US Democratic program

[Taffy_is_a_Taff]

three letters to prove that government run health services descend into expensive, inefficient piles of poo:
NHS

[Red Harvest]

Would you like to place a wager on that? Better be careful before calling someone a liar.

I realize from your posts that you have difficulty with reading comprehension at times. If you actually read what I wrote you will find I didn't call you a liar. Let me spell it out more clearly: your idea of how the budget was balanced is fantasy.

I leave the namecalling to my Republican friends, they are so much better at it than I am--practice I suppose.

[Gawain of Orkeny]

Let me spell it out more clearly: your idea of how the budget was balanced is fantasy.

I dont think so. Accusssing someone of making things up is calling them a liar in my book. Bush has been called a liar for far less. It is you who need to study reading comprehension. Are you still denying Clinton vetoed the bill?

[Red Harvest]

This has been proven false once again. Reducing taxes actually increases federal tax income. You get a smaller piece but of a much bigger pie.

Again it stimulates the economy and actually increases revenue.

Ah yes, more bogus economic theory stated as proven fact. These fantasies haven't worked. Take a look at the budget deficit. Did it shrink? No, it took off. Economic growth has remained weak. There are ~2 trillion reasons the theory has proven wrong, far more than enough evidence for me.

You stimulate an economy by encouraging wise investment. Encourage growth into new markets, research and development. This isn't done by cutting taxes. Simply throwing money at the consumer and hoping for the best doesn't work. Far better to use the taxes to actually build something or to support research etc. It is 100% certain that money put into those two will actually produce more jobs, and economic growth. Which would you rather have, a new job? or a pink slip and tax rebate?

At the same time another conflicting theory that I've seen touted (and often by the same folks, lol) is that when there is recession and govt. receipts fall, federal spending should pull back as well. Fortunately, that is not what we typically do. Oh sure it sounds entirely logical and has an easy to understand appeal, but what does cutting govt spending do in the middle of a recession? It tanks the economy. Why? Because govt spending serves as somewhat of a moderator to dampen the economic cycles. When business gets soft, the layoffs hit hard, hiring ends, major equipment investment ends. It is often very abrupt. Now By the same token, in an economic boom it is bad if the govt. goes on a spending spree...or decides it has room to cut taxes dramatically counting on future growth...

What should you really want the govt to focus on during a recession? Govt spending on projects that produce things that we will use in the future is one. Encouraging targeted investment is another. Spend the money while the labor is cheaper, you get more for less. It creates jobs when they are needed most and it puts infrastructure in place for when the recovery occurs. One thing is certain, employees have to pay taxes. Companies don't if they are not making a profit, but employees provide steady Federal revenue.

[Xiahou]

Ah yes, more bogus economic theory stated as proven fact. These fantasies haven't worked. Take a look at the budget deficit. Did it shrink? No, it took off. Economic growth has remained weak. There are ~2 trillion reasons the theory has proven wrong, far more than enough evidence for me.

Talk about fantasy...


Google for any legitimate news story on the subject. Even in light of unusually high energy prices, economists predict steady, sustainable economic growth will continue. I can't understand for the life of me how the Dems have been able to perpetuate the myth that the economy is in bad shape- lots of help from the media helps I guess.

[Red Harvest]

I dont think so. Accusssing someone of making things up is calling them a liar in my book. Bush has been called a liar for far less. It is you who need to study reading comprehension. Are you still denying Clinton vetoed the bill?

Well if you insist on calling yourself a liar, I can't stop you, but leave me out of it. I don't think you are a liar, delusional perhaps. I don't care what Clinton did with the Contract on America. That didn't balance the budget.

The whole idea the Republicans had (and have) is that we cut out any social programs. The Contract on America was one of the weapons with which to try to achieve it.

It's no surprise really, these same corporate minded types are the ones busily eliminating health care plans and pension plans from business. The old 3 legged stool of work pensions, social security, and private savings/investment is missing a few legs...or at least they keep getting sawed off shorter.

[Red Harvest]

Talk about fantasy...


Google for any legitimate news story on the subject. Even in light of unusually high energy prices, economists predict steady, sustainable economic growth will continue. I can't understand for the life of me how the Dems have been able to perpetuate the myth that the economy is in bad shape- lots of help from the media helps I guess.

Actually, if you look at a chart going back farther, this neatly proves my point as well. Growth was higher on averge before, the current level is anemic and not the sort of return on investment that we are accustomed to in the US. If the tax refund theory was accurate, growth would need to be far higher to increase profits and offset the loss in tax revenue. Most federal revenue actually comes from employment taxes which are less variable. (The federal budget can be an interesting read at times.)

