Republican Economic Policies

[Woolleybugger]

You realize that he wants us to go into debt to make sure the money supply increases so that the top 1% can keep getting richer and richer while personal debt gets bigger and bigger. This is how he thinks money is created these days and he is right. Now that we offshore all the true wealth creation jobs to the third world, what is left for us to do but be a broker for wealth created there, sold here and consumed locally by people who go into debt to make a market. Give us easy credit and blam, you have new demand. This is what Keane is talking about btw..

 

[Woolleybugger]

The austrians are first and foremost ideologues. That is why they never became mainstream in the world of economics. Not even the far right wingers in Chicago thought they were sane.

 

[degsme]

Hint: get a hint. I already debunked you and your made-up "facts".

Talk to yourself if you want to try to convince anyone at this point.

When and where?

 

[Lukey]

Well since we know that taxing doesn't cause economic downturns until you get to marginal rates about THREE TIMES AS HIGH as what we have today
and since we know that the way out of a "demand trap" is government spending.

This is wrong how?

But do tax increases improve GDP growth rates - that is the question (you never answer).

 

[Lukey]

the last two years of W's administration featured a democratically controlled congress. coincidentally, I'm sure, when it all hit the fan.

of course the economy is recovering. that's what economic cycles bring. the question is why so lackluster and why so long.

but the left wants it both ways. they use the immeasurable 'could have been worse' (we must measure this with the same techonology that allows us to record global temperature) when it suits them but expect us to all sit tight and allow the economy to recover at a pathetic pace.(nevermind obama based his budgets and obamacare on 5% economic growth)... thankfully the catch all ''bush's fault" is available to them and their sychopantic lapdogs

Excellent! A star for the newcomer!

 

[degsme]

That is crap. Of course, since you subscribe to the Obama "tax your way to economic growth" school of economics I guess you believe it - but it is still crap.

Well I agree that an unprecedented level of filibuster is crap. That refusing to allow a majority elected POTUS a chance to govern is fundamentally treasonous.

 

[degsme]

But do tax increases improve GDP growth rates - that is the question (you never answer).

Some do. When they move Marginal Income from those who's spending and investment habits are economically inefficient to those whos spending and investment habits are more economically efficient you get a GDP increase.

Some don't. When you reverse that process.

So taxing the middle and lower classes with FICA - ie taxing economically efficient spenders and investors - reduces GDP

Taxing upper quintile earners who are economically inefficient not only increases GDP, but also increases the incentive for the upper quintile earners to optimize thier investing and spending patterns.

 

[degsme]

the last two years of W's administration featured a democratically controlled congress. coincidentally, I'm sure, when it all hit the fan.

Actually the shit hit the proverbial fan in 2005 http://www.kansascityfed.org/publicat/econrev/pdf/4q07Edmiston.pdf (see table 4) when foreclosure rates began their exponential rise. Note that 2005 is 3 years after 2002. and 2002 is when the rate of GLB based "non-conforming" loans with 3 year baloons became dominant in the mortgage market... Odd that.

of course the economy is recovering. that's what economic cycles bring. the question is why so lackluster and why so long.

And the answer is the same one as to why the GDP growth rate under GWB was 22% under historic averages for a whoppling 6 solid years (I'm leaving off the crash) and outperformed by economies like Germany by a whopping 35% http://www.tradingeconomics.com/ in that same time period: Inefficient fiscal policies. Maximized tax cuts for the least efficient creators of GDP growth, tax disincentives for business reinvestment in the form of lower cap gains taxes and regressive tax structures (FICA) on the most economically effective GDP growth creators.

