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Topic Review (Newest First)
02-25-2009 08:08 AM
skeeter Well crap, I guess I should have just let Joe take it from the start.
02-25-2009 07:58 AM
jupiterboy ^ you win. No need to understand anything save what team you are supposed to be on.
02-24-2009 09:59 PM
Joe Dirt All this type of political debate seems worthless to me. The course of action is not that complicated if you really want to solve a problem. I think we all agree that unless we all go into civil service, it is businesses that need to provide jobs, not Uncle Sam. If you want a business to hire people we should ask business people, "What would motivate you to hire additional employees and expand your business." I think the answer would be, "If it was economically advantagous and increased profits they would do it." So if the government is serious about creating jobs they must create that type of enviroment. That's it. The rest of this debate is crap. That's just common sense. All the money in the world to run social programs isn't going to make business people hire employees. Throwing money at businesses that are doomed to fail won't help either. Let them die and others with gobble up their customers quickly.
02-24-2009 10:27 AM
jupiterboy From previous article:
Quote:
Those of the supply-side movement like to project themselves in the image of free-marketers and in opposition to government interference. Yet their entire approach runs contrary to the spirit of a free market. In fact, they are very much like the rest of mainstream economics. While mainstream economists advocate the management of demand, supply-siders advocate the management of supply. It is even argued that, in order to promote greater production, there must be a preference for taxing consumption rather than production. According to Raymond J Keating, "In addition, supply-side recognition that supply comes before demand in the economic order leads to a preference for taxing consumption rather than production."

In the free-market economy, neither demand nor supply is managed. Both consumption and production are equally important in the fulfilment of people’s ultimate goal, which is the maintenance of life and well-being. In short, consumption is dependent on production, while production is dependent on consumption. The loose monetary policy of the central bank breaks this unity by creating an environment where it appears that it is possible to consume without production.
Let’s look at the Reagan record on GDP, and consider that he had to deal with the results of the previous administration’s policies, but also that the result of the Reagan supply-side approach carried over for a year or two.



What I see is a boom followed by a bust. This cycle continues from his administration forward as profit from federal bonds and easy credit gets routed directly into the largest corporate balance sheets.

What did this temporary boom cost in terms of borrowing?



What is most insidious about this philosophy is that it includes the concept that deficits do not matter, which haunts us still.

Quote:
O'Neill, fired in a shakeup of Bush's economic team in December 2002, raised objections to a new round of tax cuts and said the president balked at his more aggressive plan to combat corporate crime after a string of accounting scandals because of opposition from "the corporate crowd," a key constituency.

O'Neill said he tried to warn Vice President Dick Cheney that growing budget deficits-expected to top $500 billion this fiscal year alone-posed a threat to the economy. Cheney cut him off. "You know, Paul, Reagan proved deficits don't matter," he said, according to excerpts. Cheney continued: "We won the midterms (congressional elections). This is our due." A month later, Cheney told the Treasury secretary he was fired.
When you look at the trend, and factor in effective corporate tax rates it seems clear that we are bleeding our national wealth into international companies on the back of the tax-paying public. Look at the current bust we are in. Corporate interests are not reinvesting the cash on their books, they are either holding it or pumping it into the economies of other countries.

Now you can look at the rise of living standard and wages, but when you compare it to the deficit spending and the lack of savings I would prefer steady, solid growth. Now that we are in the mean reversion process maybe we can evaluate what it means to profit off of production rather than borrowing against the future.
02-23-2009 10:40 AM
skeeter I don't see where you're arguing against my understanding of supply side economics.
A simplified tax code would be great for legitimate businesses and isn't contrary to supply side economics.
Going back on the gold standard would be good for legitimate businesses and isn't contrary to supply side economics.
If Reagan's tax cuts didn't help business then what did?

