Friday, November 04, 2005




Anonymous said...

You might want to look at more detailed data. According to CBO, revenue through 2004 is only up because social security taxes have increased. Corporate income taxes were still 5% below what they were in 2000 and personal income taxes were still 20% below what they were in 2000. Social Security Taxes were up by 12% since 2000 and are almost as high as personal income taxes now. They do not have 2005 data yet.

I am not a fan of high taxes on principle, but I do think the government should pay for the things it does. If government expenses can be lowered, than taxes should certainly be cut. However, in the same time (2000-2004) government expenses have risen by 28%. Discretionary spending has risen by 46% and mandatory spending has risen by 31%. Military spending was up 50%.

From October of 2000 through October of 2004, US GDP increased from $9.953T to $11.995T (21% increase). The population increased from 282M to 294M (4.1% increase).

Based on the available data, it is as easy to support the idea that GDP has increased due to increased government spending as it is to support the idea that GDP has increased due to lower taxes. If you add in the fact that GDP did not decrease when Bush and Clinton increased taxes in the 90's, there is basically no support for the idea that lowering taxes leads to significant growth. Looking at the past century's data, it is clear that government spending can help end recessions, with WWII military spending as the clearest example.


Reliapundit said...

actually james the final quarter of bush sr.'s term the GDP grew by about 5%, AND clinotn's tax increase SLOWED THE ECONOMY.

also: since the payroll tax if a FL:AT tax (and the MOST WORSTEST ONE WHICH IS TOUGHEST ON POOR PEOPLE!)

the ONLY wasy for soc sec recpots to increases is for employement to increase - or for HIUGEST wage earners to increase.

and ALL this happened AFTER bush's income tax cut.

dems da facts.

BTW: there should be NO CORPRATE TAX on companies that pay dividends.

also: the share of revenue by the TOP 35% of wage earners WENT UP under Bush.

what ENDS RECESSIONS is not govt p[ending, per se,

FDR's NEW DEAL began in 1932 - and unemployment was HIGHER in 194O. the welfare state is a huge drag on the economy.

and poor people do best when the economy grows.

bush has been better for poor people than FDR.

Pastorius said...


As I recall, Clinton walked into a recession that started during the Bush Administration.

And, what year were Clinton's tax increases introduced anyway, because as I recall it, After the first couple of years of Clinton's Administration, it was nothing but up, up, up.

So, I think you and James are both making the same mistake in arguing against each other. Bush Sr. (who argued against Reagan's "voodoo economics") left us in a recession, which explains the bad economy of the first few years of the Clinton Admin.

Similarly, Clinton left us with a bad recession which explains why personal and corporate tax revenuces are still not where they were in year 2000.

In principle, I agree with you. James numbers were taken from the highest point of the dotcom boom. Those numbers were artificially high. How did they get artificially high. Well, because Clinton ignored obvious corporate abuses. I remember Warren Buffett sounding the alarm on Enron and much of the dotcom industry in 1998-99. When asked why Berkshire-Hathaway wasn't investing in these companies, his answer was "because I don't understand what they do."

As we saw, after the collapse of Enron, they didn't do much of anything, other than move money around through their various shell companies, and then claim it as revenue.

Same thing in the dotcom industry. I was intimately involved in the marketing of several dotcom companies. It became obvious to me very quickly that trades in business were being claimed as revenue.

If this was obvious to me, a relatively lowly businessman, why was it not obvious to President Clinton.

Reliapundit said...

you recall incorrectly.
yeah yeah y the dem/left said OEVRandOVERandOVER
it's the economy stupid.

and the MSM repeated it.... as nuaseum

too bad the fact is the economy was in recovery in the late fall-winter or 1992.

that is a fact.

clointon's tax increase SLOWED the recovery.

the clinton boom only came AFTER gingrich took the house ansd forced spending cuts, welfare reform ect.

if you compare year-on-year (year 1 Clinton to year one W)

bush comes out just as good.

and clinton bequethed the bubbles. BUBBA'S BUBBLES (i couned that too!.

dems sa facts. sorry.

Pastorius said...

You're right. I didn't recall that the Bush recession had gone into recovery by the time Clinton had taken office. Sorry about that.

Just for clarities sake, I know you took into account Bubba's Bubbles. What I was saying is, James didn't. He compared tax revenues from year 2000 to tax revenues from 2005. It isn't surpising they wouldn't be too favorable. Let's see two astoundingly devastating things happened during the early part of that time period. What were they again?

Oh yeah, 9/11 and the Nasdaq crash.

Gee, James, how could you have forgotten that?

Reliapundit said...

pastirini - yu da bess

Anonymous said...

Taxes have gone up and down without significantly affecting growth. When spending has increased, the economy has grown faster. I did not say that the new deal ended the Great Depression, I said that military spending on WWII ended it. FDR and the rest of the government were not willing to have significant deficit spending until there was a war. Until the late 30's, they were trying to balance the budget. This limited the amount of spending they could commit to, which is why the new deal was unsuccesful at first. Taxes and spending both went up during WWII, and it led to the highest growth rate this country has ever had. According to supply-side theories, growth should have slowed during WWII because taxes went up a lot. This proves that the theory is wrong.

Spending is the best way to end a recession. Deficit spending during recessions is fine, because it will lead to growth which will allow the government to pay off the debt later. The problem with Bush's tax cuts is that they will continue the deficit spending even when we are not in a recession (such as now). The budget has to balance in the long run unless the US is going to default on its debt. So in the long run, it is only spending that affects tax rates. Changing the tax code shifts the burden. Deficit spending shifts the tax burden into the future. Bush has not really cut taxes, he has just deferred them. If you are old and expect to die soon, that is a tax cut. If you are young and expect to work for the next 40+ years, it is a tax increase.


Reliapundit said...


you wrote:

"Spending is the best way to end a recession."

Oaky, let's assume that is true.



That would help growth and end a recession.

you also wrote:

"The problem with Bush's tax cuts is that they will continue the deficit spending even when we are not in a recession (such as now)."

BULL. The economy will grow and receipts will go up FASTER.

The notion that W is merely DEFERRING tax increases is also BULL.


If we had a low flat tax on personal income - starting at $30,000, and a low flat tax on ALL money/property transfers - even wholesale and stocks - each could be as low as 2% - and it would generate $3trillion if there are NO EXCEPTIONS and NO DEDUCTIONS.

People below the poverty line could get a "transfer tax" refund.

Also: we should privatize soc sec and medicare.

Then the fed budget would easy to balance.

But no one wouyld care: becaseu the economy would grow and taxes would be low.

a perfect world.

Anonymous said...

Check Out this Site About work at home computer jobs

Unknown said...

I was always told that when times are bad you can push off what needs to be paid but when times are good repay those debts. But our Past presidents of the last 30 years (except 1) thought it was alright to keep spending until our deficit is 11 Trillion. If you give 1,000 people a $1,000 or 1 person a $1,000,000, who do think will spend the most. The rich only get richer off the working person( Sorry) and they (working person) just go deeper into debt. We need a graduated tax the is fair to every one. Our normal exemptions up to 5, no more. Then we all pay 10% of our first $50,000, then if you make more than $50,000 you will pay 15% up $400,000 from the $50,001. If you make more than $400,000 you will pay 20% on everything over the $400,001.
Family of 4 Exemptions $3500 Per Making $42,000 Pays $2800 in taxes
Family of 4 " " Making $68,000 Pays $2800 for the first $50k & $2700 for the next $18k
Family of 4 making $489k Pays $2800 ($50k) $52500 nest ($35000) & $17,800 for the last $89k
We can still have a interest on 1 home deduction but nothing else.