Just read Ezra Klein. I’m too disgusted to add much, except to say that I doubt even Sen. Mitch McConnell is stupid enough to believe “There’s no evidence whatsoever that the Bush tax cuts actually diminished revenue,” and that the tax cuts succeeded in increasing revenue. If he’s bright enough to tie his own shoes and eat with a fork, he ought to know the Bush tax cuts drained the budget. I say he’s just plain lying.
The Mahablog
Politics. Society. Group Therapy.
Republicans, please return Alice’s looking-glass.
So, if I understand this right, tax cuts don’t add to the deficit, and they create jobs.
The proof? Look at what Bush’s tax cut did! You can’t see it, I guess, but they can, and we’re fully employed and debt free.
All of this despite someone with an appreciation for reality looking at a nation where there’s one job for every 5 applicants, and a deficit, and that they’re supposed to figure it wasn’t caused by the tax cuts, 2 occupations, and a give-away to the pharmaceutial industry. What, entitlements caused this deficit?
Is there, or isn’t there one? Don’t they matter, as Cheney said Reagan proved? Or, isn’t it important, except to eliminate any safety-net programs still around. Please tell us which the f**k it is.
And isn’t it counter-intuitive to think that the first thing a wealthy person is going to do is get all ‘socialist’ on everyone and look at this country and say, “Why, I won’t pocket these tax cuts! I’ll invest and create jobs in the hopes that others will do the same and people can get empoyed and they’ll be able to buy what I make?’ Even rich Republicans wouldn’t be THAT stupid. What idiot wouldn’t wait for the economy to improve before spending money to create jobs, as if that’s their goal? Making money is, and there’s more to be made sitting on it than risking it in this economy.
God, I’m getting a headache.
Oh good, there’s the Mad Hatter holding up two aspririns out of the rabbit hole. What? “Don’t wash them down with mercury,” you say? Why not. Maybe then I could make some sense out of Republican positions.
And people ask me why I still drink and smoke…
Holy bleep.
Gulag, I think we have our first entry for the new Gibberish-to-English Dictionary.
Gibberish: They increased revenue because of the vibrancy of these tax cuts in the economy.
English: The new CBO data show that changes in law enacted since January 2001 increased the deficit by $539 billion in 2005…. [The Committee for a Responsible Federal Budget’s] budget calculator shows that the tax cuts will cost $3.28 trillion between 2011 and 2018.
Or maybe that should be Gibberish-to-Reality.
If there is no evidence then show me how you can to the conclusion that it reduces the deficit. This is again a comment made without anyone asking for the reference. Media? Journalists? Someone call them out on their position!
Joan,
Gibberish-to-Reality. NICE!
Actually, you can also take it one word at a time:
‘Revenue’ probably mean ‘unemployment,’ since that’s the one thing that demonstrably increased. Or, it could also mean ‘deficit,’ since that went up, too. Maybe there’s an accent mark to distinguish the difference, butw e don’t know.
”Vibrancy clearly MUST mean ‘idiocy, ‘or ‘stupidity.’
Hence, the sentence, translated, reads, “They increased the unemployment/deficit becuase of the stupidity/idiocy or these tax cuts in the economy.”
There, now it makes perfect sense!
I wonder whether anyone read my comment on the previous post. I’ll try to keep my points more succinct and better organized this time. (lol)
Itemized list of points:
(1) Yes, McConnell is almost certainly lying. The only other plausible contingency is that he’s really so damn ignorant as to have never read anything about economics or ever even talked to an economist. In which case, there is no legitimate reason for him to be in the U.S. Senate.
(2) What McConnell and friends are doing is playing the old voodoo economics game invented decades ago by Reagan and pals. Supply-side economics doesn’t work and we know so from experience. The economy won’t grow just by cutting taxes, especially not taxes on the rich. They save, they don’t spend. Why would they spend when investment will just make them even richer? Multi-millionaires often already have substantial assets, so there’s little they need to buy at any given time.
(3) In his posts (and his TV appearances), Klein seems to be buying the same delusion as most everyone else. Government revenue doesn’t fund government spending. See my previous comment in the last post on this issue, or just read some publications by James K. Galbraith’s and/or Warren Mosler.
