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Post by glennkoks on Jul 5, 2012 14:44:32 GMT
laffer curve 2 Attachments:
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Post by glennkoks on Jul 5, 2012 14:47:37 GMT
Roosevelts Recession 1937. You can see the response to premature sharp spending cuts. And from the laffer curve graphs you can clearly see that there is a backside to tax cuts where their is no longer a positive effect from tax cuts and revenue decreases. Attachments:
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Post by magellan on Jul 5, 2012 16:56:39 GMT
Roosevelts Recession 1937. You can see the response to premature sharp spending cuts. And from the laffer curve graphs you can clearly see that there is a backside to tax cuts where their is no longer a positive effect from tax cuts and revenue decreases. The peak of the Laffer Curve is NOT the desirable position for taxes. That is the biggest misconception by those thinking they understand the theory. What did Michigan, Wisconsin and New Jersey do to correct the morass in those states? Re-elect Liberal Democrats taking Obama Monopoly money, raise taxes and spending, or the opposite? What did California do to correct their problems? Replace a Liberal Republican with a Conservative business woman? Nope, they decided Jerry "Moonbeam" Brown was best in order to keep the status quo. California had their chance, now it is well on the way to being Greece. When Reagan took office in 1981, inflation and interest rates needed to be corrected first. This caused much discomfort throughout the country, however by the end of 1983 the economy was booming. You dispute this? The pill is large and hard to swallow, but must be done. You can see the response to premature sharp spending cuts.
And what gives you that impression? Only a Big Government Keynesian would say such nonsense. 1937 was not a year of reduced government intervention. It was the year the New Deal manifested itself in reality. The Wagner Act and Social Security Act was passed in 1937. You actually believe government shrunk in 1937? Really? Unemployment remained in double digits the entire decade; not even one month went below even after more "stimulus" in 1938. The New Deal was the Raw Deal led by a crooked president whose unconstitutional grab for power has only been eclipsed by the current administration. We were FDR'd again, but now with even more sinister outcomes and plans should Obama be re-elected. Keynesian economics fails every time it is tried. Yet, like Socialism, when it fails the Keynesians claim not enough was done. It sounds like you are a disciple of Paul Krugman.  |
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Post by magellan on Jul 5, 2012 16:59:58 GMT
No Glennkoks, you don't understand the Laffer Curve. It is between 0 and the peak on the left side that produces the most results, not the peak. It would help if you read up on the man who authored the Laffer Curve......Arthur Laffer. Also Glennkoks, CITE YOUR SOURCES FOR THE GRAPHS. |
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Post by glennkoks on Jul 5, 2012 19:41:24 GMT
magellan, do you understand what a curve is? Do you realize that there is a backside? I don't care where the peak is I am just concerned with the point at which a lack of revenue just increases the deficit and debt.
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Post by magellan on Jul 5, 2012 21:06:07 GMT
magellan, I don't support any candidate on 100% of the issues. If one thing is clear it is that tax cuts are not the magic pixie dust the Neocon's and their Tea Party ilk make them out to be. The Bush tax cuts during a time of two wars was the height of fiscal irresponsibility and it stimulated the economy so well we fell into the worst recession since the Great Depression. Simpson-Bowles only affirms what anyone with 1/2 a brain already knows. We have to cut spending. In particularly spending on the military and entitlements. So we are in rare agreement on that topic. However slashing spending too sharply AKA austerity has shown some negative economic side effects on growth in Europe. In addition we tried premature sharp spending cuts and a move towards austerity in 1937 to disastrous results in what came to be known as the Recession of 1937 or "Roosevelts Recession". Spending cuts in combination with modest tax increases back to Reagan era levels slowly over time is clearly the prudent coarse of action. I do not share your "gloom and doom" economic forecasts. In 1945 our debt to GDP ratio was 120%, currently we are around 100%. So we have been here before. But it is clear that we cannot tax cut our way out of this mess. The Bush tax cuts during a time of two wars was the height of fiscal irresponsibility and it stimulated the economy so well we fell into the worst recession since the Great Depression. Now it is clear you don't what you're talking about. You actually believe the Bush tax cuts caused the worst recession since the Great Depression? Straight from the government data sources, after passing the Bush tax cuts, revenue went UP. Surely you can see that. There was a recession in 2000. Perhaps you missed that. Then 