Will the Real Fiscal Stimulus Please Stand Up?
Arthur Laffer warns of the folly of a demand-side stimulus package.
By Thomas E. Nugent
Last week was one of those times when things aren’t what they seem to be.
Since I’m a heavy investor in foreign markets, I experienced my own “black Monday†when non-U.S. stocks plunged in value. The following day I anticipated at least a 500-point opening decline in the Dow, since there’s a historical relationship between U.S and foreign markets. The big decline happened, and it continued into Wednesday before the Dow rocketed back. Unfortunately, by then the knee-jerk responses were just about said and done. The Fed responded with an emergency three-quarter-point cut to the fed funds rate. The House of Representatives then rushed through a fiscal-stimulus package, a “bipartisan†agreement that had the full support of President Bush.
While all this was going on the media attributed the outsized market volatility to fears of a U.S. recession. That was my thinking at the time, too, and this assuredly played a part.
But on Thursday morning it was revealed that a French bank’s rogue trader had run up a $7 billion liability in trading baskets of common stock, the discovery of which forced the bank to begin liquidating its portfolio. That’s what sparked the global sell-off. Unfortunately, neither the Fed nor Bush nor Nancy Pelosi got the news in time, so they rushed to judgment on stimulating the economy.
The elixir of a lower Fed interest rate did help stem the emotional upheaval of markets last week, and it may indeed help homeowners refinance. (The boom appears to have already begun.) But there may be an equally painful offset in lower income for savers who hold money-market funds and Treasury securities as safe havens. Just check on the relationship between interest rates and GDP in Japan to see the lack of any causation.
Then there’s the latest Keynesian demand stimulator: a tax-rebate plan that “puts money in people’s pockets.†George Bush’s first tax cut did just that, and it turned out to be a temporary palliative that kept the economy and financial markets in never-never land until the real Bush tax cuts landed in 2003.
Alternative fiscal-stimulus plans being offered by businessman Mitt Romney and ex-New York City Mayor Rudy Giuliani seem to make a lot more sense. Their tax programs would stimulate economic activity by encouraging entrepreneurs to be productive, resulting in increased output and lower prices.
But where’s the beef when it comes to fiscal policy today?
In an editorial for the Wall Street Journal last Friday, Arthur Laffer, the renowned supply-side economist, warned of the folly of implementing a demand-side fiscal-stimulus package. Whenever economists mention supply-side solutions such as those offered by Laffer, the counter-argument is that such tax plans favor the rich and are unfair. But Laffer provides important statistics to support his argument that cutting tax rates on the rich provides higher, not lower, tax revenues over time. Laffer begins,
Since 1980, statutory marginal tax rates have fallen dramatically. The highest marginal income tax rate in 1980 was 70%.
Today the top rate is 35 percent, an apparent tax-break windfall for the rich. However, Laffer goes on:
In the year Ronald Reagan took office (1981) the top 1% of income earners paid 17.58% of all federal income taxes. Twenty five years later, in 2005, the top 1% of income earners paid 39.38% of all (federal) income taxes.
For the bean counters who like to whip out their inflation slide rules, Laffer provides statistics on a real (inflation-adjusted) basis:
In 1981, the total taxes paid in 2005 dollars by the top 1% of income earners was $94.84 billion. In 2005 it was $368.13 billion.
Now consider those middle- and lower-income folk who, Democrats say, have suffered during the Republican tax-cutting years. Here’s Laffer’s response:
From 1981 through 2005, the share of all income taxes paid by the bottom 75% of all income earners (as reported on the individual income tax returns) declined to 14.01% from 27.71% … the bottom 75% of all taxpayers today pay less than 35% of all the taxes paid by the top 1% of all income earners.
The data that Laffer provides refute the notion that supply-side tax-rate cuts favor the rich and hurt the poor. Yet the proposed economic platforms of the Democratic contenders for president commit to higher tax rates and the expiration of the stimulative Bush tax cuts. Laffer’s conclusion that cutting tax rates on the rich actually increases government revenue over time — while reducing tax rates on middle- and lower-income earners actually lowers government revenue — should serve as a warning to those who would do the opposite. Writes Laffer:
Mark my words: If the Democrats succeed in implementing their plan to tax the rich and cut taxes on the middle and lower income earners, this country will experience a fiscal crisis of serious proportions that will last for years and years until a new Harding, Kennedy or Reagan comes along.