Remember that the vast majority of "job creating" investment does not come from the upper quintile earners. CALPERS for example - which is merely one pension plan in one segment of the economy in one state - has MORE ASSETS INVESTED in "job creation" than the 10 wealthiest Americans PUT TOGETHER.

they use the immeasurable 'could have been worse' (we must measure this with the same techonology that allows us to record global temperature)

nothing immeasurable about either. its the same measurement and mathematical techniques that allow you to post this since they are used in designing the chipset you are running on. That the mathematics is beyond you doesn't mean it isn't valid

when it suits them but expect us to all sit tight and allow the economy to recover at a pathetic pace.

want some oats with all that straw? Liberals would very much like to have a fiscal policy that we have historic data shows works. Instead an unprecedented rate of Filibusters by the GOP in the first 2 years of recovery (unprecedented by a Factor of 2) http://www.senate.gov/pagelayout/reference/cloture_motions/clotureCounts.htm combined with a mendacious effort to prevent the seating of a legitimate filibuster proof majority - basically prevented all but the initial stimulus from being implemented. That stimlus WORKED - in fact it outperformed the job creation/protection predictions by as much as 150%.

But that was all that passed. Other than the minor aspects that could be forced through via Budget reconcilliation

Then we have had 13 mos of not only a "Just Say No" congress - but a congress hell bent on actually CRASHING the economy to force crippling austerity measures in the name of a foolish innumerical ideology of "no deficits".

(nevermind obama based his budgets and obamacare on 5% economic growth)..

Factually false. They are actually based on the historic average of 3.5% with a 4% kicker in the first two years driven by recovery stimulus

FACTS MATTER
got any?
didn't think so

. thankfully the catch all ''bush's fault" is available to them and their sychopantic lapdogs

Well when you crash an economy so had that you lose 2 full years of AVERAGE GDP growth, - and closer to 3 years based on the fiscal policies you have put in place - it takes a bit longer than average to recover from it.

When you destroy job market incentives so thoroughly that you are the first POTUS in modern history to fail to have positive job creation over your 2 terms - or when you are losing 0.75% of the job market EVERY MONTH - it takes more than say the 3 mo average to recover from it.

And that's assuming you actually implement stimulus policies and don't filibuster them.

Mind you when this comes after 6 years where annual job creation doesn't even keep up with the growth of the population and labor pool - the crash is that much worse.


So tell me, since this is the worst economic crash in human history - what would be a reasonable time period for an actively promoted recovery to take place?


Now we have some small business owners in these forums. I've asked them to point to a single act of the GOP Congress that has been "blocked" by the Dem Senate that would have motivated them to hire one additional worker. NOT ONE OF THEM has been able to point to a single act.

And in fact academic research on this backs this up

FACTS MATTER
got any?
didn't think so

(BTW getting a star from the likes of Lukey??? well put it this way - if he gave me one, I'd give it back. That's how good his factual credibility is)

 

[Lukey]

regardless of tax rates, the 'take' from the economy is always around 19%. 'the rich' are glad to pay their fair share but when the gov't gets greedy their lawyers/CPAs get busy.

Exactly, and despite Degsme's (rather suspect) take on it, when the rich are spending more time trying to figure out how to minimize their tax payments, they usually are not efficiently allocating their investable assets. And that will tend to lead to a sub-optimal GDP growth rate.

 

[Lukey]

Some do. When they move Marginal Income from those who's spending and investment habits are economically inefficient to those whos spending and investment habits are more economically efficient you get a GDP increase.

Some don't. When you reverse that process.

So taxing the middle and lower classes with FICA - ie taxing economically efficient spenders and investors - reduces GDP

Taxing upper quintile earners who are economically inefficient not only increases GDP, but also increases the incentive for the upper quintile earners to optimize thier investing and spending patterns.

Even if the majority of the wage tax cut is spent at Walmart on Chinese products?

 

[degsme]

Even if the majority of the wage tax cut is spent at Walmart on Chinese products?

Yup.. because the production end of the supply chain actually gets a very small part of that. Unlike a buying a BMW where less than 20% of the cost stays in the USA, buying a Tshirt at Walmart that was made in Malaysia leaves over 50% of it in the US part of the Supply chain.

