Why do Libs view tax cuts as artificially generating growth?

Question

The ONLY real capital is earnings - wealth that was created by the private sector. Money is not capital - this is why inflating doesn't work in the long run.

In this country the primary tax is the income tax - the government takes some of those earnings, meaning the economy cannot reinvest them.

All a tax cut does is allow the economy to reinvest more of its earnings - to grow organically.

And that's precisely how it has worked since 1981 - why we've had steady growth and why a repeat of the 1970s is out of the question.

strattz - tax REVENUE has gone UP - what part of that don't YOU get?

Usama, Clinton got a lot of help from the Fed - - - also, in terms of economic policy, Clinton was basically a Republican - - - he expanded free trade, deregulated the financial services sector, signed welfare reform, opened huge corporate tax loopholes...

All of which worked!

Sorry, the numbers don't support you. Median household income dropped precipitously in 1979 and 1980 due to the runaway inflation and runaway unemployment. We cut tax rates, enabling the economy to reinvest its own earnings and rely less on the Fed for growth, in turn allowing the Fed to focus on price inflation, and the economy grew, created jobs, incomes rose, inflation AND unemployment fell. Reagan also inherited gas lines because someone in DC forgot to read Jean-Baptiste Say and didn't realize that price ceilings cause shortages. Reagan had read Say, undid the price ceilings, and the gasoline shortages disappeared within six weeks - which is about the time it takes a barrel of crude being pulled out of the ground halfway around the world to wind up in your local gas station's UGT.

strattz you are a joke - how can the tax cuts add to the national debt when REVENUE HAS GONE UP?

World Peace Now what news might that be? The Fed says the subprime market's woes really aren't affecting the broader economy, and the data supports that conclusion. Where do you get your news? Not the WSJ, Barron's, CNBC or Bloomberg.....

Answer 1

They like science except hate business science and therefore diminishing returns is irrelevant to them.

They just want more for their social programs to bye votes and lower living standards for everyone.

Answer 2

Taxes aren't exactly removed from the economy. The government spends that money, putting it right back in. It's more a question of how that money gets spent. If the government uses tax revenues to build up infrastructure, for instance, it will have much the same effect on the economy as capital investments. If it uses tax revenues to increase the income of the poor, that money will be spent on consumer goods, increasing demand. If it's spent on the military, it will divert some production away from both capital and consumer goods.

So, tax revenues can in effect be 'reinvested.' Though, the question remains as to whether the government makes better or worse decisions about such investment compared to the people the taxes were collected from...

Answer 3

And do you want to know why this republican system doesn't work? Because the people who get the money don't reinvest it in American markets. Those who get the most money either spend it on frivolous items instead of reinvesting or the money gets outsourced to where it can generate a greater return for THEM.. not the nation... the trickle down theory of Reagonomics relies on the goodness of people to use their money to generate a stronger American market.. whereas Capitalism thrives on the survival instincts of people... the two systems by their very nature can not work together for long periods of time.

Communism also relies on the goodness of people.. and we see how well that has worked out in the past.

Answer 4

Do you not read the news? The economy is crumbling around us. Those tax cuts were just to put lipstick on a pig. People are pulling their money out of hedge funds which is crippling them. More foreclosures on the way, and right now we can't afford another banking bail out.

Answer 5

Blueridge - Do you have an original thought about economics or do you prefer to just copy and paste from a liberal "think tank"?

Answer 6

The tax cuts are not real........They are just increasing the national debt. What don't you get?

The National debt is 9 trillion dollars and the huge undeserved ultra rich tax breaks are increasing this debt!!

Bush is like a 16 year old with a credit card at the local mall. If Bush can't actually PAY for the tax cuts then they don't count...all he is doing is giving money to the rich and putting on the Americans credit card aka the national debt!!!!
I can not understand this though process!!!!!!

Thumbs down? What a bunch of ignorant mindless clowns....

Tax revenue has gone up but so has spending what don't you get....We spending more than we are taxing, do you get it NOW!!!!!!!!!!!!!!!!!!!!!!!!!! Whatever

Answer 7

Sure, that explains the corporate bail-outs. the corporate welfare...

Why not go into another rambling diatribe about how the illegals are being imported into the country in order to fudge the number of people slipping into poverty, I mean, I'm still laughing over that one.

Answer 8

http://www.huppi.com/kangaroo/L-taxcollections.htm

Answer 9

Willful ignorance on their part.

Answer 10

Wowie.

You're scary.