Art Laffer has had the uncanny ability to recognize good economic policy and the impact of such policy on the economy. Given the accuracy of his past forecasts and his dire warnings about prospective tax increases, Americans should think twice before voting for populists who promise a free-lunch supplied by the entrepreneurs of this country.
“The nearest thing to eternal life we will ever see on this earth is a governmental program” -Ronald Reagan
Replies
couldn,t have said it better.
Laffer is one of the brightest TRUE economists in the country. I wish there were more like him."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
Laffer is just regurgitating his old, tired theories. And they don't look any more appetizing than they were on Reagan's watch.
If your view never changes you're following the wrong leader
starting with JFK every large tax break has done just that. It is hard for me to understand how people just keep dening it.
What about the tax breaks of the past 7 years? Why is the economy not sailing high?
If your view never changes you're following the wrong leader
maybe it has been and you haven't been paying attention. I bet you beleave that the only people that benifited from tax reduction was the "rich". People , the economy has risen each quarter since tax cuts were enacted. Did you know that that 86% of all taxes are paid by by top25% of taxpayers, that top 50% of earners pay 97% of taxes. Don't keep falling for the rich don't pay taxes. Corp. tax rates in the US are now some of the worlds steepest. This is the reason that corps, are registering in foreign countries. A flat tax on taxpayers with no taxes paid until 30000 earned is very simular to what we have now. yes, tax policy is screwed up. Yes, oil companies should not be receiving large tax breaks, although any business with only 10% net income to receipts is not all that great.
If the economy is roaring along so well, why are so many economists worried that we're headed for a recession? And why don't I feel rich?
If your view never changes you're following the wrong leader
second question: charge more for your work. first question: this is complicated, combination of several factors. I honestly don't beleave we are going to have a recession. If we do it will be the combination of people losing confidence because of the subprime mess and the overhyping of old media how this will cause a recession. In most recessations parts of the country escape and others do not.
Dunno, seems to me like we've been headed for a recession for 2-3 years. Only cheap mortagages were keeping us afloat, both because they kept the construction industry going full tilt and because everyone and his brother got a home equity loan to buy all sorts of Chinese junk.If interest rates begin to climb then the whole house of cards collapses. That's why the experts are so worried about the subprime mess -- it could tighten credit all around and send things into a tailspin. Of course, to keep rates low the government must keep pumping money into the economy, driving up inflation and eventually driving up rates. We could end up with serious "stagflation", or worse.
If your view never changes you're following the wrong leader
I believe that the fed researve raised the rate too high in the belief that inflation had become to high. Again, the dormer fed chief left rates too low for too long. I, really don'y believe if it occurs, it will last very long. Remember, we are in a world economy that is roaring.
Be sure you total ALL taxes before you start discussing who pays the taxes. That means federal, state, local, property, sales, inheritance, estate, excise (I still don't know what that one is), lotteries (a voluntary tax), plus all the fees, fines, etc.
Bryan: We were talking incone taxes. They tend to act upon the economy differently.
No he's not. He's well ahead of his peers. He is not regurgitating anything."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
What's that old saying? When your only tool is a hammer, everything looks like a nail. IMO these interest rate cuts are just silly -- like trying to change a light bulb with a hammer.
The Federal Reserve can cut interest rates down to zero, but whatever they do will have almost no effect in the real economy for 6-9 months. These wild gyrations are supposed to affect the psychology of Wall Street investors and make the general public think the government is "doing something". Well last time I checked, Ben Bernanke's degree was in economics not psychology, and somebody should cite him for practicing without a license.
You don't fix a problem of too much debt by urging people to borrow even more.
This is the time for people to refinance everything they owe for as long as they can at as low of an interest rate they can find.
You gotta do it soon before the inflation "cure" hits the fan.
It's gonna be the only way out for most.
"This is the time for people to refinance everything they owe for as long as they can at as low of an interest rate they can find."I agree with you. By the time Uncle Sam gets through with election-year "fixes", we'll probably see mortgage interest rates at historical lows. Now the smart thing to do would be a straight refi at the lower rates with no cash out. How many will have the discipline to do that?
