Ineresting comparison.

[whell]

Originally Posted by noonereal

Were you dropped on your head as a kid?

No. Are you a condescending ass? Let me help you with that. Yes, you are.

Originally Posted by noonereal

"two presidents from two different eras who faced entirely different economic circumstances: Reagan's arguably being far worse."

Reagan's policies did NOTHING to help the economy, we were lucky that the rebound was strong enough to withstand hios assult on it. Also what you do not mention is that he economy was changed by Ray-gun. The middle class was put on a death spiral.

In fact during the recession of the early 90's the wealthy were ntouched do to the policies of Ray-gun while the middle class again suffered.

Your comments area at odds with the facts. But don't let that stop you. You're on a roll.

[finnbow]

Reaganomics (lower taxes & increased spending) is a sure-fire short term fix for a lagging economy. However, IMHO it is only indicated as a short term fix and needs to be curtailed with a balanced approach once the economy comes around. Unfortunately, its adherents fail to recognize that long term use of these policies will ultimately result in runaway deficits.

[whell]

Originally Posted by finnbow

Reaganomics (lower taxes & increased spending) is a sure-fire short term fix for a lagging economy. However, IMHO it is only indicated as a short term fix and needs to be curtailed with a balanced approach once the economy comes around. Unfortunately, its adherents fail to recognize that long term use of these policies will ultimately result in runaway deficits.

As Reagan once said, "There you go again."

Reductions in tax rates have been demonstrated to increase revenues. Budget deficits are not linked to revenue increase. They are linked to overspending - increasing spending faster than the increasing revenues. In otherwords, you can't have a budget deficit without failing to correlate spending with available revenue.

The Kemp - Roth Act was signed into law late summer 1981, and phased in cuts over three years. Treasury receipts increased in 1983 and showed steady year over year growth thereafter.

Spending was a different matter. Inside the beltway, spending decisions always seem to be made in a vacuum with no link to revenue. In fact, if spending exceeds revenue, the Washington answer has simply been to finance the difference with debt spending (the Bill Clinton balanced budget myth).

In the 1980's there were no reductions in spending. Reagan inherited the first trillion dollar budget from Carter, and spending incraesed each year thereafter, including the recessionary period 1981 - 1983. This was one of Reagan's failures - to deliver on the promise of smaller government. However, the rate in spending growth or deficit spending was not new during the Reagan years, and has continued unabated ever since - including a budget that increased by over a trillion dollars during the term of the icon of liberal fiscal austerity Bill Clinton.

[finnbow]

Originally Posted by whell

As Reagan once said, "There you go again."

Reductions in tax rates have been demonstrated to increase revenues. Budget deficits are not linked to revenue increase. They are linked to overspending - increasing spending faster than the increasing revenues. In otherwords, you can't have a budget deficit without failing to correlate spending with available revenue.

The Kemp - Roth Act was signed into law late summer 1981, and phased in cuts over three years. Treasury receipts increased in 1983 and showed steady year over year growth thereafter.

Spending was a different matter. Inside the beltway, spending decisions always seem to be made in a vacuum with no link to revenue. In fact, if spending exceeds revenue, the Washington answer has simply been to finance the difference with debt spending (the Bill Clinton balanced budget myth).

In the 1980's there were no reductions in spending. Reagan inherited the first trillion dollar budget from Carter, and spending incraesed each year thereafter, including the recessionary period 1981 - 1983. This was one of Reagan's failures - to deliver on the promise of smaller government. However, the rate in spending growth or deficit spending was not new during the Reagan years, and has continued unabated ever since - including a budget that increased by over a trillion dollars during the term of the icon of liberal fiscal austerity Bill Clinton.

Your long dissertation did nothing but confirm my characterization of Reaganomics as lowering taxes while increasing spending. Thank you.

As for your assertion "Reductions in tax rates have been demonstrated to increase revenues," I'd say sometimes and maybe depending on lots of factors. If one believes the Laffer Curve (the inspiration for Reaganomics), it depends where you are on the curve. Considering where our tax rates are now (quite low by historical standards), we are on the part of the curve where lowering tax rates decreases revenue. If one took your assertion to its logical conclusion, we would approach infinite revenue at a tax rate of 0%. How does that work?