911. Forget that too? Your solution would have been to raise taxes and cut defense spending? Bush, was a Big Spender and a Progressive which I detest, however, the 2003 Bush tax cuts, no matter how your Keynesian Liberal sources spin it, generated $785 BILLION more dollars to the U.S. Treasury from 2004-2007, the largest 4 year increase ever. Forget about that that? I'll bet you didn't even know it. Oh please explain how cutting taxes in 2003 caused the 2008 meltdown. I can't wait. The sub-prime housing bubble is what caused the crash in 2008. This was accelerated by Clinton in 1995 and again in 1998. Need proof? Hear it straight from the horse's mouth. Clinton's second intifada on the banks. Clinton bragging about his role in the Community Reinvestment Act. The warnings were there. Need proof? Several references on youtube. Here's a long one. The Democrats said everything was fine, no problems at all. In fact, Democrats lauded Fannie and Freddie as a huge success and encouraged increasing their involvement. Oh, you forgot about that? We could always look at the data for what happened to spending after Democrats took over Congress in 2007, but let's not be confused with facts; Congress does hold the purse strings. Unfortunately Bush never saw a spending program he didn't like from day one, and Republicans through 2006 were no less culpable. However slashing spending too sharply AKA austerity has shown some negative economic side effects on growth in Europe. What austerity? Name the austerity measures that have been in effect in Europe. I'll patiently wait. Europe is in the position they are in because......it is Europe; 50 years of Socialism has buried it. Obama said we should be more like Europe. Do you agree? ============================================ If one thing is clear it is that tax cuts are not the magic pixie dust the Neocon's and their Tea Party ilk make them out to be.
Ah yes, those pesky Neocon's (code for Jews). Have you ever attended a Tea Party? I'm a founding member in these parts. I don't think you know the first thing about the Tea Party. Who runs the Tea Party? You do realize Ron Paul is a strong supporter of the Tea Party right ;D ============================================== Spending cuts in combination with modest tax increases back to Reagan era levels slowly over time is clearly the prudent coarse of action. I do not share your "gloom and doom" economic forecasts. In 1945 our debt to GDP ratio was 120%, currently we are around 100%. So we have been here before. But it is clear that we cannot tax cut our way out of this mess. The top marginal rate when Reagan left office was 28%, lower than it is today. Oh I'm sure in 2007 when I moved 100% of my 401K out of the stock market, you wouldn't have shared my gloom and doom then either. Several of my co-workers blew it off, but by October 2008 you could hear a pin drop. You would have said I was crazy for buying gold in 2001/2002. No Glennkoks, we have not been here before. The economy is not improving as you suggested some months back. So, you think Defense spending is out of control and needs to be cut. Drastically? How much would you cut it? 10%? 20%? 50%? Should we go back to the 30's with cardboard tanks and bi-planes? Let's look at what defense spending has been for the past 100 years:  You say Defense spending, along with too little taxation, are the largest contributors to our country's economic woes. That is not a strong argument. Does the data support your claim? As a percentage of GDP, Defense spending about 6%, less than during the Eisenhower years, and that includes war expenditures. What is half of 6%? A strong national Defense is a requirement of the Constitution. Social spending is not. We now borrow 40% of every dollar spent. No amount of taxing will even make a dent in the deficit. Confiscate virtually every penny from the top 10% of earners and it will finance the government for a few months, probably much less. There is well over $100 TRILLION in unfunded entitlements looming for future generations. Social Security needs $22 TRILLION just to finance the current recipients. And the list goes on. Yet you think we've been here before? ROFL. I don't support any candidate on 100% of the issues. Then you must be a one issue voter, because so far the only issue you agree with Ron Paul on is cutting Defense spending. |
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Post by magellan on Jul 5, 2012 21:14:05 GMT
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Post by magellan on Jul 5, 2012 21:37:44 GMT
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Post by glennkoks on Jul 5, 2012 22:24:31 GMT
magellan, I understand the Laffer curve perfectly. There is clearly a sweet spot in taxation where an optimum between growth and taxation is achieved. The problem is you clearly dont have a grasp and have twisted it into lower taxes = magic pixie dust that fixes everything.
We have reached a point where our debt will handicap our future growth. Spending is only part of the equation. Revenue has to be increased as well.
I would expect such week arguments from someone who refers to Eisenhower's admin as something from the Communist Manefesto.
