Taxes went down, business investment went up, jobs were created, unemploym

[southernleftylady]

http://www.foxnews.com/story/0,2933,162398,00.html

[trotsky]

1. Krugman already busted this bubble.

His latest column destroys the spin.

[iconoclastic cat]

4. Link?

Thanks.

[trotsky]

5. Here ya go

http://www.nytimes.com/2005/07/11/opinion/11krugman.html?n=Top%2fOpinion%2fEditorials%20and%20Op%2dEd%2fOp%2dEd%2fColumnists%2fPaul%20Krugman

[AlCzervik]

9. Yes he did, i read that a few days ago and just as he predicted

Bush and his clowns came out and brag about how wonderful everything is going.

[getmeouttahere]

2. You'd like to believe...

that even sheeple that watch Fox News would look around them and ask, "where are the new jobs" or "hey, I'm still unemployed" or "my taxes haven't gone down"

[zbdent]

13. Reply for the sheep

"Hey, if you work long enough and have a spotless record, you get to man the Drive-Thru window!"

They must be dreaming of the day they get to become the greeter in the blue vest at Wal-Mart . . .

[Fovea]

3. Yeah, it is now just a train wreck

instead of a multi train collision.

Anyone see real improvement in the employment situation on the ground?
Anyone.... Buhler?...

[fberknm]

7. We have to look beyond our small personal windows

It is called anecdotal evidence, and it opens an argument to a barrage of legitimate criticism.

Remember the story of the three men and the elephant, they could only believe that which they could touch. It is always better to reason with a broad set of facts rather than personal observation. In this case, the unemployment statistics are misleading due to the discouraged worker effect.

However the influence of lower tax rates is far more uncertain. While many Democrats have criticized the application of Laffer to our tax rates, the fact is that the first President to lower taxes with the goal of growing the economy was President Kennedy, and it worked. The issue is not whether the concept is true; a reasonable, educated person would be hard pressed to argue against the concept of an optimal tax rate. Recall that the surest way to drive tax receipts to zero is to implement either a 0% tax rate or a 100% tax rate. However, republicans hide behind Laffer and the supply side model by always advocating a reduction in tax rates.

Laffer never said one should continually reduce tax rates to increase receipts via economic growth. Rather, he demonstrated that there exists an optimal tax rate, given the structure of the economy, that will maximize tax revenue. The current economic data suggests that W's tax cuts moved us toward the optimum, but there is absolutely no reason to believe that continued tax cuts will continue the trend. We may already be there, or we may have gone too far.

fwh

[newyawker99]

11. Hi fberknm!!

Welcome to DU!! :toast:

[trotsky]

12. Question

Dimbulb's tax cuts were enacted in 2001. 4 years later, how can we be sure that this blip is because of those? If these tax cuts supposedly moved us toward the optimum, why did we not see an uptick in revenue until now? (Which happens to coincide with a temporary corporate tax break expiring?)

Have you read Krugman's article regarding this?
http://www.nytimes.com/2005/07/11/opinion/11krugman.html?n=Top%2fOpinion%2fEditorials%20and%20Op%2dEd%2fOp%2dEd%2fColumnists%2fPaul%20Krugman

[fberknm]

15. Econometricians can answer the question

There are a number of ways of analyzing the economy to identify the nature and term of lags. It does take time for stimulus to impact the economy, the question is, how much time? John Keynes accepted that outside of the liquidity trap condition, tax reductions could stimulate the economy. His problem was that it took too long. This indeed was the foundation behind his statement regarding tax cuts improving the economy in the long run. "In the long run, we are all dead", meaning that if help is needed immediately, then increases in spending are needed as opposed to reductions in taxes. From a macro level, he claimed they both act in a similar way, just one working much faster than the other.

We can never know with the level of a mathematical proof waht works, we can only build analyses that support a theory to some finite level of doubt.

As for the corporate tax break expiring, a closer look at the numbers indicates that personal tax receipts have increased far more than forecast. It is difficult to see how an expiring corporate tax cut would be responsible for an increase of personal tax payments. Frankly one would expect quite the opposite.

Thanks for the welcome, I am not sure if I completely belong here, but there are some interesting thoughts presented.

FWH

[Fovea]

14. A couple thoughts

1. The discouraged worker effect is not per se misleading, it is a part of the phenominon. In actuality, it makes unemployment numbers look better than they actually are.

2. the question of lowering taxes to increase revenue is not as simple as presented by Republicans. Which taxes and how much are valid questions to ask, and clearly Dim Son is shifting the economic burdens of taxation squarely onto the classes on whom they fall most regressively via tax exemption for the investing class and shifting funding requirements to the states. I completely disagree that Dubya moved us toward the optimum. He made a system that was already too regressive to the working and middling class yet more permissive to the investing class. Manufacturing is dying in America. Capital is being re invested all right, but in China, Malaysia, etc.

3. Laffer has is no more worthy of apotheosis than Adam Smith, or Ayn Rand, for that matter.

4. It is six blind men and an elephant.

[ProfessorGAC]

6. Wrong. Wrong. Wrong. Wrong

The whole GDP is being propped up through deficit spending by the gov't, and the consumption fraction is down, despite borrowing at an all time high.

The unemployment rate is still 18% relative higher now than at any time after 1995 in Clinton's term.

The market is still down, so only cash flow increased INTO the market. There is limited profit taking and reinvestment, at least since the first wave of low cap gain taxation selloff.

The venture capital markets are lower, and the percentage of goods being produced that are under 4 years old (the mark of economic innovation) is down almost 20%.

Jobs were created, but the median household income is flat, and the number of people un- or uner-employed is higher than at any time since the Depression.

Wow! What good news, this all is, huh?
The Professor

[Catholic Sensation]

8. Trickle Down Economics at its best!

Whenever I see right wingers spouting this crap that more money given to the rich eventually gets down to the lower income people I am reminded of a Bill Maher line:

Trickle Down Economics works like this: we all have money, if we drop some, go for it, it's yours!

[JHB]

10. My version goes something like...

"Trickle down economics works.... if and only if the sponges at the top get squeezed."