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IT'S THE ECONOMY, STUPID.
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Starscream
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CloseSo brandonabley and I were quabbling in another post about the economy (ironically, in a forum that had little to do with the economy) and he suggested we have an economy thread. So let's do it.
I'll start out with some econ theory. I really want to focus on supply-side economics because, well, they don't work. For those of you caught unawares, this is a macroeconomic theory made popular by Ronald Reagan during his presidency. The general gist of it is that those who believe in supply-side economic believe the government should have extremely low tax rates for corporations and wealthy individuals, which, in their mind, would cause the economy to grow through increased saving and from economic development.
This is the same mentality that President Bush has advocated (though much less charismatically) and that now John McCain is being forced to believe to secure his nomination.
The problem is it doesn't really work.
Reagan used his popular vote mandate to force these ideas through, along with dismantling regulatory agencies. We were in a recession at the beginning of his term, and after a few years the supply-side economics were put into place we experienced a decent rise in the total economy. In fact, the total numbers show that it was perhaps the third best decade in modern history for the economy, trailing only the 1960's and the 1990's. That means it works, right?
Well, it did on paper, but it hides a lot of facts.
The actual growth during this period all benefited wealthy investors. Real wages for normal workers were depressed. Unemployment was still at 5% (about what it is now in our recession, compared to 4% in the 1990's). The poverty rate was still at about 13%, compared to 9% in the Clinton administration. The tax cuts for the wealthy and the military buildup ballooned our federal deficit like at no other period in our history (except for Bush).
Oh, and it lead to another recession at the end of George H.W. Bush's term.
In short, supply-side economics is great for wealthy investors and executives and terrible for everybody else.
I am a strong believer in the free market, but I also think it has to be regulated and fair to insure it remains free. I don't support the welfare state, but I also don't support corporate welfare. Supply-side economics have given corporations unfair advantages in the market and the benefits have went exclusively to the wealthy.
During the 1970's, a CEO of a corporation might make 40 times that of his or her average worker. Today a CEO makes approximately 400 times as much as his or her average worker.
And it just keeps getting worse. Capital gains are now only taxed at 15% while the average citizen pays nearly 35% of their check towards taxes. For a comparison, during the Reagan period they lowered capital gains to 28% while raising the average citizen's rates to 28%. Then the capital gains tax was lowered again to 20% and now 15%. This doesn't even include the caps on social security taxes for those making over $90,000 a year. And we wonder why the program is failing - the people with the most money aren't paying in.
Neo-conservatives say they stand against redistributing wealth, but it appears to me that is exactly what they are doing - to their advantage of the wealthy.
Sorry for the long rant, but hopefully it will generate some discussion.
I'll start out with some econ theory. I really want to focus on supply-side economics because, well, they don't work. For those of you caught unawares, this is a macroeconomic theory made popular by Ronald Reagan during his presidency. The general gist of it is that those who believe in supply-side economic believe the government should have extremely low tax rates for corporations and wealthy individuals, which, in their mind, would cause the economy to grow through increased saving and from economic development.
This is the same mentality that President Bush has advocated (though much less charismatically) and that now John McCain is being forced to believe to secure his nomination.
The problem is it doesn't really work.
Reagan used his popular vote mandate to force these ideas through, along with dismantling regulatory agencies. We were in a recession at the beginning of his term, and after a few years the supply-side economics were put into place we experienced a decent rise in the total economy. In fact, the total numbers show that it was perhaps the third best decade in modern history for the economy, trailing only the 1960's and the 1990's. That means it works, right?
Well, it did on paper, but it hides a lot of facts.
The actual growth during this period all benefited wealthy investors. Real wages for normal workers were depressed. Unemployment was still at 5% (about what it is now in our recession, compared to 4% in the 1990's). The poverty rate was still at about 13%, compared to 9% in the Clinton administration. The tax cuts for the wealthy and the military buildup ballooned our federal deficit like at no other period in our history (except for Bush).
