Do republicans intentionally sabotage stability?

[mathwonk]

It seemed to me that the elder bush, late in his term, started an intervention in africa that bill clinton would need to deal with. last week it dawned on me that the current bush might start a war with iran that obama would have to deal with. it seems that republicans intentionally start problems their democratic successors will have to grapple with, even though the consequences are harmful. i realize this implies republican presidents are consciously trying to make the world order worse under subsequent democratic watch, although such irresponsible behavior seems unimaginable to a person of integrity.

however todays "fresh air" featured an interview with seymour hersh, whose article in the current issue of the new yorker apparently reveals that the bush administration, led by VP cheney, have been recently trying to provoke iran into some aggressive response that can be used as a pretext for an attack, by funding covert ops in iran including "lethal defensive action." Moreover there was apparently no objection to the associated "presidential finding" from the democratic leadership, from fear of political repercussions, although on a prior occasion at least nancy pelosi had stood up against such craziness.

am i the only one who fears another insanely harmful act by this lame duck moron?


mark how times have changed since the late nineteenth century. then, after the previous presidential election scam in florida, i read that the successful candidate chose not to introduce any controversial action due to lack of a mandate. in direct opposition to that precedent, the current president has chosen to push his opportunity as far as possible with little or no mandate whatsoever. even now, with the public hugely opposed to his behavior, he seems inclined to try to use his last few months to create as much havoc as possible. or is cheney running to show entirely? when will we be rid of these persons and their ilk?

 

[wildman]

I don't think it is intentional. It is the same moronic approach to foreign policy they have always have had.

I don't think Bush will invade Iran. There would have to be some kind of build up going on. I'm not seeing that.

 

[robheus]

I don't think it is intentional. It is the same moronic approach to foreign policy they have always have had.

I don't think Bush will invade Iran. There would have to be some kind of build up going on. I'm not seeing that.

They DO intentionally try that and have done that, but to no success currently, because Iran is too clever not to let themselves provoke.

 

[WarPhalange]

This is why I think some law needs to be passed where the president, upon stepping down, goes on trial to defend his/her actions under penalty of imprisonment, exile, or death. Currently you can become president, totally screw the country over, and go "Well, my 4/8 years are up! I'm going home. Cya guys." with no penalty. You try that in a 3rd world country and you will be publicly executed.

 

[OAQfirst]

Isn't this assuming that Obama gets in? What if McCain wins it? What does this say about Bush's intentions to destabilize/cause problems for the next guy?

 

[turbo]

I don't think it is intentional. It is the same moronic approach to foreign policy they have always have had.

I don't think Bush will invade Iran. There would have to be some kind of build up going on. I'm not seeing that.

How many carrier groups do we need within striking distance of Iran? The build-up is in place and has been for a long time. Do the carrier groups need to be there to counter the Iraqi insurgency's naval superiority or air superiority? I fear that there will be an "excuse" for an attack against Iran before Bush's term is up. Bush and Cheney demonize an "enemy" that may or may not be any threat against US interests, demand that the "enemy" adhere to some standards that may or may not apply to other regimes, and if the "enemy" does not comply, they claim to have exhausted diplomatic options, leaving military force as the only resort. Our administration is staffed with criminals whose disregard for US law and international law alone is grounds for prosecution. If they start another war, W and his puppet-master should be delivered in chains to the Hague.

 

[Gokul43201]

How many carrier groups do we need within striking distance of Iran? The build-up is in place and has been for a long time.

How many additional CVBGs have been added to the Persian Gulf since last summer?

 

[WheelsRCool]

The foreign policy under President Bush was the foreign policy initiated by President Clinton (that Saddam Hussein was a dangerous threat who had to be done away with). President Bush just carried through with it (and I'm not saying that was the correct thing to do).

I would disagree that Republicans always "screw" things up. That depends. Vietnam is a textbook example of that.

IMO, both parties have their faults.

 

[Gokul43201]

The foreign policy under President Bush was the foreign policy initiated by President Clinton (that Saddam Hussein was a dangerous threat who had to be done away with). President Bush just carried through with it (and I'm not saying that was the correct thing to do).

When you deal in generalities like you just have, you can show that a duckling is the same thing as an aircraft carrier, since both have wings and spend a lot of time on water. Bush's foreign policy is not very much like Clinton's when you get down to specifics. Don't believe me? Ask PNAC.

 

[OrbitalPower]

Again, an inaccuracy. Bush's Foreign Policy is not in any way a continuation of Clinton's. The Iraq Liberation Act passed under Clinton actually forbade an all out invasion of Iraq to accomplish their goals. Clinton also tried to balance Saddam's power, and he even campaigned on the notion that he believed in Southern Baptist like "conversions" and that Saddam might be able to be tamed.

It's ludicrous to compare one to another.

Anyway, Yes, Republicans have generally created a disasterous economy, like Black Monday and wars and so on, that Democrats have to fix. It's well known Clinton spent a lot of his presidency trying to pay down the federal deficit, which had tripled under Reagan's watch. This prevented him from doing things like Universal Health Care and forced him to cut social welfare (though corporate welfare remained in tact, of course). He was actually a fiscal conservative. And we know Greenspan was just tying his hands, because Greenspan reversed his positions and endorsed Bush's tax cuts which a two year old could have told you would lead to more recessions.

I would say, though, it's not so much to hand democrats a mess as to create problems that only Republicans can solve, like national security. The Iraq war was timed to the offset of the 2002 elections, and that's when a lot of the propaganda started cropping up against Iraq as if they were a great enemy (and polls show from that period a majority of Americans thought Iraq had WMDs, and even had a connection to 9-11, both now disproven).

 

[WheelsRCool]

When you deal in generalities like you just have, you can show that a duckling is the same thing as an aircraft carrier, since both have wings and spend a lot of time on water. Bush's foreign policy is not very much like Clinton's when you get down to specifics. Don't believe me? Ask PNAC.

Good point.

 

[WheelsRCool]

Anyway, Yes, Republicans have generally created a disasterous economy, like Black Monday and wars and so on, that Democrats have to fix.

Mmm...I'd have to disagree. For example, the so-called "great economy" under Clinton, for example, was a direct result of the policies of Ronald Reagan, not Clinton himself.