Even more discipline would be to invest that extra in the market. There are a good number of inflation hedges there.
That's exactly what we're planning.
If rates drop even half a point more, I can do a 15 year term, buy one discount point and pay only about 100$ more with taxes and ins each month than I do now with my 30 year term
And pay off our house by the time my daughter is just out of high school.
Does't take discipline really--just understanding. With understanding comes the motivation.
Or on the other hand,
You could still refinance, but for the full 30. Take the savings in payments and start a systematic investment program into a good mutual fund (such as the Growth Fund of America).
Then, when it's time for her college, take the cash out of the fund as needed (still making those payments into it) to pay her education.
After she's done, and her school is paid off, you can then decide whether to pay off the house faster. You'll have a bigger and bigger account value that you can cash in at any time should the job get lost or some other disaster happen.
Let's see, refi at 5%, the fund earns twice that...
I dunno,
We're doing that too--mutual funds.
Who knows what will happen, but I trust equity in my home more than the stock market.
And the home's not taxed.
The equity in my home could be pulled out to buy one of the eight bazillion foreclosures we're all reading about, to flip or rent.
All Fed chairmen have been the target of that sort of criticism, and worse. But most forget that he represents the banks, not the depositors. He will always do what is best for the bankers, like it or not. That is what he is hired to do and that is what he should be doing. Whether it is effective or not is another discussion. Economics degrees all have some bearing to psychology, as the emotions are what mess up the formulas!! so you have to understand HOW the emotions mess things up."The nearest thing to eternal life we will ever see on this earth is a governmental program"Â -Ronald ReaganÂ
Edited 2/2/2008 9:20 pm ET by unTreatedwood
The Fed chairman is hired to keep inflation under control. That is the primary function of the central bank.
Not true. In the 80s and 90s, there was a great deal of discussion as to whether The Fed Chrmn should be worrying about the US $ or inflation. Definitely a could be a conflict of interests, as I see it. But his position is to represent the best interests of the banks, not the US dollar. To the extent inflation is harmful to the banking system, absolutely he will defend against inflation. But the economy is not always so tidy. He is specifically employed to represent the banking interests.
++++++++++++++++++++++++++++++++++
From Wikopedia:
The primary motivation for creating the Federal Reserve was to address banking panics (bank runs). The Federal Reserve briefly describes the circumstances that led to its creation, the purpose for creating it, and functions of the system in The Federal Reserve in Plain English:[22]
"Just before the founding of the Federal Reserve, the nation was plagued with financial crises. At times, these crises led to “panics,” in which people raced to their banks to withdraw their deposits. A particularly severe panic in 1907 resulted in bank runs that wreaked havoc on the fragile banking system and ultimately led Congress in 1913 to write the Federal Reserve Act. Initially created to address these banking panics, the Federal Reserve is now charged with a number of broader responsibilities, including fostering a sound banking system and a healthy economy."
The purpose of the Federal Reserve System is formally stated in the Federal Reserve Act:[23]
"To provide for the establishment of Federal reserve banks, to furnish an elastic currency, to afford means of rediscounting commercial paper, to establish a more effective supervision of banking in the United States, and for other purposes."
The purpose and functions of the Federal Reserve include:[22][24]
to address banking panics (bank runs)
to serve as the central bank for the United States
to strike a balance between private interests of banks and the centralized responsibility of government
supervising and regulating banking institutions
protect the credit rights of consumers
to manage the nation's money supply through monetary policy
maximum employment
stable prices
moderate long-term interest rates
maintain the stability of the financial system and containing systemic risk in financial markets
providing financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation’s payments system
national functions
facilitate the exchange of payments among regions
strengthen U.S. standing in the world economy
regional functions within the nation
to be responsive to local liquidity needs "The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
Then why don't we just cut tax rates to zero and fund all government by debt?
Have you noticed the huge increases in "fees" by government agencies. More and more they are charging for things. But these are not considered "taxes" and they don't get the scrutiny they deserve because they become "self supporting" programs. Like permit fees for building.
Whatever government we want, we have to pay for. And the only way we should pay for it is with taxes. And the only thing that can pay taxes is income.