(4) Since taxes don’t pay for federal spending, there’s no necessity of raising taxes to pay for new spending. Nor is there any necessary reason to cut spending to eliminate deficits.
(5) The only reason for the government to do anything in the budget department is based on the actual economic conditions. If inflation were high, employment was excellent, and there were no pressing matters like wars or oil spills to deal with…well, then that would be an excellent time to cut federal spending and/or raise taxes on the rich, or both. As we know, the current state is just the opposite. The correct behavior during a recession is for the government to spend on as many valuable projects as possible — especially projects with long term value to the economy.
(6) Infrastructure projects are generally the best investments in terms of spending. They create jobs for many years and usually, after ten to fifteen years, have more than repaid their initial cost in terms of economic benefits. Naturally, this means we should be encouraging such projects now, most especially in the areas the country has the greatest need. Right now, those seem to be clean energy, high-speed long-distance transit, and communications infrastructure.
(7) We should avoid putting too many eggs in any particular basket with energy generation technology. Spread it around: photovoltaics, solar thermal, wind turbines, geothermal, and nuclear fission or nuclear research are very probably the best targets right now. Some things are almost completely useless — forget ethanol or powering things using crops and crop-fuels. That will never be able to power an industrial economy without using a massive amount of land, limiting future population expansion and causing problems in the food supply down the road. Crops are just indirect solar energy, and we can do a lot better by harnessing it directly.
(8) We’re way behind most of the rest of the industrial world on high-speed rail and internet bandwidth (especially out in suburbia, but even in the middle of the city). Japan and France really put our rail network to shame — we used to be the best in the world before the government decided to subsidize the car industry. Likewise, we used to have the best internet connections in the world. Hell, we invented the damn thing, you’d expect it, right ? Not anymore.
(9) Investments in these projects could easily bring unemployment down several points. Probably back in the neighborhood of five percent, maybe lower.
(10) We’re not experiencing any notable inflation. There’s no need to worry about expanding the money supply until you actually have meaningful inflation. By all means, deficit spend. Just put the money into projects valuable to the American people.
The other side of tax policy is that it’s a two edged sword.
When tax rates are high, there’s more incentive to invest in the company you’re building, because necessary business expenses are fully deductible. There’s more incentive to give raises and purchase benefits, because it’s that, or pay a boatload of taxes. There’s less incentive to skimp on quality – at a 70% marginal rate, why risk a dissatisfied customer to take home 30 cents on the dollar?
When marginal tax rates are low, every dollar you pay your employees is most of a dollar you’re not taking home yourself. Skimping on benefits? No biggee; you can afford a high deductible insurance policy! Skimping on quality? Hey, since marginal rates are low, *everyone* is squeezing their employees, so *no* workers have boatloads of money, so only well-to-do folks are competing on quality – everyone else competes on price. So low quality often means more money, even if there are dissatisfied customers.
It’s an ugly, vicious cycle.
Ezra makes the statement “Because it’s hard to see the country prospering when one of its two major political parties is this economically illiterate”.
Even worse than that is the fact that the majority in this country (left, right, middle) are too fucking selfish, stupid, and or impatient to ever let either side actually institute its policies and then either take credit or blame for the results. I mean it was only two years ago that we saw the fruits of Bu$hco’s trickle down policies almost bring down the house. But here we are two years later and the “independents” are willing to turn back to the uber corporatists. You know if the republicants are going to get back in power I wish we’d leave them there long enough for them to actually be forced to take account for the mess they will certainly make. I agree with cundulag it is fucking maddening!
kagerato,
I certainly did. I meant to say something, but I didn’t.
It was very thought provoking, with a take on some things I either hadn’t heard before, or, at my age, forgotten…
K…
I’ve met Mitch McConnell, and I suspect that he might really be that ignorant. In any event he’s a mean-spirited little prig, and has no business in the US Senate.
I just read the Harper’s article on Arizona. Man, those idiots really know how to cut taxes…and send their state down the toilet. Apparently, things are even worse than in California.
Yeah, the Harper‘s article is terrifying. It appears that for some time the state has been run by angry right-wing whackjobs, and as state government gets more and more dysfunctional voters are turning to even angrier and more extreme right-wing whackjobs. It’s a true race to the bottom.