Oh, and it lead to another recession at the end of George H.W. Bush's term.
In short, supply-side economics is great for wealthy investors and executives and terrible for everybody else.
I am a strong believer in the free market, but I also think it has to be regulated and fair to insure it remains free. I don't support the welfare state, but I also don't support corporate welfare. Supply-side economics have given corporations unfair advantages in the market and the benefits have went exclusively to the wealthy.
During the 1970's, a CEO of a corporation might make 40 times that of his or her average worker. Today a CEO makes approximately 400 times as much as his or her average worker.
And it just keeps getting worse. Capital gains are now only taxed at 15% while the average citizen pays nearly 35% of their check towards taxes. For a comparison, during the Reagan period they lowered capital gains to 28% while raising the average citizen's rates to 28%. Then the capital gains tax was lowered again to 20% and now 15%. This doesn't even include the caps on social security taxes for those making over $90,000 a year. And we wonder why the program is failing - the people with the most money aren't paying in.
Neo-conservatives say they stand against redistributing wealth, but it appears to me that is exactly what they are doing - to their advantage of the wealthy.
Sorry for the long rant, but hopefully it will generate some discussion.
maladroithim
1495
author=rcholbert link=topic=1051.msg14859#msg14859 date=1210096067
Sorry for the long rant, but hopefully it will generate some discussion.
It definitely will later man. I have no time right now but I just wanted to let you know I read it!
(also you are basically right on all fronts though I will debate your view on capital gains)
demondestiny
889
author=republic link=topic=1051.msg15064#msg15064 date=1210147291
Economy discussion is boring. Politics is much more interesting.
Yep, i'm going to have to side with you on this one. But carry on anyway.
Economics are way more interesting than random people making promises they can't keep while systematically calling everyone in the other party, at best, a child-eating savage.
Economics is really the study of efficiency. Which is what Western society is built upon.
Economics is really the study of efficiency. Which is what Western society is built upon.
republic
20
Economics are way more interesting than random people making promises they can't keep while systematically calling everyone in the other party, at best, a child-eating savage.
Well, the thing is about economics is that you can not include someone without a background into the discussion. When you're talking about GDP or Keynsian economics, I'm willing to bet that a lot of people don't know what I'm talking about. I'm willing to bet holbert's essay went over a few people's heads. With politics, all you need to know is whether you like the candidate or you don't. Bring some back up evidence and you've got a discussion. People get all passionate about it, which I find fascinating. The fact that you refer candidates as random child-eating savages illustrates my point.
Economics is really the study of efficiency. Which is what Western society is built upon.
I disagree, western society is built upon natural human equality and natural right. Efficiency came to play when western countries started to do away with feudalism and divine right of kings. But that's another discussion. >.<
maladroithim
1495
author=rcholbert link=topic=1051.msg14859#msg14859 date=1210096067
Supply side economics
I agree wholeheartedly. Another fundamental problem with supply-side economics is that a government requires a certain amount of income to function properly and that the wealthy do not spend much of their income on taxable items.
The problem is that wealthy people do not spend money that they keep on a tax holiday. The definition of a wealthy person is someone who has significantly more money than they need to survive -- their bills are paid regardless of the tax rate. Cutting their taxes does nothing but decrease government revenue and increase the size of bank accounts that do not need to grow.
The tax burden is therefore place on the middle or lower classes, who are employed by the wealthy. It's feasible to increase taxes on the poor to cover the deficit, and in the short term, that ensures that government revenue remains stable. The poor, however, are left with less recreational and discretionary income, and they end up buying fewer things. In the long term, the government collects fewer revenues through sales tax while simultaneously decreasing activity in the economy. In the very long term, depressed markets make less money for the wealthy. Eventually, all parties have less money (this is called a recession).