Thinking that tax cuts stimulate the economy all by themselves is idiotic. The profit maximizing production of any company does not change because of taxes. Think about it - it is really simple. If ACME corporation's profit maximizing position is to produce 100,000 widgets, then how much tax they pay does not change that. Their profit is maximized at 100,000.
I think taxes should be as low as possible. Not because that will increase the economy or anything else like that. They should be as low as possible because it is our money. But low as possible means the TOTAL tax burden. All taxes, plus the cost of having the tax laws and complying with them.
Governments should have to rebate all fines, fees, etc - any money they collect EXCEPT income taxes, in proportion to the amount of taxes each taxpayer pays. That way they can't turn to red light cameras for revenue, or state lotteries, or parking meters, or building permits. They sheriff can't finance his office by "asset seizure".
Income tax, continuously progressive from the first dollar to the last, based on cumulative income, by individuals. Not families (quit discriminating against singles - more people live more years unmarried than married). Individuals. And all income (and benefits) are accounted for. THAT is the tax plan I want to hear.
Tax cuts CANNOT stimulate the economy by themselves. They only change what is purchased. To the economy, it doesn't matter if the government purchases paper clips or I purchase paper clips. The effect on the economy is the same - paper clips were purchased. Any stimulus for tax cuts is generally due to deficit spending. If the government cuts taxes AND spending, then the net effect is (more or less*) a wash. Which doesn't mean they shouldn't do it, just that it is not a "stimulus" to the economy.
* The government buys some things the rest of us do not, and that may have a differential impact on the economy. But I think even that is questionable.
"Think about it - it is really simple. If ACME corporation's profit maximizing position is to produce 100,000 widgets, then how much tax they pay does not change that. Their profit is maximized at 100,000."But that number is not static. It is based on a number of factors including all taxes that they pay or credits that they get, either directly or indirectly."Tax cuts CANNOT stimulate the economy by themselves."I disagree. Some of the "cuts" that they are talking about in the stimulus package would are for business to buy new equipment or increase employement.So the widget company might by a new machine and now can increase production to 150,000 and hire 5% more people..
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A-holes. Hey every group has to have one. And I have been elected to be the one. I should make that my tagline.
""So the widget company might by a new machine and now can increase production to 150,000 and hire 5% more people."" Is it not possible that the company could buy the new equipment with the stimulus package money , increase production and FIRE 10% of it's work force because the new machine replaces them? As an aside I came across this while noodling around the net on state tax issues. Large PDF Dial uppers probably wont want to open. http://www.ctj.org/pdf/corp0205an.pdf I don't know shid about economics as I proven again and again in my Life (and some of my dumb comments here at BT), but something seems wrong to me about this state of affairs.
They can't get your Goat if you don't tell them where it is hidden.
Well it depends on what the tax cut (and tax credits) are on. Some are directly on employee hires. Other on equipment write offs. There might be some on some comination.But you just give another example of how tax cuts don't change comanies profits. Which the OP said it did not."Thinking that tax cuts stimulate the economy all by themselves is idiotic. The profit maximizing production of any company does not change because of taxes. Think about it - it is really simple. If ACME corporation's profit maximizing position is to produce 100,000 widgets, then how much tax they pay does not change that. Their profit is maximized at 100,000."" As an aside I came across this while noodling around the net on state tax issues."So.Corporation don't pay any taxes in the first place. Never have, never will.They only are a conduit for the taxes that are paid by the customer, the supply, the employees, and the stock holders.But another reason for the Fair Tax.http://www.fairtax.com
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A-holes. Hey every group has to have one. And I have been elected to be the one. I should make that my tagline.
Got it.
They can't get your Goat if you don't tell them where it is hidden.
ACME can buy a new widget machine without the lower taxes. There is plenty of capital available. And that is provided that there is demand for more widgets. If there isn't a demand, no amount of tax cuts to ACME will increase the output of widgets. The profit maximizing position of ACME is NOT dependent on the taxes, in either the short term or the long term. Only the amount of profit is affected by the taxes. Taxes are not an operating cost.Now if those profits come at a lower cost of capital than all other sources, maybe. But if that is the case, then the profits should be given to the shareholders. It's their money.
following through on your last statement, when the profit is passed to stockholders, they pay more in taxes, after the corp. has alreasy paid taxes. The economy is not static. When an economy grows, through tax cuts etc., this is the reason more tax revenues result, even with lower tax rates.
