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Thread: U.S. Jobless Rate Unexpectedly Declines to 8.6%

  1. #181
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    Re: U.S. Jobless Rate Unexpectedly Declines to 8.6%

    Quote Originally Posted by Goldenboy219 View Post
    Page 3 of the article has a chart that gives an efficiency breakdown of various types of fiscal policy stemming from tax cuts to transfer payments. The article was an address to congress calling for economic stimulus as early as July 2008.

    To state that Keynesian stimulus "borrows demand from the future" is inaccurate. The point of enacting such a policy is to create demand, but this does not necessarily require future demand to be repaid. When the government conducts any sort of fiscal stimulus, public saving (government spending minus tax revenue) should go to the negative if it is not already there. This can be achieved on three possible fronts; 1.) decreasing taxes 2.) increasing government expenditures 3.) a mixture of both. Any type of deficit spending, whether it is stimulative or not, requires tax increases in the future to finance said expenditure. Tax revenue is also a component in private saving (income minus (consumption plus taxation)), so it is intuitive that increasing taxes in the future will diminish business investment, but not necessarily future demand.

    For an actual article that supports the stimulus which is also quantitative in nature, see this.
    I went back and double checked the table. Sorry, but as for your second link I don't have the energy to read through it all right now. Such is the life in the financial industry and it's after work on a Friday.

    I don't see your argument of why "borrowing demand from the future is inaccurate". From my limited understanding of Keynesian economics I get this:

    " The mainstream economics position is that deficit spending is desirable and necessary as part of countercyclical fiscal policy, but that there should not be a structural deficit: in an economic slump, government should run deficits, to compensate for the shortfall in aggregate demand, but should run corresponding surpluses in boom times so that there is no net deficit over an economic cycle a cyclical deficit only. This is derived from Keynesian economics, and has been the mainstream economics view (in the Anglo-Saxon world especially) since Keynesian economics was developed and largely accepted in the Great Depression in the 1930s."
    Deficit spending - Wikipedia, the free encyclopedia

    Now the core point of this position is countercyclical fiscal policy. Note that the position calls for running surpluses in boom times in order to realize a zero net deficit. In order to realize these surpluses one doesn't necessarily have to raise taxes. The point of the stimulative spending in the first place is that future incomes are greater and thus more revenue is collected. Also, if the government decided to cut spending during boom times by an amount equal to the spending in recessionary times than they could also realize a surplus.

    Whether you raise taxes, cut spending, or collect higher revenues at the same tax rates, you are still using demand to pay for past demand. The higher the deficit spending in the recession, the more the government has to spend paying down debts in the boom time. This spending is essentially borrowed in the recession from potential spending in the future. Now if you look at our current fiscal situation the quote above would make you laugh. Since deficit spending started we have never run a surplus despite experiencing huge economic booms. I don't think this is a system Keynes would have ever approved of.

    I have asked this question many times on this board and have yet to receive a response. If you raise taxes but fail to increase revenues, who stands to benefit? Increased tax rates affect on government revenue are about as predictable as reduced tax rates on GDP. If you raise taxes and the government doesn't realize projected revenues all you are doing is suppressing GDP growth. Please read my post on this thread to get a better understanding of my position that tax increases (and the difficulty of predicitng their effect) do not automatically equal increased revenue.

    As for the table, you should note that the numbers are a prediction of the one-year change in GDP as a result of the tax cuts and spending. There is no arguing that spending is a better short term solution as it directly increases demand by putting money in the consumers hand tomorrow. Realization of tax cuts in GDP takes longer as the money that is kept in the market isn't put into the pockets of consumers as quickly and requires time for it to make it's back into the system. Now where is the money coming from? From deficit government spending it comes from debt. From tax cuts it comes from a higher percent of the private sector's share of GDP. On a side note, the reason why I am always in support of lower taxes and lower spending as opposed to higher taxes and higher spending is because the former increase in GDP comes from the result of an individual's productivity. They are allowed to keep a higher portion of what is rightfully theirs. The latter can only come from two places. A higher portion of the government's share of an individuals earnings (higher taxes) or borrowing money from investors/inflation of the money supply (deficit spending). If the government chooses to borrow the money, higher portions of future GDP must be collected in order to repay the loan. Now the rationalization is that by spending today the government is able to create more future demand than it would need to collect to repay the loans. This is sometimes true if businesses are willing to pick up where the government left off and invest capital in the same productivie activity that the government spurred. However, I find the recent stimulus to be an example of the failure to do so. The unemployment extensions and food stamp increases have provided no additional productivity and have only served to temporarily inflate GDP today (through consumer spending of government dollars) at the expense of future spending/revenue that must be used to repay the loans that are incurred.