Supply-Side Tax Cuts and the Truth about the Reagan Economic Record
Quote:
The Real Reagan Economic Record

Table 1 contrasts side by side the economy's performance for the three periods of analysis--1974-81, 1981-89, and 1989-95--for 10 key variables. We measure the change in each economic variable from the start of the period through the end and present the annualized change. [11] On 8 of the 10 key variables, the Reagan record unambiguously outperformed the records of the pre- and post-Reagan years. The two exceptions were the savings rate, which declined in the Reagan years at a faster rate than in the pre- and post-Reagan years, and productivity, which grew faster in the pre-Reagan years but slower in the post-Reagan years. [12] The following is a summary for each of the 10 variables:

* Economic Growth. The average annual growth rate of real gross domestic product (GDP) from 1981 to 1989 was 3.2 percent per year, compared with 2.8 percent from 1974 to 1981 and 2.1 percent from 1989 to 1995. The 3.2 percent growth rate for the Reagan years includes the recession of the early 1980s, which was a side effect of reversing Carter's high-inflation policies, and the seven expansion years, 1983-89. During the economic expansion alone, the economy grew by a robust annual rate of 3.8 percent. By the end of the Reagan years, the American economy was almost one-third larger than it was when they began. [13] Figure 1 shows the economic growth rate by president since World War II. That rate was higher in the 1980s than in the 1950s and 1970s but was substantially lower than the rapid economic growth rate of more than 4 percent per year in the 1960s. The Kennedy income tax rate cuts of 30 percent that were enacted in 1964 generated several years of 5 percent annual real growth.
* Economic Growth per Working-Age Adult. When we adjust the economic growth rates to take account of demographic changes, we find that the expansion in the Reagan years looks even better and that the 1970s' performance looks worse. GDP growth per adult aged 20-64 in the Reagan years grew twice as rapidly, on average, as it did in the pre- and post-Reagan years.
* Median Household Incomes. Real median household income rose by $4,000 in the Reagan years--from $37,868 in 1981 to $42,049 in 1989, as shown in Figure 2. This improvement was a stark reversal of the income trends in the late 1970s and the 1990s: median family income was unchanged in the eight pre-Reagan years, and incomes have fallen by $1,438 in the anti-supply-side 1990s, following the 1990 and 1993 tax hikes. [14] Most of the declines in take-home pay occurred on George Bush's watch. Under Bill Clinton's tenure, there has been zero income growth in median household income.
* Employment. From 1981 through 1989 the U.S. economy produced 17 million new jobs, or roughly 2 million new jobs each year. Contrary to the Clinton administration's claims of vast job gains in the 1990s, the United States has averaged only 1.3 million new jobs per year in the post-Reagan years. The labor force United States has averaged only 1.3 million new jobs expanded by 1.7 percent per year between 1981 and 1989, but by just 1.2 percent per year between 1990 and 1995. [15]
* Hours Worked. Table 1 confirms that hours worked per adult aged 20-64 grew much faster in the 1980s than in the pre -or post-Reagan years.
* Unemployment Rate. When Reagan took office in 1981, the unemployment rate was 7.6 percent. In the recession of 1981-82, that rate peaked at 9.7 percent, but it fell continuously for the next seven years. When Reagan left office, the unemployment rate was 5.5 percent. This reduction in joblessness was a clear triumph of the Reagan program. Figure 3 shows that in the pre-Reagan years, the unemployment rate trended upward; in the Reagan years, the unemployment rate trended downward; and in the post-Reagan years, the unemployment rate has fluctuated up and down but today remains virtually unchanged from the 1989 rate.
* Productivity. For real wages to rise, productivity must rise. Over the past 30 years there has been a secular downward trend in U.S. productivity growth. Under Reagan, productivity grew at a 1.5 percent annual rate, as shown in Figure 4. This was lower than in the 1950s, 1960s, and 1970s but much higher than in the post-Reagan years. Under Clinton, productivity has increased at an annual rate of just 0.3 percent per year--the worst presidential performance since that of Herbert Hoover.
* Inflation. The central economic evil that Ronald Reagan inherited in 1981 from Jimmy Carter was three years of double-digit inflation. In 1980 the consumer price index (CPI) rose to 13.5 percent. By Reagan's second year in office, the inflation rate fell by more than half to 6.2 percent. In 1988, Reagan's last year in office, the CPI had fallen to 4.1 percent. Figure 5 shows the inflation and interest rate trend.
* Interest Rates. In 1980 the interest rate on a 30-year mortgage was 15 percent; this rate rose to its all-time peak of 18.9 percent in 1981. The prime rate steadily fell over the subsequent six years to a low of 8.2 percent in 1987 as the inflationary expectation component of interest rates fell sharply. The prime rate hit its 20-year low in 1993 at 6.0 percent. The Treasury Bill rate also fell dramatically in the 1980s--from 14 percent in 1981 to 7 percent in 1988. In the 1990s, interest rates have continued to migrate gradually downward, as shown in Figure 5.
* Savings. The savings rate did not rise in the 1980s, as supply-side advocates had predicted. In fact, in the 1980s the personal savings rate fell from 8 percent to 6.5 percent. [16]In the 1990s the average savings rate has fallen even further to an average of 4.9 percent [17]--although the rate of decline has slowed.