There is double taxation, and I'm opposed to that. But there is double taxation all over and I'm opposed to all of it.Sure different taxes have a different impact on different aspects of different people and the economy.But I don't believe taxes should be used for social engineering. Taxes should be simple and should be used to pay for whatever government we want. And there should ONLY be income taxes. Everyone always wants more income. Taxes do not change that.There is absolutely nothing about lowering income taxes that will grow the economy as a whole. Perhaps at absolutely usury levels there could be a difference, but they would have to very widespread. Historically it has been deficit spending that has increased the economy. Sure if you cut taxes but keep spending up, that will increase the economy. But cuts in both just rearrange things. Of course this may well be a good thing to do, but it doesn't increase the economy. The economy doesn't care if I buy paper clips or the government buys paper clips.If there was actually a shortage of capital, lower taxes on the wealthy might make a difference. But there certainly is no shortage of capital now, and I doubt in a global economy where capital can pretty much freely move anywhere, there will ever be a shortage of capital.
When the economy grows, there will be more revenue from taxes, sure. But the economy does not grow from tax cuts, except in some really extreme circumstances which the U.S. is nowhere near.The economy grows from two things: increases in the population and advances in technology. OF course, our definition of "the economy" is sorely lacking in that it fails to encompass many aspects of what happens in peoples lives, but right now this is the definition we have.When your only measuring instrument is a protractor everything will look like circles. So we measure the economy as output, or GNP if you will. If my quality of life goes down because a vacant house is now occupied (and rent is being paid) by a Meth lab, the economy got bigger. But no adjustment is made to compensate me for having a lower quality of life.If we pay Fairy Maids to clean the house, the economy gets bigger. If my wife cleans the house, the economy stays the same (if I clean the house lightning will strike).But taxes should not be used for economic policy (nor any other policy). Taxes should be used to pay for the government we want, whatever that is.
Bryan: Given that we have had three major cuts in income tax in the last 50 years, this should not be such a hard concept to understand. When rates are lowered, tax revenues increase. When your max rate is cut how does that happen? If the economy does not in crease because of more money to invest or spend, how does that happen? While increased pop. tends to expand the economy that in and of itself is not enough. A child being born does not increase family income. When a family has more of it's own money to spend, tax rate decreases, this gives them more money to spend. Quality of life isa not part of this economic equation.
The problem I have with those who are constantly looking for tax cuts is that they don't seem to concede that there is some level of taxes that is appropriate or necessary or will produce optimum revenue. Whatever rates we have now are always too high.
Laffer's basic concept, that there is a point between zero and 100% marginal income tax rates where revenue will be maximized, seems intuitively correct. The real problem is figuring where that point is and whether it varies and if so, why, when and to what extent?
As a practical matter, we'd all be better off if politicians told us what spending they would cut if elected and then simply adjust tax rates to bring in enough to pay for what we want. It's easy to call for lower taxes, because everyone wants to pay less $$. But as soon as someone suggests eliminating a Navy ship or ethanol subsidies or Medicare, it's a non-starter because each spending program has a substantial constituency behind it. I live near Bath Iron Works and I can assure you that every politician, liberal or conservative, who ever hopes to get elected or reelected in Maine is an enthusiastic supporter of more ships, whether we need them or not.
If one can believe the polls, most Republicans approve of the war in Iraq. Fine, but none of them are suggesting we ought to pay for it. The President's budget continues to be presented as though the war doesn't exist. Whatever happened to Gramm-Rudman?
Edited 2/5/2008 11:01 am ET by smslaw
gramm-rudman unconstitutional
again; you run into the problem that we do not live in a static economy. The basic premis that a point where it is possible to tax to pay for what we agree is necessary, it is not static.
The basic premis that a point where it is possible to tax to pay for what we agree is necessary, it is not static.