[whell]

Originally Posted by finnbow

Your long dissertation did nothing but confirm my characterization of Reaganomics as lowering taxes while increasing spending. Thank you.

As for your assertion "Reductions in tax rates have been demonstrated to increase revenues," I'd say sometimes and maybe depending on lots of factors. If one believes the Laffer Curve (the inspiration for Reaganomics), it depends where you are on the curve. Considering where our tax rates are now (quite low by historical standards), we are on the part of the curve where lowering tax rates decreases revenue. If one took your assertion to its logical conclusion, we would approach infinite revenue at a tax rate of 0%. How does that work?

Your characterization, not my "dissertation" is what's flawed. In fact one of the key pillars of Reaganomics is reducing the rate of government spending growth. It was this pillar that was not achieved, as I stipulated. However, the rest of the program worked pretty well. To analogize a bit: the concept of an automobile isn't flawed just because the gas tank is empty.

What taxes are low by historical standards? Personal income taxes? No. That source of income has been pretty constant for the last 50 years. Payroll taxes? No, those have incraesed, save the last year or so of SS tax cuts. Corporate income tax as a share of the revenue pie has decreased, which I suspect is why the left bitches the most about the offshoring trend. Rates on corporate tax are largely unchanged in the last 25 years.

[finnbow]

Originally Posted by whell

Your characterization, not my "dissertation" is what's flawed. In fact one of the key pillars of Reaganomics is reducing the rate of government spending growth. It was this pillar that was not achieved, as I stipulated. However, the rest of the program worked pretty well. To analogize a bit: the concept of an automobile isn't flawed just because the gas tank is empty.

What taxes are low by historical standards? Personal income taxes? No. That source of income has been pretty constant for the last 50 years. Payroll taxes? No, those have incraesed, save the last year or so of SS tax cuts. Corporate income tax as a share of the revenue pie has decreased, which I suspect is why the left bitches the most about the offshoring trend. Rates on corporate tax are largely unchanged in the last 25 years.

One cannot praise the success of Reaganomics, while at the same time condemning the higher spending that occurred at the time (and that may have contributed to the economic turnaround). While budgets (both taxes and spending) are the purview of the legislative branch, the Executive has the ability to veto anything he wishes. Might it be that Reagan wanted to demagogue big spending while continuing to spend because he knew it was the key to recovery? Might it be that higher spending was indeed a factor in the economic turnaround in the '80's and that modern-day Reagan acolytes forget that half of the equation?

As for your second assertion, that's complete and utter hogwash with respect to personal income tax rates. The highest marginal personal income tax rate when Reagan took office was 70%. It is now 35%. If one ascribes to Laffer's views, 70% is certainly on the side of the curve where revenues decrease with increased taxes. However at 35%, we're on the other side of the curve.

[whell]

Originally Posted by finnbow

One cannot praise the success of Reaganomics, while at the same time condemning the higher spending that occurred at the time (and that may have contributed to the economic turnaround). While budgets (both taxes and spending) are the purview of the legislative branch, the Executive has the ability to veto anything he wishes. Might it be that Reagan wanted to demagogue big spending while continuing to spend because he knew it was the key to recovery? Might it be that higher spending was indeed a factor in the economic turnaround in the '80's and that modern-day Reagan acolytes forget that half of the equation?

Might it be selective memory on your part? I seem to recall Tip O'Neil declaring Reagan budget submissions "Dead on Arrival", while Reagan begged for the line item veto. There's a difference between being king - vetoing anything he wanted - and being an President with a Democrat - controlled House.

Originally Posted by finnbow

As for your second assertion, that's complete and utter hogwash with respect to personal income tax rates. The highest marginal personal income tax rate when Reagan took office was 70%. It is now 35%. If one ascribes to Laffer's views, 70% is certainly on the side of the curve where revenues decrease with increased taxes. However at 35%, we're on the other side of the curve.

