@FreedomFighter41. I would agree that years of studying Keynesian economics
would make you an acolyte of his methods, but there are others who study
"supply-side" economics who would disagree with you and your
conclusions. Reagan became President during one of the worst economies in the
recent past. Double-digit inflation, car loans over 20%, home loans over 14%
were the norm. Our National Defense was a shambles and we were vulnerable.
Reagan did what any good leader should do; first rebuild our defense so we
weren't so vulnerable. The increased spending got the economy moving
again. It wasn't just the government spending that did it, it was the
increased spending by consumers who weren't saddled with the taxes.
Consumers spend, economy improves which generates more tax revenue, all with a
lower tax rate. Gov't spending is like crack, once the economy is
addicted, it's tough to withdraw....
Mike Richards South Jordan, UtahSolve the problem by
letting millions of businessmen hire the people they need at a wage that pays
for value received.8:42 a.m. Aug. 3, 2013Like==========
Mike, There is nothing stooping them from doing so already.And if the product price needs to go up to off set the balance for the
owner, so be it.That's called inflation.You don't
complain about the Oil companies inflating your costs.And they are running
historical record level profits, and being subsidized by your "little
guy" taxes to boot!
There are not enough "rich guys" in America to make a difference in the
deficit, even if they were taxed at 100% of their income. If revenue is to be
raised, it must be paid by all of us "little guys" who hardly make
enough to pay our bills. In order for us "little guys" to have a job,
the business owner must be allowed to make a profit on the money that he puts at
risk. He can't be treated like the policemen and teachers whose pension
funds "owned" GM and Chrysler. He has to know that expanding his
business and hiring more people will increase his profits. When
ObamaCare keeps businessmen from hiring new workers because the cost is still
unknown and when businessmen cut back the hours of existing workers so that they
will not be forced to provide a "service" along with the wages that they
pay, everyone can clearly see that government regulation is destroying the
economy.Reduce taxes. Reduce regulation. Reduce "edicts"
from the White House. Solve the problem by letting millions of businessmen hire
the people they need at a wage that pays for value received.
to Eric SamuelsenI wouldn't know. I'm not a lawyer.
@2bitsWith most tax cuts that it doesn't result in increased revenue
and generally what happens is that if you reduce a companies' tax burden by
a million dollars, even if they manage to somehow turn that into two million
dollars, it'll still only be taxed at around 30% so that's only
600,000 in revenue as opposed to the million dollar tax cut. Obviously reading that sentence one can easily argue that that hypothetical
scenario is good for the economy, but as far as the deficit is concerned it
doesn't help. I'm perfectly fine with tax cuts (as is most people) as
long as we can afford them.
God bless you FreedomFighter41, That post of TRUTH is something
millionaires like Limbaugh, Hannity, and Beck [who create ZERO jobs] and the
Mitt Romneys of WallStreet don't want the other 99% of us to ever
discover.To them, money is power.The truth is, Knowledge is
atl134,actually during the kennedy years there were cuts to the tax rates
which resulted in increased revenue, and again in the reagan years there were
cuts in the rates that resulted in increased revenue.To use your
household analogy, though it is not really the same thing: with both spouses
working,the household spends an additional $45K/year (child care, clothing,
eating out more, extra auto expenses, etc), yet one of the spouses is only
making $40k/year. It makes sense to quit the lower paying job.
atl134The theory of stimulating the economy with tax cuts is... that if
you decrease taxes on everybody (not just one economic group)... people have
more money to spend. When you spend more money it creates jobs (because people
have to make the stuff you buy). Which means less people on welfare, more
workers, more wages, which means more income taxes (less from each person, but
more people working and paying taxes).You can debate whether it
works or not. It only works IF you can give a big enough tax break
for the average family to see a real difference. Otherwise they don't see
any real releaf and nothing happens. The effect also runs out over
time as people get used to the lower burden they are carying and it becomes the
new normal.Bottom line... if you cut taxes and increase government
spending... it's not a good combination for trying to have a balanced
budget. That's something the Bush Administration should have learned.
Continued...Since the 1980s we have reverted back to the failed
version of Capitalism, Supply-Side Economics. We saw the Internet bubble burst
in the 90s followed by the real estate and banking industry failing in 2008.
Throughout the 2000s we saw deregulated commodities, such as oil skyrocket. In
fact, in 2007, did you know that gas prices should have decreased? Supply
increased and demand actually decreased. Instead, the prices doubled. Consumers,
were being gouged. Has anyone been held accountable for that? Nope.