But we don't even make the attempt to match income and outgo. No one cares if we balance the budget to the penny every year, but spending and taxation have been completely decoupled. As a result, we borrow. I wonder if financing our debt by borrowing from China, among others, buys us as much security as we think we are getting from spending the (borrowed) money on the war in Iraq?
again I wonder how smart the chinese are. If as you say we are headed for stagflation, then it pays us to borrow even more. Then we will pay back in devalued dollars. I would like to see the government stop spending money on items they have no right. ie. The constitution does not allow for federal spending on education, but we are. Remember, anything not spelled out, is reserved to the states. Again, our federal government should be a lot smaller, if it were, taxes would more closely match outgo.
again I wonder how smart the chinese are. If as you say we are headed for stagflation, then it pays us to borrow even more.
I didn't say anything about stagflation. As to the Chinese, call me a fiscal conservative if you want, but debt makes me nervous and putting ourselves in a position where another country which is not our friend can ruin our economy by dumping dollars makes me even more nervous. How certain can we be that the Chinese leaders will always act out of enlghtened self-interest? I guess MAD worked during the Cold War, but the risk of calamity was never zero. Trusting China to keep lending to us because it would hurt their economy to stop may turn out to be correct, but it is an unacceptable risk, especially considering that the leaders of China aren't worried about reelection or about you and me.
The constitution does not allow for federal spending on education.
Article I, Section 8:
Congress shall have the power (1) To lay and collect taxes... to pay the debts and provide for the...general welfare of the United States...
same old tired arguement. I belive that is how they justify giving our tax dollars away to anything.
I was responding to your assertion that federal spending on education is unconstitutional. It isn't.
If it were up to me, we'd abolish the Federal Dept of Education.
just one instence of over fed spending.
It's not intuitive because socialists are never satisfied, EVER!! and I include many RINOs in that statement. Laffer was Reagan's Chief of the Economic Council. He established policies from which we STILL benefit."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
It's not intuitive because socialists are never satisfied, EVER!! and I include many RINOs in that statement. Laffer was Reagan's Chief of the Economic Council. He established policies from which we STILL benefit.
I'm not sure who you are calling a socialist. Reagan was a liberal, not a socialist.
Reagan was a liberal....you may want to clarify that. "The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
Reagan was a liberal....you may want to clarify that.
Supported #### rights, raised taxes on gasoline, raised social security taxes and taxed social security benefits, huge increases on corporate taxes, expanded the earned income tax credit, agreed to eliminate nuclear weapons (until his handlers told him he couldn't),
So far, everything you mentioned took place toward the end of his career and was ultimately the responsibility of the House of Rep. If you think that list makes him a liberal, you should probably do a little more research. I wouldn't even begin a discussion with you if you think that makes him a liberal!! MWAHAHA!! Anymore than Hillary's wanting to stay in Iraq makes her a conservative. Not a chance, dude."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
So far, everything you mentioned took place toward the end of his career and was ultimately the responsibility of the House of Rep. If you think that list makes him a liberal, you should probably do a little more research. I wouldn't even begin a discussion with you if you think that makes him a liberal!! MWAHAHA!! Anymore than Hillary's wanting to stay in Iraq makes her a conservative. Not a chance, dude.
His opposition to attempts to prevent people of a certain orientation from working as teachers was when he was governor of CA. His action singlehandedly turned certain victory for the conservatives into their defeat.
His agreement with Gorbachev in Iceland to mutually disarm had nothing to do with the House of Rep.
He signed the various tax increases. I don't ever recall him using the "Tip O'Neil made me do it" excuse.
He wasn't a far left liberal, like Nixon, but he was no conservative. Dude.
His agreement with Gorbachev in Iceland to mutually disarm had nothing to do with the House of Rep.
He pushed away from the negotiations and the libs went into heart failure because he refused to take Gorbachev's deal. After that, THEY disarmed. why do you think libs went crazy? Please review your history
He signed the various tax increases. I don't ever recall him using the "Tip O'Neil made me do it" excuse.
In the last two years, he signed on to the tax increases because he was assured he would get $2 spending cut for each dollar of tax increase. Funny how you libs love to rewrite history. Take a look at the make up of the House at that point. Tip O'neil hated Reagan, and didn't make him do anything. But the House and Senate were controlled by libs, pure and simple.
He wasn't a far left liberal, like Nixon, but he was no conservative. Dude.
Yeah, dude. HE WAS A CONSERVATIVE. And you libs hated him, and now you hate his memory. But he beat you at your own game. Try reading some stories about him from non-libs. You might just be surprised. BTW, if you think he was a liberal, you must consider Obama a pure communist!!!
