I hope you’ve enjoyed our National Theater Company’s recent production of “The Debt Ceiling Crisis” as much we enjoyed performing it for you on a world stage. Don’t forget to watch the movie version sequel coming this January!
If the definition of a compromise is something that most folks don’t like, then the $2.4 trillion debt-ceiling deal worked out over the weekend by President Barack Obama and GOP leaders in Congress is a resounding success.
As details of the framework began to leak early Sunday, the far wings of each party quickly rejected the compromise as capitulation. Democrats angrily noted that the plan was all spending cuts and no revenue increases. MoveOn.org, the liberal advocacy group, panned the deal and called on Congress to “pass a clean debt ceiling bill that doesn’t force the middle class and the poor to bear the brunt of this crisis.”
Conservatives, meanwhile, worried that the deal left open the door to revenue increases and could lead to steep defense cuts. “Republican Leaders are asking their members to accept tax increases or massive defense cuts and senior anger right before the election,” blogged Erick Erickson, editor of the conservative website RedState.com.
Clearly, Tony winning writing and acting with a surprise, twist ending like this that is all illusion:
Conversely, the one clear winner from all this seems to be President Obama. If the bill passes, he can now claim the mantle of fiscal conservatism – a surefire defense to ubiquitous Republican accusations of socialism and big government. If the debt ceiling were breached and the economy tanked, he likely would’ve borne the greatest political price. But by swooping in and making the deal at the last minute, Obama can say he saved the day.
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#63, Are you suggesting that companies should be fined for laying people off?”
Essentially yes[…]
As soon as the government came in and tried to tell me who to hire and fire, I would shut down the office. Let the government figure out how to feed them without my tax revenue.
I can’t believe you truly feel that way.
My company doesn’t exist at the convenience of the government. It exists because of me. I thought up the business plan. I make the day to day decisions that determine whether it is profitable or not. Why should the government get a say in how I run it?
#69 LL:
Maybe you should move to Switzerland…
#69
“I can’t believe you truly feel that way.”
Nobody is talking about targeting individual firms, or the gov’t making specific hiring decisions. If you’d like to see Keynesianism as a sort of general ‘Business Inactivity Tax’ I’d support that view.
Somebody suggested a few years ago moving to a negative interest rate structure to increase private investment. In effect, you’d be penalized for saving. I think that is also a decent idea.
The funny thing is that money flowing into any investment class often leads to a ton of waste and spectacularly bad investment decisions. I think a lot of the Clinton-era stocks boom was due to a lower gov’t need for new debt offerings. The Big Rich like really the safest vehicles, like bonds. Once bond yields dropped to almost nothing they started buying up pre-offer chunks of tech companies.
Japan and the US, for all the talk of horrible debt levels still sell their new offerings at very low rates. That means that there is big money willing to accept negative real rates of return so they don’t have to venture into the private market.
Reagan’s trickle down tax cuts sent a ton of dough into the US economy. But where did it go?
1980: Financial sector 9% of GDP, manufacturing 24%
2008: Financial sector 23% of GDP, manufacturing 11%
The middle class got pwned and 1/4 of the US economy is devoted to making more dough for the upper 10%, not generating sustainable growth. Boom and collapse. Get used to it.
#66
Inflation in the US has everything to do with spikes in oil prices, which is a component of everything you buy. We aren’t the seeing wage rises, except in isolated jobs where there is a low supply of qualified applicants, that you’d normally see in a traditional inflation environment.
Inflation, as we’d normally think of it, is caused by too much money chasing too few goods. That’s different than changes in the commodities futures markets, your happy friend deregulation, letting the speculators become the dominate force rather than bulk producers/consumers as was intended.
Besides, China is a currency manipulator par excellence. They aren’t going to balk if we are less than pure.
#71, Nobody is talking about targeting individual firms, or the gov’t making specific hiring decisions.
So it would be a blanket decision that affected everybody without regard to the decisions made by the company owners (centrally planned)?