It's well known Clinton spent a lot of his presidency trying to pay down the federal deficit, which had tripled under Reagan's watch. This prevented him from doing things like Universal Health Care and forced him to cut social welfare (though corporate welfare remained in tact, of course). He was actually a fiscal conservative. And we know Greenspan was just tying his hands, because Greenspan reversed his positions and endorsed Bush's tax cuts which a two year old could have told you would lead to more recessions.

Actually, the Bush tax cuts are likely what helped pull the U.S. out of the "recession" of the early 2000s. As for now, I do not believe the U.S. economy is technically in a recession yet, though if not, it is likely close.

I would say, though, it's not so much to hand democrats a mess as to create problems that only Republicans can solve, like national security. The Iraq war was timed to the offset of the 2002 elections, and that's when a lot of the propaganda started cropping up against Iraq as if they were a great enemy (and polls show from that period a majority of Americans thought Iraq had WMDs, and even had a connection to 9-11, both now disproven).

I agree.

 

[OrbitalPower]

Reagan's disasterous economic that led to the plummeting of the stock market near Great Depression levels. Bush/Clinton pulled us out of the Reagan recession by increasing taxes, and in Clinton's case helping to jump start sectors in the computer industry, although we are still suffering from the corporate inequalities Reagan allowed to go through.

Bush's policies and the corporate crime wave we've experienced, as well as all the bail outs, have not been good either imo.

 

[WheelsRCool]

Reagan's disasterous economic that led to the plummeting of the stock market near Great Depression levels. Bush/Clinton pulled us out of the Reagan recession by increasing taxes, and in Clinton's case helping to jump start sectors in the computer industry, although we are still suffering from the corporate inequalities Reagan allowed to go through.

Bush's policies and the corporate crime wave we've experienced, as well as all the bail outs, have not been good either imo.

Well here is my view of it:

Before Ronald Reagan, more than half of people’s wealth was tied up in tax shelters and inflation hedges, which had driven gold, silver, oil, and commodity prices up and virtually destroyed the stock and bond markets. There was no capital available to start and grow businesses and create jobs.

With the Reagan reforms, people were smart enough to start moving their money to the stock and bond markets, where they provided capital for new businesses and new jobs. Interest rates began the fall that would drive the US stock market and the American economy for the next two decades. Commodity prices collapsed, which deprived the Soviet Union of the revenues from oil, gas, gold, and commodities they used to fund their military, which contributed to bankrupting them.

The financial reforms of the 1980s also caused the res-structuring of many corporations. Many of these corporations were big, bloated, and bureaucratic, without much debt, which caused a lot of them to spend lots of money on unprofitable ventures. With the corporate restructurings of the 1980s, companies were loaded up with debt, which caused their corporate managers to focus a lot more on streamlining operations and making them far more efficient. This also meant a lot of "cutting the fat," i.e. eliminating un-necessary jobs, which unfortunately stung a lot for a lot of folks in the beginning, but ultimately made American corporations a lot more efficient and competitive in the global economy. They also made the corporate governors more accountable to their shareholders.

I should re-state myself, the economy under Clinton was partially because of President Clinton, but not solely because of him:

The 1990s economy was from a few things, created by Ronald Reagan and by Clinton:

1) De-regulation of the financial markets which led to a financial market boom in the 80s

2) De-regulation of the technology markets which also led to a boom in the technology markets

3) Lowering taxes and stopping the growth of government for the first time in decades.

These set the stage for the 1990s boom in the technology and finance markets (hedge fund and private equity on Wall Street, technology in Silicon Valley).

4) Outspending the Soviet Union, which caused the collapse of the Berlin Wall in 1989, and the Soviet Union itself shortly after. When this happened, the world saw a level of economic ruin from central planning they had never dreamed of. Even many Western "experts" on the Soviet economy were shocked at just how ruined economically the Soviet Union was. Because of this, central planning was shelved, completely for the most part, and many nations adopted much more free-market friendly governments.

This all combined to essentially create a global market boom in which the U.S. economy prospered greatly, which then fueled many of the other world economies.

The market during the 1980s did peek in 1987 with a stock market crash, in which the market crashed at twice the amount (proportionally) to what it did in 1929 (but the economy didn't go into any depression). But markets go up and down independently for the most part; the 1929 crash wasn't the fault of Herbert Hoover; the 1937 stock market crash occurred under FDR, that wasn't his fault either. The crash in 1987 under Reagan wasn't his fault. The stock market also crashed in 2000 and tanked the markets more than 50%, that was Clinton's fault either.

The economy went into the biggest bull-run during the 1990s, because of the new technology, de-regulated financial markets, worldwide embrace of free-markets, low taxation, etc...President Clinton's signing of NAFTA (North American Free Trade Agreement) also helped contribute to this by easing up trade in North America and he also lowered capital gains taxes, which likely helped contribute to the surplus that occurred in 2000. The stock market then crashed in 2000 when the bubble of the 1990s burst.

I do not think the 1990s bubble would have occurred without the de-regulation of the finance and technology sectors that occurred under Ronald Reagan. Similarly, we wouldn't have had all the economic growth, job creation, and private charity spending, that has occurred since then either.

People oftentimes blame the economy on the Presidency, but when the President lowers taxes, embraces free-trade, and de-regulation, essentially the economy is going to self-regulate itself. If the President tries to actively manage the economy by increasing taxes highly, enacting price controls, government "stimulus" packages, etc...this can cause adverse effects, for example the price controls enacted under Richard Nixon (when he said, "We are all Keynesians now,"). Those price controls caused surpluses and shortages to start forming and were then abandoned, but gas price controls were kept until ended by Ronald Reagan, a move that was highly criticized at the time, but as Reagan knew would occur, the long gas lines at gas stations ended.

Reagan did run a large deficit to pay for his increased military spending; he tried to get the Democratic Congress at the time to decrease social spending, but they would not. However, I believe at around 1986, the economic growth that was occurring because of Reagan's reforms reversed the deficit and it began shrinking.

The housing market went into a bubble in the early 2000s, which then just burst, and well a real-estate bubble can have drastic effects on an economy because people use real-estate as collateral for loans and so forth. Combined with gas prices right now and you can see why the economy is stressed at the moment.

Now oil appears to be in a bubble, and the Chinese economy is also likely in a bubble as well. Bubbles are just a natural part of a free economy. People get over-excited, emotions take over, people don't act rationally, the market rises to unsustainable levels, and then CRASH!

