Trickle down voodoo-economics at work....

[sear]

"The Laffer Curve has never been quantified." PT #210

In the U.S. the quanta are $dollars and ¢cents.
The exact curve peak cannot be determined, because it is a dynamic state, and thus it varies within a narrow range over time.

"It was a figure of speech to help visualize a theory." PT

By definition a "theory" (your word) is speculation.
Neither the Laffer curve, nor the Laffer curve peak are speculative, even if the latter may not be precisely determined.
We KNOW it is there because:
At zero% taxation there is no government revenue, because the government's share is zero%.
At 100% taxation there is little government revenue, because there is no incentive to earn, if / when all revenue goes to government and none stays with the one that earned it.
Therefore we KNOW maximum government tax revenue is obtained at some tax rate between zero% & 100%.
I'm not sure that meets the minimum qualifications for a "theory".

"It has never been proven if the shape of the curve drawn on that bar napkin represents reality. There are just too many variables. Nobody could prove that." PT #210

Whatever.
None of that disproves my reply to your #210.

"Whatever the shape might be, it should be quite obvious that we are on the diminishing returns side of the curve for lowering taxes. Clearly we are not collecting enough revenue to pay for the country." PT

Very sloppy. Your grade is F.

The U.S. federal government runs deficits because its spending exceeds revenue. Deficit spending can take place on either side of the Laffer curve peak.

"We need to tax the rich more." PT

"They [Republicans] would have us borrow $700 $Billion $Dollars over the next ten years, to give a tax cut of about a $hundred $thousand $dollars each to folks who are already $millionaires." U.S. President Obama 2010

You'll find no more zealous advocate for balanced budgets and paying off the U.S. federal debt than sear.
But as all others, this equation has two sides. CERTAINLY we need to attend to tax rates and revenues.

BUT !!

We also need to heed spending, and proportion one to the other. We haven't done so since the Clinton administration.

[PoliTalker]

Hello sear,

Words are easy to say, and they can be arranged in any order. The meaning connoted by various phrases has no more weight then the supporting evidence behind them.

It is just as easy to say that the deficit is the result of spending exceeding revenue, as it is to say that the deficit is the result of insufficient revenue to match the spending.

Just as it is easy to arrange words and create phrases, it is easy to SAY spending needs to be reduced.

Actually reducing spending is a completely different matter.

It is irresponsible to vote for more spending [Republicans] and also vote for reduced revenue [Republicans.]

The reason spending has not been decreased in conjunction with decreasing revenue is because it would be irresponsible to give tax breaks to the rich as funding for poverty assistance programs is cut.

But that is what Republicans want to do.

So they have decoupled the two.

It makes it no less reprehensible.

Saying that spending should be decreased is easy. The tough part is what spending to reduce. What one person thinks is OK to cut is opposed by another. The only way to make everyone happy about that is to not cut anything and instead raise taxes on the rich to cover the existing spending.

[sear]

"It is just as easy to say that the deficit is the result of spending exceeding revenue, as it is to say that the deficit is the result of insufficient revenue to match the spending." PT

Clearly.

BUT !!

Your assertion I clarified / refuted was:

"Clearly we are not collecting enough revenue to pay for the country." PT

To invoke Majority Leader McConnell (R-KY) YOUR assertion is NOT that we over-spend,
but instead that we are fundamentally undertaxed.

Clearly to balance the budget one must be proportioned to the other.

BUT !!

For most of U.S. history the U.S. federal government did not impose income tax. [see Amendment #16, ratified Feb. 3, 1913]

"It is irresponsible to vote for more spending [Republicans] and also vote for reduced revenue [Republicans.]" PT

"What's pernicious about deficits for conservatives is this. It makes big government cheap. What we're doing, we're turning to the country, the "conservative" administration turns to the country and says: We're going to give you a dollar's worth of government, we're going to charge you seventy five cents for it. And we're going to let your kids pay the other quarter." George Will Nov 30, 2003

"The reason spending has not been decreased in conjunction with decreasing revenue is because it would be irresponsible to give tax breaks to the rich as funding for poverty assistance programs is cut." PT

Please forgive me my conservatism.
But I do not abide by deficit spending unless for absolute immediate survival.
And for the most conservative reasons I do not endorse these lavish entitlement programs.

"The policy of the American government is to leave their citizens free, neither restraining nor aiding them in their pursuits." Thomas Jefferson

"... everyone's for big government. The American People say we hate big government, but we like our social security and medicare. That's 38% of government right there. The biggest components of government are the most popular components of government." George Will Nov 30, 2003

Two frick in bad George!

The popular opinion you correctly observe is wrong, and Founder Jefferson is right. United States federal government should NEVER have elbowed its way into the insurance bidness.

"Saying that spending should be decreased is easy. The tough part is what spending to reduce." PT

Yes, the familiar metaphorical whose ox is $gored.

