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Thread: Reagan Insider on how the GOP, and Dems Destroyed the U.S. Economy

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    Re: Reagan Insider on how the GOP, and Dems Destroyed the U.S. Economy

    Quote Originally Posted by Conservative View Post
    Govt. revenue didn't decline and that is the point.

    U.S. Department of Commerce. Bureau of Economic Analysis
    In absolute terms, government revenue continued to rise. However, as per repeated CBO analyses, the relevant issue is that tax revenue would have been higher had the tax cuts not been made. The added revenue would have allowed for smaller budget deficits than those that resulted.

    In the wake of the tax relief measures, U.S. tax revenue comprised a smaller share of GDP than it did in 2000. Put another way, during the 1993-2000 period, federal tax revenue averaged 19.0% of GDP. In the 2001-2008 timeframe, tax revenue averaged 17.6% of GDP. Had tax revenue remained constant at 19.0% of GDP, the cumulative increase in debt over the 2001-08 timeframe would have been $1.376 trillion less than it was, and the 2008 budget deficit would have been $204 billion less than it was.

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    Re: Reagan Insider on how the GOP, and Dems Destroyed the U.S. Economy

    Quote Originally Posted by Conservative View Post
    In dollars, real or nominal or not, makes no difference, Reagan cut income taxes 10-10-5 over three years and income tax revenue went up. How did that happen.
    LOLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL of course it makes a freaking difference... it makes a HUGE difference. As does population increase btw....
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    Re: Reagan Insider on how the GOP, and Dems Destroyed the U.S. Economy

    Quote Originally Posted by Befuddled_Stoner View Post
    The topic is Republicans’ lack of fiscal conservativism. You said liberals will always complain that republicans/conservatives fall short of yesterday’s standards. I said I hoped we wouldn’t, but I feared that we will would. You said my fears would be so, that liberals would always have reason to think modern conservatives suck compared to yesterday’s.
    Yeah? How does say in any way that I'm "proud" of anything?



    Is it wrong for me to desire a conservative party that is staunchly fiscal conservative and willing to rein in liberal excess? I lament how Republicans have gone from fiscal conservative/social conservative to fiscal liberal/social conservative. Without a party diametrically opposed to the Democrats fiscal liberal/social liberal views, we’ve lost equilibrium and have drifted into massive, unsustainable debt. The entire process has accomplished very little aside from letting the special interests of both parties glut themselves on our future prosperity, and the future is incipient.
    Ah. You seem to be one of a long line of liberals who think conservatives are simply there to occasionally put the brakes on liberals when they get a little too wacky -- else they should just stay out of the way. A "good" conservative knows his place.

    This, too, is not exactly an original line of thinking. The Schlesinger boys made careers of writing on this topic.
    “Offing those rich pigs with their own forks and knives, and then eating a meal in the same room, far out! The Weathermen dig Charles Manson.”-- Bernadine Dohrn

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    Re: Reagan Insider on how the GOP, and Dems Destroyed the U.S. Economy

    Quote Originally Posted by donsutherland1 View Post
    In absolute terms, government revenue continued to rise. However, as per repeated CBO analyses, the relevant issue is that tax revenue would have been higher had the tax cuts not been made. The added revenue would have allowed for smaller budget deficits than those that resulted.

    In the wake of the tax relief measures, U.S. tax revenue comprised a smaller share of GDP than it did in 2000. Put another way, during the 1993-2000 period, federal tax revenue averaged 19.0% of GDP. In the 2001-2008 timeframe, tax revenue averaged 17.6% of GDP. Had tax revenue remained constant at 19.0% of GDP, the cumulative increase in debt over the 2001-08 timeframe would have been $1.376 trillion less than it was, and the 2008 budget deficit would have been $204 billion less than it was.
    Yep, that is what the people who don't believe that tax cuts grow govt. revenue always say but that ignores human behavior and the very poor performance in projection by the CBO. Ever checked their track record. It isn't pretty. Obama claimed the economy would grow over 4% this year and is wrong and that affects govt. revenue.

    Based upon the economy at the time there would have not been the job creation thus new taxpayers that were created if there hadn't been the tax cuts. Almost 18 million jobs were created by Reagan during that period of time and those are new taxpayers.

    Now with Regard to Clinton, there is a very good analysis of the Clinton years that point to the 1997 tax cuts that led to the economic growth. It was meager at best in 93-94 then the GOP Took Congress, repealed many of the Clinton tax increases but hit a home run in 1997. Suggest you check out that tax cut and the economic growth following.

    Per mathematics doesn't work because it ignores human behavior and our consumer driven economy.

    http://www.heritage.org/research/rep...the-1990s-boom
    Last edited by Conservative; 08-16-10 at 04:14 PM.