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Post by glennkoks on Jul 5, 2012 23:55:11 GMT
"glow=red,2,300]1937 was not a year of reduced government intervention. It was the year the New Deal manifested itself in reality. The Wagner Act and Social Security Act was passed in 1937. [/glow]"
Magellan, since you clearly don't know and want to twist the facts to support you"re political views Social Security and the Wagner Act were passed in 1935 not 1937.
In addition lets check out some stats from the Office of Management and Budget and compare them to the graph I stole from Wiki that clear shows the decline.
1933 1,997 4,598 -2,602
1934 2,955 6,541 -3,586
1935 3,609 6,412 -2,803
1936 3,923 8,228 -4,304
1937 5,387 7,580 -2,193
1938 6,751 6,840 -89
1939 6,295 9,141 -2,846
What happened in between 1937 and 1939? Did Mr. Roosevelt cut spending from -4304 down to -2193 down to -89 which resulted in a dramatic drop in economic activity that came to be known as the Roosevelt Recession?
Now you can put on rose colored glasses and blame the "Roosevelt Recession" on the tooth fairy but it's pretty clear to me and the vast majority of economists that the sharp reduction in federal spending from 1936-1937 was the leading cause.
In addition your claim that I am a "Keynesian" is as laughable as your claim that Eisenhower took a page straight from the Communist Manifesto. Yes, I think federal spending can have a stimulative effect by putting people back to work building bridges, dams, roads and infrastructure. But investment in these areas is paid back in increased effeciency. Mr. Obama's stimulus did very little of these and TARP just threw money at the banks.
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Post by sigurdur on Jul 6, 2012 0:06:33 GMT
Magellan: For myself, I don't care what happened in the past except to learn from it. When looking at long term GDP trends, it is very apparant that as debt increases faster than GDP, the economy will tank within a few years. This is what happened to Roosevelt from 1936-1941. There was a bump in GDP as a result of the stimulus, but then the drag started and growth retreated. The same thing happened after Reagan almost tripled the national debt while he was in office. At the end of his term the US economy was tanking. GHB was a patriot, and raised taxes.....which DID result in a revenue increase. He also slowed spending increases which resulted in President Clinton being handed the beginning of a booming economy. Clinton is a southern Dem....which is still more conservative than a southern Republican. While he was in office, growth in govt spending as a percentage of GDP kept going down. Huge increase in employment etc..and a very real narrowing of the deficit. GWB was a poor lad in wayyyyy over his head. Between him and Cheeny, both were clueless as to what was important for the country. I will just leave it at that. Debt doubled from roughly 5.0 trillion to 10 trillion. That drag caught up at the end of his term. President Obama was too stupid to study econ in college. I think he was too busy smoking dope. He is clueless. What we need now is a FREEZE in spending at 3.6 trillion. Glenn: Did magellan really say Eisenhower's admin was from the Communist Manefesto? HE is the LAST president to pay down debt......3 fiscal years during his administration. He was chastized for not decreaseing taxes. He told the folks pushing for that that his FIRST responsability was to the NATION.....fudicieary.....not to the rich. Also, he warned us in his parting speach about the MIC......he was very familiar with it. We need a clone of him running.....but that isn't happening. We need a freeze in spending.....AND an increase in revenue......so that the dog gone uncertainty gets taken care off. Business is sitting on cash..scared to spend it. Who wouldn't be?  ? NO plan by either side.......and no plan put for by the Tea Party either. So in effect, we have a bunch of clueless folks running around with their heads cut off like chickens. |
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Post by glennkoks on Jul 6, 2012 0:33:00 GMT
sigurdur, this is magellan's quote on page 4 of this very thread.
"The glory days of the Eisenhower era was a tax system based on the Communist Manifesto. Ouch, that hurts."
I also agree that we need a spending freeze followed by a slow managed reduction in spending over time along with modest increases in revenue.