I wasn't referring to rates. I was referring to the percent of US Federal revenue sourced from personal income taxes. Interesting that while personal income tax rates have fallen, and real US incomes have stayed relatively flat against declining employment, the percent of revenue sourced from income taxes has remained relatively constant, isn't it?

[finnbow]

Originally Posted by whell

Might it be selective memory on your part? I seem to recall Tip O'Neil declaring Reagan budget submissions "Dead on Arrival", while Reagan begged for the line item veto. There's a difference between being king - vetoing anything he wanted - and being an President with a Democrat - controlled House.

None of this matters. One cannot sing the praises of Reaganomics when it remains unclear whether the economic recovery that happened in the early '80's occurred solely due to reduced taxes, reduced taxes & increased spending, the business cycle or some combination of all of these (most likely IMHO).

I wasn't referring to rates. I was referring to the percent of US Federal revenue sourced from personal income taxes. Interesting that while personal income tax rates have fallen, and real US incomes have stayed relatively flat against declining employment, the percent of revenue sourced from income taxes has remained relatively constant, isn't it?

I don't know the relative share derived from personal income tax, but tax Revenue/GDP is 2-3% lower than its long term average of about 18%. I think pretty much all nonpartisan/non-ideological economists would agree that our deficit is both a spending and a revenue problem. A common consensus is that we need a mix of about $1 in revenue for every $3 in spending cuts to straighten things out. However, the GOP won't even consider 10:1.

[whell]

Originally Posted by finnbow

None of this matters. One cannot sing the praises of Reaganomics when it remains unclear whether the economic recovery that happened in the early '80's occurred solely due to reduced taxes, reduced taxes & increased spending, the business cycle or some combination of all of these (most likely IMHO).

I don't know the relative share derived from personal income tax, but tax Revenue/GDP is 2-3% lower than its long term average of about 18%. I think pretty much all nonpartisan/non-ideological economists would agree that our deficit is both a spending and a revenue problem. A common consensus is that we need a mix of about $1 in revenue for every $3 in spending cuts to straighten things out. However, the GOP won't even consider 10:1.

Here's some insight on relative sources of revenue:



One can at least see the forest for the trees and notice the impact of reducing rates on government revenues, and also notice the stimulative effect of reductions in tax rates on business and investment activity. Moving capital from the public sector (where it is largely consumed) to the private sector (where it is converted) should be a no-brainer.

Its hard to agree that there's a "revenue problem" when we've not addressed the over-spending issue.

[finnbow]

Originally Posted by whell

Here's some insight on relative sources of revenue:



One can at least see the forest for the trees and notice the impact of reducing rates on government revenues, and also notice the stimulative effect of reductions in tax rates on business and investment activity. Moving capital from the public sector (where it is largely consumed) to the private sector (where it is converted) should be a no-brainer.

Its hard to agree that there's a "revenue problem" when we've not addressed the over-spending issue.

That graph says nothing about overall levels of taxation, just the relative percentage each year. While I'm no fan of taxes (who is?), unless and until we cut spending to match incoming revenues (which we can't seem to do), both sides of the ledger have to be massaged toward balance.

I think we're far enough down the Laffer Curve that we could raise personal income taxes rates and increase revenue in the process. I also think the American public has to come to grips with a level of taxation commensurate with the services/programs/military they demand.

The GOP notion that we can increase spending and cut taxes to pay for it (which has infected the entire body politic) got us where we are today. Dubya's two wars and Medicare Part D, along with significant tax cuts started a very steep downhill slide for our deficit.

I'm not receptive to the argument that "Dubya wasn't a real conservative. We need a real conservative to fix things." Dubya was the most conservative President we have had in modern times, far more conservative than Reagan himself. Both employed basically the same economic model and ran huge deficits in the process, though Reagan did raise taxes a number of times (though not nearly enough to close the deficit). This is something today's Reagan-infatuated, delusional GOP can't bring themselves to admit.

Honestly, I wish somebody would drive a stake through the heart of supply-side economic theory. It's an intoxicating and attractive brew - the American public can have everything its heart desires and pay for it with tax cuts. When its warts become visible for all to see, blame the Democrats for their wavering fealty to this stupid notion.