Reagan Budget Director Slams GOP for 'Theology' Of Tax Cuts

[JohnSmith2007 353]

We did not have 4% unemployment throughout the Bush years. That's a demonstrably false statement. The closest you come to that number is the 4.2% Bush inherited in Jan 2001. It went up to 6.3% (by Jun 03) from there to then fall to 4.4% (by Mar 07) to then shoot up to the 7.6% that he left for the next President coming into office. At no point in time did Bush have a 4% unemployment rate and certainly not throughout his presidency.

You say we didn't need to create a bunch of jobs because everyone that wanted one had one? Were the Bush tax cuts not sold on the premise that they would create 5 million jobs at a time when the unemployment rate was on the way up? That never happened. This supposed goal was never accomplished - not even close.

As for myself, I am actually much better off today than I was 4 years ago.

Oh well, no sense arguing with an ideolog. I am just glad your kind were kicked out of congress. If you think we are better today than 4 years ago then there is no sense even discussing this with you. I also remember you kicking Bush's economy while things were booming. Pointing out that incomes didn't rise with the economy. Now you are trying to say that 9+% unemployment and stagnate incomes is a success. Very strange POV you have there. Good luck with that.

[Mr. Big Dog 10,747]

Oh well, no sense arguing with an ideolog actual facts and numbers.

Fixed that. You refuse to take in reality hanging on to the theology of tax cuts just as the Budget Director says.

[JohnSmith2007 353]

Fixed that. You refuse to take in reality hanging on to the theology of tax cuts just as the Budget Director says.

It is you that has taken a flight from reality. The economy is in the tank because the stimulus failed. Yet you seem to want to defend this mess as a victory. The only thing that will save the economy is cutting taxes and spending.

Haven't you been paying attention? The election was all about the dems failure to get the economy going again. It is obvious to everyone except those that are lying to themselves that we are worse off now than when Obama took office. It is a good thing that most of the electorate has woken up from the kool-aid induced delusions and are seeing things for what they really are.

Edited November 30, 2010 by JohnSmith2007

[JohnSmith2007 353]

[Mr. Big Dog 10,747]

It is you that has taken a flight from reality. The economy is in the tank because the stimulus failed. Yet you seem to want to defend this mess as a victory. The only thing that will save the economy is cutting taxes and spending.

Haven't you been paying attention? The election was all about the dems failure to get the economy going again. It is obvious to everyone except those that are lying to themselves that we are worse off now than when Obama took office. It is a good thing that most of the electorate has woken up from the kool-aid induced delusions and are seeing things for what they really are.

It isn't me that has departed reality. I am looking at actual numbers rather than make believe stuff as you would. You say that tax cuts are the way to go - about a quarter of the stimulus bill were tax cuts. If tax cuts stimulate the economy, then the stimulus should have done just that or you are arguing against your own position. The economy is in the tank not because the stimulus bill failed - there isn't any serious debate over whether or not the stimulus helped the economy stop the rapid decline it was in and climb out of the recession. The numbers are on the table. Are jobs lagging? Yes. They always do. They did lag in the recoveries of the early 80's and at the beginning of this century. There's really nothing unusual about this. Is the number high? Yes. But not as high as it was two years into reagan's forst term when the unemployment rate stood at almost 11%.

Slice it any way you want, the numbers and facts do not support your argument. Heck, your own argument doesn't support your own argument.

Take the WSJ, for example:

Many forecasters say stimulus spending is adding two to three percentage points to economic growth in the second and third quarters, when measured at an annual rate. The impact in the second quarter, calculated by analyzing how the extra funds flowing into the economy boost consumption, investment and spending, helped slow the rate of decline and will lay the groundwork for positive growth in the third quarter -- something that seemed almost implausible just a few months ago. Some economists say the 1% contraction in the second quarter would have been far worse, possibly as much as 3.2%, if not for the stimulus.

For the third quarter, economists at Goldman Sachs & Co. predict the U.S. economy will grow by 3.3%. "Without that extra stimulus, we would be somewhere around zero," said Jan Hatzius, chief U.S. economist for Goldman.

[JohnSmith2007 353]

It isn't me that has departed reality. I am looking at actual numbers rather than make believe stuff as you would. You say that tax cuts are the way to go - about a quarter of the stimulus bill were tax cuts. If tax cuts stimulate the economy, then the stimulus should have done just that or you are arguing against your own position. The economy is in the tank not because the stimulus bill failed - there isn't any serious debate over whether or not the stimulus helped the economy stop the rapid decline it was in and climb out of the recession. The numbers are on the table. Are jobs lagging? Yes. They always do. They did lag in the recoveries of the early 80's and at the beginning of this century. There's really nothing unusual about this. Is the number high? Yes. But not as high as it was two years into reagan's forst term when the unemployment rate stood at almost 11%.

Slice it any way you want, the numbers and facts do not support your argument. Heck, your own argument doesn't support your own argument.