The decline in the personal savings rate in the 1980s was disappointing, but two factors mitigate the implications of these statistics. First, the drop in the savings rate was partly a natural response to demographic changes in America--namely, the baby boomers entering their peak spending years. Second, the savings rate data fail to account for real gains in wealth, which clearly are an important form of savings. The real value of capital assets and property doubled from 1980 to 1990. The Dow Jones Industrial Average nearly tripled from a low of 884 in 1982 to 2,509 in 1989. These increases in the value of stocks, bonds, homes, businesses, and so forth added to Americans' balance sheets hundreds of billions of dollars of wealth that are not accounted for in the savings rate statistics. [18]

Why can't your sources use real numbers? Why do they feel the need to exaggerate if their point is valid?
Quote:
* Two-Thirds Of Corporations Did Not Pay Taxes: According to last month's Government Accountability Office (GAO) report, between 1998 and 2005 "about two-thirds of corporations operating in the United States did not pay taxes" because of a variety of corporate tax loopholes.
The damn study includes all corporations, many of these have nothing to do with business, many don't make a profit because the way they're structured all profits are transferred to the shareholders who pay the taxes. Many don't make a profit because they simply don't make a profit. In other words, that two thirds of corporations don't pay taxes sounds really sinister until you dig into the report. I don't have time to fact check all this stuff but that jumped out at me because I looked into setting up one of my businesses as a corporation.
02-23-2009 08:21 AM
jupiterboy Let’s look at both sides of the corporate tax rate issue.

The Washington Monthly

PolitiFact | Obama oversimplifies corporate taxes

Quote:
So, for example, the United States ranks second lowest in the world among industrialized nations when it comes to the effective corporate tax rates for debt-financed investments in machinery. For equity-financed investments in machinery, the rates are closer to the upper middle of the pack. And for equity-financed investments in industrial structures (buildings, factories, etc), the effective corporate tax rates were second highest in the world (behind Japan). As an aside, it is precisely this tax system, weighted to favor debt-financed investments, that's part of why the current credit crisis is seen as so dire.
The often quoted 35% rate does not take into account many variables and factors, which often vary from state to state. I know in Texas corporations often chose to do business because taxes were waived and customized shelters were created to sweeten the deal.

Small business owners, like myself, do not have the clout to fashion deals like this. I find the reality of this particular situation to be fairly dense. Clearly a more simplified tax code without loopholes would help the average person have a more solid understanding about where we stand on corporate taxation. I really believe the convoluted systems acts as a sophisticated disinformation system that either side can manipulate to shore up its base.

Now on trickle-down/supply side, my point is if we are providing tax shelters to international corporations that are also making the business decision to export jobs we are in a sense creating a problem by fueling a stock price bubble. This devalues the currency because there is no real production to support the prices. If we eliminate pensions and force people into the market to provide for their retirement, and then allow that same market to be manipulated in boom/bust cycles to the advantage of the largest international corporate interests we are screwing ourselves coming and going.

I’ve been in business for myself for more than 10 years, so I am somewhat familiar with the positives and negatives. I do feel that the larger international corporate interests would willingly screw small and micro businesses to increase their advantage by paying for custom legislation targeted at their own narrow interests.

Now, the two previous articles posted bring a couple of issues into light. The first is simple, that benefits attributed to the Reagan tax cuts are sketchy because of the stated 14-year lag and subsequent bust. The second article is more dense and difficult. The issue it highlights is the inflation of M3 without real production to support the profit.

