Economists unimpressed by Kerry plans

[Inquartata]

Now if only they could find 368 military experts...

http://www.nationalreview.com/nrof_c...0410131105.asp

[geezer]

Wow, what a bunch of flat-backers!

[jeff]

Dog bites man - what a surprise. The NR is unilaterally right wing and anti-taxation, and reports economists who agree. Did they ask the corresponding question, about how the same population feels about Bushonomics? In addition to quoting the economists, the article authors lard the article with their own rhetoric (fair enough, but let nobody confuse their comments with the economists they cite): "failed tax and spend policies" &etc.

[pkt]

Ha-ha!

Remember the "In a room of 30 economists you'll get at least 30 different points of view" ...and "holding other factors constant."?

I stopped reading the piece when i saw Milton Friedman's name. i personally feel that the Nobel Prize Committee must have regretted that one.

The Chicago School of Economics, what a joke! They are the ones who got the world into economic troubles in the early 80s, as well as giving us Reagonomics.

Remember "tax cuts will pay for itself"?

This dictum has been dispoved so many time but the right-wing economists, businessmen and politicians will never cede the fact.

If you don't know how the 52% income tax rates work in the Scandinavian countries work, find out for yourself. But i'll tell you this much: the citizens of those countries expect to receive a lot of services from the state. It is like a restaurant meal: you get what you pay for.

In surveys of quality of life, be it from a regular citizen's or a business' perspective, time and again, countries like Finland are usu on the top. And yes, even Canada rank very high on these surveys. One should wonder why.

Vancouver BC has been one of the top 3 cities in the world in livability in the last few years...

PK

[mrbiggs]

Both the candidates have plans for energy that are frankly retarded. They promise big spending and/or tax cuts, without saying where they're going to get the money from. For Bush, it's apparently from strengthening the economy. For Kerry, it's unspecified government programs. It's unfortunate that politicians today are not allowed to submit a balanced economic plan to the people.

[mrbiggs]

In surveys of quality of life, be it from a regular citizen's or a business' perspective, time and again, countries like Finland are usu on the top. And yes, even Canada rank very high on these surveys. One should wonder why.

True, but keep in mind, that those more socialist countries have a tremendously high national debt, even higher than the U.S. (relative to GNP)And that says something. (Actually, that statistic is a little old, but their national debts are unquestionably large.)

[pkt]

...and the reason being?

http://www.google.ca/search?hl=en&q=...mparison&meta=

"Note the dramatic slowdown in the red curve trend line, starting with the 'Reagan Era' in the 1980s. Had the U.S. in 1993 implemented a proposed National Health Plan, its data point in 1996 would be near the same as the black curve for other nations."

The graph in this stops at 2002.

http://zfacts.com/p/318.html
For a more up-to-date graph
http://zfacts.com/p/318.html

As i wrote in another thread:
the citizens get what they pay for.

PK

[Rogue]

The Chicago School of Economics, ... as well as giving us Reagonomics.

Remember "tax cuts will pay for itself"?

This dictum has been dispoved so many time but the right-wing economists, businessmen and politicians will never cede the fact.



PK

Total Federal Revenue 1981- $599,272,000,000
Enter Reaganomics tax cuts
Total Federal Revenue 1988- $909,303,000,000
http://www.gpoaccess.gov/usbudget/fy05/hist.html

Tax cuts do promote economic growth and therefore more tax revenue. It's the Congress that over spends the money.

[trragan]

As an economist I am completely unimpressed with Kerry's "Plan." All politicians want to increase the revenue to the treasury. What he doesnt realize is that as people earn more money, they tend to work less, since we all know that leisure is "normal good" and that leisure will be substituted for work, assuming this person is not a workaholic. Since, the United States also has a progressive tax system this will only reduce the overall incentive to work as a person rises to a higher tax bracket. In effect reducing the overall revenue to the treasury. Many economists, my self included estimate that the most efficient tax rate will be around 25%. This rate will bring in more income than any other rate. PKT even more than the 50% tax rate Sweden has. It would be in Kerry's best interest to actually keep the tax rates as is, rather than increase them because in effect he will be reducing his power to spend-due to decreased overall revenue-since we all know liberal's love to so.

[Rogue]

Make that 369 economist unimpressed.

Kennedy and Reagan both cut taxes and the Federal revenue and economy continued to grow.

[Maeve_Mari]

Make that 369 economist unimpressed.

Kennedy and Reagan both cut taxes and the Federal revenue and economy continued to grow.

