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

[JohnSmith2007 353]

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.

Question, how can demand go up when the workforce is unemployed? Something has to give first and that is business hiring. If a company has more disposable income they invest it in the business. That investment creates new jobs. Those new workers buy things and creates demand. Then companies hire more people to meet that demand.

On the other hand if you raise taxes on business they will cut back. That means fewer workers. That means less demand. That means fewer workers. Higher taxes kills jobs.

This is so simple even a liberal can understand. The reason you dont is because you don't want to understand.

[Mr. Big Dog 10,747]

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.

Exactly. If these tax cuts spur job creation - something they have demonstrably failed to do throughout their existence - then where are those jobs?

[wshc 46]

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.

So you are saying the the Government can use the additional $40,000 it taxed from the businesses profit better than the small business? Of course, no business will turn down the 610k, but if they had THEIR 40k extra profit, I feel they would produce additional economic activity that was more meaninngful than what the government would do. The extra 40k in the hands of business is better than being in the hands of government.

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

Business models and Statistics can be shaped, formed and spun to show anything you want on any argument. I am not going to waste time on that stuff because for every point on one side there is a point on the other. (It is never ending as this thread shows.)

However, "psychobabble", something libs don't understand because it is not in their nature to think abstractly, works. Call that "psychobabble" faith. Faith in the economy and the government.

Ronald Reagan gave the country a good feeling, a good attitude, brought back faith in the government after the years of President Nixon, Ford and Carter. People reacted to his leadership, or psychobabble as you put it and saved the economy. President Obama and the democrats are using class warfare for their own personal political gain at the expense of the country and the economy. So many libs are so jealous of anyone that works hard and earns good money that they fall for the "eat the rich" mentality of the democrat party. Tax cuts do work, especially in saying, "work hard and we will not confiscate your earnings and give it to a welfare queen. Work hard and you will have more of YOUR money to spend". Which creates jobs....(Economic Activity)

But you guys don't get it, and you probably never will.

Edited November 30, 2010 by wshc

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

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.

So you are saying the the Government can use the additional $40,000 it taxed from the businesses profit better than the small business? Of course, no business will turn down the 610k, but if they had THEIR 40k extra profit, I feel they would produce additional economic activity that was more meaninngful than what the government would do. The extra 40k in the hands of business is better than being in the hands of government.

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

Business models and Statistics can be shaped, formed and spun to show anything you want on any argument. I am not going to waste time on that stuff because for every point on one side there is a point on the other. (It is never ending as this thread shows.)

However, "psychobabble", something libs don't understand because it is not in their nature to think abstractly, works. Call that "psychobabble" faith. Faith in the economy and the government.

Ronald Reagan gave the country a good feeling, a good attitude, brought back faith in the government after the years of President Nixon, Ford and Carter. People reacted to his leadership, or psychobabble as you put it and saved the economy. President Obama and the democrats are using class warfare for their own personal political gain at the expense of the country and the economy. So many libs are so jealous of anyone that works hard and earns good money that they fall for the "eat the rich" mentality of the democrat party. Tax cuts do work, especially in saying, "work hard and we will not confiscate your earnings and give it to a welfare queen. Work hard and you will have more of YOUR money to spend". Which creates jobs....(Economic Activity)

But you guys don't get it, and you probably never will.

Business models aren't built on emotional psychobabble. It's only pundits who try to spin such nonsense into economic indicators. Sure, consumer confidence has an effect, but so does every 'gloom and doom' rant. Eventually, you have to look beyond such fuzzy math and at the nuts and bolts of why this has pretty much been a jobless recovery. Blame that on Obama? But we still have Bush's tax cuts in place. Just who is zooming who here?

[JohnSmith2007 353]

Business models aren't built on emotional psychobabble. It's only pundits who try to spin such nonsense into economic indicators. Sure, consumer confidence has an effect, but so does every 'gloom and doom' rant. Eventually, you have to look beyond such fuzzy math and at the nuts and bolts of why this has pretty much been a jobless recovery. Blame that on Obama? But we still have Bush's tax cuts in place. Just who is zooming who here?