It would be like passing a law that said all companies had to buy their office supplies from company X.
Keynesianism as a sort of general ‘Business Inactivity Tax’ I’d support that view.
Why should the government get a say in whether I choose to take on a certain project or not?
Maybe I find the project too risky and would rather not put my company in a precarious situation.
I turn down some projects because I do feel they are too risky or jobs I just don’t want to deal with (government jobs).
According to your wishes, I would have to do take those jobs, put my company at risk, or pay a fine.
Are you saying you support the government fining businesses that don’t make a certain amount of money each year?
Pedro, I challenge you to reply only substantively for a week. Argue facts, challenge assumptions, claim biases. No name calling Bobbo and Dallas.
Only Alfred/TeaDud posts more off topic ad hominem BS.
I don’t think you can do it.
#70, Why?
#75 LL
So every tax break is a fine? Are childless couples fined for not having children?
Are renters fined for not buying houses?
Its amusing that you’d cut off your businesses nose to spite its face.
Ironically, a program as suggested would actually help tax breaks create jobs. As opposed to the fantasy that they always do, despite evidence to the contrary. You’re arguing against yourself.
#77 LL
You have several times before claimed that there is an exodus of business to Switzerland due to the tax rate.
A joke reference to an old debate…
#76–tcc3==with that post I went ahead and looked at who Pedo was responding to. Imagine my amusement when it was MEEEEeeeee? I don’t Pedo understands much except for an exchange of name calling. Certainly missed the ecumenical good will and music reference in my post as if I was complaining to any real degree. Just baleful resignation that Pedo wishes to be in the rut he is.
-or- maybe he did get it and is actually pissed at me that I compared us as too much alike? Course, I was LYING when I said that. Heh, heh.
Poor pedro. Smart enough to read and post to this blog. Not smart enough to contribute.
Sad.
#64
My #42 suggests that your Laffer Curve is likely correct, but that conservatives ALWAYS assume we are at the far right end of the graph.
At various points along the continuum of tax rates a move to lower/higher rate is going to have a different effect.
There is NOTHING in that wikipedia article that suggests to me there is a constant relationship between lower taxes and higher revenues gov revenues. I’m saying that conservatives misuse their own ideas by assuming a single case is the general case.
Later on in that article is a graph is a possible curve that peaks at 70%. So that means, assuming THAT curve is true, that decreasing rates below 70% is going to cause lower revenues. Graph: http://en.wikipedia.org/wiki/File:LafferCurve.svg
If you think that lowering taxes below 35% is going to create offsetting revenue, then you’d also be assuming that the peak of the graph is to the left of 35% on the x-axis. I don’t think that is defensible in the real world.
Current conservatives seem to recognize this. No longer are any tax cuts going to lead to increased revenues, now the decreased revenues need to be answered by eliminating government.
#67 Considering I did not answer you between #64 and #67 it is hard for me to see how I was being evasive or how that evasion was dealt with in absence of a response from me.
Oh, and Mr. Baggins provided some good links at #56 that you should look at.
Any graph of two variable is a correlation.
for proof, you need to test with a control group.
Silly rabbits.
#53
“…the sudden increase in gas prices. Like a tax, people suddenly found they had less and less money to spend. The economy suffered for it. Granted, it wasn’t the only thing that caused the recession, but I don’t think I have to prove it made things worse.”
I think that the higher gas prices caused the US property bubble, and the debt that was layered on top of that go into decline. I don’t think that, as you say, sudden hit is at all equivalent to raising top marginal rates on the rich and corporations.
When gas price doubles you are paying twice as much every single time you use gas. If the top marginal rate doubled to ~70% from ~35% it WOULD NOT be a doubling of taxes( look at my post #45 for why).
History seems to indicate that robust economic growth can be had at MUCH HIGHER top rates. Now is not the time to do that, but down the road it would be a good idea.