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    Re: Reagan Insider on how the GOP, and Dems Destroyed the U.S. Economy

    Quote Originally Posted by Conservative View Post
    In dollars, real or nominal or not, makes no difference, Reagan cut income taxes 10-10-5 over three years and income tax revenue went up. How did that happen.
    I prefer measuring tax revenue and expenditures as a % of GDP rather than solely by absolute numbers. Doing so makes a huge difference. For example, if tax revenue growth is slower than overall economic growth while expenditures grow at the same rate as the economy, then federal budget deficits will widen, even if tax revenue is increasing in absolute terms. Even under President Reagan, tax revenue dipped from 19.6% of GDP to 17.3% before rising gradually but never regaining the figure of 19.6% of GDP. Under the Bush tax cuts, tax revenue fell from 20.6% of GDP to as low as 16.1% of GDP before recovering to 18.5% of GDP just before the financial crisis/severe recession.

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    Re: Reagan Insider on how the GOP, and Dems Destroyed the U.S. Economy

    Quote Originally Posted by donsutherland1 View Post
    I prefer measuring tax revenue and expenditures as a % of GDP rather than solely by absolute numbers. Doing so makes a huge difference. For example, if tax revenue growth is slower than overall economic growth while expenditures grow at the same rate as the economy, then federal budget deficits will widen, even if tax revenue is increasing in absolute terms. Even under President Reagan, tax revenue dipped from 19.6% of GDP to 17.3% before rising gradually but never regaining the figure of 19.6% of GDP. Under the Bush tax cuts, tax revenue fell from 20.6% of GDP to as low as 16.1% of GDP before recovering to 18.5% of GDP just before the financial crisis/severe recession.
    Here is a good analysis of the Clinton economic plan

    Tax Cuts, Not the Clinton Tax Hike, Produced the 1990s Boom | The Heritage Foundation

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    Re: Reagan Insider on how the GOP, and Dems Destroyed the U.S. Economy

    Quote Originally Posted by donsutherland1 View Post
    I prefer measuring tax revenue and expenditures as a % of GDP rather than solely by absolute numbers. Doing so makes a huge difference. For example, if tax revenue growth is slower than overall economic growth while expenditures grow at the same rate as the economy, then federal budget deficits will widen, even if tax revenue is increasing in absolute terms. Even under President Reagan, tax revenue dipped from 19.6% of GDP to 17.3% before rising gradually but never regaining the figure of 19.6% of GDP. Under the Bush tax cuts, tax revenue fell from 20.6% of GDP to as low as 16.1% of GDP before recovering to 18.5% of GDP just before the financial crisis/severe recession.
    To do as you suggest ignores the condition of the economy when Reagan took office, mortgage rates were 17% and inflation was double digit. Unemployment was rising. There is no way that the economic growth would have occurred as it did were it not for the tax cuts. Putting money into the hands of the people who created it unleashed incredible economic growth and job creation. That for some reason is ignored. Wonder why?

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    Re: Reagan Insider on how the GOP, and Dems Destroyed the U.S. Economy

    Quote Originally Posted by Conservative View Post
    Yep, that is what the people who don't believe that tax cuts grow govt. revenue always say but that ignores human behavior and the very poor performance in projection by the CBO. Ever checked their track record. It isn't pretty. Obama claimed the economy would grow over 4% this year and is wrong and that affects govt. revenue.
    IMO, tax cuts that are fully funded e.g., either matched by offsetting revenue increases or spending reductions are far better than those that are not financed. To President Reagan's credit, initially there was an attempt to seek deep spending reductions. But that effort failed and then was not sustained. Reagan also confronted stagflation where a supply side remedy was useful.

    In contrast, in the current situation, the nation has witnessed a shock to aggregate demand. Its problem is not a matter of a lack of aggregate supply, hence supply side remedies are not the right medicine this time around.

    Furthermore, down the road the nation faces enormous long-term fiscal challenges. To address those issues, the nation will need to combine tax hikes, discretionary spending reductions (including Defense spending), and entitlement reform. Entitlement reform will very likely require fundamental health care reform that addresses that sector's chronic excess cost growth problem. The IMF suggests that the largest, but not whole share, of fiscal consolidation be achieved by spending reductions.

    IMO, a formula that is comprised of two-thirds spending reductions/reduced growth in spending and one-third on the revenue side would probably be useful. It would be fairly close to the successful Canadian fiscal consolidation of the 1990s, though the necessary U.S. adjustment is much larger than Canada's.

    Given the gravity of the fiscal imbalances, some revenue increases will be necessary. Needless to say, those increases cannot be implemented all at once nor should they focus strictly on a narrow base of taxpayers.