"The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
Edited 2/5/2008 4:19 pm ET by unTreatedwood
Try reading some stories about him from non-libs
Like this one, in the National Review?
http://www.nationalreview.com/nrof_bartlett/bartlett200310290853.asp
"In 1982 alone, he signed into law not one but two major tax increases. The Tax Equity and Fiscal Responsibility Act (TEFRA) raised taxes by $37.5 billion per year and the Highway Revenue Act raised the gasoline tax by another $3.3 billion."
"In 1983, Reagan signed legislation raising the Social Security tax rate."
and so on.
But the House and Senate were controlled by libs, pure and simple.
Those crazy libs, always hiding the Gipper's veto pen.
And just in case you missed it, here is a clearer description of your liberal...Mr. Reagan. Walking out on an arms meeting...sending all of Washington into heart failure with your usual doom and gloom.
"At their face-to-face summit of October 1986 in Reykjavik, Reagan went far beyond Gorbachev's proposal of a 50 percent strategic-arms cut. To the alarm of some aides, who were not let in on the discussion, he suggested that the two sides get rid of nuclear weapons altogether and jointly build an SDI system to guard against a nuclear revival. Gorbachev initially dismissed the idea. "I do not take your idea of sharing SDI seriously," the minutes (which were declassified by the Soviets 12 years ago) show him saying. "You don't want to share even petroleum equipment, automatic machine tools, or equipment for dairies, while sharing SDI would be a second American revolution—and revolutions do not occur all that often." Reagan replied, "If I thought that SDI could not be shared, I would have rejected it myself."
The Reykjavik talks finally fizzled. Gorbachev said he'd accept the zero-nukes plan if Reagan pledged not to test nuclear weapons in outer space (a crucial element of SDI). Reagan wouldn't accept that condition."
"The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
Edited 2/5/2008 4:37 pm ET by unTreatedwood
I won't call you a liar, but you certainly intend to mislead and decieve...take it for what it's worth. Pls note what is said earlier in the article you quote:
"...Peter Wallison, who was White House counsel to President Reagan, responded to my analysis in the New York Times on October 26. He pointed to Ronald Reagan's resistance to tax increases in 1982, citing passages from Reagan's diary that were published in his autobiography, An American Life. The gist of Wallison's article is that Ronald Reagan successfully resisted efforts by his staff and many in Congress to raise taxes, thereby ensuring the victory of Reaganomics."
Please don't waste any more of my time. You have demonstrated how liberals steal funds. You put a gun to the victim's head , and then you claim they gave it to you willingly. Please stop it.
Further in your "non-lib" article.....
I don't believe that Reagan ever initiated any of the tax increases enacted during his watch. Nor do I think Bush will, either. But when all the political and economic elites of this country gang up on a president to raise taxes, history shows that they always get what they want. Indeed, they were even able to get Bush's father to raise taxes in 1990, even though his political advisers knew that it would likely lead to his defeat in 1992, which it did.
How do the elites break down presidential resistance to tax increases? They do so by promising the moon. Tax increases, they say, will lead to huge reductions in interest rates, which will power economic growth and reduce unemployment. The rich only pay them anyway, which makes the president look like a populist. And tax increases are the price that must be paid to get spending cuts.
This last point is especially laughable. In 1982, Ronald Reagan proudly announced that he was getting $3 of spending cuts for every $1 of tax increase. He later lamented that all he ever got were the taxes. "Congress never cut spending by even one penny, " Reagan complained in 1993.
I'm done.
"The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
Edited 2/5/2008 4:39 pm ET by unTreatedwood
So Mr. lib, here is a direct quote from the transcipts. Note the part where he says...I COULD NOT AGREE TO THAT!!! That means he was not asking for MUTUAL disarmament, he wanted Gorbachov to include all missles, not just the European missles...Reagan wanted them all removed. That was not what Gorbie was offering. Mutual indeed.... DUDE. (note also that this is posted on CNN website...not exactly a conservative bastion) read it for yourself....