The Bush tax cuts have already done their job. The country is now used to them and letting them expire is an effective tax hike. While keeping the tax rates where they are may not create new jobs, raising taxes on business will have the effect of cutting jobs. If you want to create new jobs then reduce the tax on business more than they are now. If you want things to stay the same employment wise then let the tax rates stay the same. If you want to kill the weak recovery we are now in then raise taxes. Those are the choices we have.

[Mr. Big Dog 10,747]

Jeez, you are being deliberatly obtuse.

Extending all of the George W. Bush tax-rate cuts is a no-brainer. But that won't create any new jobs...

Me? Obtuse? Look at what you posted. There you have it - from your own preferred source. Extending the Bush tax cuts won't create any new jobs. Now that this comes even out of the Washington Examiner can we just accept that as a given and move on?

[JohnSmith2007 353]

Me? Obtuse? Look at what you posted. There you have it - from your own preferred source. Extending the Bush tax cuts won't create any new jobs. Now that this comes even out of the Washington Examiner can we just accept that as a given and move on?

You are trying to be brainless aren't you? Do I have to give you the nursery school version? Here, I will just repost what I told Steven.

The Bush tax cuts have already done their job. The country is now used to them and letting them expire is an effective tax hike. While keeping the tax rates where they are may not create new jobs, raising taxes on business will have the effect of cutting jobs. If you want to create new jobs then reduce the tax on business more than they are now. If you want things to stay the same employment wise then let the tax rates stay the same. If you want to kill the weak recovery we are now in then raise taxes. Those are the choices we have.

Clear? Or are you just trying to do a gotcha trap and play word games?

[Mr. Big Dog 10,747]

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.

So you are saying the the Government can use the additional $40,000 it taxed from the businesses profit better than the small business?

That's not what I'm saying. Let me try and type a bit slower for you. The argument presented is that small businesses won't create jobs if we were to revert back to 1990's level top tier tax breaks. That argument makes no sense for two reasons: 1) the vast majority of small businesses that are actually employers is not at all impacted by any change to the top tier tax rates and 2) even those small businesses that are will base their decision on whether to expand and hire on overall market conditions and demand for their products and services.

Case in point: If we are going to add $140 billion dollars to the deficit then rather than doing that by extending the top tier tax cuts for just two years, we should consider sending a $1,000.00 tax rebate check to each and every one of the 130 million taxpayers in this country. Much more of that $140 billion dollars would circulate back into the economy quickly and create demand for products and services going that route than heaping hundreds of thousands of dollars on a few households that are sitting on huge piles of cash already.

So, if the goal is to spur job creation, then you pursue policies that create demand which will encourage businesses to hire in order to meet that demand. That's how jobs are created in the real world and that's how additional income for more households is generated which will then be able to sustain economic growth. Piling heaps of cash on top of huge piles of cash isn't going to create the braod demand for products and services that is needed to encourage businesses to hire. The job creation record that the Bush tax cuts left us with should be evidence enough that it's a strategy that doesn't work.

[wshc 46]

Strangely enough, I supported the bank bailout as well as the auto bailout. Those vital industries could not fail. Too big to fail is true. I didn't like what the banks were doing, nor what the unions did to ruin the auto industry. President Bush was right in bailing them out.

We were in such deep "dodo" that I agree with the stimulus package in theory even if we had to borrow the money. The economy needed a jump start. Every right wing capitalist knows that a business needs start capital and the economy was at such a point that an injection of start capital done correctly would have worked and produced enough economic activity and the resulting tax revenue to pay back the stimulus. The stimulus package was not done correctly however and that is the problem. That is why the economy has not created any new jobs, on the contrary, caused jobs to be lost.