This link might prove helpful (has lots of charts.) http://www.thechartstore.com/html/Economic%20Samples.pdf Take a look at capacity utilization. That number is as real as it gets. You can also see GDP running ~5% throughout most of Clinton's administration.

The current oil/energy price rises weren't unforseen. They were discounted as a possibility by those in industry and govt, but not unforseen. I hear the same sort of denial about the possibility of a rise above $60 at the moment. Wish I could find a clear indicator of when, I could easily make good money off ot it. I failed to follow my instinct last time around, and that was a mistake.

[Gawain of Orkeny]

Tax Cut Facts and Fantasies

By: Richard Rahn
Washington Times
April 4, 2003


In 1980, President Carter and his supporters in the Congress and news media asked, "how can we afford" presidential candidate Ronald Reagan's proposed tax cuts?

Mr. Reagan's critics claimed the tax cuts would lead to more inflation and higher interest rates, while Mr. Reagan said tax cuts would lead to more economic growth and higher living standards. What happened? Inflation fell from 12.5 percent in 1980 to 3.9 percent in 1984, interest rates fell, and economic growth went from minus 0.2 percent in 1980 to plus 7.3 percent in 1984, and Mr. Reagan was re-elected in a landslide.

Now a quarter-century later, the same debate is being replayed, with the opponents demonstrating collective amnesia and ignorance. Those opposed to President Bush's tax proposals make two major arguments: the tax cuts will increase the deficit and benefit the rich. Those who support the tax cuts argue that such tax cuts will increase economic growth and liberty, and reduce poverty.

To have an honest debate, it is important to know the facts. Claims are made that a tax cut will "cost" $700 billion or so, over 10 years. Such numbers are almost meaningless. First, they tend to be static revenue estimates, which assume no change in behavior because of the tax cut, which is totally unrealistic. Second, gross domestic product (GDP) is expected to be approximately $140 trillion over the next 10 years, which means the proposed tax cut is approximately one-half of 1 percent of total national product (in static terms). Even though political commentators, like David Broder of The Washington Post, refer to the tax cut as "massive" (March 30, 2003), it is almost too small to be meaningfully measured.

The correct way to measure tax revenues and government outlays is as a percentage of gross domestic product, in the same way the burden of your home mortgage is directly related to your income. You may be shocked to learn that even though federal government tax revenues and spending have increased almost twentyfold in the last 40 years, they have barely budged as a percent of GDP.

For instance, federal tax revenues were 17.5 percent of GDP in 1962 and were an almost identical 17.9 percent of GDP last year. Over this 40-year period federal tax revenues have never been lower than 17 percent (1965) or higher than 20.8 percent (2000) of GDP. Likewise, federal expenditures have ranged from a low of 17.2 percent (1965) to a high of 23.5 percent (1983) of GDP over this same 40-year period.

Despite the fact that federal revenues have varied little (as a percentage of GDP) over the last 40 years, there has been an enormous variation in top tax rates. When Ronald Reagan took office, the top individual tax rate was 70 percent and by 1986 it was down to only 28 percent. All Americans received at least a 30 percent tax rate cut; yet federal tax revenues as a percent of GDP were almost unchanged during the Reagan presidency (from 18.9 percent in 1980 to 18.1 percent in 1988).

What did change, however, was the rate of economic growth, which was more than 50 percent higher for the seven years after the Reagan tax cuts compared with the previous seven years. This increase in economic growth, plus some reductions in tax credits and deductions, almost entirely offset the effect of the rate reductions. Rapid economic growth, unlike government spending programs, proved to be the most effective way to reduce unemployment and poverty, and create opportunity for the disadvantaged.

The nonpartisan Congressional Budget Office (CBO) has just released its analysis of the effects of the President Bush's tax and spending package. They found that without the president's tax cut, federal tax revenues will rise to 20.6 percent of GDP, up from last year's 17.9 percent; but even with the president's tax cut, taxes will still rise as a percentage of GDP to 18.8 percent in 2012. As we get wealthier, tax revenues increase as a percentage of GDP because of our progressive tax system. In order to keep the tax burden constant, we need to have periodic tax cuts even larger than the ones the president has proposed.

Some of the critics of the proposed tax cut claim the planned deficit spending will increase interest rates. Here again, the facts do not support the criticism. What is important is the total federal debt burden, not year-to-year changes in the deficit.