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Post by magellan on Jul 6, 2012 21:22:36 GMT
Magellan: For myself, I don't care what happened in the past except to learn from it. When looking at long term GDP trends, it is very apparant that as debt increases faster than GDP, the economy will tank within a few years. This is what happened to Roosevelt from 1936-1941. There was a bump in GDP as a result of the stimulus, but then the drag started and growth retreated. The same thing happened after Reagan almost tripled the national debt while he was in office. At the end of his term the US economy was tanking. GHB was a patriot, and raised taxes.....which DID result in a revenue increase. He also slowed spending increases which resulted in President Clinton being handed the beginning of a booming economy. Clinton is a southern Dem....which is still more conservative than a southern Republican. While he was in office, growth in govt spending as a percentage of GDP kept going down. Huge increase in employment etc..and a very real narrowing of the deficit. GWB was a poor lad in wayyyyy over his head. Between him and Cheeny, both were clueless as to what was important for the country. I will just leave it at that. Debt doubled from roughly 5.0 trillion to 10 trillion. That drag caught up at the end of his term. President Obama was too stupid to study econ in college. I think he was too busy smoking dope. He is clueless. What we need now is a FREEZE in spending at 3.6 trillion. Glenn: Did magellan really say Eisenhower's admin was from the Communist Manefesto? HE is the LAST president to pay down debt......3 fiscal years during his administration. He was chastized for not decreaseing taxes. He told the folks pushing for that that his FIRST responsability was to the NATION.....fudicieary.....not to the rich. Also, he warned us in his parting speach about the MIC......he was very familiar with it. We need a clone of him running.....but that isn't happening. We need a freeze in spending.....AND an increase in revenue......so that the dog gone uncertainty gets taken care off. Business is sitting on cash..scared to spend it. Who wouldn't be? ? NO plan by either side.......and no plan put for by the Tea Party either. So in effect, we have a bunch of clueless folks running around with their heads cut off like chickens. Wow, the rewriting of history is profound. Here Sigurdur is a complete breakdown of every single budget item during the HW Bush and Clinton era. It explains in exact detail why you are wrong about tax hikes. Democrats want it to simply grow government, period. "Soaking the rich" doesn't work, never has. iret.org/pub/BLTN-103.PDFClinton's first year was so radical he ushered in Republican's complete takeover of Congress in the 1994 election; the first time in 40 years. Perhaps you forgot about that? There was nothing "southern Democrat" (Blue Dogs as they're called) about Clinton. What he was smart enough to understand was he had to move to the right to get re-elected, and if you recall he was brought kicking and screaming to the table and 7 of 10 of the Republican's main economic planks were signed into law by Bill Clinton. Remember this? During his campaign he promised to "end welfare as we know it", then vetoed the Republican plan, only to sign the very same legislation into law and took credit for it. As a fellow Democrat once said of Clinton, "he's an usually good liar". Glenn: Did magellan really say Eisenhower's admin was from the Communist Manefesto? HE is the LAST president to pay down debt......3 fiscal years during his administration. He was chastized for not decreaseing taxes. He told the folks pushing for that that his FIRST responsability was to the NATION.....fudicieary.....not to the rich. What people earn isn't the damned government's money, and it isn't yours or mine either. We don't live in a Commune. It is completely factual to state Eisenhower continued FDR's New Deal tax policies, which is a direct composition of the Communist Manifesto. Go ahead if you think I'm crazy, read the 10 planks of the Communist Manifesto. A strong graduated income tax is at the top of list. After WWII the U.S. had ZERO foreign competition. Americans were sick of war and Eisenhower kept the peace after the Korean War, yet also understood the serious threat from the Soviet Union and growing threat from China. In short, Eisenhower was well aware of the Communist threat. You do realize he financed the French and was the first to send U.S. troops as military advisers to Vietnam?  Defense spending went UP during his administration, which I am not criticizing. Let's not pretend our military spending today is anything out of the ordinary throughout the past 70 years. We live in a dangerous time. The GDP growth during Eisenhower's administration was 2.4%; nothing to get excited over. There were three recessions during that period as well. Once the rest of the world began recovering from the war, the U.S. had to deal with something it hadn't for many years: competition. Eisenhower was a great leader, but not much of an economist. Then again, some in the Obama administration think Mao Tse Tung was a great leader. Seriously, I am not saying Eisenhower wasn't a good president, but let's be honest and understand the base monetary policies were leftovers from FDR. It took many years to wean off those failed policies, but we're paying dearly for the consequences of FDR ushering in the nanny state. I am very well versed in 20th century economic history Sigurdur, if you're going to slam me, make sure you've got the numbers to back it up. I propose a 50% income tax increase on the bottom 50% of wage earners. Oh wait, they don't pay income tax now! How stupid of me to forget that. See, for every dollar removed from the private sector and given to government is money taken from savings and investment resulting in lost GDP. It isn't difficult to understand, but only if one knows how capitalism works. The only fair tax is......a fair tax. Why shouldn't everyone pay the same amount? That is the only way to keep government growth in check. Instead, government buys votes by promising all sorts of free goodies to citizens from the public treasury, paid for by their neighbor of course. If everyone paid the same rate, everyone would have a stake in the game. As it is now, 1/2 the population is paying for the other half. That is Collectivism. A specific example that is very easy to use is your characterization of HW Bush as a "hero" for raising taxes, one that I recall specifically is the 10% luxury tax on boats, planes and jewelry. Remember that? I do, because I live near Saginaw Bay and that "soak the rich" tax strangled our local economy. Rather than ramble on, here are the details: townhall.com/columnists/walterewilliams/2011/08/10/ignorance,_stupidity_or_connivance/page/full/ Let's look at what happened when Obama's predecessor George H.W. Bush signed the Omnibus Budget Reconciliation Act of 1990 and broke his "read my lips" vow not to agree to new taxes...........