BUT !!

You under-state the case. You call it "tough". It's quite easy, and simple. End entitlements. Privatize Social Security, and etc.

BUT !!

While simple and easy, it's also surely politically suicidal. I deduce that's what you meant by "tough". The difference between you and me PT is (if you'll pardon the Bushism), I don't misunderestimate you. It is not necessary for you to 'splain reality to me.

"What one person thinks is OK to cut is opposed by another. The only way to make everyone happy about that is to not cut anything and instead raise taxes on the rich to cover the existing spending." PT

You have me longing for the days (long, long ago) when Republicans were $fiscal conservatives.

I'm not Republican.
I'm conservative.
"Tax cuts" is not my mantra. "Balanced Budgets" is my mantra; and why I'm so politically lonely way out here on the fringes of the right wing.

[PoliTalker]

Hello sear,

Part of political loneliness on this Forum is having considerate manners.

On deficit spending, I once took the position that we should have no deficit.

But I have changed my position on that.

Gradually I came to understand that the way finance works in this country it is actually a good thing to carry a small deficit. Most of our deficit is in the form of US Bonds. This is a basic investment vehicle upon which all others are based. Much is referenced to the T-Bill or Treasury Notes. It is thought to be the most secure place one can put their money.

Our problem is that the deficit is too high with relation to our GDP. That is why we have this figure called the Debt to GDP ratio. It is right around 100% right now, and that is too high.

We need to reduce our deficit. If we reduce deficit enough, the Debt/GDP will drop to a healthier level which is sustainable.

You would willingly eliminate all 'entitlement programs.'

Easy to say, tough to do.

If that were done, the economy would crash.

Since we don't want to crash the economy we don't do that.

We could raise taxes on the rich without crashing the economy.

That's what we have to do.

[sear]

"Gradually I came to understand that the way finance works in this country it is actually a good thing to carry a small deficit." PT

Deficits may be orgasmic.
Debt is potentially fatal. Don't take my word for it. Just ask the Soviet Union.

Reductio ad absurdum PT.

If $1.oo of U.S. federal debt is a little bit better than none, the $2.oo of U.S. federal debt is $twice as good. Right?

Why stop there?!
Once the deficit exceeds GDP, just keep it going! If a little is good, a lot is better !!

BUT !!

Whatever the economic merit claimed for it, there's no smoothing over the ethics. With $20+ $Trillion in debt, and fast climbing, we're spending $money our grandkids haven't earned yet.

"There are two ways to conquer and enslave a nation. One is by the sword. The other is by debt." John Adams

That's not hyperbole.
Slavery is theft of wages.
Government debt on this scale is theft of wages. It's slavery. Economically I see little difference.
Deficit spending may be justified legally, economically.

I know of no rational justification for it morally, ethically.

"You and I as individuals can, by borrowing, live beyond our means, but for only a limited period of time. Why, then, should we think that collectively, as a nation, we are not bound by that same limitation?" Ronald Reagan's First Inaugural Address, 1981

[PoliTalker]

Hello sear,

Deficits may be orgasmic.
Debt is potentially fatal. Don't take my word for it. Just ask the Soviet Union.

'potentially' being the operative word there.

If $1.oo of U.S. federal debt is a little bit better than none, the $2.oo of U.S. federal debt is $twice as good. Right?

Why stop there?!
Once the deficit exceeds GDP, just keep it going! If a little is good, a lot is better !!

No, not at all. I already explained there is a limit to health deficit spending.

Whatever the economic merit claimed for it, there's no smoothing over the ethics. With $20+ $Trillion in debt, and fast climbing, we're spending $money our grandkids haven't earned yet.

That's not hyperbole.
Slavery is theft of wages.
Government debt on this scale is theft of wages. It's slavery. Economically I see little difference.
Deficit spending may be justified legally, economically.

I know of no rational justification for it morally, ethically.

Deficit spending may sound insane and scary but it provides a basis for the financial system, which actually accounts for so much of our economy that it is crucial. All lending is driven by one basic: The US Treasury Note. T-Bills, for short. Lending rates weigh risk vs ROI. The T-Bill is the lowest risk investment. It is the standard by which the rest of the lending market is based. When you invest in a T-Bill, you are lending the USA money. You feel safe and secure lending the USA money because everything else is considered more risky. Interest rates are all referenced to the T-Bill. It is the basis. Without it, the lending which allows so much of our economy to thrive would have no basis.

It is not necessary to pay off the US debt. If you have been troubled wondering why no knowledgeable major politician ever talks about paying off the debt that is why. It is also why I knew when Trump claimed he could pay off the US debt as President that he didn't know what he was talking about, that he was making things up, and it would never happen.

