Who Said it?

[Lagboltz]

I do not believe your statement is accurate in an historical sense. History shows that economic growth can come quickly. If you look at what Coolidge, JFK, and Reagan did, you see that economic growth during their terms was very good. And conversely, economic growth was poor during Hoover, FDR and BO's presidencies.

We had GDP growth averaging 7% by Reagan's fourth year. I think that rather quick. If we had that rate today, instead of 2.5%, revenues would be flowing into the Treasury and things would not be so bleak.

I don't take much stock in a GDP growth that also leads to an increased debt. You will notice on the graph below that during Reagan's years the debt/GDP started rising for the first time since WWII. Reagan didn't even have a war to contend with. An increased GDP accompanied by an increased debt/GDP says very little about what that short term gain really means.

You will notice in the graph that there is an inverse relation between the debt/GDP and the tax rate. When the tax is higher, the debt/GDP decreases, when the tax goes lower, the debt increases. There is absolutely no reason to believe that lowering taxes will start lowering the debt.

Since 2003 the capital gains tax decreased further. Lowering taxes during two wars is insane. Washington is getting worse at sacrificing long term prosperity for short term gain.

 

[Gipper]

I don't take much stock in a GDP growth that also leads to an increased debt. You will notice on the graph below that during Reagan's years the debt/GDP started rising for the first time since WWII. Reagan didn't even have a war to contend with. An increased GDP accompanied by an increased debt/GDP says very little about what that short term gain really means.

You will notice in the graph that there is an inverse relation between the debt/GDP and the tax rate. When the tax is higher, the debt/GDP decreases, when the tax goes lower, the debt increases. There is absolutely no reason to believe that lowering taxes will start lowering the debt.

Since 2003 the capital gains tax decreased further. Lowering taxes during two wars is insane. Washington is getting worse at sacrificing long term prosperity for short term gain.

Are you asserting that when the top rate (I assume that is what your unsourced graph identifies as the Income Tax line) was much higher that the Treasury took in more revenue? If so, I can't agree and the facts are with me. Secondly, it has been proven over and over that no matter what the tax rates are the government can only confiscate 20-22% of the GDP.

You put no stock in GDP growth that leads to more debt. How nice.... So you apparently believe that government debt drives up the GDP. If that were true, BO would have a GDP threw the roof. Increased government spending is generally a DRAG on the economy. Claiming Reagan's boom was driven by increased government spending, is nonsensical and baseless..

You also fail to recognize that the Bush tax cuts, DURING TWO WARS, resulted in INCREASED revenues to the treasury. So, cutting taxes worked if your goal was more revenues. You apparently disagree. Why?

Reagan did have a war to deal with. You might have heard of it. It was called the Cold War. We won it thanks to him, but unfortunately squandered the victory by electing in succession, four dumb ass interventionist progressives.

 

[Dr.Who]

I don't take much stock in a GDP growth that also leads to an increased debt. You will notice on the graph below that during Reagan's years the debt/GDP started rising for the first time since WWII. Reagan didn't even have a war to contend with. An increased GDP accompanied by an increased debt/GDP says very little about what that short term gain really means.

You will notice in the graph that there is an inverse relation between the debt/GDP and the tax rate. When the tax is higher, the debt/GDP decreases, when the tax goes lower, the debt increases. There is absolutely no reason to believe that lowering taxes will start lowering the debt.

Since 2003 the capital gains tax decreased further. Lowering taxes during two wars is insane. Washington is getting worse at sacrificing long term prosperity for short term gain.

Is that a graph of revenue collected or of tax rates?

 

[Lagboltz]

Are you asserting that when the top rate (I assume that is what your unsourced graph identifies as the Income Tax line) was much higher that the Treasury took in more revenue? If so, I can't agree and the facts are with me. Secondly, it has been proven over and over that no matter what the tax rates are the government can only confiscate 20-22% of the GDP.

Yes the blue line labeled "Income tax" is the top marginal tax rate. I am not arguing anything about the revenue. It does not appear in the graph.

You put no stock in GDP growth that leads to more debt. How nice.... So you apparently believe that government debt drives up the GDP. If that were true, BO would have a GDP threw the roof. Increased government spending is generally a DRAG on the economy. Claiming Reagan's boom was driven by increased government spending, is nonsensical and baseless..

I did not say nor think that that government debt drives up the GDP. The GDP is historically a fairly constant 20-22%, as you say. I'm saying there is a historical inverse relation between top marginal tax rate and debt/GDP. My interpretation is that BO inherited a very low tax rate and it's no surprise that the debt is rapidly increasing.