Because Supply-Side demands that the markets remain unregulated. While a few made killings (and didn't create new jobs) the rest of
us suffered.Just as we saw in the Gilded Age.The market
blew up and collapsed in on itself in 2008. Just as we saw in the 20s. How many more examples do we need until we (re)discover the lessons our great
grandparents knew? Supply-Side doesn't work. The truth that
they learned (and we have forgotten) is that the real job creators aren't
the folks on top but the folks in the trenches. If we want to build
a healthy long-term economy, we need to focus on rebuilding the middle-class.
Let see if I can explain trickle up for ya… (otherwise know as a healthy
economy)Ya see 100 million consumers (the poor and working poor)
purchase more goods and variety than 1 millionaire buyings a luxury item. When
more goods are purchased, more people are employed, more people employed have
more money to spend, the economy improves. Henry Ford understood this.or Reaganomics (trickle down) consolidates money in a few hands
who are not job creators as much as money changers & brokers, who stuff it
away in the caymans not stimulating anything but their egos, and not buying what
millions of consumers could, back when taxes helped persuade the precious
wealthy and corporations to invest in their employees and businesses in
America.I believe the deregulation Freedom was speaking of was
Reagan's doing. Now we have over 30 years of evidence of the damage
done by these carelessconservative economic schemes.
Great letter. Cleverly put.
@ 2 bits and LostSimple challenge. List 3 examples of when
Supply-Side Economics has led to healthy long-term prosperity. I don't
blame you for changing the subject or never responding to this challenge.As someone who has studied economics for years and has read volumes from
the greats, it never ceases to amaze me the "doubt" that has been spread
over the past decade or so over Keynesian economics (often, he is demonized on
AM Radio as some sort of Communist). While Supply-Side is somehow unquestionably
the "savior" of capitalism and the only form that Adam Smith indicated
200+ years ago. In reality, it's as simple as gravity or
evolution (yikes, science! I know!). Keynesian economics works to build a
healthy robust long-term economy and supply-side doesn't.The
Gilded Age, 1920s, and post 1980s has seen the effects of them. The thought
process of "the rich will save us" is completely flawed. It makes it so
very few win big and the rest lose. Whereas, Keynesian gave us the
American recovery in the 30s-40s and provided us with the best economy in the
world. Up until the 1980s, when it all changed.
@lost in DC"Where you came up with “You're the ones who
think the way to fiscal solvency for a household is to quit your second
job” is beyond me, though. "The idea that tax cuts
(decreasing income) lead to increasing federal revenue and decreasing deficits
as is frequently argued.
Freedomfighter41Trickle-up poverty is working well – in bringing
more and more of us down.You condemn deregulation. There were NO
major financial regulations repealed during the bush years, so you MUST be
condemning slick willy for signing the repeal of Glass-Steagal and for refusing
to regulate derivatives.Who lied about WMD? Too much MSNBC for you!
Hillary and plenty other dems looked at the same intelligence reports and
concluded the same thing, so are you saying they are the ones who lied?atl134THANK YOU for recognizing the 1990s did not produce a surplus.
Your comment about “nearly balanced budgets” is correct. Where you
came up with “You're the ones who think the way to fiscal solvency
for a household is to quit your second job” is beyond me, though.
Actually, the way to fiscal solvency is to not spend more than you make. A
janitor making $40k who only spend $39k is fiscally solvent, yet a MD making
$400k and spending $450k is not.
How about this one... "Letter about rain causes leftists to flip
out".Lets take them one by one:1. "Trickle-down
economics (aka deregulation and "free market") led to the destruction of
the American economy".Has the American Economy really been destroyed?
That's obviously false. We had a few bad years but it's far from
destroyed, and how many years of prosperity did it bring to the US? It's
almost back to where it was before, and we still have a free market. So how
did the Free Market destroy the US Economy? Corrections will happen in
any free system. No economy can guarantee unlmited and uninterrupted
prosperity.2. Lying about WMDs led to the Iraqi War.WMDs
weren't the only reason for the Iraq war. And which administration said
Hussain had chemical weapons? Wasn't that the Clinton Administration?3. Bush tax cuts worked (at first). The economy improved. But they
needed to be temporary. The stimulation a tax break gives to the enconmy
doesn't neccessarily last forever. If you cut taxes long-term, you need
to cut spending too. Bush did the opposite, and "Conservatives"
criticized opposed him on that. But Bush was never a "Conservative".
