Obama is Bush part 3

I.O.U.S.A.: Documentary Worth a Peek

chistletoe - while I agree with you 100% that spying/harassing Americans, bailing out foolish investment banks, and the various other shenanigans of Bush 43 are bad -- I have to take issue with your implication that the problems are all Bush 43. For all the propoganda, Clinton did not balance SPENDING, he balanced the "budget" (lots of things "didn't count" even though they cost money). The US has been spending way beyond its means for decades. Propping up dictators is hardly a new thing: JFK and LBJ were two of the biggest supporters of the Shah of Iran. Every president has (by necessity) been a supporter of the House of Saud.

While I agree with you in principle that some spending should be reallocated -- the facts remain that government spending has grown twice as fast as the economy (and this doesnt count off balance sheet spending like Fannie Mae and all the turnpike authorities). Even if 100% of it was spent on infrastructure and helping the less fortunate -- it would still be terrible fiscal policy.

Comedians loved to poke fun at Enron's accounting-- but off balance sheet financing vehicles were invented by government accountants: The NY State Turnpike Authority was created to circumvent voter imposed debt limits. Government was committing accounting fraud long before Ken Lay or Bush 43 came on the scene

I.O.U.S.A.: Documentary Worth a Peek

ironist15 -- thanks for clarifying what Laffer curve meant, according to Laffer. What you say sounds much more reasonable... But what the Laffer Curve came to mean, as defined by Washington DC, was absurd.

My point was: whatever your view on tax rates, government spending has been growing way too fast... roughly twice as fast as the economy as a whole (measured by GDP). The effect of that absurd spending completely overwhelms a discussion of tax rates -- so I have to disagree with the author's "conclusion" that lower tax rates do not increase tax revenue. If lower tax rates promote faster economic growth, than over the **long term** they might very well result in higher over all tax receipts.

This is all somewhat of a moot discussion though-- unless spending is curtailed as a percent of GDP it won't make any difference.

I think its too late to save Social Security/Medicare. The amount of adjustment necessary is too great to absorb in the 7-8 years before they go cash flow negative. If we were going to save these programs, the adjustment needed to be spread over a longer period of time (and give people time to increase savings). Its too late now.

I.O.U.S.A.: Documentary Worth a Peek

Why does every person in the media always frame the deficit debate as a question of insufficient taxes? Why does it not even occur to you that tax rates (even the lower ones of Bush 43) are more than sufficient, but SPENDING is too high? You need to present a more balanced view and not suggest the answer is always higher tax rates.

Government spending, as a percent of GDP, is now TWICE what it was when JFK was president (according to numbers from the Fed St Louis). This means government spending has grown twice as fast as the economy as a whole.... Tax rates are not the problem.

I agree the Laffer curve was absurd, but the bigger question of whether lower taxes creates more/less revenue was never answered -- its just most Americans have too short an attention span. Lower tax rates are almost always associated with higher economic growth. Over a long period of time a low tax rate on a big economy (from higher growth) can very easily be larger than a high tax rate on a smaller economy. Low tax rates helped JFK, Reagan and Bush 43. High tax rates hurt LBJ, Carter, Bush 41. Low tax rates helped Ireland, while high tax rates hurt France and all the banana republics -- its not just a U.S. question. Reagan, like all the Presidents in recent times, spent like a drunken sailor -- so the lower tax rates were temporary (effectively unwound in his second term with lower deductions, and formally unwound by Bush 41). We never got to see the long term effects of lower tax rates. All the evidence you cite is what happens when spending is out of control.

I challenge you to prove that higher tax rates generate more revenue over the **long term**. Higher tax rates arguably generate more revenue **short term**, but the slower economic growth clearly negates any advantage over a longer term. And you would have to keep spending constant (at least as a percentage of GDP) in order to draw any meaningful conclusion.

Its absurd for you to ask people to think about Peak Oil (a long term issue) and then have such a short attention span on fiscal policy.