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Post by agito on Jun 18, 2008 11:22:03 GMT -6
was trying to research demand-side econ and came upon this interesting link: www.slate.com/id/2093947/given the comparisons between Obama and Kennedy, and the supply-side arguments about kennedy that are sure to come up, this is a relevant read.
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Post by proletariat on Jun 18, 2008 14:49:03 GMT -6
So does this make Bush a Keynesian?
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Post by unlawflcombatnt on Jun 18, 2008 22:02:43 GMT -6
So does this make Bush a Keynesian? I suspect you're joking about Bush. Bush is considered to be a supply-sider by some, such as Larry I-lost-my-straitjacket Kudlow. Former Reagan Treasury undersecretary, Paul Craig Roberts, author of the book "The Supply-Side Revolution" states that there were no supply-side justifications for Bush's tax cuts. They were just economically counterproductive gifts to his rich friends. The best label for Bush is as a Pseudo-Supply-Sider. He falsely used supply-side arguments to justify reverse Robin Hood tax cuts.
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Post by agito on Jun 18, 2008 22:19:02 GMT -6
actually, proletariat got this right.... kind of.
Bush has done 2 things to "stimulate" the economy. (and he's done it twice for each). He's cut taxes, and he's refunded a pittance to the poor.
The funny thing is, he cut taxes when the economy wasn't really in trouble... but when the chips were down the economy sagged, he turned to a "free market keynesian", helicoptering money to the poor.
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Post by unlawflcombatnt on Jun 19, 2008 4:10:38 GMT -6
actually, proletariat got this right.... kind of. Bush....cut taxes when the economy wasn't really in trouble... but when the chips were down the economy sagged, he turned to a "free market keynesian", helicoptering money to the poor. What? When did Bush ever "helicopter money to the poor"? Or are you referring to the "poor" Wall Street investment bankers, loan sharks, and housing speculators? Bush has given handouts exclusively to Corporations and the rich. That's not generally considered Keynesian.
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Post by blueneck on Jun 19, 2008 4:56:42 GMT -6
Agito may be referring to the tax rebates we got- the first 300 dollar one barely paid for a month of utilities, and the second barely paiud for a month of gas and utilities
woot!
Again the supply siders make a false comparison with Kennedy. the times and economic conditions were very different then. A case could actually be made that the 90% tax on the upper bracket was excessive - he moved it down to a more reasonable 70%. Kennedy was responding to a mild economic slowdown and had to compromise to get his plan put thru.
We had much greater more shared and sustainable prosperitywhen the upper tax rates and corporate taxes were higher than they are today. How much lower do taxes have to go before some of the so called "trickle down" actually trickles down?
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Post by proletariat on Jun 19, 2008 6:21:55 GMT -6
Yes, I was referring to the latest surplus package. Actually I think arguing for a big ideological divide between demand side and supply side is a non starter. They are both pound foolish.
A demand side tax plan in a country who has long ago given up producing anything makes no more sense to me than demand side tax cuts. In the 60's it might have made some sense - demand pushing production and all, but today it just makes us all poorer and more in debt than when we began.
I guess I am an old fashion kind of Keynesian. It is not that we create demand through tax cuts, but through infrastructure investment. It makes a hell of a lot more sense to me to make sure than we all have universal health care than a measly $500 tax cut.