Yes, writer, you have been wrong all this time. Gov't spending has always
been a formidable for stimulating a faltering economy, as Reagan demonstrated
with a massive injection of defense spending in the early '80s that caused
the economy to take off. As prosperity returned, Clinton intelligently backed
off on the stimulus and reduced gov't outlay, which juiced up further
prosperity. You have to know when to apply stimulus and when to back off. Right
now the worst thing to do would be to make huge cuts to gov't spending and
thus cripple the GDP, as even Romney admitted last year. System thinkers know
these things. (BTW, analogies are always false, so forget the flood
. . . And CHS 85 just illustrated my point! All of the things that CHS 85 cites
are very highly correllated, but the causal link varies considerably with each
of the examples, and none of them has an absolute "if A, then always B"
"Cause-and-effect" is a tricky critter, and should be handled with care,
because, as has been famously said, correlation does not necessarily equal
causation. "Post hoc, ergo propter hoc" ("after this, therefore
because of this") is a common logical fallacy in arguments. For example,
the fact that roosters crow before sunrise doesn't mean that crowing
roosters cause the sun to rise. In Mr. Soulier's example citing the
poorly-written headline, he correctly implies that flash floods almost
certainly DO NOT cause rain, but then he goes on to imply that rain DOES cause
flash floods, which is technically not 100% true. Granted, rain is a
contributing cause in the occurrence of flash floods, but so are the intensity
of the rain and the geography and topography of the area.Applying
this to economic theory driving fiscal policy, does supply create its own demand
(Say's Law; supply-side economics)? Sometimes, but not always. Well then,
does demand create its own supply (Keynesian mantra; increased consumption leads
to prosperity)? Again, sometimes, but not aways.As I said,
"cause-and-effect" is a tricky critter . . .
Bush tax cuts led to higher deficits. Trickle-down economics (aka
deregulation and "free market") led to the destruction of the American
economy.Lying about WMDs led to the Iraqi War.
@Mountanman"Satires are especially useful and appropriate in
describing liberal politicians. In fact it is an art form!"An
amusing percentage of conservatives polled think Stephen Colbert is a
conservative. @Mike Richards"Maybe then they'll cut
taxes so that the private sector can create the jobs that will eliminate the
yearly deficit."Our taxes are already at Bush levels for
everyone except those making 250k+ a year whose tax rates are between Bush and
Clinton levels. Last I checked the 90s were prosperous and had practically
balanced budgets. You're the ones who think the way to fiscal solvency for
a household is to quit your second job.
Some other things that are cause and effect - low paying jobs cause hunger, lack
of education causes crime, lack of compassion causes cynicism, and war causes
Not all flash floods make for record rainfall totals so its a valid thing to
Even more boggling than tricky logic like, "you gotta pass the bill to find
out what's in it" and floods causing rain (or visa versa) are things
like... do recesions cause job losses, or do job losses cause recessions. And
if you're in a recession with high unemployment... is the solution to
enlarge government and put more restrictions on businesses and more taxes and
then DEMAND that they hire more people? Or should you lessen restrictions and
taxes so they will hire more people on their own, which will lead to more people
having jobs and buying more stuff creating even MORE jobs and so on...
It's a toughy. The solution probably is to tax and restrict businesses
more and more so government can get bigger and bigger and once the government is
big enough... they can force businesses to get us out of this recession!These type of tricky situations seem so hard for politicians to figure
Gravity causes falling. I do know that. Also that in demand-side recessions,
stimulative spending reduces unemployment. Laws of physics are a little less
mutable than laws of economics, but both are, you know, laws.
Great satire Scott, even though it will be lost on liberals. Satire: "1.use
of wit to criticize behavior: the use of wit, especially irony, sarcasm, and
ridicule, to describe hypocritical behavior." Satires are especially useful
and appropriate in describing liberal politicians. In fact it is an art form!
"...Silly me."Silly letter.
Scott is correct. He sees things as they really are. It's too bad that
Congress has things backwards. It's too bad that Obama has things
backward. Somehow, those in Washington think that they "own" the money
and that "letting" us keep a little of our hard-earned wages is a
"gift". They have the "backwards thinking" that Scott so
cleverly pointed out.When Obama and Congress realize that private
sector jobs create the tax revenue that Washington needs, maybe then
they'll defeat ObamaCare. Maybe then they'll cut taxes so that the
private sector can create the jobs that will eliminate the yearly deficit. But,
Congress and the President have been putting the cart before the horse for so
long that they've forgotten the proper order of things.