Our government has faced this issue pretty much since the day Bush started guiding the country and it is probably exclusively his fault. His solution up until now has been to borrow money, because lower federal income was viewed as temporary problem (it was erroneously assumed that the Gulf Wars wars would end someday). Because the supply-side economic model has the long-term effect of depressing the overall economy, however, we end up in the situation we are in right now. The current solution (for those not living in the US) is to literally send $600 checks to every single tax-paying adult in the country. It's believed that this will stimulate the economy, which is a ridiculous idea because it 1. does nothing to address the problems that got us here in the first place and 2. will probably not result in increased economic activity other than a briefly increased rate of repaying credit card debt (the fed aren't the only people subsidizing their bills with credit cards).
However Holbert I disagree with your stance on capital gains.
Not every investor is wealthy. In the last 15 years, the average rate of lifetime savings has gone from something like 20% to -%20 percent (Hillary Clinton said so who knows if she's telling the truth). Regardless of the exact numbers, the fact is that Americans are saving less money. Capital gains taxes include stocks and bonds, which every lower and middle-class person should purchase if they ever plan on retiring. Decreasing capital gains taxes encourages people to invest in their futures. People who have invested money not only stimulate new ideas in the marketplace (investment is more productive than hoarding) but also help protect against recession (people who have a positive net worth can always rely on savings to help them through tough times).
The problem is that regardless of the tax rate, most people can't afford to even pay their mortgages (however it is their own fucking fault Jesus) so they are hardly about to start investing into their future. I also note that IRA and Roth IRA accounts are not legally available to the wealthy and that these accounts are protected from taxation, so capital gains taxes probably don't even apply to the poor.
I do believe that the very wealthy should be taxed more heavily on their investments as well as the value of whatever property they happen to own that generates income. The distinction I posit is that people with a net worth of less than a million dollars have a lower capital gains tax than those with a higher net worth -- after all, extracurricular investing in addition to a retirement account does nothing but good for the economy.
So hey guys what about the economic stimulus package?
The problem with your thoughts on capital gains is... well, you already mentioned it. The gap between the have and the have nots is now so large that the have nots won't even consider investing. However, it did remind me of a radical tax code I used to advocate back in the day.
The "scaling flat tax" (previously referred to as the progressive flat tax before I realized progressive means liberal which means gay) would give everyone a burden percent on their income, but scale up according to wealth. For example, if you lived below the poverty level for your family you would pay no taxes. Those above poverty but not yet middle class would pay a smaller tax, like a 10-15%. As your wealth increases, your tax burden also increases.
The problem with this is you have to make sure that the percents make sense and there cannot be a "tax bracket" because then otherwise it would actually make sense to stay under a certain level so your tax percent doesn't rise if you were close to a cutoff.
I understand the wealthy pay the vast majority of taxes, but I also understand that the taxes they pay constitute a mere fraction of their income, while the poor struggle to put food on the plate and thus it affects them so much more. By taxing someone who made $500,000,000 last year at a 45% tax rate or so, their lives would not really be affected. They would still be incredibly wealthy and in the top 1% of earners. If they bitch about it you can tell them to work at Wal-Mart and get the 0% tax rate - then maybe they'll realize that "hey, maybe this not the end of the world.". It doesn't reduce the incentive to work hard because you can still make outrageous sums of money.
America gave them the opportunity to make themselves a success, now they need to give America their just dues. There aren't many rags to riches stories in Myanmar.
I would also remove all income caps of things like social security taxes. The fact that the wealthy quit paying at $90,000 is ridiculous, and then when wonder why social security is bankrupt (that and borrowing money from it to pay for WAR).
And no, I would not use the higher tax rate to found a socialistic utopia. I would use the money to make payments on the national debt. I would also like to dismantle or overhaul various other parts of the welfare, such as, well, welfare. The only "socialism" type ideas I really like are social security (we need to move the age requirement up though and look at what it pays out) and universal healthcare (not the watered down BS Obama and Clinton are proposing). Most of the rest of them just give people excuses to stay poor - I have plenty of family members who made a career out of welfare and food stamps. Now that is no incentive to work. Replace it with a very limited, temporary system which requires you to work but helps you make ends meet until whatever crisis blows over.
