I am concerned about consumer income; not government income. But even there, the more income consumer has, the more he spends on goods and services, and the more goods and services are purchased, the greater the profits to American business and the greater the growth of the GNP. All this leads to more jobs and more income which will result in more taxes being paid to the federal government, which increases the income of the federal government. This is economics 101. I repeat. The economy is driven by consumer spending; not government spending. A principle Democrats have never been able to understand. When Reagan announced his tax cuts the democrats made the same arugument you are making. But the tax cuts actually led to an increase in federal taxes. The subsequent budget deficit was not due to the tax cuts, but to increased federal spending.
$600/person does not substantially increase business, profits, or GNP. And the immediate taxes paid on it will be mostly state/local sales taxes. You should be concerned with government income as well as consumer income. Both are vital parts of the economy. The economy is driven by both, and in fact both are equally weighted in calculating GDP. Tax cuts & tax rebates are not the same thing. Tax cuts combined with lower government spending are GREAT for our economy. Tax rebates (an actual sending out of government cash) combined with no cut in spending help our GDP marginally for a brief period of time, but cause inflation over the course of the future.
I think you have oversimplified too greatly. Just because the Reagan tax cuts came before the late 80's does not mean they caused what happened by the late 80's. A lot was going on in the 80's. Paul Volker, Fed Chairman, had to kill inflation. It robbed many americans of their life savings by devastating their standard of living. He raised interest rates until the economy crumbled and he destroyed inflation (a good thing, and good for the next 20 years, until Bush II destroyed fiscal responsibility and revived inflation, which will eat away the purchasing power of our retirement funds). So they started off with a severe recession. Simply the business cycle tells us tax receipts will eventually rise from the bottom of a recession. Reagan gets no credit for the business cycle following its normal pattern. Oil fell from $30 a barrel to $13 a barrel, from the late 70's to the late 80's. That's why I quit my job at McDermott in NO. Reaganomics had no effect on this at all. Higher prices spurred new exploration, and govt. mandated fuel economy standards and a decade of changing out the US auto fleet resulted in surplus of oil, and prices fell. What would happen to our economy if oil fell from $110 to $40 a barrel today? Good things. Increase in productivity of the workforce, primarily from widespread deployment of personal computers. Lotus 123, Word Perfect, Paradox, Power Point, and eventually Word, Excel, and Access have had tremendous effect on improving productivity, especially back in the 80's. Reagan gets no credit for this, but corporate profitability had a surge due to technology. Most of that surge is behind us now. As far as you last statement about the deficits being due to spending increases, not tax cuts, its wrong. A deficit is a difference of two numbers, always. To manage the deficit effectively, you have to balance BOTH sides, spending and revenue. A one time temp tax cut to stimulate the economy is not a bad thing to do, if it targets the people who will spend the money and put it to work in the economy. A long term permanent tax cut to address a short term problem may not work out so well. If the Reagan tax cuts worked so well in the long term, why was Bush I a one term president, and defeated primarily on the poor economy ("It's the economy, stupid")? I think Reagan benefited more from other factors in the economy than the tax cuts. Bush I eventually had to raise taxes because the deficit was getting out of control. On TOP of the Bush I tax increase, Clinton passed a second, larger tax increase in 93, targeting the rich, who could afford it. There was no negative effect seen, the deficit began to come down, the govt. exited the credit markets, and with less demand for credit, the banks had to put money on sale, and NATURALLY, interest rates came down. Now it was easier to form capital to start new businesses, which is what happened, creating the longest peacetime expansion since WWII. No tax cuts, 2 consecutive tax increases. There were other new factors, such as widescale deployment of the internet and email which further improved business productivity, but oil prices were not falling as they were on a slow steady climb. Permanent tax cuts combined with permanent spending increases, like we have had since Reagan, have eventually sunk the dollar (except for the Clinton balanced budget years when the dollar was at its strongest). Bad Republicans!
That's voodoo economics 101. Nonsense. The economy is driven by ALL spending. If the goverment hires a contractor to build 20 miles of interstate highway, it is driving the economy just as if you paid for it personally. Our tax dollars don't just disappear from the economy, they allow us to spend money collectively to produce public works and services that can't be paid for by individual citizens. This is economy 101. It's a completely flawed republican concept, not an economic principle. Exactly. The government needs to be gathering just enough income to pay expenses--no more and no less. They don't need to be bailing out corporate failures and they don't need to be stimulating the economy by underfunding government projects, then borrowing money to pay for it. This is a true economic prinicple the republicans have forgotten -- you have to pay the piper.
We are not in a recession. Trying to create one for political purposes will not change that. Look up the economic definition of a recession. We have yet to see a single quarter of a negative GNP.
$600 x 200 million is pretty substantial. The economy is NOT driven by government spending because the government does not add anything to the GNP. Every year there are only so many dollars in circulation. The more dollars that go into government coffers rather than into consumers' pockets, the more that will reduce the GNP and have negative effects on the economy. Tax cuts and tax rebates are not the same. I agree. But they have the same effects. More money for the consumer.
I said that it will not have a substantial effect, not that it was not substantial. I don't know why you don't get this, but government spending is just as much of GDP as consumer spending. Seriously. Look at how GDP is calculated: GDP = consumption + gross investment + government spending + (exports − imports) I'm all for more money to the citizens, but you seem to be ignoring the concept of a balanced budget, which also must be taken into consideration.
That's Liberal propaganda 101 :grin: While I agree in principle, you ignore the part where Liberals build governments so big that they become Socialist - which is where much of Europe is and America cannot afford to go. Europe provides the heinous economic example... C'mon Red. Say it. Reaganomics. You'll feel better. :grin: The problem is that under Liberal regimes, the definition of "expenses" gets expanded. Safety nets become entitlements and entitlements become rights and pretty soon we're back where we were before Bill Clinton reformed welfare, which was sorely needed and is still not complete. In a globalized economy, America cannot compete unless we continue to liberalize our own economy - odd that the Liberals don't want a liberal economic system... BTW: completely agree with your anti-bailouts sentiment. Including the airlines and stupid homeowners. Life is full of gambles and risks. Educate yourself or suffer the harvest of your ignorance.
Unfortunately, your republican party has been no different. Both have expanded government programs & spending.
Not my party. I'm about 40-60 in my voting record. I vote for people, not party. I just don't like party rhetoric.