An easy analogy is a mafia bust out, where the muscle comes in and blows out the credit line on a business for purchases that are sold black market. The mafia pulls out with the profit, a bunch of idiots walk away with $25 DVD players, the business (America) can’t pay the debts, and the establishment gets torched or the owner is ruined. This is exactly the scheme that the very large corporate interests have pulled off. The added bonus is that they will break the back of the American worker and put us on course to being the next third-world country to be exploited.
02-22-2009 09:48 PM
skeeter
Quote:
Originally Posted by jupiterboy View Post
I don’t see it. You can create a bubble in the stock market by allowing corporate interests to not pay into the tax base and not observe basic standards, but every party has an end when the music gets turned down and clean up starts.
Reagan didn't eliminate corporate tax, he reduced it from 70% to 28%
Corporations still payed into the tax base but they had more incentive to create more because they got to keep more of their money which was then reinvested in the business or spent on goods which spurs on more business.
Big money doesn't get stuffed into mattresses, it gets used which drives the economy.

Look at Ireland, they had a high corporate tax rate and business sucked, they dropped their corporate tax to 12.5% and experienced a substantial increase in investment which took them from one of worst economies in the EU to one of the best.
We still have one of the highest corporate tax rates in the world even after the Reagan and Bush cuts.




Quote:
Originally Posted by jupiterboy View Post
Here is the rub. From a globalist perspective this is true. Workers in China and India are doing better. Business is global. A strong nation with work and health standards and a legal system is a problem for business.
Ok, are we discussing "trickle down economics" or free trade?
Two different things.
I'm not a free trader, I believe we should have tariffs and such with nations like China and Mexico that don't treat their workers well. That's why I supported Duncan Hunter for president.


Quote:
Originally Posted by jupiterboy View Post
Problem is, I am an American not an international corporation.
So you have no investments in multinational corporations? Do you some sort of retirement investment?
Anyone invested in the stock market has a financial interest in seeing those businesses do well but large multinational corporations only account for about 30% of jobs in America, some 70% of the jobs are created by small business. The same tax cuts that benefit large corporations also benefit small business. I've started and run three businesses over the years, I know from first hand experience how much bullshit the government piles on to any attempt to run a business. Any reduction in the bullshit, the taxes, fees, permits and so on will encourage more people to start and run new businesses.


I read your articles, the first one makes no attempt to base his claims on facts. The article I linked to at the Cato institute includes real numbers that don't support his admittedly liberal position.

I'm not sure what the second article has to do with the tax cuts under Reagan or Bush, I would like to see our currency have a real basis but I'm not sure gold would be best considering it's just as susceptible to supply and demand fluctuations as anything else.
02-22-2009 08:59 PM
jupiterboy It isn't about nations anymore, save that there are still depressed nations that can be exploited for a few decades at a time before they are abandoned for the next.
02-22-2009 08:53 PM
Joe Dirt The problem with globalization is that it is one sided. We import most products and export far less. It's called a trading defecit and it has cost us huge numbers of manufacturing jobs. Loss of those types of jobs affect the least educated, least fortunate, and most needy amoung us.
02-22-2009 07:03 PM
jupiterboy
Quote:
Originally Posted by jpdocdave View Post
i don't know which buzz word i hate more right now "bail out" or "globalization"
You’re telling me. When I worked in college textbook publishing every textbook had to have a "global perspective". Didn't matter if it was an abnormal psychology textbook. Guess what, it is not the "liberal" media shoving that one down our throat.
02-22-2009 07:00 PM
jpdocdave i don't know which buzz word i hate more right now "bail out" or "globalization"
02-22-2009 06:57 PM
jupiterboy
Quote:
Originally Posted by skeeter View Post
You seem to be confusing economic policies with fiscal responsibility.
Yep, Reagan and the Democrat congress spent like drunken sailors, "trickle down economics"/ "supply side economics" however did a great deal of good for the economy.
Or, did you like the economy under Carter?
I don’t see it. You can create a bubble in the stock market by allowing corporate interests to not pay into the tax base and not observe basic standards, but every party has an end when the music gets turned down and clean up starts.