 

[russ_watters]

It seemed to me that the elder bush, late in his term, started an intervention in africa that bill clinton would need to deal with...

it seems that republicans intentionally start problems their democratic successors will have to grapple with, even though the consequences are harmful

Your understanding of what happened there and why is flawed and what you accuse Bush of is wrong:

-The situation in Somalia long predated Bush's action there (there was no stability for Bush to sabbotage) and when the UN decided it needed to act, the action was a highly international UN effort. It wasn't even close to being Bush's choice alone, much less an intentional mess to throw at Clinton (heck, as an incumbent, he no doubt expected to win!).
-Clinton, not Bush, changed the mission from peacekeeping and handing out food to nation building, putting our men at increased risk, underequipping them, and causing the failure in the Battle of Mogadishu.

You really need to read up on what actually happened there:

http://en.wikipedia.org/wiki/United_Nations_Operation_in_Somalia_I
http://en.wikipedia.org/wiki/UNOSOM_II

So the answer to your question is no. Rebpublican presidents do not intentionally sabbotage stability. The accusation and chosen example is just plain absurd.

 

[russ_watters]

Reagan's disasterous economic that led to the plummeting of the stock market near Great Depression levels.

Could you explain what, exactly, you mean by that because what it implies to me is nowhere close to reality. At the end of Jan, 1981, the Dow was at 947. On black Monday, in Oct, 1987, the Dow dropped 508 points to 1739 - still almost double what it was when Reagan took office 7 years earlier. Over the next few months, the total drop from its high was 23%, a bear market, sure, but still far above where it was when he took office.

The "great depression levels" part simply doesn't make any sense. Just prior to the depression, the stock market peaked at 387 (and dropped to 200). It took 15 years for the market to recover for that level after the depression.

The two events bear no resemblence to each other whatsoever.

 

[BobG]

Anyway, Yes, Republicans have generally created a disasterous economy, like Black Monday and wars and so on, that Democrats have to fix. It's well known Clinton spent a lot of his presidency trying to pay down the federal deficit, which had tripled under Reagan's watch. This prevented him from doing things like Universal Health Care and forced him to cut social welfare (though corporate welfare remained in tact, of course). He was actually a fiscal conservative. And we know Greenspan was just tying his hands, because Greenspan reversed his positions and endorsed Bush's tax cuts which a two year old could have told you would lead to more recessions.

Mmm...I'd have to disagree. For example, the so-called "great economy" under Clinton, for example, was a direct result of the policies of Ronald Reagan, not Clinton himself.

Actually, the Bush tax cuts are likely what helped pull the U.S. out of the "recession" of the early 2000s. As for now, I do not believe the U.S. economy is technically in a recession yet, though if not, it is likely close.

Even within the Republican Party there's been a huge debate over whether tax cuts or a balanced budget should take priority - the Reagan/Kemp camp vs the 1980 Bush/Dole camp.

I generally side with the Dole camp, but Reagan's tax cuts did lead to a better economy and increased tax revenues. Bush's tax cuts weren't bad in themselves. They were just bad when mixed with a war. There have to be some priorities and you can't afford both a war and tax cuts.

 

[Gokul43201]

... but Reagan's tax cuts did lead to a better economy and increased tax revenues.

This is often repeated by Republicans but it is definitely false. Reagan's cuts did not lead to increased tax revenues (nor did Bush's). The OMB says so, the CBO says so, and the President's Council of Economic Advisers say so. I've provided links to the CBO reports in the "Hate Obama" thread. Here's another one: http://www.cbpp.org/3-3-03tax.htm

 

[Astronuc]

Even within the Republican Party there's been a huge debate over whether tax cuts or a balanced budget should take priority - the Reagan/Kemp camp vs the 1980 Bush/Dole camp.

I generally side with the Dole camp, but Reagan's tax cuts did lead to a better economy and increased tax revenues. Bush's tax cuts weren't bad in themselves. They were just bad when mixed with a war. There have to be some priorities and you can't afford both a war and tax cuts.

I think the massive borrowing and federal spending contributed to a better economy, but now we are experiencing the downside of that approach.

It would be interesting to see how much of those taxes were re-invested in the US. Billions of dollars have been slowly moved off-shore (out of the US) and then loaned back. That certainly does not provide for stability.

 

[WheelsRCool]

This is often repeated by Republicans but it is definitely false. Reagan's cuts did not lead to increased tax revenues (nor did Bush's).

The OMB says so, the CBO says so, and the President's Council of Economic Advisers say so. I've provided links to the CBO reports in the "Hate Obama" thread. Here's another one: http://www.cbpp.org/3-3-03tax.htm

I would have to disagree that it is "definitely false;" remember, there are multiple ways to measure taxes, one is that increasing taxes increases revenues, decreasing taxes decreases revenues. However, increasing taxes to a certain point will kill incentives to work hard and invest, thus decreasing revenues; OTOH, decreasing taxes will provide more incentives to work, save, and invest, thus increasing tax revenues.

Since these two effects go against each other, the exact effect a tax rate increase or decrease will have isn't always instantly clear.

Historically, every time capital gains taxes were cut, tax revenues and economic growth seem to have increased. The question is does this last.

Also the performance of states and in other countries also seems to confirm this. The states that seem to struggle the most right now economically are the ones with the largest taxes, in particular California and New York. You know, we have a problem here in New York State of businesses leaving the state in record numbers because the tax structure is so repressive.

If you watch the performance of the deficit during the Reagan years, you see it reverses itself despite the fact that Reagan increased military spending significantly. It reverses itself starting in 1986 and continues shrinking all the way up to 1989, where it then begins growing again, up until 1992, which is essentially when the 1990's economic bubble began. It decreases and then becomes a surplus in 1998, and stays that way up to 2000, then becoming a deficit again in 2002, growing until 2004, where it reverses again.

Also, the above link you cited was written in 2003, when the deficit was at -3.4% of GDP, however, as of 2007, it was at -1.2% of GDP.

Now with the high oil prices and the housing crash messing up the economy and slowing economic growth, I am guessing tax revenues will be less by the end of 2008, likely increasing the size of the deficit. But aside from this, I do not see how the Reagan or Bush tax cuts haven't really paid for themselves. After the Reagan tax cuts, we went into what has been the largest period of wealth creation in history. If you increase government spending, and the economy and tax revenues do not eventually grow accordingly, you should not see the deficit eventually reverse itself.