But just because it is not necessary to pay off the debt, does not mean that it can be limitless. While some deficit spending is actually a good thing, too much of it is definitely bad. You are correct that $21 Trillion is already too high for the size of our economy. And since the Debt/GDP is already too high, the recent tax cut for the rich was a big mistake.

The major reason is that you can't pay down your debt during a recession.

A recession forces government spending higher to help people who are laid off, and possibly to stimulate more economic activity. And there is less revenue during a recession.

The only time you can pay down the debt is when the economy is doing well, such as right now. This is the perfect timing in the bust/boom cycle of capitalism to reduce the deficit and improve the Debt/GDP figure.

It is irresponsible of Republicans to have this tax cut while things are doing well. This was our chance to reduce the deficit, hold the debt rise back and let the economy generate more revenue. By taking that revenue and divvying it up among the richest and the big corporations, Republicans have raided the piggy bank at a time when it is important to save that. Very foolish. That will come back to bite us.

And did you notice they didn't even really talk much about believing in supply side economics this time? They knew it wasn't going to generate any more revenue. They just got dollar signs in their eyes and could not resist. So irresponsible.

[cawacko]

hello sear,



'potentially' being the operative word there.



No, not at all. I already explained there is a limit to health deficit spending.



Deficit spending may sound insane and scary but it provides a basis for the financial system, which actually accounts for so much of our economy that it is crucial. All lending is driven by one basic: The US Treasury Note. T-Bills, for short. Lending rates weigh risk vs ROI. The T-Bill is the lowest risk investment. It is the standard by which the rest of the lending market is based. When you invest in a T-Bill, you are lending the USA money. You feel safe and secure lending the USA money because everything else is considered more risky. Interest rates are all referenced to the T-Bill. It is the basis. Without it, the lending which allows so much of our economy to thrive would have no basis.

It is not necessary to pay off the US debt. If you have been troubled wondering why no knowledgeable major politician ever talks about paying off the debt that is why. It is also why I knew when Trump claimed he could pay off the US debt as President that he didn't know what he was talking about, that he was making things up, and it would never happen.

But just because it is not necessary to pay off the debt, does not mean that it can be limitless. While some deficit spending is actually a good thing, too much of it is definitely bad. You are correct that $21 Trillion is already too high for the size of our economy. And since the Debt/GDP is already too high, the recent tax cut for the rich was a big mistake.

The major reason is that you can't pay down your debt during a recession.

A recession forces government spending higher to help people who are laid off, and possibly to stimulate more economic activity. And there is less revenue during a recession.

The only time you can pay down the debt is when the economy is doing well, such as right now. This is the perfect timing in the bust/boom cycle of capitalism to reduce the deficit and improve the Debt/GDP figure.

It is irresponsible of Republicans to have this tax cut while things are doing well. This was our chance to reduce the deficit, hold the debt rise back and let the economy generate more revenue. By taking that revenue and divvying it up among the richest and the big corporations, Republicans have raided the piggy bank at a time when it is important to save that. Very foolish. That will come back to bite us.

And did you notice they didn't even really talk much about believing in supply side economics this time? They knew it wasn't going to generate any more revenue. They just got dollar signs in their eyes and could not resist. So irresponsible.

We haven't paid down national debt since the Eisenhower years. It's not a priority in our country.

[PoliTalker]

Hello cawacko,

We haven't paid down national debt since the Eisenhower years. It's not a priority in our country.

That could be because we normally should not have to pay it down.

As long as GDP rises faster than debt, then the Debt/GDP ratio improves.

Most people don't understand why this is an important metric to watch.

There is something more important than the debt.

That is the Debt/GDP ratio.

Check out this valuable resource:

http://www.usdebtclock.org/

Notice the debt is $21 trillion.

The GDP is $19.9 trillion.

The ratio of Debt/GDP is 106.2%.

That last figure is the most important figure.

Some debt is healthy up to a certain point.

Our problem is not that we have debt.

It is that the debt we have is too high for the size of our economy.

Obviously, a larger economy can carry a larger debt than a small one can, so the amount that is OK depends on the size of the economy. That's why we look at the Debt/GDP ratio.

[Frank Apisa]

Hello cawacko,



That could be because we normally should not have to pay it down.

As long as GDP rises faster than debt, then the Debt/GDP ratio improves.

Most people don't understand why this is an important metric to watch.

There is something more important than the debt.

That is the Debt/GDP ratio.

Check out this valuable resource:

http://www.usdebtclock.org/

Notice the debt is $21 trillion.

The GDP is $19.9 trillion.

The ratio of Debt/GDP is 106.2%.

That last figure is the most important figure.

Some debt is healthy up to a certain point.

Our problem is not that we have debt.

It is that the debt we have is too high for the size of our economy.

Obviously, a larger economy can carry a larger debt than a small one can, so the amount that is OK depends on the size of the economy. That's why we look at the Debt/GDP ratio.

Poli, with all the respect in world to you, CA, Evince, sear, and the others...