Within eight months after the change in the law took effect, Viking Yachts, the largest U.S. yacht manufacturer, laid off 1,140 of its 1,400 employees and closed one of its two manufacturing plants. Before it was all over, Viking Yachts was down to 68 employees. In the first year, one-third of U.S. yacht-building companies stopped production, and according to a report by the congressional Joint Economic Committee, the industry lost 7,600 jobs. When it was over, 25,000 workers had lost their jobs building yachts, and 75,000 more jobs were lost in companies that supplied yacht parts and material. Ocean Yachts trimmed its workforce from 350 to 50. Egg Harbor Yachts went from 200 employees to five and later filed for bankruptcy. The U.S., which had been a net exporter of yachts, became a net importer as U.S. companies closed. Jobs shifted to companies in Europe and the Bahamas. The U.S. Treasury collected zero revenue from the sales driven overseas.
Back then, Congress told us that the luxury tax on boats, aircraft and jewelry would raise $31 million in revenue a year. Instead, the tax destroyed 330 jobs in jewelry manufacturing and 1,470 in the aircraft industry, in addition to the thousands destroyed in the yacht industry. Those job losses cost the government a total of $24.2 million in unemployment benefits and lost income tax revenues. The net effect of the luxury tax was a loss of $7.6 million in fiscal 1991, which means Congress' projection was off by $38.6 million. The Joint Economic Committee concluded that the value of jobs lost in just the first six months of the luxury tax was $159.6 million.
Congress repealed the luxury tax in 1993 after realizing it was a job killer and raised little net revenue. Why did congressional dreams of greater revenues turn into a nightmare? Kennedy, Mitchell and their congressional colleagues simply assumed that the rich would act the same after the imposition of the luxury tax as they did before and that the only difference would be more money in the government's coffers. Like most politicians then and now, they had what economists call a zero-elasticity vision of the world, a fancy way of saying they believed that people do not respond to price changes. People always respond to price changes. The only debatable issue is how much and over what period.
Here's my question for you: Is it likely that in the two decades since 1990, American human nature has changed? If Congress imposes a luxury tax on corporate jets and other luxury items, will Americans behave differently this time? In other words, can we expect federal tax revenues to rise and unemployment to fall as a result of Obama's tax proposal?
I don't believe that Obama is dumb enough to believe that a tax on corporate jets would be a revenue generator. His agenda is to inspire envy and resentment against wealthy Americans as a tool in pursuit of his higher-tax agenda. This is not a zero sum game. No offense guys, but Socialism has so permeated our country most don't even know what Capitalism is anymore. Some of the stuff you've been saying is just flat out anti-capitalist. Ron Paul wants to cut government spending by 50%. What's wrong with that? |
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Post by magellan on Jul 6, 2012 23:04:14 GMT
Why I believe the income tax should be abolished (and so does Ron Paul). Only in time of war such as the magnitude of WWII is it necessary, but once in place, it never goes away and is used as a political football to encourage envy of those with more than you. Which political Party is best known for pimping class warfare?
[youtube]http://www.youtube.com/watch?v=DYeYPcougmA&feature=related
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Post by sigurdur on Jul 6, 2012 23:29:03 GMT
Magellan:
I am going to ask you a simple question before I respond to some of what you wrote above.
What is your solution to our current debt problem.
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? NO plan by either side.......and no plan put for by the Tea Party either. So in effect, we have a bunch of clueless folks running around with their heads cut off like chickens.
Defense spending went UP during his administration, which I am not criticizing. Let's not pretend our military spending today is anything out of the ordinary throughout the past 70 years. We live in a dangerous time.