If the total debt burden rises as a percentage of GDP, it can crowd out private investment thus causing a reduction in investment or a rise in interest rates. However, again according to CBO, the total debt burden will actually shrink as a percent of GDP under the president's plan (from 34.3 percent in 2002 to 33.1 percent of GDP in 2012). The fact is the U.S. could run a small deficit forever and still reduce the debt burden, in the same way as an individual can take on more debt each year provided that the cost of servicing this additional debt is smaller than the rise in the individual's income.

At current levels, the debt is not a problem. At the end of WW II it was more than 100 percent of GDP and as late as 1995 is was almost 50 percent of GDP, and we did just fine. Ironically, the only time our debt burden was less than 30 percent in the last 60 years was in the 1970s, which were characterized by high inflation and interest rates and low growth.

What kind of tax cut should we have? Nobel Prize-winning economist Robert Lucas presented an important paper in January of this year, in which he says: "There remain important gains in welfare from better fiscal policies, but I argue that these are gains from providing people with better incentives to work and to save, not from better fine tuning of spending flows." Mr. Lucas found that reducing capital income taxation from its current level to zero (using other taxes to support an unchanged rate of government spending) would result in overall welfare gains of "perhaps 2 to 4 percent of annual consumption, in perpetuity."

President Bush's proposal to eliminate the double tax on dividends is a good first step but, if we would remove all taxes from productive savings and investment, such as taxes on interest and capital gains, almost all Americans including the poorest would see their real incomes grow at roughly twice the present rate ? forever. Those who oppose tax cuts on savings and investment because they think the rich would benefit are in fact punishing the poor.

President Reagan understood that one wins a war, the Cold War, by being resolute; and he understood that one strengthens the economy not only by having good policies, but also by educating the press and the American people every day as to why those policies are right and necessary. President Bush is being resolute on the war on terrorism, but he also should create an army of knowledgeable supporters to educate the press and people about the needed growth-enhancing tax policy to avoid losing the economic war.

You dont improve the economy by giving money to the poor.

[Red Harvest]

You dont improve the economy by giving money to the poor.

Actually, to some extent you do. You see, if you give money to the poor, they put it right back into the economy--nearly immediately. Plus they have less need for other subsidy (on the lowest end of the scale.) You don't improve the economy by giving to the wealthy, they have no need to spend it right away.

That article has to be one of the most incorrect loads of propaganda I have ever read. I could spend many hours just exploring and debunking that nonsense. Love stuff like the '45 deficit comparison--can an author be more dishonest with his reader? Post war America/Canada was the only major developed economy that had not been wrecked. It was a no lose proposition after that since we were helping rebuild the world.

In short:
Reagan was great, won the cold war, got the country thinking positively again after a decade or self-doubt and a country reeling from one crisis to the next. Reagan's economic policy did not work as advertised or as "conveniently" remembered. Volker's monetary policy fixed stagflation. Reagan's deficits shot through the roof as revenues did not keep up. So after the tax cut...there was a tax increase. And there was also a big Social Security tax rate increase (perhaps 2) in there somewhere in the Reagan/Bush era if memory serves...I've seen some tabular data that supports it. I do remember it was a substantial issue for me at the time. Hanky panky with the books...


An essay I came across that is much more accurate:

Reaganomics

Excerpt from Commanding Heights by Daniel Yergin and Joseph Stanislaw, 1998 ed., pp. 341-342

It took three years. By the summer of 1982, the conquest of inflation was in sight. In fact, inflation that year would fall below 4 percent. [The] singular achievement [of Federal Reserve Chairman, Paul Volcker] was to conquer inflation at a time when defeatism was rampant. He set the United States on a new economic course. The risks of not succeeding were often on his mind. So was history. Once confronted with the accusation that he was behaving like a German central banker, he replied, "I don't take that as criticism. That's a compliment. I'm in pretty good company there."

Thanks to Volcker's efforts, monetary restraint was obtained quite early in the course of the Reagan administration. And Reagan's unwavering stance in the air traffic controllers' strike of 1981 helped change the tone of labor relations, indirectly contributing to the muting of inflationary psychology. But there was still fiscal policy to be dealt with -- the ways that government raised its revenues and the ways that it chose to spend them. The rise of welfare demands, entitlements, and obligations toward the middle class, the poor, and especially the elderly made spending politically necessary as a source of votes. The problem, of course, was how to finance the outlays.

