Do spending cuts produce jobs?

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We're told that America does not have a revenue problem, despite a decade of tax cuts, loopholes and taxpayer-funded subsidies.

We're told that America has a spending problem, and that only reducing spending and debt will produce jobs.


Really?


How does that work?



Here's how:








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So, in states where government spending was curtailed, jobs were not produced.


Jobs were reduced.
 
Spending cuts will reduce jobs as that is money that will not be spent in american businesses.





A tax increase equivalent to 1 percent of the nation’s economic output usually reduces gross domestic product by about 1 percent after 18 months.


A spending cut of that size, by contrast, reduces G.D.P. by about 1.5 percent — substantially more.


There is a basic reason why government spending changes probably have a larger short-term impact than tax changes.




When a household’s tax bill rises by, say, $100, that household typically pays for part of that increase by reducing its savings.




Its spending tends to fall by less than $100.




But when the government cuts spending by $100, overall demand goes down by that full amount.




Wealthy households typically pay for more of a tax increase out of savings, and so they reduce their spending less than ordinary households.




This implies that tax increases on wealthy households probably have less effect on the economy than those on the poor or the middle class.














http://www.nytimes.com/2011/07/03/business/economy/03view.html?_r=1

 
Strange that we don't hear that from the GOP. Perhaps Faux News didn't mention that talking point.




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CBO's Long Term Budget Outlook

The Congressional Budget Office released the latest edition of its annual forecast of where the federal government’s budget is headed. The numbers are new but the message is the same: the budget is on an unsustainable path. According to the CBO’s more politically-realistic “alternative scenario,” federal debt as a share of GDP will hit 109 percent in 2021 and would approach 190 percent in 2035.

For those mistaken souls who believe that merely eliminating “waste, fraud, and abuse” in government programs can solve the problem, the CBO has news for you:

In the Congressional Budget Office’s (CBO’s) long-term projections of spending, growth in noninterest spending as a share of gross domestic product (GDP) is attributable entirely to increases in spending on several large mandatory programs: Social Security, Medicare, Medicaid, and (to a lesser extent) insurance subsidies that will be provided through the health insurance exchanges established by the March 2010 health care legislation. The health care programs are the main drivers of that growth; they are responsible for 80 percent of the total projected rise in spending on those mandatory programs over the next 25 years.

Others believe that “tax cuts for the rich” are the source of the problem. But according to the CBO’s alternative scenario, if the Bush tax cuts are extended and the Alternative Minimum Tax continues to be patched, federal revenues as a share of GDP will still exceed the post-war average by the decade’s end. Under the CBO’s standard baseline, which assumes that those policies will not be continued, federal revenues as a share of GDP will go zooming by the historic average. That might be good for politicians, bureaucrats, and other “tax eaters,” but it wouldn’t be good for the country’s economic welfare.

The problem is clearly spending and the GOP has rightly made spending cuts a key condition to lifting the debt ceiling. The magic number being reported is $2 trillion in cuts. That sounds like a lot of money – and it is – but it’s likely that those cuts are to be achieved over 10 years. According to the CBO’s most recent estimates, the federal government will spend almost $46 trillion over the next 10 years. And as Chris Edwards has been repeatedly warning (see here, here, and here), there’s a possibility that the cuts will be of the “phony” variety.

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[SIZE=+1]By the summer of 1992, just 24 percent of Americans said their country was better off because of the Reagan years, while 40 percent said it was worse off -- and more Americans (48 percent) viewed Reagan unfavorable than favorably (46 percent).[/SIZE]

[SIZE=+1]When the requirements for managing savings and loan institutions became lax in the 1980s, leaders of those organizations invested money recklessly. Many institutions failed or came close to failure, and the cleanup cost more than $150 billion.[/SIZE]

[SIZE=+1][SIZE=+1]Recent troubles in the American economy can be attributed to a weakening of business regulation in the public interest, which is, in large part, a consequence of Reagan's anti-government preaching. In the absence of oversight, lending became a wildcat enterprise. Mortgage brokers easily deceived home buyers by promoting sub-prime loans, and then they passed on bundled documents to unwary investors.[/SIZE][/SIZE][SIZE=+1][/SIZE]
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http://www.prorev.com/reagan.htm
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That's hilarious. The comparison to Reagan in the early 80s is pure dumbassery. Reagan didn't cut spending. In fact, Reagan increased government spending to its highest levels as a percentage of GDP since the end of WWII.

translation:

i can't dispute anything in the article, so will bitch and moan and build strawmen
 
"Ronald Reagan was never afraid to raise taxes," said historian Douglas Brinkley, who edited Reagan's diaries.