On the other hand — this afternoon I made my weekly run to my favorite grocery store, in a blue-collar section of Yonkers. Standing outside the store was a nice-looking young man in a snappy suit who was trying to register people as Republican voters. As shoppers walked past him into the store, it went like this —
“Ma’am, are you registered to vote Republican?”
“No!”
“Sir, how about you?”
“Hell, no!”
“Um, sir …”
“No! En-oh No!”
And then there was me, laughing and shaking my head. He didn’t even ask. When I came out of the store later, he had gone.
Note that most people in this little sample happened to be white and middle-aged or older — the usual tea party demographic. Not in Yonkers, I guess.
McConnell’s comment follows the same pattern the right has maintained for years that tax cuts, especially for the rich, are the all purpose cure for whatever ails you. If there were no evidence that the tax cuts diminished revenue, then why did Bush have to borrow to finance the Iraq War and why did Bush run of an $800 billion deficit in 2008? I remember the rhetoric around the Reagan tax cuts and “supply side economics”, where the right compared the tax cuts to a tax cut by Kennedy which ended up raising revenue. Okay, that didn’t happen with the Reagan taxcuts. So now we know that cutting taxes doesn’t always raise revenues. Does it therefore follow that if it doesn’t work a second time, then those who point that out have the burden of proving that it didn’t?
I heard this rant by cable TV news commentatorAnd why is the burden on those of us who argued tax cuts
The saddest part about McConnell’s BS, like that of his comrades, is that I am convinced they have the power to sell this message, and that the Democrats will squander the opportunity to pound hard on the message of “Republicans wouldn’t pay for unemployment benefits, but they’d happily pay for tax cuts for rich folks.” I’m convinced that, even though it confounds reality and is completely topsy-turvy, the right-wing’s Mighty Wurlitzer will be able to get people to believe in the “importance” of extending these tax cuts, no matter what.
I wish it weren’t so, but … they managed to convince people that a country that hadn’t attacked us and wasn’t actually able to was somehow an urgent threat to our very existence. Compared to that, economic bafflegab is easy.
There is an argument that can both support the Kennedy tax cuts and support and increase in taxes today: calories.
No one except perhaps an Olympic swimmer needs to eat 10,000 calories a day. Cutting back one’s intake (i.e. cutting taxes, as was done under the Kennedy administration, when tax rates were much, much higher) will probably have a salutory effect on one’s health and weight. But when one cuts back on calories (or taxes) too much, the body (the country) starts to cannibalize itself in the search for sufficient nourishment. That’s precisely what’s happening today.
Of course, as we sadly know, facts don’t seem to sway righties. In fact, giving them the real facts seems to further entrench their fantasies.
@LongHairedWeirdo :
That’s a very good point. Income taxes are, after all, taxes on profits rather than revenue. The progressive taxation scale is good at lessening the incentive to profiteer, but only if the upper tax brackets are set effectively. Judging by the amount of speculation on Wall Street and in commodities lately, they are clearly not high enough. Many of the rich have found it better to gamble with their saved money on high-risk, high-return “investments” in derivative products which have little to no real economic value — though they do drive up the price of meaningful commodities like houses and gasoline. If you set the highest tax rate to apply at $20 million or so and recoup 80% of profits above that level, this kind of behavior is strongly discouraged. There’s just much less return on investment.
You could drastically reduce the same kind of speculation by other means. A one percent tax on any financial trade (most especially sales, but perhaps purchases as well) would substantially reduce back-and-forth day trading in favor of long term investment.
Another idea is to create a time-receding tax system for financial investments. In such a scheme, the tax paid on the sale of any financial product is inversely proportional to the time that product has been held since its purchase on the market. So, for example, a stock you sold the next day after you bought it might be subject to a 50% tax. Sold the next week, a 45% tax. The next month, 40%. And so forth until after some long period (perhaps ten or fifteen years), no taxes need be paid at all.
Of course, there’s always the issue of how to prevent tax evasion, and that needs to be dealt with effectively first. Funneling money into other countries and other stock exchanges, for instance, poses a significant problem. One that can only really be solved with international cooperation and monitoring.