, no facts have yet been offered to establish the bland absurdity offered that high tax rates have no effect on how hard people work or the level of their entrepreneurial activity.

Cicerone (above) notes that the occurrence of lifelong occupation of a single job by some folks establishes the proposition. Do you buy that half-baked nonsense?

Many factors influence the energy, creativity and effort people put into economic activity, ... and into evading taxes if they can. The desire for gain and profit is prominent among those factors. Taxes directly reduce those gains.

Consider the transformation of China in the last 20 years. Do you deny that the profit motive was the major factor in that dramatic reversal of fortune for them?

In the current era, the long-term difference in the economic growth rates of western European nations and the United States is generally attributed by economists to the higher tax rates and labor market rigidity that prevail in Europe.

What other "proof" do you seek?

http://www.ncpa.org/sub/dpd/index.php?Article_ID=19836&utm_source=newsletter&utm_medium=email&utm_campaign=DPD
Principles for Economic Revival
America's financial crisis, deep recession and anemic recovery have largely been driven by economic policies that have deviated from proven fact-based principles, say George P. Shultz, a fellow at the Hoover Institution, and his colleagues. Here are the priorities that should guide policymakers as they seek to restore more rapid growth.

First, take tax increases off the table:

Higher tax rates are destructive to growth and would ratify the recent spending excesses.
For example, the U.S. corporate tax is one of the highest in the world.

Second, balance the federal budget by reducing spending:

The publicly held debt must be brought down to the precrisis safety zone.
The government should begin by rescinding unspent "stimulus" and Troubled Asset Relief Program (TARP) funds, ratcheting down domestic appropriations and repealing entitlement expansions, most notably the subsidies in the health care bill.

Third, modify Social Security and health care entitlements to reduce their explosive future growth.

Fourth, enact a moratorium on all new regulations for the next three years:

Going forward, regulations should be transparent and simple, pass rigorous cost-benefit tests and on market-based incentives instead of command and control.
Direct and indirect cost estimates of regulations and subsidies should be published before new regulations are put into law.

Fifth, monetary policy should be less discretionary and more rule-like.

The Federal Reserve should announce and follow a monetary policy rule, such as the Taylor rule, in which the short-term interest rate is determined by the supply and demand for money. The rate is then adjusted through changes in the money supply when inflation rises above or falls below the target, or when the economy goes into a recession.

Source: George P. Shultz, Michael J. Boskin, John F. Cogan, Allan Meltzer and John B. Taylor, "Principles for Economic Revival," The Wall Street Journal, September 16, 201

Well, I suppose proof of that claim might be nice. But it would be better if you defined your own position first. Frankly, I can't figure out what you're trying to establish.

Table of Income Tax Rates in for an Individual in 2010


Tax % Monthly Income (CNY)
5% 1 - 500
10% 501 - 2,000
15% 2,001 - 5,000
20% 5,001 - 20,000
25% 20,001 - 40,000
30% 40,001 - 60,000
35% 60,001 - 80,000
40% 80,001 - 100,000
45% 100,001 and above

Several here (I believe including yourself) have advanced the proposition that tax rates have no effect whatever on "how hard people work" or the level of economic activity that results.

Neither you nor anyone else here has yet provided any proof of your assertions that no reductions will occur.

I believe the forthcoming tax hikes will indeed tend to limit investment in both businesses and existing ones, thereby limiting the growth of employment and recovery from the current economic situation. However, as it is a future event, I cannot speak with certainty.

Neither can you.

I believe it was clear that I was directly responding to an absurd general statement that tax rates don't influence "how hard people work" or general economic activity.

As a related matter there is the odd presumption among those here in favor of the tax increases that they have no burden of proof in showing that there will not be an adverse effect on economic activity, while those favoring an extention of the tax reductions do have a burden of proof that there will. This makes sens only if one buys the nonsensical proposition that I debunked.

I believe the truth is that in general higher taxes do tend to limit economic activity. In any real situation the actual outcome will depend on that and the effects of many other factors as well. Indeed economic activity may increase in some situations, but that will be the result of the action of other factors.

Now do you see?

Congress > Legislation
H.R. 5297:

Small Business Jobs and Credit Act of 2010
111th Congress

This is a bill in the U.S. Congress originating in the House of Representatives ("H.R."). A bill must be passed by both the House and Senate and then be signed by the President before it becomes law.

An act to create the Small Business Lending Fund Program to direct the Secretary of the Treasury to make capital investments in eligible institutions in order to increase the availability of credit for small businesses, to amend the Internal Revenue Code of 1986 to provide tax incentives for small business job creation, and for other purposes.