"He knew that it was necessary at times, and so there's a false mythology out there about Reagan as this conservative president who came in and just cut taxes and trimmed federal spending in a dramatic way. It didn't happen that way. It's false."





It's important to note that Reagan's tax increases did not wipe out the effects of that initial tax cut, but they did eat up about half of it.




The 1983 payroll tax hike went to pay for Social Security and Medicare. (Reagan raised taxes to pay for government-run health care.)




Reagan also raised the gas tax and signed the largest corporate tax increase in history.




Reagan was not happy about raising taxes or expanding government, but that doesn't change the fact that Reagan both increased spending and, after the initial cut, showed a willingness to raise taxes - exactly the sort of policy prescriptions so widely condemned by today's Reagan-reverent conservatives.
















http://www.cbsnews.com/8301-503544_162-20030729-503544.html
 
translation:

i can't dispute anything in the article, so will bitch and moan and build strawmen


FARGLE BARGLE.

It's hilarious that in a post about whether cutting spending produces jobs you post an article about the early Reagan era when spending was not cut but instead was increased to the highest levels since the end of WWII.
 
Federal Reserve Chairman Ben S. Bernanke rejected an argument frequently made by Republican deficit hawks that immediate, deep cuts in federal spending will help produce jobs.


The Fed chairman said at a news conference that — to the contrary — cuts in spending at the state and local level, combined with the withdrawal of stimulus spending at the federal level, contributed to the slowdown in job growth and economic growth seen this year.


“I don’t think that sharp, immediate cuts in the deficit would create more jobs,” he said.


State and local governments have eliminated close to a half-million jobs since the recession, according to the Bureau of Labor Statistics.


Those job losses originally were fed by gaping budget gaps in most states and now are being fed in part by the loss of federal stimulus funding.


The Republicans have argued that slashing federal spending will create jobs by reducing the government burden on the private economy.


The party dogma runs counter not only to Mr. Bernanke’s advice, but the counsel of most economists.








http://www.washingtontimes.com/news/2011/jun/22/bernanke-spending-cuts-wont-boost-jobs/
 
FARGLE BARGLE.

It's hilarious that in a post about whether cutting spending produces jobs you post an article about the early Reagan era when spending was not cut but instead was increased to the highest levels since the end of WWII.

so the article was only about reagan era.....what a dishonest shit who can't counter anything in the article so you have to make shit up...taxes were cut and jobs were created...boo fucking hoo
 
so the article was only about reagan era.....what a dishonest shit who can't counter anything in the article so you have to make shit up...taxes were cut and jobs were created...boo fucking hoo


Your post said "Want to Create Jobs? Cut Government Spending?" and linked to an article extolling the virtues of Reagan. Well, Reagan didn't cut spending. He increased it. Dramatically.

Throughout the period cited in the article, spending was significantly increased to the highest levels as a percentage of GDP since 1946. So, spending was increased and jobs were created. FARGLE FUCKING BARGLE.
 
Reagan's massive $749 billion supply-side tax cuts in 1981 quickly produced even more massive annual budget deficits.


Combined with his rapid increase in defense spending, Reagan delivered not the balanced budgets he promised, but record-setting deficits.



The Gipper presided over a tripling of the American national debt to nearly $3 trillion.




By the time he left office in 1989, Ronald Reagan more than equaled the entire debt burden produced by the previous 200 years of American history.












http://crooksandliars.com/jon-perr/republicans-fail-reagan-litmus-test
 
Your post said "Want to Create Jobs? Cut Government Spending?" and linked to an article extolling the virtues of Reagan. Well, Reagan didn't cut spending. He increased it. Dramatically.

Throughout the period cited in the article, spending was significantly increased to the highest levels as a percentage of GDP since 1946. So, spending was increased and jobs were created. FARGLE FUCKING BARGLE.

nice dishonest cherry pick of the article...when you can't debate what is said, make shit up and build strawmen...
 
The inedible image of Ronald Reagan the tax cutter is "false mythology."


It is also worth noting that it was President Obama and not Reagan who delivered the largest two year tax cut in American history.


While Governor, Reagan doubled California's state spending and signed the biggest tax hike up to that point.


As President, he raised taxes in seven of his eight years in office.












http://crooksandliars.com/jon-perr/republicans-fail-reagan-litmus-test
 
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