Furthermore it primarily puts it in the hands of other lower 5 decile earners. who... are the most efficient spenders and investors.

FACTS MATTER
you don't like them but they are what they are.

 

[degsme]

I'd like to thank the academy...................

Be careful which academy gives you accolades... there is a difference between the MPAA and the AVN awards.

 

[Lukey]

capital that could be used for growth, gets parked

Or worse, gets put into tax efficient but economically unnecessary "investments." I inherited a bunch of (worthless) oil and mineral partnerships from my dad in the 80's that he was using for tax write offs.

 

[Lukey]

So you think its an infinite pie? Where does all that extra money come from Lukey?

Entrepreneurial activity.

 

[degsme]

Entrepreneurial activity.

Um no. Entrepreneurs are completely unable to do anything without access to capital. And if there is a fixed monetary pie (as Ron Paul suggests we should have) Entrepreneurs simply take capital from other ventures to fund their own.

The ONLY way Entrepreneurs are able to expand the pie is because fractional reserve banking allows those with capital (often relatives and parents as in the case of Jobs and Gates) to use their borrowing multiplier to inject capital into these startups.

Then as these startups generate cashflow, which also is facilitated by the fractional reserve system, they "accelerate" the velocity of money (startups pretty much spend at a faster precentage of assets than established companies) which itself goes back into the fractional reserve system.

Try again.

FACTS MATTER
ECONOMICS MATTERS

(yes yes wooley I should have let you walk him down the socratic aisle - but I sometimes lack the patience )

 

[degsme]

[quote

Originally Posted by DefeatObama
capital that could be used for growth, gets parked
ooo
regardless of tax rates, the 'take' from the economy is always around 19%

Or worse, gets put into tax efficient but economically unnecessary "investments." I inherited a bunch of (worthless) oil and mineral partnerships from my dad in the 80's that he was using for tax write offs.[/QUOTE]

First off the claim about 19% "regardless of tax rates" is simply not true. If you modify it to be "regardless of top marginal tax rates" - you would be closer to the mark, but actually since the GWB tax cuts the fraction of the economic activity has been more like 14% of GDP. So clearly that's not even direclty true.

But it also isn't true because there has never been simply an accross the board rise in tax rates. There has ALWAYS BEEN a complex rejiggering of all the rates so that the NET TAX RATE has been around 20%... But that is a political choice not an economic one.

So this claim is classic post hoc reasoning fallacy.


Now as for "parking capital in tax efficient but economically unnecessary investments" - that actually happens more with LOWER tax rates than with higher rates. Its basic market dynamics.
More productie investments yield a higher rate of return. Less productive ones yield less.

So if I have two investments, one yielding 45% ROI and one yielding 40% ROI. with a 15% Cap Gains rate, I earn 23% and 19% after taxes respectively - I have very little incentive to move my assets from the less productive to the more productive asset class OTOH if the cap gains rate is 30% I earn 1.5% and -2% respectively. Now I have a clear incentive to move from the less productive to the more productive asset class.

And since EVERYONE is paying the same rate anyway, there isn't an incentive to flow out of the system. And the data on this is quite clear. with LT Cap Gains rates as high as 35%, there IS NO CHANGE IN THE PERCENTAGE OF GDP REINVESTED... NONE.

FACTS MATTER,
HISTORIC DATA MATTERS
got any?

 

[degsme]

Originally Posted by degsmeWell I agree that an unprecedented level of filibuster is crap. That refusing to allow a majority elected POTUS a chance to govern is fundamentally treasonous.

what was your excuse during his 1st two years: incompetence or indecision?

Um look at the Cloture vote counts http://www.senate.gov/pagelayout/reference/cloture_motions/clotureCounts.htm

FACT is that Obama only had a filibuster proof majority from July 7th when Al Franken was sworn in http://www.washingtonpost.com/politics/al-franken-d-minn/gIQAnCqo9O_topic.html until the senate went into recess August 7th. - because Ted Kennedy died in mid august during the recess.