Ronald Reagan's advisors came to office with the intention of cutting both taxes and spending. But they soon found out that it was easier to achieve the first of these objectives than the second. The reason was simple: politics. It was popular to cut taxes. And taxes did come down substantially. The top marginal rate was reduced from 70 percent to 28 percent; the tax base was broadened; and many deductions and loopholes were eliminated. But it was unpopular to cut spending, and the Democratic Congress bridled at the extent of the cuts that the president proposed. Reagan did not take on middle-class entitlements. He also spared the Defense Department from the ax, and indeed initiated, over the course of his two terms, major increases in defense expenditures, including the "Star Wars" space defense program.

Some in the Reagan camp were optimistic, despite the failure to cut total government spending. They were the advocates of what traditional Republican economist Herbert Stein -- echoing the music of the day -- called "punk" supply-side economics, which made sweeping assertions that reductions in tax revenues resulting from tax cuts would be more than made Up for by higher tax revenues generated by economic growth. It did not turn out that way. Because spending did not come down with taxes -- and indeed defense spending went up sharply -- and because the tax cuts did not feed back into the economy to the extent hoped, both the federal debt and the annual deficit ballooned; and in 1981-82, the economy was in a deep recession.

In September 1982, in its first effort to repair the damage, the Reagan administration followed the "largest tax cut in history" with the "largest tax increase in history." But there was no catching up. By the end of Reagan's first term, the supply-side logic was discredited in the eyes of many, and the inability to bring taxes and spending down together stood in marked contrast to Volcker's victory over inflation. David Stockman, Reagan's first director of the Office of Management and Budget, left the administration dejected, disillusioned with supply-side economics, and chastened by the realities of the political process. Failure to achieve fiscal-policy change, he argued, was a clear vindication of the "triumph of politics" -- of entitlements over austerity, and of the enduring pork-barrel tradition of American legislation over any cold economic logic. "I joined the Reagan Revolution as a radical ideologue," he wrote. "I learned the traumatic lesson that no such revolution is possible."

The triumph of politics and what Stockman called the "fiscal error" that went with it spawned a new monster, which would come to occupy center stage in policy debate: the deficit and the federal debt. Between the beginning and the end of the Reagan presidency, the annual deficit almost tripled. So did the gross national debt -- from $995 billion to $2.9 trillion. Or, as Reagan and Bush administration official Richard Darman put it, "In the Reagan years, more federal debt was added than in the entire prior history of the United States."

There simply was no quick cure to the scale of spending. In the minds of some, however, there was another logic to tax cuts: Reduce taxes and government revenue, and eventually the pain and scale of deficits -- and the threat of national bankruptcy -- would force a retrenchment of government spending. That thought was not restricted to fervent supply-siders, and ultimately it would end up true. But not for some years, and certainly not during the Reagan years.

When George Bush took office in 1989, the annual deficit stood at $152 billion. Taxes could not be raised substantially for devastatingly powerful political reasons -- as Bush found out when his retreat from his solemn "read my lips" campaign promise of "no new taxes" became his most damaging political liability. There was no choice but to contain spending. And luckily, international events afforded a good opportunity to start tackling the problem. The fall of the Berlin Wall and the crumbling of the Soviet empire made possible a tapering-off in defense spending. Still, this was not enough. Owing to the recession of the early 1990s, tax revenues fell, and in 1992, as Bush was ending his term, the deficit peaked at $290 billion"

At any rate it is rather easy to see what has happened in the past few years as we have added $2 trillion dollars of debt in spite of this supposedly "robust" economy. Bush's Iraq expenditures are off budget, so a post Reagan peace dividend is not going to propel the economy either.

[Gawain of Orkeny]

The same thing is happening to Bush that happened to Reagan. For every nre dollar Reagan brought in the democratic congress spent two. Bush has actually cut much un needed spending but we are fighting a war and it costs money. We have had far larger deficits in the past.

Actually, to some extent you do. You see, if you give money to the poor, they put it right back into the economy--nearly immediately. Plus they have less need for other subsidy (on the lowest end of the scale.) You don't improve the economy by giving to the wealthy, they have no need to spend it right away.

Yes to a small extent but they tend to spend it on perishable items and not invest it in the economy. Its been proven not to work.

[Red Harvest]

The same thing is happening to Bush that happened to Reagan. For every nre dollar Reagan brought in the democratic congress spent two. Bush has actually cut much un needed spending but we are fighting a war and it costs money. We have had far larger deficits in the past.

More fantasy. Reagan had to pay for his defense build up--it was a necessary evil from a financial standpoint but it was expensive. Also, the interest payments shot through the roof as a result. In 8 years domestic govt spending rose from 581 to 615 billion dollars/yr, now how is that a big increase? Defense went from 198 to 285, interest from 88 to 156.