Take the WSJ, for example:

The quarter of the stimulus that was tax cuts is the only thing that had positive results. The deficit spending did nothing. You just proved my point. What we need is more tax cuts to really help out the economy. Then we need real spending cuts. The bottom line is this, the economy is in the tank. The stimulus did nothing. Live in your fantasy world if you like but the American people have made their choice. They kicked the dems out because what they did didn't work.

[one...two...tree 2,762]

The quarter of the stimulus that was tax cuts is the only thing that had positive results. The deficit spending did nothing. You just proved my point. What we need is more tax cuts to really help out the economy. Then we need real spending cuts. The bottom line is this, the economy is in the tank. The stimulus did nothing. Live in your fantasy world if you like but the American people have made their choice. They kicked the dems out because what they did didn't work.

How are the current tax rates preventing jobs? Be specific. What sector of the job market is being dampened by the current tax rates to where companies aren't hiring.

[Ban Hammer 13,346]

:rofl: :rofl:

[JohnSmith2007 353]

How are the current tax rates preventing jobs? Be specific. What sector of the job market is being dampened by the current tax rates to where companies aren't hiring.

It is all about confidence and the ability to plan ahead. Without knowing what the tax rates are going to be creates an atmosphere of doubt that hampers job growth.

[Mr. Big Dog 10,747]

The quarter of the stimulus that was tax cuts is the only thing that had positive results. The deficit spending did nothing. You just proved my point.

Actually, you just proved my point. In two ways: 1) The stilmulus bill did help the economy and 2) you keep contradicting yourself. Remember that the tax cuts were fully added onto the existing deficit - they are indeed deficit spending. So now we have good deficit spending and bad deficit spending?

[Mr. Big Dog 10,747]

It is all about confidence and the ability to plan ahead. Without knowing what the tax rates are going to be creates an atmosphere of doubt that hampers job growth.

Bull. The only thing that spurs job growth is growth in demand for products and services. No business is hiring a single person just because they received a tax break. They hire if they have demand for the products they sell which the current staffing levels can't fulfill. As I said, if a business sees an opportunity to generate an additional $1,000,000.00 in profits, it will hire the people needed to realize that profit whether that profit is taxed at 35% or 39%. No business is going to refuse an after tax profit of $610,000.00 because uncle Sam denied it an after tax profit of $650,000.00. Any claim to the contrary is just nonsense.

[one...two...tree 2,762]

Actually, you just proved my point. In two ways: 1) The stilmulus bill did help the economy and 2) you keep contradicting yourself. Remember that the tax cuts were fully added onto the existing deficit - they are indeed deficit spending. So now we have good deficit spending and bad deficit spending?

Yeah, I don't get how on one hand, he's arguing that tax cuts (which we've had for almost 10 years now) create job growth, but then when confronted with high unemployment numbers, he's saying we need more tax cuts, and he's got nothing to base it on beyond some rigid ideological view that the GOP has embraced since the 80's.

[JohnSmith2007 353]

Actually, you just proved my point. In two ways: 1) The stilmulus bill did help the economy and 2) you keep contradicting yourself. Remember that the tax cuts were fully added onto the existing deficit - they are indeed deficit spending. So now we have good deficit spending and bad deficit spending?

Jeez, you are being deliberatly obtuse. Cutting taxes and borrowing money to spend on "shovel ready" projects is an apple and oranges thing. What do you have against people keeping more of their own money? Do you really think it is better to give the government more and let them spend it? Talk about an idealog.

The anatomy of (stimulus) failure

Obama's plan wasn't a mistake, it was a hoax from the beginning

It was the economy that drove the Democrats out and a Republican majority in. Specifically, it was the failure of President Obama's "stimulus" package to stimulate the economy enough to bring the unemployment rate down. Now a lame-duck 111th Congress is going to have to decide what to do. The Republican-led 112th Congress will confront the same questions when it convenes in January. Before making more decisions about economic stimulus, we should be absolutely clear why the huge stimulus program failed.

Failure in this context doesn't mean that the stimulus program didn't create any jobs. That's a silly proposition. Every student who completes Economics 101 knows that an increase in government spending or a cut in taxes will give the economy a short-run shot in the arm. The failure of the Obama package was that the actual demand stimulus was absurdly small in relation to the amount of money ($827 billion) spent. Spending even more money in the same way, as many liberals advocated, only would have added to that failure. The failure resulted not from a shortage of money, but from two fundamental flaws in the program's design.

The first flaw was the choice of policy levers. Fiscal stimulus can be generated from either increases in government spending or tax cuts. From the outset, Mr. Obama was adamant about his preferences. He characterized the tax-cut option as the "tired dogma of the past" and emphasized the need to hitch short-run stimulus onto long-term investments in infrastructure and energy independence.