The economics you're describing are DISASTROUS.
The Real Reagan Legacy
Debunking Myths About Reagan
”Let's begin our examination of the real Reagan Legacy by taking a look at myth number one: Democrats dominated Congress all through Reagan's terms, and called all his budgets Dead On Arrival.
That's numerically and historically false. Reagan's people shoved his program through the Congress during the early Reagan years. James A. Baker, David Stockman and other Reaganites ran roughshod over Tip O'Neill and the divided Democrats in the House and Senate, and won every critical vote. This is because of the GOP majority in the Senate and the GOP-"Boll Weevil" (or "Dixiecrat") coalition in the House. Phil Gramm was a House Democrat at the time, and he even sponsored the most important Reagan budgets.
Only after the huge Reagan recession -- made worse by utterly failed Reagan "Voodoo Economics" - did Democrats regain some control in Congress. They halted some Reagan initiatives, but couldn't do much on their own. That was a time of gridlock.
Six years into Reagan's presidency, Democrats retook the Senate, and began to reverse some of Reagan's horrendous policies. By that time, Reaganomics had "accomplished" quite a bit: doubled the national debt, caused the S&L crisis, and nearly wrecked the financial system.
Which brings us to myth number two: Jimmy Carter wrecked the economy, and Reagan's bold tax cuts saved it.
This is utterly absurd. Economic growth indices -- GDP, jobs, revenues -- were all positive when Carter left office. All plunged after Reagan policies took effect.
Reagan didn't cure inflation, the main economic problem during the Carter years. Carter's Federal Reserve Chairman Paul Volcker tried when he raised interest rates. That's the opposite of what Fed Chairman Alan Greenspan has done to keep inflation low.
Carter's policies and people fought inflation, but maintained real growth. On the other hand, Reagan's policies helped cause the worst recession since the Great Depression: two bleak years with nearly double-digit unemployment! Reaganomics failed in less than a year, and it took an entire second year for the economy to recover from the failure.
Carter didn't cause the inflation problem, but his tough policies and smart personnel solved it. Unfortunately for Carter, it took too long for the good results to kick in. Not only didn't Reagan help whip inflation, he actually opposed the Volcker policies!
Another major myth: Reagan cut taxes on all Americans, and that led to a great expansion.
Here's the truth: the total federal tax burden increased during the Reagan years, and most Americans paid more in taxes after Reagan than before. The "Reagan Recovery" was unremarkable. It looks great only contrasted against the dismal Reagan Recession -- but it had nothing to do with Supply Side voodoo.
With a red ink explosion -- $300 BILLION deficits looming as far as the eye could see -- GOP Senators, notably including Bob Dole, led the way on tax hikes. The economy enjoyed its recovery only after total tax increases larger than the total tax cuts were implemented. Most importantly, average annual GDP growth during the Reagan 80s was lower than during the Clinton 90s or the JFK-LBJ 60s!
Enough about the economy. Here's the biggest myth of them all: Ronald Reagan won the "Cold War".
In reality, Reagan did nothing to bring down the Soviet Union.
By 1980, the Soviet Union was trying to cut its own defense spending. Reagan made it harder for them to do so. In fact, Reagan increased the possibility of a nuclear war because he was -- frankly, and sadly -- senile. He thought we could actually recall submarine-launched nuclear missiles (talk about a Reagan myth), and bullied the Soviets to highest alert several times.
Critically, Reagan never even tried to bring down the Soviet Union.
Wasteful overspending on defense didn't end the Soviet Union. In fact, it played into the hands of authoritarian "Communist" hard-liners in the Kremlin. Reagan thought the Soviet Union was more powerful than we were. He was trying to close what he called "the window of vulnerability."
This was sheer idiocy.
No general in our military would trade our armed forces for theirs. If it were to happen, none of the Soviet military command would turn down that deal. We had better systems, better troops, and better morale.
Here's the truth: we'd already won the Cold War before Reagan took office. All Reagan needed to do was continue the tried-and-true containment policies Harry S. Truman began and all subsequent presidents employed. The Soviet Union was Collapsing from within. The CIA actually told this to Reagan as he took office.
Here's an example: the Soviet Union military couldn't deal with a weak state on its own border, the poor, undermanned Afghanistan. Most of the Soviets' military might had to make sure its "allies" in the Warsaw Pact and subjects along the South Asian front didn't revolt. Even Richard Nixon told Reagan he could balance the budget with big defense cuts.
Reagan ignored this, and wrecked our budget.
We didn't have to increase weapons spending, but Reagan didn't care. He ran away from summits with the dying old-guard Soviets, and the new-style "glasnost" leadership of Mikhail Gorbachev baffled the witless Reagan and his closed-minded extremist advisors.
Maggie Thatcher finally cajoled the Gipper into meeting Gorby, and Gorby cleaned Reagan's clock. Reagan's hard-right "handlers" nearly had to drag Reagan out of the room before he signed away our entire nuclear deterrent. Reagan -- and the planet -- was lucky Gorbachev sought genuine and stable peace. Had Yuri Andropov's health held, Reagan's "jokes" and gaffes might have caused World War III.
Eventually Reagan even gave Gorbachev his seal of approval. Visiting Moscow before the August Coup, Reagan said the Soviet Union was no longer the "Evil Empire." He predicted his friend Gorbachev would lead the Soviet Union for many years to come.
As usual, Reagan was wrong. A few months later, disgruntled military officers kidnapped Gorbachev, throwing him out of power forever. Reagan remained disengaged: nothing he did caused the coup, and nothing he did made the Soviet military support Boris Yeltsin over their superiors.
We're all fortunate things happened as they did -- but once again, Reagan did nothing to make this fluke more likely.
All this is vintage Reagan. Reagan took credit for others' hard word and hard choices, and blamed them for his failures. Reagan even blamed Jimmy Carter for Reagan's foolish, fatal, and reckless decision to leave 243 Marines stationed in Beirut, helpless and unguarded.
Reagan hired over 100 crooks to run our government, and broke several laws himself. His policies were almost uniformly self-defeating, wrong-headed, immoral and unfair.
Reagan was an actor playing the part of the president. He was style over substance; lucky, not good.
And once the myths are stripped from the "legacy", the truth becomes obvious: Reagan was by far the most overrated man in American history.”

http://www.americanpolitics.com/20020319Hersh.html

****************************

Jeremy: Sure. Here's an "original thought" for you. Your stealing from taxpayers to coddle the rich and allowing Big Business to steal from workers is just about to blow up in your face. Congratulations on your applauding the American Meltdown. It's all over the news all over the world, you know.