Funnily enough, the consensus seems to be that the ’08 commodity spike was NOT based on supply-demand. I think the big banks were trying to fill the enormous holes in their balance sheets by squeezing the consumers of the world. It ended up touching off an even bigger problem. If you can even get close to that view I think you’ll have a hard time maintaining that a regulation-averse government is a good thing.
# 42 chris said:
Current conservatives are ENTIRELY WRONG that the economic incentives on workers are the same at our current tax rates, and that lower rates now would result in increased or comparable government revenues.
# 81 chris said:
Current conservatives seem to recognize this. No longer are any tax cuts going to lead to increased revenues, now the decreased revenues need to be answered by eliminating government.
————–
Wow! Those current conservatives sure are a mercurial lot. I don’t think I have the energy to keep up, so I guess I’ll just take your word for it.
chris said:
“Somebody suggested a few years ago moving to a negative interest rate structure to increase private investment. In effect, you’d be penalized for saving. I think that is also a decent idea.”
No, I never suggested that.
Besides, we already have that. It’s called inflation.
#84
Zing! You got me.
Tax cuts as universal revenue generators was more the Reagan-era dogma. I still do see it every now and then. Like from you at #64.
Now it’s all government that needs to give way for tax cuts. A devolution, I guess.
#85 Oh come on, that is pretty weak! I’ll give you an honest point but this is a major stretch.
I see what the problem is here.
You are looking at economics in the fun-house mirror of Keynesianism.
My post #68 applies.
Every Keynesian should have been shopping for a new theory after the stagflation of the Carter years.
The experience in 1970s was pretty specific.
The Arab Oil Embargo reduced oil supplies, which had all sorts of shortages in the manufacture of other types of materials. In effect it caused inflation in the traditional sense, not enough goods being chased by too much money.
The ’08 commodity spikes had nothing to do with any actual shortage of commodities. The higher prices caused consumers to back off their demand, which made the idea of shortages even more silly. Although higher prices did feed their way into other areas it WAS NOT the same deal.
There is a difference between an actual shortage and an investor generated price spike.
In the 1970s there weren’t enough commodities to fill demand. In ’08 there was NO shortage, but prices were high enough to decrease demand.
Different things.
China would be more likely to enter a 1970’s stagflation due to lack of manufacturing inputs than us.
OK, but keep google-ing stagflation. It’s important that you know why it was Keynes’s Waterloo.
#75, LL
So it would be a blanket decision that affected everybody without regard to the decisions made by the company owners (centrally planned)?
It would be like passing a law that said all companies had to buy their office supplies from company X.
Or it would be like enforcing every company pay a minimum wage, or provide a safe environment, or provide a safe product, or ensure their products are safe, or their vehicles driver within the speed limit, or any number of other regulations already on the books.
Putting a “fine” or other disincentive on companies that lay off workers may have a desired effect. That is not to suggest there should be a fine. It shouldn’t be counted out though.
But as usual, Liebertarians want others to pay for their bills.
#89 Perdedor
I should have known you weren’t up to the challenge.
#91 Somebody
You’ve claimed that before, and its misleading.
“Until recently no macroeconomic policy had been able predict the occurrence of Stagflation.”
The Keynesians realized there was new event – one that no other model foresaw either – and adjusted accordingly.
That one case has little bearing on the value of an entire economic model.
Its simple minds that want a simple model to provide all the answers to complex situations.
Libertarianism, free market, nanny state, green energy, etc all are but touchstones: values that need to be balanced against all the other values. When you enter the market place/society/politics with one and only one idea: you are a failure–part of the problem.
This can be seen in SPADES right now with the Teaparty. Their touchstone that we spend too much is quite right===as a VALUE. But they wasted this insight by turning it into a dogma. Even Pedro can see the problem with this–it turns people into sheeples. No one wants that. No, the correct notion of spending too much has to be BALANCED against the other valid social values, like not creating an ensconced wealthy elite engineered by privatizing profit and socializing loss===and other balances with all the other values.
IT IS NOT THE FUNCTION of business to provide jobs. Policies with that goal will certainly fail if they ever even get implemented.