Speaking of which, we need a constitutional amendment to require congress and the president to have a balanced budget each year to prevent further ventures down the debt path. Almost all states have this as part of their constitution. Obviously exceptions would have to be made in a time of war, but seriously. Of course then we need to elect people who aren't morons and know how to the the War Powers resolution to the end the war when it is no longer necessary or feasible so it doesn't make a excuse to overspend.
We also need to require congress to use modern corporate (but not Enron) style accounting procedures. The ones they use now allow them to hide their debt because they don't have to include future expenditures that they have going on. This means they don't pay their bills until long after they are due.
Holy cow did I go off topic.
(Afterthought: I should probably edit this post so it doesn't bar me from holding an elected office in the future.)
I am not spending a dime of my stimulus bill yet. I am saving to to help fund my bachelor's degree. If I did spend it, it probably would go on a TV from China, a videogame from Japan, gas from Iran or some clothes from India, thus not helping things out too much.
The tax stimulus is just as crazy as the gas tax holiday McCain and Clinton are proposing, except this one puts some extra bills in your wallet and make you feel all good and fuzzy.
The "scaling flat tax" (previously referred to as the progressive flat tax before I realized progressive means liberal which means gay) would give everyone a burden percent on their income, but scale up according to wealth. For example, if you lived below the poverty level for your family you would pay no taxes. Those above poverty but not yet middle class would pay a smaller tax, like a 10-15%. As your wealth increases, your tax burden also increases.
The problem with this is you have to make sure that the percents make sense and there cannot be a "tax bracket" because then otherwise it would actually make sense to stay under a certain level so your tax percent doesn't rise if you were close to a cutoff.
I understand the wealthy pay the vast majority of taxes, but I also understand that the taxes they pay constitute a mere fraction of their income, while the poor struggle to put food on the plate and thus it affects them so much more. By taxing someone who made $500,000,000 last year at a 45% tax rate or so, their lives would not really be affected. They would still be incredibly wealthy and in the top 1% of earners. If they bitch about it you can tell them to work at Wal-Mart and get the 0% tax rate - then maybe they'll realize that "hey, maybe this not the end of the world.". It doesn't reduce the incentive to work hard because you can still make outrageous sums of money.
America gave them the opportunity to make themselves a success, now they need to give America their just dues. There aren't many rags to riches stories in Myanmar.
I would also remove all income caps of things like social security taxes. The fact that the wealthy quit paying at $90,000 is ridiculous, and then when wonder why social security is bankrupt (that and borrowing money from it to pay for WAR).
And no, I would not use the higher tax rate to found a socialistic utopia. I would use the money to make payments on the national debt. I would also like to dismantle or overhaul various other parts of the welfare, such as, well, welfare. The only "socialism" type ideas I really like are social security (we need to move the age requirement up though and look at what it pays out) and universal healthcare (not the watered down BS Obama and Clinton are proposing). Most of the rest of them just give people excuses to stay poor - I have plenty of family members who made a career out of welfare and food stamps. Now that is no incentive to work. Replace it with a very limited, temporary system which requires you to work but helps you make ends meet until whatever crisis blows over.
Speaking of which, we need a constitutional amendment to require congress and the president to have a balanced budget each year to prevent further ventures down the debt path. Almost all states have this as part of their constitution. Obviously exceptions would have to be made in a time of war, but seriously. Of course then we need to elect people who aren't morons and know how to the the War Powers resolution to the end the war when it is no longer necessary or feasible so it doesn't make a excuse to overspend.
We also need to require congress to use modern corporate (but not Enron) style accounting procedures. The ones they use now allow them to hide their debt because they don't have to include future expenditures that they have going on. This means they don't pay their bills until long after they are due.
Holy cow did I go off topic.
(Afterthought: I should probably edit this post so it doesn't bar me from holding an elected office in the future.)
I am not spending a dime of my stimulus bill yet. I am saving to to help fund my bachelor's degree. If I did spend it, it probably would go on a TV from China, a videogame from Japan, gas from Iran or some clothes from India, thus not helping things out too much.