One may perhaps debate capital gains taxes within the range they are now or income taxes, but I think the cut from the highest income tax rate of 70% to a much lower amount significantly contributed to growing the economy more. The debate seems to be is the ideal lower maximum tax rate twenty-something percent, or thirty-something percent, etc...? Since the Reagan tax cuts, according to the CBO data here, the highest-earners have gone to paying a larger overall portion of the toal tax burden with much lower tax rates, compared to when the top income tax rate was far higher: http://www.cbo.gov/publications/collections/tax/tax_liability_shares.xls

President Reagan decreased capital gains taxes down to 20%, but then increased the rate later to 28%, which when it took effect in 1991, decreased capital gains tax revenues.

President Clinton did increase taxes during the 1990s, but he also had the benefit of serving as President during the biggest bull-run in history, and also having the benefit of a slashed military budget during the 1990s. He also cut capital gains taxes in 1997 from 28% to 20%, which caused caused a very significant increase in tax revenues. Also during the capital gains tax cuts from Reagan, Clinton, and Bush, we have seen the deficit reverse itself.

Now I know the link in the "Hate Obama?" thread specified that cutting capital gains taxes, historically, does seem to increase tax revenues in the short term, but in the long term, it is believed they decrease tax revenues. Since the Bush tax cuts are set to expire in 2011, if allowed to, would this really make a difference, since they are not permanent unless Senator McCain is elected?

Perhaps one could reason that the Reagan cut in capital gains taxes increased revenues initially, which shrank the deficit, then the longer-term effect kicked in, icnreasing the deficit; as I said, Reagan's increase in capital gains taxes from 20% to 28% took effect in the early 1990s, which is when the deficit began to reverse itself again, however, the total amount of capital gains tax revenues decreased. When President Clinton cut capital gains taxes, again, we saw a boom in revenues, and the deficit became a surplus, but then after 2001, it became a deficit again. With the Bush capital gains tax cut to 15%, again a boom was seen, with the deficit shrinking thus far, but this seems it might reverse again, so they could be correct.

Furthermore, could it be a combination of both, for example, if capital gains taxes are too high, this will greatly discourages investment. Lowering them to say 28% gives a lot more incentive for people to invest, and long-term increases tax revenues, however, lowering them further to 20% (as Reagan and Clinton did) or 15% (as President Bush did) can increase revenues in the short term, but decrease them in the long term...?

The following link I found interesting, it was written by Arthur Laffer: http://www.heritage.org/Research/Taxes/bg1765.cfm

The other thing I am thinking of is, do tax revenues need to keep growth with the economy itself? I would think the tax revenues just need to keep growth with the increase in the size of the government itself, but if the economy itself is growing faster than tax revenues, for whatever reason, does this really matter?

 

[quadraphonics]

I would have to disagree that it is "definitely false;" remember, there are multiple ways to measure taxes, one is that increasing taxes increases revenues, decreasing taxes decreases revenues.

That's not a "way to measure taxes." That's an ideological position. As is its converse.

OTOH, decreasing taxes will provide more incentives to work, save, and invest, thus increasing tax revenues.

Only if taxes are already so high as to disincentive productive activities. Certainly, lowering taxes when the rate is already low is not going to make up the difference in extra incentive. Otherwise, you could argue that tax revenue is maximized by eliminating taxes altogether, which is obviously false. The question is "how high is too high?" (or, equivalently, "how low is too low?"). And the thing is that, after the tax-cut crazes of the past few decades, it's difficult to argue that further cuts are going to do anything besides lower revenue. Which is not a great idea given that we're running a deficit.

Also the performance of states and in other countries also seems to confirm this. The states that seem to struggle the most right now economically are the ones with the largest taxes, in particular California and New York.

That's a coincidence. Those two states are struggling (actually, are they? I happen to live in one of them, and haven't noticed a difference outside of the housing prices) because they had the most over-valued housing sectors. This, in turn, is because they are the most desirable states to live in; something that hasn't changed. The fact that untold thousands of people are currently taking advantage of falling real estate prices to get in on the ground floor in places like California and New York is actually a good thing, in the long run.

You know, we have a problem here in New York State of businesses leaving the state in record numbers because the tax structure is so repressive.

Yeah, they say the same thing about California, but it never adds up to much, for the obvious reason that CA has the best workforce in the world, because CA is a highly desirable place to live. This is how they've gotten away with higher taxes all these years. You can move your company to to North Dakota or Idaho to avoid taxes, but who's going to work there? This brings up the other point, that changes in capital gains taxes can't be considered in isolation; the set of incentives that influences production and revenue is also influenced by personal and corporate income taxes.

After the Reagan tax cuts, we went into what has been the largest period of wealth creation in history.

And where is the evidence that this was caused by the Reagan tax cuts, and not simply a coincidence?

President Clinton did increase taxes during the 1990s, but he also had the benefit of serving as President during the biggest bull-run in history, and also having the benefit of a slashed military budget during the 1990s.

And where is the evidence that the biggest bull-run in history was not caused by Clinton's tax/spending policies? I'm not arguing that it was, so much as pointing out that you're being awfully selective about the level of evidence you require to assign causation.

He also cut capital gains taxes in 1997 from 28% to 20%, which caused caused a very significant increase in tax revenues.

Again, where is the evidence for causation? How do we know that it wasn't simply an artifact of the biggest bull-run in history?

The other thing I am thinking of is, do tax revenues need to keep growth with the economy itself? I would think the tax revenues just need to keep growth with the increase in the size of the government itself, but if the economy itself is growing faster than tax revenues, for whatever reason, does this really matter?

It doesn't matter as such, no. The thing is that the growth of the economy is typically correlated with growth of the population and corporate community, and so growth of the government as well. You can imagine a situation with a stable population and stable set of government expenses, and the economy grows (because of, say, exports) without any need to grow the tax revenue. But this is not a very realistic scenario, and certainly not applicable to the United States.

 

[WheelsRCool]

That's not a "way to measure taxes." That's an ideological position. As is its converse.

What makes it ideological? You increase taxes, you increase revenues, you decrease taxes, you decrase revenues, but there's then the human factor, you increase taxes too much, why work hard? Might as take a lower-paying and easier job. Consequently, you lower taxes too much, it doesn't matter how hard or much people work, the government still needs revenues. These two effects combine.

Only if taxes are already so high as to disincentive productive activities. Certainly, lowering taxes when the rate is already low is not going to make up the difference in extra incentive.