There is no significant argument that tax cuts and economic growth are part of the core principles of macroeconomics. The issue is, and what Bush failed to do when trying to implement this Econ 101 lesson is how he tried to use it for the wrong economic segment, and then didn't use it in conjunction with sound fiscal practices.

From the another thread, the one Peach posted:

"What has the country received in return for mortgaging its future? The President says that his tax cuts lifted the economy before and after 9/11, thereby moderating the downturn that began with the Nasdaq’s collapse in April, 2000. It’s true that even badly designed tax cuts can give the economy a momentary jolt. But this doesn’t make them wise policy. “Most of the tax cuts went to low- and middle-income Americans,” Bush said during his final debate with Senator John Kerry. This is false—a lie, actually—though at least it suggests some dim awareness that the reverse Robin Hood approach to tax cuts is politically and morally repugnant. But for tax cuts to stimulate economic activity quickly and efficiently they should go to people who will spend the extra money. Largely at the insistence of Democrats and moderate Republicans, the Bush cuts gave middle-class families some relief in the form of refunds, bigger child credits, and a smaller marriage penalty. Still, the rich do better, to put it mildly. Citizens for Tax Justice, a Washington research group whose findings have proved highly dependable, notes that, this year, a typical person in the lowest fifth of the income distribution will get a tax cut of ninety-one dollars, a typical person in the middle fifth will pocket eight hundred and sixty-three dollars, and a typical person in the top one per cent will collect a windfall of fifty-nine thousand two hundred and ninety-two dollars."

Further economic trouble, that should really unimpress the economists, which was caused by the spend and spend Bush is found in this passage from the same article Peach found:

"In January, 2001, just after Bush’s inauguration, the nonpartisan Congressional Budget Office published its budget outlook for the coming decade. It showed a cumulative surplus of more than five trillion dollars. At the time, there was a lot of talk about what to do with the anticipated bounty, a discussion that now seems antique. Last year’s federal deficit was three hundred and seventy-five billion dollars; this year’s will top four hundred billion. According to the C.B.O., which came out with its latest projection in September, the period from 2005 to 2014 will see a cumulative shortfall of $2.3 trillion.

Even this seven-trillion-dollar turnaround underestimates the looming fiscal disaster. In doing its calculations, the C.B.O. assumed that most of the Bush tax cuts would expire in 2011, as specified in the legislation that enacted them. However, nobody in Washington expects them to go away on schedule; they were designated as temporary only to make their ultimate results look less scary. If Congress extends the expiration deadlines—a near-certainty if Bush wins and the Republicans retain control of Congress—then, according to the C.B.O., the cumulative deficit between 2005 and 2014 will nearly double, to $4.5 trillion."

[pkt]

...

"In January, 2001, just after Bush’s inauguration, the nonpartisan Congressional Budget Office published its budget outlook for the coming decade. It showed a cumulative surplus of more than five trillion dollars. At the time, there was a lot of talk about what to do with the anticipated bounty, a discussion that now seems antique. Last year’s federal deficit was three hundred and seventy-five billion dollars; this year’s will top four hundred billion. According to the C.B.O., which came out with its latest projection in September, the period from 2005 to 2014 will see a cumulative shortfall of $2.3 trillion.

Even this seven-trillion-dollar turnaround underestimates the looming fiscal disaster. In doing its calculations, the C.B.O. assumed that most of the Bush tax cuts would expire in 2011, as specified in the legislation that enacted them. However, nobody in Washington expects them to go away on schedule; they were designated as temporary only to make their ultimate results look less scary. If Congress extends the expiration deadlines—a near-certainty if Bush wins and the Republicans retain control of Congress—then, according to the C.B.O., the cumulative deficit between 2005 and 2014 will nearly double, to $4.5 trillion."

This is what puzzles me: people who considers themselves 'fiscal conservatives' are willing to overlook these bits of fact and projections to support Bush and accuse Kerry as a tax-and-spend liberal. Either these people are confused, on both counts, or I am.

Can someone educate me, PLEASE?

PK

[Tomas N]

More Nobel Prize winning economists support Kerry.

http://www.msnbc.msn.com/id/5818277/

Tomas

[jeff]

Kennedy and Reagan both cut taxes and the Federal revenue and economy continued to grow.