The tax stimulus is just as crazy as the gas tax holiday McCain and Clinton are proposing, except this one puts some extra bills in your wallet and make you feel all good and fuzzy.
Haha. Very true (Iran isn't even the top dozen, IIRC).
But it sounds more sensationalist that way!
I LANDED UNDER SNIPE FIRE...
But it sounds more sensationalist that way!
I LANDED UNDER SNIPE FIRE...
maladroithim
1495
author=rcholbert link=topic=1051.msg15505#msg15505 date=1210291953
The tax stimulus is just as crazy as the gas tax holiday McCain and Clinton are proposing, except this one puts some extra bills in your wallet and make you feel all good and fuzzy.
Man the gas tax holiday is outrageous. It would save the average American about $.50 per day but cost the federal government like over a billion dollars or something =\ I think the only reason the idea of a gas tax holiday came up was because a lot of Americans assume the government has infinite money and never stop to wonder where the money comes from.
Also Holbert can I be your VP? That way we can bring a little bit of ovary to the oval office <3
author=brandonabley link=topic=1051.msg15513#msg15513 date=1210293706author=rcholbert link=topic=1051.msg15505#msg15505 date=1210291953
The tax stimulus is just as crazy as the gas tax holiday McCain and Clinton are proposing, except this one puts some extra bills in your wallet and make you feel all good and fuzzy.
Man the gas tax holiday is outrageous. It would save the average American about $.50 per day but cost the federal government like over a billion dollars or something =\
Also Holbert can I be your VP? That way we can bring a little bit of ovary to the oval office <3
It would cost the federal government 9 billion dollars, directly taken out of infrastructure upkeep for things like roads. Or, as you well know, bridges collapsing.
I may have use of a guy who wears crazy sweaters and handbags to balance my ticket.
republic respond, you know you want to.
republic
20
republic respond, you know you want to.
Sorry, I was getting distracted. I kept watching the playoffs.
(previously referred to as the progressive flat tax before I realized progressive means liberal which means gay)
I can't help but feel that's directed towards me.
(Afterthought: I should probably edit this post so it doesn't bar me from holding an elected office in the future.)
If you're serious about politics, I'll give you some starting advice. Hopefully, you've ran into this already. Ask yourself if you can convince 100 people to vote for you. If you're able to do this, then convince each of them to get another 100 to vote for you. So on and so forth. Once you're comfortable with that get into small time position. Then work your way up. Never ever get into a losing race early in your career. Too many losses can end it.
Blah blah economy
Economy is not my field of study. I'm also uninterested in the subject and unwilling to partake in the discussion. Sorry! >.<
author=republic link=topic=1051.msg15520#msg15520 date=1210296961
I can't help but feel that's directed towards me.
I honestly have no idea why you would feel that is directed at you unless you have some unknown secret you would like to share.
author=republic link=topic=1051.msg15520#msg15520 date=1210296961
Intro to politics
I am pretty well versed in local level politics, but thanks for the advice.
author=republic link=topic=1051.msg15520#msg15520 date=1210296961
Economy is not my field of study. I'm also uninterested in the subject and unwilling to partake in the discussion. Sorry! >.<
I fully expect Senator McCain to nominate you as secretary of the treasury if he is elected, as you and he are apparently on the same page.
Hillary never actually wanted the gas tax holiday to happen. She knew full well it would never fly, which is exactly why she pitched it so much.
Guess it blew up in her wide-eyed face, eh?
YAY NORTH CAROLINA and to a lesser extent INDIANA
Guess it blew up in her wide-eyed face, eh?
YAY NORTH CAROLINA and to a lesser extent INDIANA
republic
20
author=rcholbert link=topic=1051.msg15523#msg15523 date=1210297385
I fully expect Senator McCain to nominate you as secretary of the treasury if he is elected, as you and he are apparently on the same page.
I bet the pay isn't worth the trouble.