    Now, personally, on a moral level, I believe that the reduction in a person's income from the government is almost always preferable to the reduction in a person's income from their own productivity. Of course exceptions have to be made for certain people who lack the productive abilities to survive on their own as we are much too civilized to base fiscal policy on social darwinism. Charities do a great deal in addressing this issue but I realize there is a need for the government to make up the balance. This is the basis for why I am predisposed to tax cuts over government spending.
    "There is an excellent correlation between giving society what it wants and making money, and almost no correlation between the desire to make money and how much money one makes." ~Dalio

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    Re: U.S. Jobless Rate Unexpectedly Declines to 8.6%

    Sorry, but as for your second link I don't have the energy to read through it all right now. Such is the life in the financial industry and it's after work on a Friday.
    I have bookmarked it and will be reading it over the weekend or Monday morning at the office.
    "There is an excellent correlation between giving society what it wants and making money, and almost no correlation between the desire to make money and how much money one makes." ~Dalio

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    Re: U.S. Jobless Rate Unexpectedly Declines to 8.6%

    Quote Originally Posted by treedancer View Post
    Here is a CP from the post you quoted for ya.
    Oh! Total earnings. Ok, that clears it up. So, after deductions, the tax liability s going to be much lower. By then, the Earned Income Credit will kick in and this person will owe, um, nothing!
    Quote Originally Posted by Top Cat View Post
    At least Bill saved his transgressions for grown women. Not suggesting what he did was OK. But he didn't chase 14 year olds.

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    Re: U.S. Jobless Rate Unexpectedly Declines to 8.6%

    so the unemployment rate drops and your all mad? Americans are an odd breed..

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    Re: U.S. Jobless Rate Unexpectedly Declines to 8.6%

    Quote Originally Posted by Higgins86 View Post
    so the unemployment rate drops and your all mad? Americans are an odd breed..
    Well, if unemployment really is down, and if it continues to drop, then we're likely to have four more years of a Democrat in the White House.

    That's the last thing that the Republican party wants to see happen.

    But, some of us are questioning whether unemployment is, in fact, down, or whether other factors are making it look as if it is.
    "Donald Trump is a phony, a fraud... [he's] playing the American public for suckers." Mitt Romney

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    Re: U.S. Jobless Rate Unexpectedly Declines to 8.6%

    I wonder how many where homeless people sent to guantanamo while OWS is active. I bet some mayors would be tempted to use the OWS movement timing to also clear the streets of homeless and say their part of the OWS group.
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  7. #187
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    Re: U.S. Jobless Rate Unexpectedly Declines to 8.6%

    Quote Originally Posted by Dittohead not! View Post
    Well, if unemployment really is down, and if it continues to drop, then we're likely to have four more years of a Democrat in the White House.

    That's the last thing that the Republican party wants to see happen.

    But, some of us are questioning whether unemployment is, in fact, down, or whether other factors are making it look as if it is.

    meh with all the crappy financial news we have been having im just going to play dumb and say that unemployment is dropping and soon we will all be having picnics and double rainbows.

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    Re: U.S. Jobless Rate Unexpectedly Declines to 8.6%

    Quote Originally Posted by Higgins86 View Post
    meh with all the crappy financial news we have been having im just going to play dumb and say that unemployment is dropping and soon we will all be having picnics and double rainbows.
    Hold that thought, at least until after Christmas. Maybe it's true after all.

    Can we have unicorns frolicking under the double rainbows?
    "Donald Trump is a phony, a fraud... [he's] playing the American public for suckers." Mitt Romney

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    Re: U.S. Jobless Rate Unexpectedly Declines to 8.6%

    Quote Originally Posted by Dittohead not! View Post
    Hold that thought, at least until after Christmas. Maybe it's true after all.

    Can we have unicorns frolicking under the double rainbows?

    we can have whatever you want champ

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    Re: U.S. Jobless Rate Unexpectedly Declines to 8.6%

    Quote Originally Posted by apdst View Post
    Oh! Total earnings. Ok, that clears it up. So, after deductions, the tax liability s going to be much lower. By then, the Earned Income Credit will kick in and this person will owe, um, nothing!

    Based on the information you provided, you are not eligible to claim the Earned Income Tax Credit because...

    The total of your earned income amount must be less than $13,460 for 2010
    The total of your adjusted gross income amount must be less than $13,460 for 2010
    The haggardness of poverty is everywhere seen contrasted with the sleekness of wealth, the exhorted labor of some compensating for the idleness of others, wretched hovels by the side of stately colonnades, the rags of indigence blended with the ensigns of opulence; in a word, the most useless profusion in the midst of the most urgent wants.Jean-Baptiste Say

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