Unless I'm sorely mistaken, the Bush wars are off the budget as seperate emergency appropriations. Bush himself submitted far larger budget increases than any previous administration as admitted by fiscal conservatives. Dubya has zero fiscal restraint. The democrats have had little power while he's been in office. Trying to blame it on them is like trying to make a lead turkey fly.

Yes to a small extent but they tend to spend it on perishable items and not invest it in the economy. Its been proven not to work.

No it hasn't! They spend it on things they must have anyway--I've seen it first hand as a kid when things were very tight. They will spend 100% of it in the economy because they need goods.

Where you don't get the return is on the top end. I've seen the studies of that. It's called hoarding. Their pile gets bigger, but it isn't necessily helping the economy. Even Buffet and many other billionaires will tell you that.

[Xiahou]

Bush himself submitted far larger budget increases than any previous administration as admitted by fiscal conservatives. Dubya has zero fiscal restraint. The democrats have had little power while he's been in office. Trying to blame it on them is like trying to make a lead turkey fly.

You won't find me defending Bush's lack of fiscal restraint, particularly on new entitlements. But, I view that as a seperate issue from tax cuts which do stimulate economic growth- you can't blame the tax cuts for Bush spending like a drunken sailor and driving up deficits. I'd much prefer to see tax cuts coupled with some fiscal restraint, but given the choice between tax cuts with poor spending discipline or no tax cuts at all, I'll still take the tax cuts.

[doc_bean]

You won't find me defending Bush's lack of fiscal restraint, particularly on new entitlements. But, I view that as a seperate issue from tax cuts which do stimulate economic growth- you can't blame the tax cuts for Bush spending like a drunken sailor and driving up deficits. I'd much prefer to see tax cuts coupled with some fiscal restraint, but given the choice between tax cuts with poor spending discipline or no tax cuts at all, I'll still take the tax cuts.

Well, my problem was never as much with the tax cuts as it was with the lack of a balanced budget, if you are going to cut taxes (that won't clearly improve the economy) you should cut expenses.

But tax cuts are probably a better way to stimulate the economy than subsidies, so if he wants to be a Keynesian he's doing a fine job, but this kind of deficit 'spending' is hardly what Republicans (and Reagan with them) usually stand for.

And I wouldn't have recommended it

[PanzerJaeger]

Hehe, this thread is the essense of what is wrong with the modern democratic party.

No plans except to bash Bush. Out of all the posts in this thread very few have been about democrats at all.

They'll never win elections by simply not being someone else, theyve got to stand for something besides late-term abortion.

[Don Corleone]

Amen, brother Panzer.

[Red Harvest]

Hehe, this thread is the essense of what is wrong with the modern democratic party.

No plans except to bash Bush. Out of all the posts in this thread very few have been about democrats at all.

They'll never win elections by simply not being someone else, theyve got to stand for something besides late-term abortion.

On the contrary, the thread was a "bash democrats" thread from the outset. From the bashing of democrats I read "what's wrong with the Republican party" instead of "what's wrong with the democratic party." After all, the Republicans control the House, Senate, and Whitehouse yet they still want to blame their massive deficits on the democrats. Looks like another of many conservative self flagellation threads to me...

It would help alot if the Republicans would try some intellectual honesty for a change. The economic theories being thrown about are disproven by the facts. I have to give them credit for a masterful job of manipulation. They have certainly convinced themselves.

Hmmm, I wasn't aware that the democrats were a one issue "late term abortion" party. Not sure what the relevance was of that statement. Looks more like a case of..."gee, this discussion is not going the way I would like so I'll drag something else into it...let's try to drag in something emotional but irrelevant, that might work."

The biggest problem the Democrats have is that they have been allowing the Republicans to define them. They are going to need to find a charismatic leader to break the cycle of the Republican snake oil salesmen. In the first 5 minutes any democratic proposal is misrepresented and given some inaccurate catchy label that fails to match reality. No need to actually look at it in any detail, just use your political dogma stamp and be done with it. The GOP is terrific in using creative name calling. Masters of deception par excellence. Compassionate conservative...what a howler that one is. Or how about "Mission Accomplished?"

The truth is neither party has all the answers (yes, blasphemy.)

[PanzerJaeger]

This thread was started by a Dutch man I believe - and you know how they hate democrats.

In any event, thank you for proving my point. Opponents of Republicans are devoid of any ideas of their own and can only hope throw enough mud to get elected. It didnt work the last two elections, but maybe the third time's a charm.

Intellectual honestly, heh, give me a break.