Specifically, the stimulus was wrong in these areas;

No shovel ready projects - that is an ill-informed concept. Projects take planning and are a long process. I initially thought that the current infrastructure (every state's department of transportation) would be put in to high gear to repair the nations infrastructure such as bridges and roads. (I was shocked when a couple months ago the administration wanted additional money for bridges etc... That should have been in the first stimulus package.)

Extend unemployment benefits - it is human nature to want to stay home and get money for watching TV. This was encouraged with those extensions. I know that in theory those benefits did not come from the stimulus package, but it all comes from Washington so in the mind of most people it is all the same, again has an affect on the way people think, which effects economic activity. (I lived for a very long time in a European country that has very generous unemployment benefits and I know that if the benefits are shorter then people will get out and work.)

Environmental projects with stimulus money. Very short term, high cost process that does not create a net gain in jobs. Jobs created in this field will lead to lose of jobs in traditional energy fields. The energy must be heavily subsidized or the consumer will not use it. The main stream media may think that energy savings are high on the list of priorities on Amreican's minds, but other than the left coast and the east coast, (flyover country), people want what works and what they can afford.

Stimulus - what other stimulus has there been? It was suggested here that every American receive a $1000 check from the government. Sounds good on the surface, but will it work? (Will the evil rich get one of those checks too or will they be descriminated against again.) Remember Japan did that in the 90's a couple of times giving everyone $500 a pop. People didn't spend it, but just saved it. That would mean more money in savings accounts which is not a bad thing, but more long term than short term. Amreicans with $1000 may pay down their credit card debt. Again not much help. Maybe the government should give people the chance to select either a best buy, sears, or panda express $1000 gift card. That wouldn't work either because people would be selling those cards at a discount if bought in cash so they could pay their electric bill. In theory, the idea of direct stimulus to consumers is not bad, but will it work in realilty. (Send me $1000 and I promise to spend it on a durable good :-))

Stimulus was used for social engineering - What kind of stimulus was available for small business? If you were in a certain group there were stimulus projects you could apply for. Were there any others?

Fanatsy projects - high speed rail for the USA?? Be real. Where are they going to run? On freight lines that can't handle the high speed. Americans will not take the trains in large numbers to ever make this feasible. Also, kinda competes with the car companies that the government has invested heavily in. Also, very long term and not for short term stimulus.

Health Care legistration process detracted from stimulus - the administration should have stayed focused on using the stimulus to create jobs and get back on track before even thinking about anything else. That should have been the number one priority. Every brain cell should have been on the economy, not on nationalizing health care. Of course, the goal is not to help America, but to increase the size of the deomcratic voting dependent class. Bringing more and more people to the dependent class is their goal because those voters will not vote for the good of the country, but will vote for the hand that feeds them.

And that leads us back to the subject of this entire forum. The Dems are only interested in immigration reform only in as much as it brings people in to the country not as LPR's but as citizens by the millions to guarantedd their lock on power for generations to come if not longer. They want to reshape Amreica to the point of collaspe. Better a king in a third world country than an white colloar politician in a first world country. That is why they will not allow tax cuts on "ALL" Amreicans. It does not fit in to their game plan of class warfare.

The sad part is all of the somewhat normally intelligent Amreicans that fall for their plan.

Edited November 30, 2010 by wshc

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

from the Brookings Institute:

Five Myths About the Bush Tax Cuts

William G. Gale, Senior Fellow, Economic Studies

1. Extending the tax cuts would be a good way to stimulate the economy.

As a stimulus measure, a one- or two-year extension has one thing going for it -- it would be a big intervention and would provide at least some boost to the economy. But a good stimulus policy can't just be big; it should also offer a lot of bang for the buck. That is, each dollar of government spending or tax cuts should have the largest possible effect on the economy. According to the Congressional Budget Office and other authorities, extending all of the Bush tax cuts would have a small bang for the buck, the equivalent of a 10- to 40-cent increase in GDP for every dollar spent.