True.

Otherwise, you could argue that tax revenue is maximized by eliminating taxes altogether, which is obviously false. The question is "how high is too high?" (or, equivalently, "how low is too low?"). And the thing is that, after the tax-cut crazes of the past few decades, it's difficult to argue that further cuts are going to do anything besides lower revenue. Which is not a great idea given that we're running a deficit.

Yes, tax cuts are pretty much at the limit I would think; however, what about taxes on dividends? Corporations already pay the corporate tax and they pay the tax on their investment income, so when a shareholder gets paid dividends, the tax on them is really a triple tax; so, should this tax I think should remain low. The tax on investment income of a corporation is still low, but combined with the corporate tax for big corporations, still adds up to around 45% I think. With the 15% tax on dividends as of now, shareholders receiving dividends technically pay at around a 60% tax it seems, so I am on the fence about that tax.

That's a coincidence. Those two states are struggling (actually, are they? I happen to live in one of them, and haven't noticed a difference outside of the housing prices) because they had the most over-valued housing sectors. This, in turn, is because they are the most desirable states to live in; something that hasn't changed. The fact that untold thousands of people are currently taking advantage of falling real estate prices to get in on the ground floor in places like California and New York is actually a good thing, in the long run.

Perhaps, but from what I have read, California is already running a large deficit, and that is with some of the highest taxes in the nation already. I think the main reason California is so desirable to live in is because of the weather. As for New York, well up here in Upstate, NY, on the television, there have been commercials talking about the problem of businesses fleeing the state and what they can do to try and stop that. I also believe that a large swath of people are moving out West right now; Google about the growth of the West in population, in particular Arizona and Nevada.

Yeah, they say the same thing about California, but it never adds up to much, for the obvious reason that CA has the best workforce in the world, because CA is a highly desirable place to live. This is how they've gotten away with higher taxes all these years.

Yep.

You can move your company to to North Dakota or Idaho to avoid taxes, but who's going to work there? This brings up the other point, that changes in capital gains taxes can't be considered in isolation; the set of incentives that influences production and revenue is also influenced by personal and corporate income taxes.

Yep; I would imagine also, as you mentioned, the skill of the workforce. One might prefer higher taxes with a very skilled workforce, then lower taxes, but a lesser-skilled workforce.

And where is the evidence that this was caused by the Reagan tax cuts, and not simply a coincidence?

Well Reagan didn't just cut taxes, he de-regulated much of the economy, in particular the financial and technology sectors, which is where most of the boom seems to have occurred, during both the 1980s and the 1990s. The growth in these sectors likely not have occurred had Reagan not done this. The financial sector made American corporations a lot more streamlined and efficient for global competition, and the technology sector revolutionize the entire way of life for people. Some of the de-regulation also occurred under Carter (airlines and trucking industry I believe), which also helped grow those industries. Reagan's tax cuts gave a lot more incentive to work harder and to invest, and for the wealthy to move their money into the stock and bond markets.

And where is the evidence that the biggest bull-run in history was not caused by Clinton's tax/spending policies? I'm not arguing that it was, so much as pointing out that you're being awfully selective about the level of evidence you require to assign causation.

Good point, well I would argue for one that the bubble began in 1992, before any of Clinton's policies would have really been able to create any real effect on the economy, also Clinton I do not think had much to de-regulate as Reagan had, and also the Soviet Union was gone, and the world was beginning to embrace free-market capitalism a lot more; but also, you're right, I forgot to mention (I did before), I do think that Clinton's signing of NAFTA did contribute to the 1990s economy, by allowing free trade in North America to flow a lot better.

Again, where is the evidence for causation? How do we know that it wasn't simply an artifact of the biggest bull-run in history?

I believe the capital gains tax revenue increased by about 90% after his capital gains tax cut took place, the Laffer link I put above talks some about it.

It doesn't matter as such, no. The thing is that the growth of the economy is typically correlated with growth of the population and corporate community, and so growth of the government as well. You can imagine a situation with a stable population and stable set of government expenses, and the economy grows (because of, say, exports) without any need to grow the tax revenue. But this is not a very realistic scenario, and certainly not applicable to the United States.

I see.

 

[mathwonk]

"So the answer to your question is no. Republican presidents do not intentionally sabbotage stability. The accusation and chosen example is just plain absurd." russ w.

so russ, the fact that W is currently trying to destabilize iran. and has submitted a secret "finding" to obtain 400 million dollars for covert action including "lethal defensive action" for that purpose, is what? just a well intentioned foreign policy initiative?

a last ditch attempt to do some more good on the international front before he has to return power to those nutcases who disagree with him? ie most people?

your argument is that he is just trying to do as much good as possible while he still can?

thats a hard sell.

 

[quadraphonics]

so russ, the fact that W is currently trying to destabilize iran. and has submitted a secret "finding" to obtain 400 million dollars for covert action including "lethal defensive action" for that purpose, is what? just a well intentioned foreign policy initiative?

It may not be well-intentioned, but this is not some last-moment effort to push a particular policy direction. The United States has followed a consistent policy of trying to destabilize Iran since the Carter administration. Iran's been complaining about airspace violations, and making accusations of covert ops, for at least 5 years now. This is simply not a good example of the supposed Republican Presidential tendency to sabotage stability on their way out.

 

[mathwonk]

if it walks like a duck,...

if my point is somehow too subtle here, the issue is whether this is something we should be doing, and if not, how to stop it? get on the train.

 

[Gokul43201]

I'm going to take a crack at some of this too. Since my statement (which you disagreed with) was entirely about revenues, I shall limit my comments on points relating to growth and other aspects.

I would have to disagree that it is "definitely false;" remember, there are multiple ways to measure taxes, one is that increasing taxes increases revenues, decreasing taxes decreases revenues.

No, there is only one way to measure tax revenues - the way it is done by the IRS. What you've described has nothing to do with any kind of measurement - probably just a poor choice of words.

increasing taxes to a certain point will kill incentives to work hard and invest, thus decreasing revenues; OTOH, decreasing taxes will provide more incentives to work, save, and invest, thus increasing tax revenues.

Since these two effects go against each other, the exact effect a tax rate increase or decrease will have isn't always instantly clear.

Which is why we leave the analysis to the experts. And the experts (OMB, CBO, CEA) disagree with your assertion that tax cuts result in increased revenues.