And during that 4 week interval the GOP "worked to rule" (also unprecedented) on Cloture. Which meant that EVERY SINGLE BILL took roughly 10 calendar days to pass. (go read the Senate rules on Cloture).

So no excuse is needed - the record is clear. Mitch McConnell announced that the GOP Senate's minority's "number one priority" was not "to recover from the economic recession" but rather "to make Obama a One term President".

The mistake was Reids for not simply seating Franken and letting the lawsuits peter out.

 

[Lukey]

Or worse, gets put into tax efficient but economically unnecessary "investments." I inherited a bunch of (worthless) oil and mineral partnerships from my dad in the 80's that he was using for tax write offs.

First off the claim about 19% "regardless of tax rates" is simply not true. If you modify it to be "regardless of top marginal tax rates" - you would be closer to the mark, but actually since the GWB tax cuts the fraction of the economic activity has been more like 14% of GDP. So clearly that's not even direclty true.

But it also isn't true because there has never been simply an accross the board rise in tax rates. There has ALWAYS BEEN a complex rejiggering of all the rates so that the NET TAX RATE has been around 20%... But that is a political choice not an economic one.

So this claim is classic post hoc reasoning fallacy.


Now as for "parking capital in tax efficient but economically unnecessary investments" - that actually happens more with LOWER tax rates than with higher rates. Its basic market dynamics.
More productie investments yield a higher rate of return. Less productive ones yield less.

So if I have two investments, one yielding 45% ROI and one yielding 40% ROI. with a 15% Cap Gains rate, I earn 23% and 19% after taxes respectively - I have very little incentive to move my assets from the less productive to the more productive asset class OTOH if the cap gains rate is 30% I earn 1.5% and -2% respectively. Now I have a clear incentive to move from the less productive to the more productive asset class.

And since EVERYONE is paying the same rate anyway, there isn't an incentive to flow out of the system. And the data on this is quite clear. with LT Cap Gains rates as high as 35%, there IS NO CHANGE IN THE PERCENTAGE OF GDP REINVESTED... NONE.

FACTS MATTER,
HISTORIC DATA MATTERS
got any?[/QUOTE]

Yeah, they do and yeah, I got them and you don't. A) The fact that we are so below average as a percent of GDP since the Bush tax cuts is precisely because of all the big government crowding out the private sector. In fact, it says more about the lack of jobs than it does about an "inadequate" marginal tax rate. Go look at the labor participation rate since the Bush tax cuts and see if it correlates to the decline in tax revenue as a percent of GDP. B) The fact of the matter is that when you implement high marginal tax rates, the amount of investable capital declines and so does the opportunity to make big bucks on investments so you tend to focus on preservation of capital and tax efficiency becomes more important. And as for your example, in the case of the 30% cap gains rate, if your choice is between 1.5% and -2% return you don't do either - you start looking for investments that do nothing of value for the economy but throw off tax losses that you can use against other income (which was precisely the point I made).

 

[Lukey]

Um no. Entrepreneurs are completely unable to do anything without access to capital. And if there is a fixed monetary pie (as Ron Paul suggests we should have) Entrepreneurs simply take capital from other ventures to fund their own.

The ONLY way Entrepreneurs are able to expand the pie is because fractional reserve banking allows those with capital (often relatives and parents as in the case of Jobs and Gates) to use their borrowing multiplier to inject capital into these startups.

Then as these startups generate cashflow, which also is facilitated by the fractional reserve system, they "accelerate" the velocity of money (startups pretty much spend at a faster precentage of assets than established companies) which itself goes back into the fractional reserve system.

Try again.

FACTS MATTER
ECONOMICS MATTERS

(yes yes wooley I should have let you walk him down the socratic aisle - but I sometimes lack the patience )

So there was no entrepreneurial activity when we were using the gold standard. Quick, send Carnegie a telegram and tell him he's broke...