Why? As the CBO notes, most Bush tax cut dollars go to higher-income households, and these top earners don't spend as much of their income as lower earners. In fact, of 11 potential stimulus policies the CBO recently examined, an extension of all of the Bush tax cuts ties for lowest bang for the buck. (The CBO did not examine the high-income tax cuts separately, but the logic it used suggests that extending those cuts alone would have even less value.) The government could more effectively stimulate the economy by letting the high-income tax cuts expire and using the money for aid to the states, extensions of unemployment insurance benefits and tax credits favoring job creation. Dollar for dollar, each of these measures would have about three times the impact on GDP as continuing the Bush tax cuts.

2. Allowing the high-income tax cuts to expire would hurt small businesses.

One of the most common objections to letting the cuts expire for those in the highest tax brackets is that it would hurt small businesses. As Sen. Orrin Hatch (R-Utah) recently put it, allowing the cuts to lapse would amount to "a job-killing tax hike on small business during tough economic times."

This claim is misleading. If, as proposed, the Bush tax cuts are allowed to expire for the highest earners, the vast majority of small businesses will be unaffected. Less than 2 percent of tax returns reporting small-business income are filed by taxpayers in the top two income brackets -- individuals earning more than about $170,000 a year and families earning more than about $210,000 a year.

And just as most small businesses aren't owned by people in the top income brackets, most people in the top income brackets don't rely mainly on small-business income: According to the Tax Policy Center, such proceeds make up a majority of income for about 40 percent of households in the top income bracket and a third of households in the second-highest bracket. If the objective is to help small businesses, continuing the Bush tax cuts on high-income taxpayers isn't the way to go -- it would miss more than 98 percent of small-business owners and would primarily help people who don't make most of their money off those businesses.

3. Making the tax cuts permanent will lead to long-term growth.

A main selling point for the cuts was that, by offering lower marginal tax rates on wages, dividends and capital gains, they would encourage investment and therefore boost economic growth. But when it comes to fostering growth, this isn't the whole story. The tax cuts also raised government debt -- and higher government debt leads to higher interest rates. If estimates of this relationship -- by former Bush Council of Economic Advisers chair Glenn Hubbard and Federal Reserve economist Eric Engen, and byoutgoing Office of Management and Budget Director Peter Orszag and myself -- are accurate, then the tax cuts have raised the cost of making new investments. As the economy recovers and private borrowing rises, the upward pressure on interest rates is likely to grow even stronger.

I have used standard growth and investment formulas to calculate that the overall effect of the Bush tax cuts on economic growth has therefore been negative -- and it will continue to be negative if the cuts are extended.

4. The Bush tax cuts are the main cause of the budget deficit.

Although the cuts were large and drove revenue down sharply, they are not the main cause of the sizable deficit that exists today. In 2007, well after the tax cuts took effect, the budget deficit stood at 1.2 percent of GDP. By 2009, it had increased to 9.9 percent of the economy. The Bush tax cuts didn't change between 2007 and 2009, so clearly something else is to blame.

The main culprit was the recession -- and the responses it inspired. As the economy shrank, tax revenue plummeted. The cost of the bank bailouts and stimulus packages further added to the deficit. In fact, an analysis by the Center on Budget and Policy Priorities indicates that the Bush tax cuts account for only about 25 percent of the deficit this year.

5. Continuing the tax cuts won't doom the long-term fiscal picture; entitlements are the real problem.

One theory holds that the country's long-term budget shortfall is "just" an entitlements problem, the result of rising costs associated with growing Social Security rolls and increased health-care spending (via Medicare and Medicaid). Republicans like this idea because it plays down tax increases as a potential solution. Democrats like it because it makes the recent health-care package seem like even more of a triumph.