...arguing over whether it makes better sense to deal with the debt by cutting spending or raising taxes (whether in general or focused on the rich)…is the ultimate case of working INSIDE the box.

Neither is truly feasible; neither will get us out of the problem; and neither will ever occur, because both require the consent of legislators…and legislators have no interest in either of those “solutions.” They do not even see them as “solutions”; they see them as impediments to re-election.

Anyway, if an automobile has 300,000 miles on it…and spends more time in the repair shop than on the road…the question stops being “which repair shop should (or shall) we use”…and becomes “how do we get rid of this car and get a new (or newer) one?”

More to come.


...

[evince]

that is why infrastructure building is so important

it helps increase the size of your economy

[cawacko]

Poli, with all the respect in world to you, CA, Evince, sear, and the others...

...arguing over whether it makes better sense to deal with the debt by cutting spending or raising taxes (whether in general or focused on the rich)…is the ultimate case of working INSIDE the box.

Neither is truly feasible; neither will get us out of the problem; and neither will ever occur, because both require the consent of legislators…and legislators have no interest in either of those “solutions.” They do not even see them as “solutions”; they see them as impediments to re-election.

Anyway, if an automobile has 300,000 miles on it…and spends more time in the repair shop than on the road…the question stops being “which repair shop should (or shall) we use”…and becomes “how do we get rid of this car and get a new (or newer) one?”

More to come.


...

Is inflating away our debt considered outside the box?

[evince]

If country claims infrastructure is not worth spending on they wont last long.


is that your real plan wack?

[sear]

"'potentially' being the operative word there." PT #216

I doubt you're really this obtuse.

OF COURSE borrowing is a SHORT TERM benefit. The problems are:

a) It's not simply a matter of having to pay the $money back. It has to be paid back with $interest. And the $interest on $20+ $Tril. is $mucho $dollaro.

b) Therefore long term, which except in emergency is the only rational criterion, it costs $more!

WHY ?!

Because without debt, we have so much income (revenue) and so much outgo (spending). BUT !!

With debt, we have the same income, BUT !! we have just as much outgo PLUS interest !! It's by far the worse deal, except in cases where the expense is invested.

"No, not at all. I already explained there is a limit to health deficit spending." PT

In the vaguest of terms, generalities.
But you did not quantify it in terms of:
- $dollars
- %GDP
- or other useful standard. Merely that a little is good, a lot is bad, and you refuse to identify the demarcation between one & the other.

"Deficit spending may sound insane and scary but it provides a basis for the financial system" PT

So do balanced budgets.
The difference is, balanced budgets eliminate interest payments, and we're paying $Hundreds of $Billions with a $B on debt service.
That's not paying down the principle. It's merely keeping our creditors off our backs.

You see PT. So far you've ignored these facts, and then pretend I don't hue to you, that your one narrow bogus reality is the only reality.
To the contrary, no one I know has ever disputed it. I've already agreed with it. Just because it's true doesn't justify the overall principle.
A little cocaine may elevate our energy level. Would you have all humanity strung out on cocaine?
It has short term affect. The long term affects MORE than negate it in most cases, by historical standard.

"which actually accounts for so much of our economy that it is crucial." PT

Oh?
Are there not some nations that balance their budgets?
So please explain what's unique about the U.S. that this simple sensible rule Reagan mentioned in his inaugural address is perfectly viable with other nations, but simply doesn't apply in North America.

"It is not necessary to pay off the US debt." PT

Correct.
We can continue to keep our tax rates high, and continue to pay the $Hundreds of $Billions we pay each year in debt service.
But I prefer lower taxes, & efficient finance.

"If you have been troubled wondering why no knowledgeable major politician ever talks about paying off the debt that is why." PT

piffle

Reagan ADVOCATED it while campaigning against President Carter. Reagan criticized Carter for deficit spending.

$BUT !!

Once in office, not only did Reagan spend more than Carter. Reagan ran up more U.S. federal debt than all the other previous U.S. presidents before him COMBINED !!

"If you have been troubled wondering why no knowledgeable major politician ever talks about paying off the debt that is why." PT

It's because it's political suicide, as I mentioned before.

"... everyone's for big government. The American People say we hate big government, but we like our social security and medicare. That's 38% of government right there. The biggest components of government are the most popular components of government." George Will Nov 30, 2003

[Frank Apisa]

Is inflating away our debt considered outside the box?

Actually...NO.

But the dangers of using inflation as a means of ridding debt are enormous. Witness people carting notes around in Germany because of inflation between the two world wars.

[Rune]

Look at the economic growth of the '80's. Those numbers speak for themselves. Obama was your traditional big government Keynesian and look what that produced. And economic inequality continued on a hockey stick. What's the argument today for Keynesian economics and what examples of success are we supposed to look to?

LMFAO
L