Quote:
Originally Posted by skeeter View Post
What's good for business is good for workers.
Here is the rub. From a globalist perspective this is true. Workers in China and India are doing better. Business is global. A strong nation with work and health standards and a legal system is a problem for business.

Problem is, I am an American not an international corporation.

Debunking the myth of Reaganomics | The San Diego Union-Tribune

http://mises.org/story/991
02-22-2009 05:31 PM
Joe Dirt Bailing out banks does not result in jobs. The problem with our country is that we no longer make anything. Products are made in Mexico and China. Construction was the last job that you could suport a family on without a degree. Gone are the days that hard work was enough. Secondly, we don't have a credit crisis. We have given credit to everyone and allowed banks to do anything they want. People are struggling to keep their jobs, pay off credit, while credit card companies are allowed to raise the rates to 30% on that debt. Inflation is going up, wages are going down and Americans are getting screwed from all sides.
02-22-2009 04:20 PM
skeeter You seem to be confusing economic policies with fiscal responsibility.
Yep, Reagan and the Democrat congress spent like drunken sailors, "trickle down economics"/ "supply side economics" however did a great deal of good for the economy.
Or, did you like the economy under Carter?

I keep having to repeat this. The government is not the economy. Government policy can encourage or discourage economic growth but it takes private industry to supply us with an income.
What's good for business is good for workers.

Supply-Side Tax Cuts and the Truth about the Reagan Economic Record
02-22-2009 02:52 PM
jupiterboy Reagan pushed trickle-down and kicked off a debt party that crippled our nation. Trickle-down was considered a failure because of the large deficits it produced soon after Reagan left office, but Rupert Murdoch and the conservative media waited out America’s short attention span and sold it to us again.
02-22-2009 02:30 PM
skeeter
Quote:
Originally Posted by jupiterboy View Post
"The Burning Platform" by James Quinn. FSO Editorial 02/18/2009

I couldn’t pull a chart out of this to post it. While I suspect some of the opinions regarding the military are not shared by the majority on this forum, the information regarding the debt as attributed to historical presidents and other general information is worth looking at.

I know Skeeter had mentioned wanting to have a discussion of trickle-down under Reagan. Possibly this would provide some perspective.
So what would you like to discuss? Lay out a position and we can have a good debate.

http://capmag.com/article.asp?ID=1115
02-22-2009 09:20 AM
jupiterboy ^ that caught my attention as well. Funny how is this not commonly known? Given anyone taking a mortgage is not necessarily a victim.

Also of interest is the debt attributed to the various presidential administrations, and the unfunded liabilities.

So gold broke $1000 an ounce this week.
02-22-2009 08:34 AM
jpdocdave great read, lots of great quotes in there.

this i did not know about gmac, but they deserve billions in bail out:

You have already given $7 billion to Capital One and American Express so they can hand out more credit cards with $20,000 limits to pizza delivery boys. When you see someone carting a 52 inch HDTV out the door of Best Buy, you may be making his credit card payment. Barney Frank, and his band of merry Congressmen, has also provided $9 billion of your hard earned tax dollars to GMAC Financial and Chrysler Financial. GMAC Financial used the name Di-Tech to lure millions of gullible poor people into negative amortization no doc mortgage loans at the peak of the housing bubble. When you see a BMW 525i parked in front of a boarded up house in West Philly, know that you are making the car payment for that deadbeat.
02-22-2009 08:30 AM
jupiterboy As usual, all the people doing the advisement are not giving the right message. Still, pressure is mounting and voices of opposition are getting louder.
02-22-2009 06:55 AM
Dare2BSquare Good read. Too bad our leadership is more interested in looking good than actually addressing all these issues long term.
02-22-2009 04:27 AM
jupiterboy
Burning Money

"The Burning Platform" by James Quinn. FSO Editorial 02/18/2009

I couldn’t pull a chart out of this to post it. While I suspect some of the opinions regarding the military are not shared by the majority on this forum, the information regarding the debt as attributed to historical presidents and other general information is worth looking at.

I know Skeeter had mentioned wanting to have a discussion of trickle-down under Reagan. Possibly this would provide some perspective.

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