Prehttp://http://www.cnn.com/SPECIALS/cold.war/episodes/22/documents/reykjavik/sident
Reagan: No, I like it very much, but only with a global resolution of the issue. If the zero is on a global scale, then this would be fabulous. But if intermediate-range missiles are eliminated only in Europe, while a significant number of missiles aimed, in your words, at Asia will remain on your side, I could not agree to that. Your missiles could reach Europe from there, after all, and in addition, they could be moved suddenly to other places.
"The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
Edited 2/5/2008 4:20 pm ET by unTreatedwood
Thanks for the CNN link. It is clear that they were discussing complete mutual elimination of all nuclear weapons:
President Reagan:
On the other hand, you know that even in this situation we will not be able to guarantee that someone will not begin to make nuclear weapons again at some point.
Secretary General Gorbachev: Mr. President, you just made a historic statement: What the hell use will SDI be if we eliminate nuclear weapons? But it is exactly because we are moving toward a reduction and elimination of nuclear weapons that I favor strengthening the ABM Treaty.
It's been fun.
Your friend, Mr Lib.
That is the problem.On the federal level there is absolutley no relationship between what is collected and what is spent.Even for the those taxes with so called "trust funds". The money is all dumped into one pot and the the "fund" is only an accounting trick.One the state level is typically a little better using dedicated taxes, but no less effectice.For example laws are pasted allowing lottery with the income to be used for education.And it is sucessful and lots of money for education.But that does not stop the legislation from allocating general account funds that used to go to education for other purposes..
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A-holes. Hey every group has to have one. And I have been elected to be the one. I should make that my tagline.
I agre wit hyou on this one.
Assuming that the curve is correct, why should we care to hit the optimum point? What if that point is a higher tax than we need? Why not have the lower tax?The curve may be correct at the extremes. It's irrelevant in between.Laffer will go the economic history way of his mentor, Say. There is a tiny smidgen of correctness, but mostly it is absurd.
Your argument doesn't hold for the Bush tax cuts.
If your view never changes you're following the wrong leader
explain
One of the recent changes from Bush's tax cuts is the 179.Machinery that used to be depreciated over 7 years, is now eligible to be expensed out in 1 year up to $100K.I want a new planter = 100K.With pre tax cut depreciation, I can expense (reduce taxable income) by about 10K with the purchase of said planter.With the new rules I can take all 100K right off the top.90,000 x 30% = $27,000 It makes more sense to replace the planter every year, than to repair and pay the interest on the old planter, which is declining in value.ACME and I both have a very real interest in tax policies, because they have a huge effect on after tax income (PROFIT).A medium to large guy named Alan, not an ambiguous female....
NOT that there is anything wrong with that.
Yes, they have an impact on profit. But rarely on the economy as a whole.BTW, you are still better off holding onto the old planter (unless maintenance is really large, in which case you buy a new one every year regardless of the tax - you just have to borrow to get it). Just because the book value is zero doesn't mean you don't get productive use out of it.
The point is, that those type of tax policies encourage equipment replacement on a large scale across all segments of business and manufacturing, which does indeed have a large and tangible effect on the economy as witnessed by the large revenue increases that these latest tax breaks generated. As for my decision to buy a planter or not, you can rest assured that the scenario I layed out for you is fictional in detail, so no advice is necessary.Although I did spur the economy with several several thousands of dollars this year, due in large part to tax planning and business asset managment.A medium to large guy named Alan, not an ambiguous female....
NOT that there is anything wrong with that.
Revenues absolutely DO and HAVE increased with income tax cuts. When it happens, the media says something like: THE REVENUE INCREASE HAS SURPRISED THE EXPERTS!!!...(so-called Experts!). They are always surprised, and it has always happened. check the record, it is very simple to verify."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan
The reason we DON'T fund with debt has to do with control. That is why we will never go to a flat tax or sales tax....congress will NEVER give up control. That is what they live and die for. Tax cuts DO have an effect, and it can be dramatic, taking up to 12-18 months to kick in. How can it NOT be effective when you take money out of the most inefficient organism in the country, ( the U.S. Government) and put that money into the pockets of the people who directly benefit from it? There is NO comparison. Tax cuts actually will bring in MORE revenue than often predicted by the libs. But that doesn't agree with what the media says, so we never hear about that, yet it is absolutely true."The nearest thing to eternal life we will ever see on this earth is a governmental program" -Ronald Reagan