Our atavistic social Calvinism is ill equipped to deal with what the USA is facing now: long term structural unemployment given we spent decades off shoring our manufacturing jobs. What did anyone think was going to happen?
All you have to do is: look. Just LOOK!!!
Then act. Any society that doesn’t try new ideas like corn based ethanol subsidies is doomed to failure. Any society that doesn’t stop such subsidies on the recognition that they don’t work is also doomed to failure.
Just LOOK. Then act.
Rinse, repeat. Its a PROCESS not the application of dogma.
#91
This is interesting, but I’m going to address it tomorrow.
#75
“So it would be a blanket decision that affected everybody without regard to the decisions made by the company owners (centrally planned)? ”
I’m talking about the aggregate actions of all firms. In conditions of low consumer demand or low investment demand, government could stimulate short term by directly creating demand, or indirectly by helping to develop new technologies.
“It would be like passing a law that said all companies had to buy their office supplies from company X.”
Not like that at all. Since we are talking office supplies I will make a silly example, say everyone decided the world was in the process of ending. Because everyone decides to ditch work to hit the beach all office supply shops are empty day after day. No activity at all.
Government looks at the situation from a longer term view. If the world isn’t going to end people will have to go back to work eventually. They will need office supplies. As a matter of fact, the government decides it will need office supplies as well. Emergency meetings are held and a huge buy for office supplies is made. In one shot the gov’t solves its pen and paper needs for a few years AND saves the venerable Staples and OfficeDepot.
As things return to normal the public comes to the sudden realization that they still have bills to pay. They return unhappily to work only to discover that their pens have dried out. Private demand for office supplies comes roaring back with a vengeance. 🙂
“Why should the government get a say in whether I choose to take on a certain project or not?”
Government acting as a buyer in time of crisis doesn’t prevent you from doing whatever it is you’re doing, and it certainly doesn’t suggest government is going to be making business decisions for your firm.
The CONCEPTS and construction and running of a corp are Simple and basic(no matter how complicated they make it seem)
Those basics also work for the government. And the principles were placed into our gov. BUT, some persons have overridden some of the BASICS..like bidding wars for contracts.. LIKE CONTRACTS that Told you the COST of the job, and NO OVER RUNS..it didnt cost an EXTRA million to do a $0.99 job.
Also when we elected a person to represent us, it did NOT INCLUDE 200 assistance, to do his job.
# 95 tcc3 said:
“#91 Somebody
You’ve claimed that before, and its misleading.”
But, ironically, not as misleading as your claim that it is misleading:
http://mises.org/daily/2351
Don’t overlook this part:
The events of the 1970s therefore came as a shock for most economists. Their theories based on the supposed existing trade-off suddenly became useless.
# 95 tcc3 also said:
“The Keynesians realized there was new event – one that no other model foresaw either – and adjusted accordingly.”
I’ll refrain from characterizing that as silly.
Feel free to investigate the rest of the mises.org site.
Oh, and you can find this:
“It was not until the stagflation (high levels of inflation and unemployment coupled with low growth) of the 1970s that Keynesian dominance was brought to an end…”
Here:
http://britannica.com/nobelprize/article-236424
#78, So every tax break is a fine? Are childless couples fined for not having children?
Are renters fined for not buying houses?
Um, uh, noooooo.
A tax levied, though, is. Kinda like not participating in interstate commerce IS fined (see Obamacare).
Don’t confuse a tax credit and an outright tax. One, the government is permitting you to feed your children. The other isn’t.
Its amusing that you’d cut off your businesses nose to spite its face.
You’ll have to explain that more.
Ironically, a program as suggested would actually help tax breaks create jobs.
No, it doesn’t. The government doesn’t know how well any particular business is doing. It is entirely possible the government could force a company to close its doors because it HAS to pay somebody, either an employee it can’t use or the government for laying off the employee.
#79, 🙂 I’m slow but I take my time.