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Post by unlawflcombatnt on Jun 19, 2008 15:23:59 GMT -6
Again the supply siders make a false comparison with Kennedy. the times and economic conditions were very different then. A case could actually be made that the 90% tax on the upper bracket was excessive - he moved it down to a more reasonable 70%. Exactly. The case could have been made in 1960 that a 90% tax rate was not really fair, even if it was optimal for economic growth. (Ravi Batra actually makes this point in his book Greedspan's Fraud, maintaining that even near-confiscatory tax rates on high incomes were still best for overall economic growth and production. But such rates were not advisable — based on "fairness" concerns.) We had much greater more shared and sustainable prosperity when the upper tax rates and corporate taxes were higher than they are today. How much lower do taxes have to go before some of the so called "trickle down" actually trickles down?We all know the answer to that one — No level of reduction will insure a "trickle down" effect. Jobs are created only when there is demand for production, and a resultant demand for workers to provide production. If there's no change in production or labor demand, there'll be little additional investment, and little trickle down effect. We already have mechanisms to reward capital investment to begin with. They're called tax "deductions." If you buy capital equipment, you can deduct the cost from your net income. Unfortunately, businesses would rather borrow all money needed for investment, rather than re-invest their profits in capital goods purchases. Maybe some capital equipment tax deductions could be converted into tax credits, or at least partial tax credits. (I'm not necessarily advocating this. I'm just posing this as a possibly beneficial, quasi-supply-side tax reduction.) Combined with these quasi-supply side tax reductions, we could reduce (or eliminate) tax deductions for interest payments. To me it seems like the combination of these 2 (capital purchase tax credits + interest payment deductions ) should increase re-investment of profits, while reducing business borrowing. Of course, this combination will have limited effects without increased production demand. But it might augment capital investment when production demand is already increasing. ( Production demand, by the way, could be instantaneously increased by slapping tariffs on imports.) I do agree, however, that it is generally difficult to stimulate consumer and production demand with tax cuts. Government spending is one method suggested by Keynes. What is often overlooked, however, is that Keynes also recommended restricting imports, to keep domestic demand from leaking out of the domestic economy. Given our huge national debt and annual deficit, restricting imports through tariffs would be my 1st choice. It would increase Federal revenues, without increasing Federal outlays. Instead of "hoping" to stimulate the economy through creation of "new" jobs in a currently non-existent industry, we'd create/restore jobs in already existing industries that have been outsourced. We'd be restoring jobs in industries where production demand already exists, rather than creating production jobs for something there may never be any demand for. Domestic production demand can best be increased through tariffs. This will raise prices on imports, reduce import demand, and cause a compensatory increase in domestic production demand. The increased Federal revenue from tariffs will reduce Federal debt & borrowing, thus reducing inflation. This, in turn, will increase real dollar purchasing power of current wages, thus augmenting the increased domestic demand resulting from tariffs.
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Post by judes on Jun 19, 2008 16:25:59 GMT -6
....Unfortunately, businesses would rather borrow all money needed for investment, rather than re-invest their profits in capital goods purchases. Well that's because if they reinvested their profits instead of borrowing more and more money there wouldn't be as much left for those obscene executive pay packages....now would there. ..... Given our huge national debt and annual deficit, restricting imports through tariffs would be my 1st choice. It would increase Federal revenues, without increasing Federal outlays. Instead of "hoping" to stimulate the economy through creation of "new" jobs in a currently non-existent industry, we'd create/restore jobs in already existing industries that have been outsourced. We'd be restoring jobs in industries where production demand already exists, rather than creating production jobs for something there may never be any demand for. Domestic production demand can best be increased through tariffs. This will raise prices on imports, reduce import demand, and cause a compensatory increase in domestic production demand. The increased Federal revenue from tariffs will reduce Federal debt & borrowing, thus reducing inflation. This, in turn, will increase real dollar purchasing power of current wages, thus augmenting the increased domestic demand resulting from tariffs. Amen to that!
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Post by blueneck on Jun 20, 2008 4:12:53 GMT -6
A rare moment of agreement Proletariat Reinvesting in upgrading and repairing infrastructure - roads bridges, rail, electric grid, air traffic control and other works like universal health care that benefit the public as a whole - using US labor and US materials would be a much more effective and longer lasting stimulous than the few bread crumbs tossed that the rebates represent. Huckabee was the only candidate suggesting that infrastructure investment was the right thing to do vs more tax breaks I haven't been able to get a straight answer from anyone on this issue - at tax time will they take the rebates and tack it back on as income like they did last time? essentially double dipping on the taxation
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Post by blueneck on Jun 20, 2008 4:18:37 GMT -6
And that is precisely the problem with tax cuts for corporations and the wealthy that have no strings attached - it presumes that they will reinvest on an honor system - as you know there is no honor among thieves
Now if tax cuts camewith the stipulation that it must be used to raise wages, invest domestically in capital equipment, reducing energy usage, or research and development that would make more sense than simply giving away the farm.
What really happens is just as youy suggest - it ends up in some offshore account somewhere, or joins the too much money in the system bubble chase
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