Historically, every time capital gains taxes were cut, tax revenues and economic growth seem to have increased. The question is does this last.

The key phrase there is "Seemed to have". The CBO[1] explains while this illusion exists and that the long term effects, if any, are bound to be very small.

Capital gains taxes often garner policy attention that is disproportionate to their importance in generating federal revenues.
...
Because taxes are paid on realized rather than accrued capital gains, taxpayers have a great deal of control over when they pay their capital gains taxes. By choosing to hold on to an asset, a taxpayer defers the tax. The incentive to do that--even when it might otherwise be financially desirable to sell an asset--is known as the lock-in effect. As a consequence of that incentive, the level of the tax rate can substantially influence when asset holders realize their gains, as can be seen particularly clearly when tax rates change. For instance, the Tax Reform Act of 1986 boosted capital gains tax rates effective at the beginning of 1987. Anticipating that increase, investors realized a huge amount of gains in 1986. Then, in 1987, realizations fell by almost as much, returning to a level comparable to that before the tax increase.
...
Because of the other influences on realizations, the relationship between them and tax rates can be hard to detect and easy to confuse with other phenomena. For example, a number of observers have attributed the rapid rise in realizations in the late 1990s to the 1997 cut in capital gains tax rates. But the 45 percent increase in realizations in 1996--before the cut--exceeded the 40 percent and 25 percent increases in 1997 and 1998 that followed it. Careful studies have failed to agree on how responsive gains realizations are to changes in tax rates, with estimates of that responsiveness varying widely.

Most of what follows is not related to tax revenues, so is irrelevant to any disagreement with my statement about revenues. But I'll address some of them briefly.

Also the performance of states and in other countries also seems to confirm this. The states that seem to struggle the most right now economically are the ones with the largest taxes, in particular California and New York. You know, we have a problem here in New York State of businesses leaving the state in record numbers because the tax structure is so repressive.

Contrary to your assertion, California and NY have been in the highest or second highest quintile for state GDP growth among all US states in recent years. Alaska, with no state taxes, has been in the bottom quintile of states.[2,3,4]

If you watch the performance of the deficit during the Reagan years, you see it reverses itself despite the fact that Reagan increased military spending significantly. It reverses itself starting in 1986 and continues shrinking all the way up to 1989, where it then begins growing again, up until 1992, which is essentially when the 1990's economic bubble began. It decreases and then becomes a surplus in 1998, and stays that way up to 2000, then becoming a deficit again in 2002, growing until 2004, where it reverses again.

I don't know what exactly is to be gained by looking at the deficit performance, but sure... here's the debt curve for the last half-century: [5]

Also, the above link you cited was written in 2003, when the deficit was at -3.4% of GDP, however, as of 2007, it was at -1.2% of GDP.

And for 2008, it will be twice or thrice as big. What exactly is your point? The analysis is definitely not based on a single year's data.

Now with the high oil prices and the housing crash messing up the economy and slowing economic growth, I am guessing tax revenues will be less by the end of 2008, likely increasing the size of the deficit.

How is it fair to blame the housing crash for a poor deficit but not credit the housing bubble for a good one?

But aside from this, I do not see how the Reagan or Bush tax cuts haven't really paid for themselves.

Let me try a simplistic approximate explanation:
Let the current effective tax rate be about 20%, and the current GDP be G1.
Let the effective rate for the next year be cut to 16% and this stimulates the GDP to grow to G2.
The for the tax revenue to actually grow, we will need (roughly) 0.15G2 > 0.2G1, or G2/G1=1.33.
So, for the tax cut to pay for itself, you need a single year (unchained) GDP growth of about 33% for every succeeding year.
Now that's clearly an oversimplification, purely to demonstrate the rough order of growth needed for a tax cut to "pay for itself". But you here's an article you might find more credible[6]. The author interviews Laffer about this very question of tax cuts increasing revenues and paying for themselves.

If there's one thing that economists agree on, it's that these claims are false. We're not talking just ivory-tower lefties. Virtually every economics Ph.D. who has worked in a prominent role in the Bush Administration acknowledges that the tax cuts enacted during the past six years have not paid for themselves--and were never intended to. Harvard professor Greg Mankiw, chairman of Bush's Council of Economic Advisers from 2003 to 2005, even devotes a section of his best-selling economics textbook to debunking the claim that tax cuts increase revenues.
...
I decided to find out what Arthur Laffer thought. Laffer is a bona fide economist with a doctorate from Stanford. He's also largely responsible for the Republican belief that tax cuts pay for themselves. Now 67, Laffer runs economic-consulting and money-management firms in Nashville. About the best I could get out of him on the question of whether the Bush tax cuts have paid for themselves was "I don't know." But that's only part of the story.
...
"The Laffer Curve should not be the reason you raise or lower taxes," he says. Perhaps not, but it does make for great campaign promises.

After the Reagan tax cuts, we went into what has been the largest period of wealth creation in history.

What does this mean - "the largest period of wealth creation"? If you are talking about GDP growth - the standard definition of wealth creation - then that's not even true. The first Reagan cut produced one of the shortest periods of growth - lasting exactly one quarter in 1982 before it went negative again. Following the second cut in 1986, the economy grew for about 4 years, till the recession of 1990. Even if you extract the maximum length of positive growth during this time, it lasts for about 8 years, which is a little shorter than the succeeding period of growth throughout the 90s. And if you require two consecutive quarters of negative growth, then it becomes 8 years of growth following Reagan and 17 years of growth through the 90s and 2000s. There were also 9 consecutive years of quarter-on-quarter growth during the 60s and over 11 consecutive years of recession free growth. [7]

And just FYI, here's an additional report on how the Bush tax cuts - much more than runaway government spending on domestic projects and a little more than defense spending on the wars - have contributed to the deficit: [8]

That's all I've got the energy for.