Whatever the merits of such long-term investments, Mr. Obama was dead wrong about the efficacy of tax cuts. One need look back no further than 2008. The $100 billion in tax rebates was spent quickly by consumers. In the process, the negative growth in gross domestic product of the first calendar quarter was reversed in the second quarter. The tax rebates did the job of stimulating short-term growth, and did it quickly. The ideologues advising Mr. Obama ignored this evidence, relying instead on surveys of consumer intentions.

When asked what they will do with a tax rebate, consumers piously respond that they'll save it or pay off credit card debt. In truth, those responses are no more reliable than New Year's resolutions to exercise more, eat more healthfully, quit smoking and spend more time with the family. Psychiatrists might have reason to examine such proclamations; economists focus on actual behavior. Not only do tax rebates get spent quickly, but even liberals should appreciate the egalitarianism of giving everyone the same-sized rebate. Mr. Obama's first failure was to reject this fiscal-stimulus option.

Mr. Obama's second mistake was to ignore the timing of his preferred policy option. He spoke repeatedly about the vast number of "shovel-ready" government projects that would put people to work quickly. In reality, there is no such thing as a "shovel-ready" government project. In fact, it's against the law.

The government procurement process is bound by strict rules and procedures. If Congress appropriates $50 billion for Department of Transportation (DOT) infrastructure projects today, DOT can't start building highways tomorrow. The department must first prepare a solicitation document (Request for Proposals or RFP) that details the scope of work desired. The development and in-house approval of that solicitation typically takes four to six months. Once the RFP is published in the Federal Register, the bidding process can begin. For infrastructure projects, the bidding time frame usually stretches out over six months. Once the bidding closes, DOT bureaucrats must review all the bids and select a winner. That review process lasts three to six months. Then the losing bidders can protest the award, forcing a second review. If you're keeping track, the procurement process has dragged on for about 1 1/2 years, and not a penny has been spent. So much for the short-term job-creation potential of "shovel-ready" projects.

Then there are those environmental concerns. No federal shovel can hit the ground without an environmental impact assessment. That can drag on for months. If environmental groups file suit, the procurement process drags on still longer. It can easily take two years from the time Congress appropriates infrastructure money until any of it gets spent. As of Oct. 1, DOT acknowledged that just 41 percent of its stimulus appropriation had been spent.

Mr. Obama swept aside all of these procurement hurdles when he proclaimed in January 2009 that his stimulus programs would create millions of jobs and keep the national unemployment rate, which was then 7.6 percent, under 8 percent. But ignoring the time lags in the government procurement process doesn't make them go away. By pretending they didn't exist, Mr. Obama was perpetrating a hoax that created unattainable expectations. The Democrats paid dearly for that hoax in this election.

Ironically, Mr. Obama tried to rally pre-election support by pushing a second stimulus program of roughly $50 billion. If DOT hasn't yet spent the first chunk of cash, what is the purpose of adding to that pile of unspent appropriations? Because a second stimulus package is subject to the same institutional delays as the first, how could it possibly help create more jobs in the short run? As they say, you can fool me once. But twice with the same hoax?

Now the lame-duck Congress must decide what to do next. Extending all of the George W. Bush tax-rate cuts is a no-brainer. But that won't create any new jobs; it will just avoid job destruction. If the goal is short-term job creation, Congress should revisit the tax-rebate option. If a chunk of the unspent appropriations of Mr. Obama's first and second stimulus programs were converted into tax rebates, consumers would jump-start the economy with another spending spree. That would be a real fiscal stimulus success.

Brad Schiller is an economics professor at the University of Nevada at Reno and author of "The Economy Today" (McGraw-Hill, 2010).

http://www.washingtontimes.com/news/2010/nov/5/the-anatomy-of-stimulus-failure/?page=2

[one...two...tree 2,762]

Bull. The only thing that spurs job growth is growth in demand for products and services. No business is hiring a single person just because they received a tax break. They hire if they have demand for the products they sell which the current staffing levels can't fulfill. As I said, if a business sees an opportunity to generate an additional $1,000,000.00 in profits, it will hire the people needed to realize that profit whether that profit is taxed at 35% or 39%. No business is going to refuse an after tax profit of $610,000.00 because uncle Sam denied it an after tax profit of $650,000.00. Any claim to the contrary is just nonsense.

Business models not built on emotional psychobabble? Say it ain't so.

[JohnSmith2007 353]

Yeah, I don't get how on one hand, he's arguing that tax cuts (which we've had for almost 10 years now) create job growth, but then when confronted with high unemployment numbers, he's saying we need more tax cuts, and he's got nothing to base it on beyond some rigid ideological view that the GOP has embraced since the 80's.

Please tell me how increasing taxes on the very people that create jobs will create new jobs? I would like to hear it. It is simple logic that if the people that own the business have more money (less taxes) they will expand and hire new workers. On the other hand if the business owners have less money (more taxes) the will not be able to hire more workers.