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Thread: CBO: Stimulus hurts economy in the long run

  1. #391
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    Re: CBO: Stimulus hurts economy in the long run

    Quote Originally Posted by Goldenboy219 View Post
    Agreed. But that is not a reason to make the false claim that i have argued anything of the sort. Raising taxes is how you increase public savings, which is something that is negative for growth at this stage of the recovery. You have stated yourself that firms are unwilling to hire because there is a general glut in sales, and therefore the only way to remain profitable is to "do more with less". How do we increase the amount of money people are willing to spend on goods when the cost of these goods (because costs are way off their 2008 levels on nearly all accounts) is not the primary driver in weak sales?
    Certainly the most efficient way to increase demand is to increase spending without raising additional revnue, but that is a political impossibility. Class war rhetoric aside, however, you can also boost demand by raising taxes on the rich and cutting taxes on the poor and middle class, for the simple reason that the poor and middle class tend to spend all or most of their income while the rich do not. That's why it makes sense, from an economic perspective, to finance payroll tax cuts with a tax hike on millionaires.

  2. #392
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    Re: CBO: Stimulus hurts economy in the long run

    Quote Originally Posted by AdamT View Post
    Certainly the most efficient way to increase demand is to increase spending without raising additional revnue, but that is a political impossibility. Class war rhetoric aside, however, you can also boost demand by raising taxes on the rich and cutting taxes on the poor and middle class, for the simple reason that the poor and middle class tend to spend all or most of their income while the rich do not. That's why it makes sense, from an economic perspective, to finance payroll tax cuts with a tax hike on millionaires.
    So let me see if I have this right, you support cutting the funding for SS and Medicare and then for rich to pick up that funding thus paying for the SS benefits of others? How is that not class warfare? How typically liberal of you?

  3. #393
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    Re: CBO: Stimulus hurts economy in the long run

    Quote Originally Posted by Conservative View Post
    So let me see if I have this right, you support cutting the funding for SS and Medicare and then for rich to pick up that funding thus paying for the SS benefits of others? How is that not class warfare? How typically liberal of you?
    It is simply the best, (possibly) politically feasible way available to boost demand. Of course the wealthy ultimately benefit from the strategy, as stronger demand trickles up and lands in corporate coffers.

  4. #394
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    Re: CBO: Stimulus hurts economy in the long run

    Quote Originally Posted by AdamT View Post
    ...for the simple reason that the poor and middle class tend to spend all or most of their income while the rich do not.
    One could argue the poor and middle class tend to spend all or most of their income on outsourced products (Walmart) as they are all they can afford which questions the affect it has on domestic demand. And in turn argue that the rich are the only ones who can afford to purchase domestic products.

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    Re: CBO: Stimulus hurts economy in the long run

    Quote Originally Posted by AdamT View Post
    It is simply the best, (possibly) politically feasible way available to boost demand. Of course the wealthy ultimately benefit from the strategy, as stronger demand trickles up and lands in corporate coffers.
    The potential problem with this policy is that the tax cuts cuts could be used to pay down consumer debt which ultimately does not affect demand in the short term. The wealthy (banks) will benefit immediately on debt repayment. Bill Clinton stated at the GDI that the economy for the last decade was based on housing, public and private debt all three of which is not sustainable (obviously now). IMHO the economy will not gain much steam until the private debt is reduced to a level that the majority of low/middle income people have ENOUGH disposable income to stimulate demand. The PR tax cut is not sufficient enough to promote this condition quickly.

  6. #396
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    Re: CBO: Stimulus hurts economy in the long run

    Quote Originally Posted by Dickieboy View Post
    One could argue the poor and middle class tend to spend all or most of their income on outsourced products (Walmart) as they are all they can afford which questions the affect it has on domestic demand. And in turn argue that the rich are the only ones who can afford to purchase domestic products.
    You could argue that, but it would be a pretty lame argument without something resembling fact to back it up. Last time I checked, Porsche and Lamborghini didn't have any U.S. manufacturing plants.

  7. #397
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    Re: CBO: Stimulus hurts economy in the long run

    Quote Originally Posted by Dickieboy View Post
    The potential problem with this policy is that the tax cuts cuts could be used to pay down consumer debt which ultimately does not affect demand in the short term. The wealthy (banks) will benefit immediately on debt repayment. Bill Clinton stated at the GDI that the economy for the last decade was based on housing, public and private debt all three of which is not sustainable (obviously now). IMHO the economy will not gain much steam until the private debt is reduced to a level that the majority of low/middle income people have ENOUGH disposable income to stimulate demand. The PR tax cut is not sufficient enough to promote this condition quickly.
    It's true that demand has been dampened due to deleveraging, but the recent uptick in demand has been accompanied by an increased use of credit.

  8. #398
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    Re: CBO: Stimulus hurts economy in the long run

    Quote Originally Posted by AdamT View Post
    You could argue that, but it would be a pretty lame argument without something resembling fact to back it up.
    Sorry but I missed the links to the facts backing up your arguments made in post #391 (or #397 for that matter). Would I be amiss in describing it 'lame' as you did mine?

  9. #399
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    Re: CBO: Stimulus hurts economy in the long run

    Quote Originally Posted by AdamT View Post
    It's true that demand has been dampened due to deleveraging, but the recent uptick in demand has been accompanied by an increased use of credit.
    Here is something you and all other liberals need to think about. What is it about liberalism that creates such loyalty?

    East Lake Blister

  10. #400
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    Re: CBO: Stimulus hurts economy in the long run

    Quote Originally Posted by Dickieboy View Post
    Sorry but I missed the links to the facts backing up your arguments made in post #391 (or #397 for that matter). Would I be amiss in describing it 'lame' as you did mine?
    #391 is standard economic theory with respect to tax cuts and stimulus. I'm sure this isn't the first time you've heard it. For #397:

    Consumer use of debit and credit cards to pay for purchases on Black Friday increased significantly on a year-over-year, according to data from First Data's SpendTrend analysis of Black Friday sales figures. In all, the number of transactions using these accounts jumped 7.3 percent over last year's totals, and the value of those purchases rose 6.3 percent.
    Black Friday card transactions increased significantly

    Not saying you're wrong about your theory, but I've never seen any evidence that low income people spend a proportionately higher amount of their money on imported goods.

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