[1] http://www.cbo.gov/doc.cfm?index=3856&type=0
[2] http://www.statemaster.com/graph/eco_eco_gro-economy-economic-growth
[3] http://www.bea.gov/newsreleases/regional/gdp_state/2005/gsp1005.htm
[4] http://www.bea.gov/newsreleases/regional/gdp_state/2007/gsp0607.htm
[5] http://zfacts.com/p/318.html
[6] http://www.time.com/time/magazine/article/0,9171,1692027,00.html
[7] http://www.bea.gov/national/nipaweb/TableView.asp?SelectedTable=6&ViewSeries=NO&Java=no&Request3Place=N&3Place=N&FromView=YES&Freq=Qtr&FirstYear=1958&LastYear=2008&3Place=N&Update=Update&JavaBox=no#Mid
[8] http://www.cbpp.org/1-25-05bud.htm

 

[Gokul43201]

"So the answer to your question is no. Republican presidents do not intentionally sabbotage stability. The accusation and chosen example is just plain absurd." russ w.

so russ, the fact that W is currently trying to destabilize iran. and has submitted a secret "finding" to obtain 400 million dollars for covert action including "lethal defensive action" for that purpose, is what? just a well intentioned foreign policy initiative?

a last ditch attempt to do some more good on the international front before he has to return power to those nutcases who disagree with him? ie most people?

your argument is that he is just trying to do as much good as possible while he still can?

thats a hard sell.

mathwonk,

It's a harder sell that every Republican administration wants to have itself succeeded by a Democratic administration. And that is a necessary premise for this thread.

 

[WheelsRCool]

Which is why we leave the analysis to the experts. And the experts (OMB, CBO, CEA) disagree with your assertion that tax cuts result in increased revenues.

Having found and read the following, I am going to have to agree with you, as according to this, it is a myth that the Reagan Administration itself claimed that tax cuts would increase revenues per se: http://www.cato.org/pub_display.php?pub_id=1120&full=1 I have more reading to do.

Contrary to your assertion, California and NY have been in the highest or second highest quintile for state GDP growth among all US states in recent years. Alaska, with no state taxes, has been in the bottom quintile of states.[2,3,4]

According to the StateMaster source, Nevada and Florida, some of the most business-friendly states in the nation, have had the highest amount of growth. I am not saying that California and New York are not major players in the national economy, I just mean that their tax structures are harsh to business (they are consistently ranked among the worst states for business: http://www.taxfoundation.org/publications/show/78.html) and that even though they generate a LOT of economic growth, they could do a lot better if they were more business-friendly.

But as long as New York state is home to Wall Street and all those banks, hedge funds, etc...and California home to so many technology firms, movie studios, etc...(Cali is I think the WORLD's 7th largest economy!), they will both remain major economic players.

And for 2008, it will be twice or thrice as big. What exactly is your point? The analysis is definitely not based on a single year's data.

Well my point at the time of writing was that I did not think the tax cuts necessarily decreased revenues since this administration has been so fiscally irresponsible, yet the deficit (as a percentage of the GDP) still shrank.

How is it fair to blame the housing crash for a poor deficit but not credit the housing bubble for a good one?

Good point! However, could one then also argue that the 1990s bubble was responsible a good deal for the surplus that occurred in 1998 to 2001?

Let me try a simplistic approximate explanation:
Let the current effective tax rate be about 20%, and the current GDP be G1.
Let the effective rate for the next year be cut to 16% and this stimulates the GDP to grow to G2.
The for the tax revenue to actually grow, we will need (roughly) 0.15G2 > 0.2G1, or G2/G1=1.33.
So, for the tax cut to pay for itself, you need a single year (unchained) GDP growth of about 33% for every succeeding year.
Now that's clearly an oversimplification, purely to demonstrate the rough order of growth needed for a tax cut to "pay for itself". But you here's an article you might find more credible[6]. The author interviews Laffer about this very question of tax cuts increasing revenues and paying for themselves.

Having thought about it more, I do not think anyone can know whether tax cuts "pay for themselves," because this implies that one knows what the tax revenues would be had the taxes not been cut, which is speculating. I posted a link of an article written by Laffer in which he talks some about the Reagan years, here it is again if you missed it: http://www.heritage.org/Research/Taxes/bg1765.cfm

What does this mean - "the largest period of wealth creation"? If you are talking about GDP growth - the standard definition of wealth creation - then that's not even true. The first Reagan cut produced one of the shortest periods of growth - lasting exactly one quarter in 1982 before it went negative again. Following the second cut in 1986, the economy grew for about 4 years, till the recession of 1990. Even if you extract the maximum length of positive growth during this time, it lasts for about 8 years, which is a little shorter than the succeeding period of growth throughout the 90s. And if you require two consecutive quarters of negative growth, then it becomes 8 years of growth following Reagan and 17 years of growth through the 90s and 2000s. There were also 9 consecutive years of quarter-on-quarter growth during the 60s and over 11 consecutive years of recession free growth. [7]

We have had more wealth created between 1980 and 2007 then at any other period in history, I believe. We have seen the GDP grow from $2.7 trillion in 1980 to $13.6 trillion in 2007. For example, during the 1970s, the GDP grew from about $1.0 trillion in 1970 to about $2.5 trillion in 1979. Furthermore, because of high inflation during this period, a lot of the increase in GDP growth was canceled out. From 1980 to 1989, we saw GDP growth from $2.7 trillion to $5.4 trillion, almost double what occurred in the 1970s. From 1990 to 1999, GDP grew from $5.7 trillion to $9.1 trillion, and from 2000 to 2007, $9.7 trillion to $13.6 trillion.

One could also observe the number of new multimillionaires and billionaires. There were less than twenty known billionaires in 1980, but now, there are over one-thousand, and thousands more multimillionaires. It is a new Guilded Age, in a sense. Never before has there been so much wealth or such a high standard of living.

And just FYI, here's an additional report on how the Bush tax cuts - much more than runaway government spending on domestic projects and a little more than defense spending on the wars - have contributed to the deficit: [8]

That's all I've got the energy for.

Yes, but this was 2005, when the deficit was just beginning to shrink. Remember, the deficit does increase in terms of overall size, but the economy grows as well.

 

[Gokul43201]

We have had more wealth created between 1980 and 2007 then at any other period in history, I believe.

How about between 1970 and 2007? Your choice of starting point is arbitrary, and is the sole deterministic criterion for this measurement.

We have seen the GDP grow from $2.7 trillion in 1980 to $13.6 trillion in 2007. For example, during the 1970s, the GDP grew from about $1.0 trillion in 1970 to about $2.5 trillion in 1979. Furthermore, because of high inflation during this period, a lot of the increase in GDP growth was canceled out. From 1980 to 1989, we saw GDP growth from $2.7 trillion to $5.4 trillion, almost double what occurred in the 1970s.