Take a look at the maximum tax rates of their times, and compare to the current situation. Further - IIRC when Reagan cut taxes, Federal revenue did not rise. The deficit did rise, and he was forced to sneak in stealth taxes (taxes by any other name) to address them

[jeff]

As an economist I am completely unimpressed with Kerry's "Plan." All politicians want to increase the revenue to the treasury. What he doesnt realize is that as people earn more money, they tend to work less, since we all know that leisure is "normal good" and that leisure will be substituted for work, assuming this person is not a workaholic. Since, the United States also has a progressive tax system this will only reduce the overall incentive to work as a person rises to a higher tax bracket. In effect reducing the overall revenue to the treasury. Many economists, my self included estimate that the most efficient tax rate will be around 25%. This rate will bring in more income than any other rate. PKT even more than the 50% tax rate Sweden has. It would be in Kerry's best interest to actually keep the tax rates as is, rather than increase them because in effect he will be reducing his power to spend-due to decreased overall revenue-since we all know liberal's love to so.

From the thread "The US Economy and Politics" (in Water Cooler, not Politics)", rudely quoting myself: "To recap: the top 1% of households pay 24% of all taxes (but they make more than 24% of the income). When the Bush tax cuts of 2001-2003 are fully in place in 2010, they will increase the tax burden of the bottom 95% of tax payers by 3.8%, while the top 5% will have their burden lightened by that amount. Almost all of that savings will go to the to 1% (reduction of 2.7%). The Bureau of Labor Statistics splits out in quintiles and expresses this differently: the top 20% of households paid a 19% of their income for _all_ levels of taxes, while the poorest 20% of households had a total burden of 18% of their incomes. (eg: a person making 1,000,000 paid $190,000). Since the marginal rates are higher than 19%, it means that there must be ways to not pay them. What this all amounts to is that there is a flat tax today."

Reading from the sentence beginning with the BLS, one would think that we are already in nirvana... but clearly we are not. Perhaps these theories need to be reevaluated.

[keith]

for those who like to stare and numbers and see pretty pictures;

http://www.taxfoundation.org/bushtaxplan-size.htm

a comparison of the kennedy, reagan and bush tax cuts.

and the paragraph below the table here;

http://reagan.webteamone.com/total_tax_burden.cfm

is a nice example of the knots people get tied in when argueing over the tax burden.

[mrbiggs]

3 economists can agree on an issue

if two of them are dead.

[trragan]

What many of you people are forgetting is that in the United States the President doesnt have the power of the purse string. Yes, Bush has signed huge budgets into law, however the congress still has to appropriate the money to be spent. This means that items in a budget do not have to be appropriated money. With respect to Bush on spending for the war, one must realize that Congress can only give money to be spent because of the power of the purse. From what I remember Kerry still voted for the appropriation of money to the war effort. Remember this is a two way street, and they both are politicians, and as we know from Jim Buchannan & Gordon Tullock, in Public Choice theory, politicians will do more harm to the economy than they will help, because they want to get reelected. Playing with economic numbers causes more harm than they typically do good. Short run gains, for long run bad conseqenses.

[jeff]

trragan, The President is the head of the party that controls both the Executive and Legislative branches, and therefore is in excellent position to influence budgets sent to him and allocate funding besides his ability to veto them. There is no excuse on the basis of him not being in Congress where he could originate budgets. Since only a portion - IIRC about 1/3 - of the deficit is due to the war costs, we cannot blame it for the deficit.

Your closing comments also require justification. You might want to summarise Buchannan andTullock for starts, and their claims are not equivalent to facts "we all know". The sweeping assertion that politicians just do long term damage to the economy is also not revealed truth. I'll go further and say that the claim is clearly wrong: belied by government programs ranging from creation of the TVA, the interstate highway system, to the funding leading to the Internet, and many others that created long term economic benefit.

[jeff]

I knew I had a citation: From the October 9 issue of The Economist, the article "The Dismal Science Bites Back"" "George Bush comes out worst in our poll of academic economists". 100 economist polled, and Bush comes off poorly. More than 70% rate his economic policies as "bad" or "very bad" and fewer than 20% gave positive scores. By comparison, Kerry got approx 40% "good" or "very good" for his plans, with only 27% giving negative scores. Complete numbers at http://www.economist.com/economistspoll

In particular, they were overwhelmingly critical of the central (perhaps only) plank of Bush's economic policy: tax cutting. Perhaps this is an example that proves trragan point, though perhaps in a different way than expected: rather than buying votes via spending, it's a short term gain (pander to people's desire to pay less tax) with long term loss (deficits looming over our heads for years to come)