    Now with Regard to Clinton, there is a very good analysis of the Clinton years that point to the 1997 tax cuts that led to the economic growth.
    President Clinton signed his 1997 tax cuts into law in August 1997. The law took effect beginning in 1998. Average annual economic growth during the 1992 Q4-1997 Q4 period was 3.5%. During the 1997 Q4-2000 Q4 timeframe, it came to 4.2%. Hence, there was a modest uptick in economic growth. But myriad factors, including but not limited to the tax cuts, contributed. In any case, prior to the tax cuts, aside from the initial years of economic recovery, economic growth was robust. In contrast, during the 2000 Q4-2008 Q4 timeframe, economic growth averaged 1.7%.

    Per mathematics doesn't work because it ignores human behavior and our consumer driven economy.
    Of course details may differ. However, the differences attributed to human behavior are not so large that one can argue that had the tax cuts not been implemented, tax revenue would have been no higher than what it actually was.

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    Re: Reagan Insider on how the GOP, and Dems Destroyed the U.S. Economy

    donsutherland1;1058924059]IMO, tax cuts that are fully funded e.g., either matched by offsetting revenue increases or spending reductions are far better than those that are not financed. To President Reagan's credit, initially there was an attempt to seek deep spending reductions. But that effort failed and then was not sustained. Reagan also confronted stagflation where a supply side remedy was useful.

    In contrast, in the current situation, the nation has witnessed a shock to aggregate demand. Its problem is not a matter of a lack of aggregate supply, hence supply side remedies are not the right medicine this time around.

    Furthermore, down the road the nation faces enormous long-term fiscal challenges. To address those issues, the nation will need to combine tax hikes, discretionary spending reductions (including Defense spending), and entitlement reform. Entitlement reform will very likely require fundamental health care reform that addresses that sector's chronic excess cost growth problem. The IMF suggests that the largest, but not whole share, of fiscal consolidation be achieved by spending reductions.

    IMO, a formula that is comprised of two-thirds spending reductions/reduced growth in spending and one-third on the revenue side would probably be useful. It would be fairly close to the successful Canadian fiscal consolidation of the 1990s, though the necessary U.S. adjustment is much larger than Canada's.

    Given the gravity of the fiscal imbalances, some revenue increases will be necessary. Needless to say, those increases cannot be implemented all at once nor should they focus strictly on a narrow base of taxpayers.



    President Clinton signed his 1997 tax cuts into law in August 1997. The law took effect beginning in 1998. Average annual economic growth during the 1992 Q4-1997 Q4 period was 3.5%. During the 1997 Q4-2000 Q4 timeframe, it came to 4.2%. Hence, there was a modest uptick in economic growth. But myriad factors, including but not limited to the tax cuts, contributed. In any case, prior to the tax cuts, aside from the initial years of economic recovery, economic growth was robust. In contrast, during the 2000 Q4-2008 Q4 timeframe, economic growth averaged 1.7%.



    Of course details may differ. However, the differences attributed to human behavior are not so large that one can argue that had the tax cuts not been implemented, tax revenue would have been no higher than what it actually was.
    Some good insight however I reject tax hikes because tax hikes will not create new taxpayers to grow enough revenue to fund our deficits and debt. A good combination of tax cuts and massive spending cuts is what is needed at this time. If not we are still going to have high unemployment and puny economic growth. there are 16 million unemployed Americans today and no plan to get them back to work.

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    Re: Reagan Insider on how the GOP, and Dems Destroyed the U.S. Economy

    Quote Originally Posted by Conservative View Post
    To do as you suggest ignores the condition of the economy when Reagan took office, mortgage rates were 17% and inflation was double digit. Unemployment was rising. There is no way that the economic growth would have occurred as it did were it not for the tax cuts. Putting money into the hands of the people who created it unleashed incredible economic growth and job creation. That for some reason is ignored. Wonder why?
    Sorry, your post and mine crossed. In my reply (#78) to your earlier message, I noted:

    Reagan also confronted stagflation where a supply side remedy was useful.

    In contrast, in the current situation, the nation has witnessed a shock to aggregate demand. Its problem is not a matter of a lack of aggregate supply, hence supply side remedies are not the right medicine this time around.


    With respect to stagflation, a supply side remedy is useful. I agree that the tight money (Fed under Paul Volcker) and supply side fiscal policy (under President Reagan) was the right combination to address stagflation. However, the 2001 and 2007-09 recessions were the result of demand shocks resulting from the aftermath of the technology stocks bubble and then real estate bubble. Supply side remedies address a lack of supply relative to demand (entire curves). In the Reagan years, there was a need to shift the supply curve to the right. In the 2001 and 2007-09 recessions there was a need to the aggregate demand curve to the right. Different economic situations require different economic medicine.

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