That's just bad math. Growth is an exponential function. The GDP more than doubled in the 70s but only doubled during the 80s. So the 70s actually saw a faster GDP growth rate than the 80s.

One could also observe the number of new multimillionaires and billionaires. There were less than twenty known billionaires in 1980, but now, there are over one-thousand, and thousands more multimillionaires. It is a new Guilded Age, in a sense. Never before has there been so much wealth or such a high standard of living.

This is a really terrible way to measure growth, as the same statement can be made about essentially any time in history. There were likely many more millionaires during the early 30s - in the midsts of the Great Depression - than there were twenty years before that. This measure is fundamentally flawed because it is effectively using an unchained measure (doesn't account for inflation), and is as reflective of the variance in the income distributions as it is of the mean (or median).

 

[russ_watters]

"So the answer to your question is no. Republican presidents do not intentionally sabbotage stability. The accusation and chosen example is just plain absurd." russ w.

so russ, the fact that W is currently trying to destabilize iran. and has submitted a secret "finding" to obtain 400 million dollars for covert action including "lethal defensive action" for that purpose, is what? just a well intentioned foreign policy initiative?

Do you have a source for that, including your assertion that Bush intends to start a war with Iran?

your argument is that he is just trying to do as much good as possible while he still can?

thats a hard sell.

I made no such argument - I simply pointed out how absurd your agument is. It's rediculous - which is why you completely dropped your only example that you used to demonstrate your point!

if my point is somehow too subtle here, the issue is whether this is something we should be doing, and if not, how to stop it?

Is what something we should be doing? Invading Iran? We're not going to invade Iran.

 

[WheelsRCool]

How about between 1970 and 2007? Your choice of starting point is arbitrary, and is the sole deterministic criterion for this measurement.

From my understanding, in 1985, there were about thirteen American billionaires, and that number has now ballooned to over 1000; it seems the major wealth creation started in the 1980s. In particular because most of the new wealth seems to be from technology companies, hedge-fund managers, and so forth, rather than from things like oil, steel, manufacturing, etc...and it was technology and finance that really took off in the 1980s (Bill Gates, Michael Dell, Steve Jobs, Michael Milken, etc...).

That's just bad math. Growth is an exponential function. The GDP more than doubled in the 70s but only doubled during the 80s. So the 70s actually saw a faster GDP growth rate than the 80s.

Is it...? I would think a large percentage increase of a small number isn't necessarily as large a growth as a smaller percentage increase of a larger number. And I may be wrong, but like with businesses, isn't there a limit to how much exponential growth an economy can experience, before it levels off and just continues to grow steadily? For example, when growing a Big Business, the founder might find that at the current growth rate, the business will exceed the gross domestic product of their own country, this obviously signalling that growth will level off soon, albeit the company can still keep growing; would economies be the same way? For example, I believe the Irish and Chinese economies have experienced significantly higher growth rates in recent years than the U.S. economy, but I would think this will level off at some point. Also, remember, the 1970s were also a period of recessions, high inflation, rising interest rates, and high unemployment.

This is a really terrible way to measure growth, as the same statement can be made about essentially any time in history. There were likely many more millionaires during the early 30s - in the midsts of the Great Depression - than there were twenty years before that. This measure is fundamentally flawed because it is effectively using an unchained measure (doesn't account for inflation), and is as reflective of the variance in the income distributions as it is of the mean (or median).

Well, I wasn't trying to actually use the number of wealthy people or standard of living to "measure growth," but usually when the standard of living increases significantly (GDP per capita increases) and the number of wealthy people (hence wealth creation) increases significantly, usually this is during a time of great economic growth.

For example, at the start of the Great Depression, the 1920s economic bubble had just burst, which had been a time of great wealth creation and economic growth (albeit the bubble burst took a large chunk of wealth with it).

You are correct to point out about inflation, however, now there is an entire industry devoted to servicing the huge amount of new wealthy people that back in the 1980s and beforehand did not exist. The number of private jets, yachts, etc...has ballooned significantly. I would think even adjusted for inflation, that there being over 1000 billionaires today is still a much larger amount of wealth than when there were 13 in 1985.

 

[Gokul43201]

From my understanding, in 1985, there were about thirteen American billionaires, and that number has now ballooned to over 1000; it seems the major wealth creation started in the 1980s.

How many were there in 1975, and how many in 1995? And I know there aren't a 1000 billionaires in the World so there definitely can't be over a 1000 in the US.

But in any case, this has nothing to do with tax cuts increasing revenues. I think we've reached an impasse on that front.

 

[WheelsRCool]

How many were there in 1975, and how many in 1995? And I know there aren't a 1000 billionaires in the World so there definitely can't be over a 1000 in the US.

Yes, that statement is a little misleading; CNBC here claims that there are over 1000 billionaires in the world now: http://www.cnbc.com/id/24791078/

This article by CNN: http://money.cnn.com/2006/03/09/news/newsmakers/billionaires_forbes/index.htm was written in 2006, talking about how the total number of billionaires in the world increased to 793, up by 102 from 2005; so as of 2008, there could be about 1000 billionaires in the world I suppose.

But in any case, this has nothing to do with tax cuts increasing revenues. I think we've reached an impasse on that front.

Yes, that one article I linked in a previous post, which defends Ronald Reagan's policies, states that the Reagan Administration itself acknowledged that his tax cuts were not meant to increase tax revenues and that the Administration even published a report predicting a $700 billion-some loss in revenue. They say this is a common misconception amongst people about Ronald Reagan, that he intended to increase tax revenues by decreasing taxes.

However, I would believe that if you tax people at too high a rate, you will kill incentive to work hard and start businesses and so forth, for example we have seen multiple other nations around the world, such as Ireland and Iceland, lower their taxes to stimulate their economies (Ireland especially!). I believe Switzerland also is having some words with the EU because a lot of businesses have fled to Switzerland for their more favorable tax rates: http://news.bbc.co.uk/2/hi/europe/6313671.stm

This is a confusing subject that I will have to do a lot more reading about. Good debate though :)

 

[mathwonk]

russ, my source is a program on npr citing an article currently in the new yorker by seymour hersch.

 

[ray b]

intentionally no most likely not BUT
they BELIEVE things that just are not true
like less taxes will magically produce more income for the gov
that is was and will be VOODOO as daddy bush said
and that mind set will always come back to bite you
you cannot run a nation on ideas that are not true
no matter how hard you want them to work