But it just isn't true. The deficits we face over the next decade reflect a fundamental imbalance between spending and revenue, one that goes beyond entitlements. Based on projections by the CBO, Alan Auerbach of the University of California at Berkeley and myself, among others, even if the economy returns to full employment by 2014 and stays there for the rest of the decade, the continuation of current fiscal policies, including the Bush tax cuts, would lead to a national debt in the range of 90 percent of GDP by 2020. That's already the highest rate since just after World War II -- and Medicare, Medicaid and Social Security aren't expected to hit their steepest spending increases until after 2020.

According to these same projections, the yearly deficit would rise to 6 to 7 percent of GDP by 2020. The Bush tax cuts would account for a significant chunk of this, considering that in each year they are in effect, the revenue lost because of them amounts to nearly 2 percent of GDP.

Compounding the problem: By increasing the government's debt, the tax cuts have already led to higher interest payments on that debt. So even if all of the cuts expire on Dec. 31, we will still be paying for them for years to come.

http://www.brookings.edu/opinions/2010/0802_tax_myths_gale.aspx

[Mr. Big Dog 10,747]

You are trying to be brainless aren't you? Do I have to give you the nursery school version? Here, I will just repost what I told Steven.

Clear? Or are you just trying to do a gotcha trap and play word games?

Attacks already? I thought you want to have a debate on the issue. Or are you out of ammunition? I notice that you're changing your argument as you go along - doesn't help the credibility of the case you're looking to make. We do agree now that retaining the Bush tax cuts is ineffective in pursuit of the goal of creating jobs. That's progress and I'm glad that you do realize that to be the case after all.

Now to the new argument that letting the tax cuts expire will cause jobs to be slashed. This is true to a degree. Which is why very few are advocating to do that. The tax relief should remain in place for those households that will use the relief to create demand for goods and services in this economy. That's the folks in the lower and middle tax brackets. The former more so than the latter will spend any extra dollar they have pretty much right away rather than piling it away. That's the effect you'd want since that is what will keep businesses in business and what will create the kind of demand that causes businesses to expand and hire.

I go a step further and say pump out $1,000.00 rebate checks to each and every taxpayer using that $140 billion dollars that the GOP wants to give to the top 2% of earners in this country. The stimulative effect of that exercise would be far greater than lavishing hundreds of thousands of dollars each onto a few.

Edited November 30, 2010 by Mr. Big Dog

[Mr. Big Dog 10,747]

Extend unemployment benefits - it is human nature to want to stay home and get money for watching TV.

Where did you get that gem?

There hasn't been a time in recent history in this country where unemployment benefits weren't extended if the unemployment rate was above a certain threshold - I think 7.5% or thereabout. It's not a new thing. The GOP has done it so many times in very recent years and supported it with such overwhelming majorities that it's not even funny. Here's a summary of all unemployment extensions done under George W Bush when unemployment was much less of an issue than it is today. But then there was a GOP President and hence unemployment extensions were a good thing. God the fcuking hypocrisy. And you folks fall for that propaganda that has no other purpose than opposing whatever it is the President supports.

Unemployment Compensation Extension Act of 2008 (HR 6867): This bill, which extended benefits, passed the House on Oct. 3, 2008, by a vote of 368 to 28. Of the 170 voting Republicans, 142 or 84 percent supported the extension. The measure passed the Senate by a voice vote, a parliamentary often used when legislation is not controversial.

Supplemental Appropriations Act of 2008 (HR 2642): This bill provided federal money to states to make emergency unemployment compensation payments to workers who had exhausted all rights to regular compensation. On final passage, it sailed through the House by a vote of 416 to 12, with 186 or 95 percent of voting Republicans supporting it. It passed the Senate 92 to 6. Among Republicans, 42 of 48 supported the measure.

Katrina Emergency Assistance Act of 2006 (S 1777): This bill, which made unemployment assistance available to people affected by Hurricane Katrina, passed by voice vote in the House and by unanimous consent in the Senate.