 

[degsme]

First off the claim about 19% "regardless of tax rates" is simply not true. If you modify it to be "regardless of top marginal tax rates" - you would be closer to the mark, but actually since the GWB tax cuts the fraction of the economic activity has been more like 14% of GDP. So clearly that's not even direclty true.

But it also isn't true because there has never been simply an accross the board rise in tax rates. There has ALWAYS BEEN a complex rejiggering of all the rates so that the NET TAX RATE has been around 20%... But that is a political choice not an economic one.

So this claim is classic post hoc reasoning fallacy.


Now as for "parking capital in tax efficient but economically unnecessary investments" - that actually happens more with LOWER tax rates than with higher rates. Its basic market dynamics.
More productie investments yield a higher rate of return. Less productive ones yield less.

So if I have two investments, one yielding 45% ROI and one yielding 40% ROI. with a 15% Cap Gains rate, I earn 23% and 19% after taxes respectively - I have very little incentive to move my assets from the less productive to the more productive asset class OTOH if the cap gains rate is 30% I earn 1.5% and -2% respectively. Now I have a clear incentive to move from the less productive to the more productive asset class.

And since EVERYONE is paying the same rate anyway, there isn't an incentive to flow out of the system. And the data on this is quite clear. with LT Cap Gains rates as high as 35%, there IS NO CHANGE IN THE PERCENTAGE OF GDP REINVESTED... NONE.

FACTS MATTER,
HISTORIC DATA MATTERS
got any?

Yeah, they do and yeah, I got them and you don't. A) The fact that we are so below average as a percent of GDP since the Bush tax cuts is precisely because of all the big government crowding out the private sector.

That's not a "fact" and you cannot demonstrate it in any way. Government is not "bigger" than usual. And in fact if this were the case you would not have seen the "flat job growth" under GWB, you simply would have seen that job growth in the Federal sector. Yet NO SUCH JOB GROWTH TOOK PLACE.

Furthermore stock market continued to grow. So again, the Government wsn't crowding anything out.

Sorry the data doesn't support your claim.

In fact, it says more about the lack of jobs than it does about an "inadequate" marginal tax rate. Go look at the labor participation rate since the Bush tax cuts and see if it correlates to the decline in tax revenue as a percent of GDP.

um that's not a correlation that is meaningful. I'd love to see your explanation of any supposed correlation

B) The fact of the matter is that when you implement high marginal tax rates, the amount of investable capital declines a

Not necessarily. Your assumption is that 100% of Capital Gains are reinvested. They aren't. In fact the percent of GDP that is invested in LTCap Gains has remained fixed over a wide range of Cap gains tax rates (from 40% down to 15%). So that means that there simply is not the kind of direct correlation you claim. This is just basic measurable fact. http://www.whitehouse.gov/omb/budget/Historicals/

and so does the opportunity to make big bucks on investments so you tend to focus on preservation of capital and tax efficiency becomes more important.

Which means ROI gets OPTIMIZED. The best example of this is the Boeing 707. Bill Boeing had the option of pocketing gains but paying large taxes on it, or reinvesting in the business and simply taking out the value as needed, thereby maximizing growth opportunity. He chose to reinvest and create the 707 - which essentially created a whole new industry - Commercial Jet Aviation.

And as for your example, in the case of the 30% cap gains rate, if your choice is between 1.5% and -2% return you don't do either - you start looking for investments that do nothing of value for the economy but throw off tax losses that you can use against other income (which was precisely the point I made).

Um no, becase optimizing ROI is still the goal of capitalists. it is only when the tax rate becomes so high that you cannot easily find better investments that you do this. That occurs at marginal income rates of about 90% and Cap gains rates of about 50%.

But we are nowhere near those so it simply does not apply

FACTS MATTER
this is all supported by historic data
your "points" thus are not "made" but "made up".