Unemployment Compensation Amendments of 2003 (HR 2185): This bill, which extended unemployment benefits by 26 weeks, passed overwhelmingly in the House by a vote of 409 to 19. Among Republicans, 204 or 91 percent voted in favor of the measure. The bill passed by unanimous consent in the Senate.

Emergency Wartime Supplemental Appropriations Act of 2003 (HR 1559): This bill provided extended benefits for displaced airline and related workers in the aftermath of the terrorist attacks of Sept. 11, 2001. It passed the House by a voice vote and the Senate with unanimous consent.

P.L. 108-1 (S 23): This bill, which provided for a five-month extension of the Temporary Extended Unemployment Compensation Act of 2002, passed the House by a vote of 416 to 4. Among 222 voting Republicans, 218 supported the measure.

Job Creation and Worker Assistance Act of 2002 (HR 3090): This bill, which extended unemployment benefits for up to 13 weeks for those who had exhausted their 26 weeks of regular coverage, passed the House by a vote of 417 to 3. All 218 voting Republicans supported it. In the Senate, the vote was 85 to 9, with only one Republican opposing the bill.

Edited November 30, 2010 by Mr. Big Dog

[wshc 46]

I go a step further and say pump out $1,000.00 rebate checks to each and every taxpayer using that $140 billion dollars that the GOP wants to give to the top 2% of earners in this country. The stimulative effect of that exercise would be far greater than lavishing hundreds of thousands of dollars each onto a few.

If tax cuts work, then it is never a cost but an investment that provides a return on that investment. Although we would all like to have $1000 for new widgets, if we could collectively let job producing entities use that money to create new jobs, wouldn't that help individuals in the long run more. In other words, you are saying that companies are sitting on tons of cash. I agree, but I say they are doing it out of uncertanity and you say they are doing it out of greed (correct me if I am wrong on what you said). If those companies were informed that the tax hike was not coming and their current tax rate would remain the same, would they let off some of their cash reserve and invest again, which whould create jobs. The creation of jobs would perpetuate itself and stabilize the economy so that even at my small widget factory as a production line worker at 40k per year, if I received a mere %2.5 pay raise, that would be my $1000 right there that you want the government to give me. After 5 years I would have an additionaly 5K.

In other words, instead of giving 130 million $1000 cash straight out, a real measureable expense, give companies (the rich if you will), tax incentives in the form of not raising their taxes and creating the climate that fosters business expansion, thereby increasing revenue to the treasurey as a side effect.

[JohnSmith2007 353]

Attacks already? I thought you want to have a debate on the issue. Or are you out of ammunition? I notice that you're changing your argument as you go along - doesn't help the credibility of the case you're looking to make. We do agree now that retaining the Bush tax cuts is ineffective in pursuit of the goal of creating jobs. That's progress and I'm glad that you do realize that to be the case after all.

Now to the new argument that letting the tax cuts expire will hurt job creation. This is true to a degree. Which is why very few are advocating to do that. The tax relief should remain in place for those households that will use the relief to create demand for goods and services in this economy. That's the folks in the lower and middle tax brackets. The former more so than the latter will spend any extra dollar they have pretty much right away rather than piling it away. That's the effect you'd want since that is what will keep businesses in business and what will create the kind of demand that causes businesses to expand and hire.

I go a step further and say pump out $1,000.00 rebate checks to each and every taxpayer using that $140 billion dollars that the GOP wants to give to the top 2% of earners in this country. The stimulative effect of that exercise would be far greater than lavishing hundreds of thousands of dollars each onto a few.

This conversation is over. You don't want to see the truth. Raising taxes on business will kill the recovery. You cannot dispute that, nor have you even tried. It seems word games are all you are good at. It is a good thing that we just had an election. People like you lost big time. If the lame duck congress does not pass the extention then the new congress will. Obama will sign it or choke on it. Your sides lame excuse for economic policy has been shown to be false. All you want to do is twist words and purposely take things out of context. Have a good day!

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

oh brother....