You also fail to recognize that the Bush tax cuts, DURING TWO WARS, resulted in INCREASED revenues to the treasury. So, cutting taxes worked if your goal was more revenues. You apparently disagree. Why?

What is the ultimate good of increased revenue at lower taxes if the debt is allowed to go through the roof and become a burden to the next generations? How will they meet the burden? With even lower taxes?

Reagan did have a war to deal with. You might have heard of it. It was called the Cold War. We won it thanks to him, but unfortunately squandered the victory by electing in succession, four dumb ass interventionist progressives.

That is playing with the word "war". Bush's war had a much higher price tag for war materiel etc.

 

[Dr.Who]

I don't take much stock in a GDP growth that also leads to an increased debt. You will notice on the graph below that during Reagan's years the debt/GDP started rising for the first time since WWII. Reagan didn't even have a war to contend with. An increased GDP accompanied by an increased debt/GDP says very little about what that short term gain really means.

You will notice in the graph that there is an inverse relation between the debt/GDP and the tax rate. When the tax is higher, the debt/GDP decreases, when the tax goes lower, the debt increases. There is absolutely no reason to believe that lowering taxes will start lowering the debt.

Since 2003 the capital gains tax decreased further. Lowering taxes during two wars is insane. Washington is getting worse at sacrificing long term prosperity for short term gain.

I see what the graph is now.

I disagree that it shows any correlation. If it did show correlation that would not indicate causation. It would be possible for debt to drive tax rates rather than the other way. I think it is more likely that the politician's perception of the economy drives debt as much as their perceived need to spend. In a good economy with a cold war politicians feel justified in driving up debt. In a bad economy they have difficulty doing so. And frequently the trend does not play out at all destroying any correlation.

Yes, Reagan had a very expensive metaphorical war called the cold war in which the whole intent was to outspend the russians.

 

[Dr.Who]

That is playing with the word "war". Bush's war had a much higher price tag for war materiel etc.

I am curious, just how much of the spending is due to the bush wars? If we took the cost of the wars minus the cost of operating the military outside of war would that be a very very large part of the budget or would that be modest?

 

[Lagboltz]

I see what the graph is now.
I disagree that it shows any correlation.

Forget the red line and compare the blue line with the black line. After 1945, when the blue line is above 50%, the black line is dropping. when the blue line is 50% or lower, the black line is rising. That is what I meant by an inverse relation of top marginal tax rate with debt/GDP.

If it did show correlation that would not indicate causation. It would be possible for debt to drive tax rates rather than the other way. I think it is more likely that the politician's perception of the economy drives debt as much as their perceived need to spend. In a good economy with a cold war politicians feel justified in driving up debt. In a bad economy they have difficulty doing so. And frequently the trend does not play out at all destroying any correlation.

I didn't say anything about causation. In post #26 I said, "I think it does say that you cannot make a case that a lower top marginal rate will reduce national debt." That's what I mean by the graph. I don't think that anyone here made that case, but I am concerned with lowering the debt. The government should be not only balancing the budget, but they should reduce debt. I don't see how that can be done by only reducing spending without increasing taxes.

I am curious, just how much of the spending is due to the bush wars? If we took the cost of the wars minus the cost of operating the military outside of war would that be a very very large part of the budget or would that be modest?

I read that the two wars cost about 1 trillion. I don't know if that was above and beyond general military spending.

 

[Gipper]

Yes the blue line labeled "Income tax" is the top marginal tax rate. I am not arguing anything about the revenue. It does not appear in the graph.

I did not say nor think that that government debt drives up the GDP. The GDP is historically a fairly constant 20-22%, as you say. I'm saying there is a historical inverse relation between top marginal tax rate and debt/GDP. My interpretation is that BO inherited a very low tax rate and it's no surprise that the debt is rapidly increasing.

What is the ultimate good of increased revenue at lower taxes if the debt is allowed to go through the roof and become a burden to the next generations? How will they meet the burden? With even lower taxes?

That is playing with the word "war". Bush's war had a much higher price tag for war materiel etc.

I am not sure I understand your position. Are you claiming that since BO inherited low marginal tax rates when compared with years earlier, this has resulted in more government debt? This would indicate that you believe if tax rates were returned to the confiscatory rates of decades ago, our debt would decrease. Yet you admit that the tax take is constant at 20-22%. Do you see my confusion?

It would seem you are not considering the fact that government spending under W and BO has increased dramatically, while revenues to the treasury have stagnated. Spending is the problem in my view...not revenue.

The other major problem ignored by BO and his followers is what they have done to the private sector. If you denigrate, regulate, and tax the private sector in punishing fashion, the private sector will shrink. Shrinkage results in less to the treasury, which only further compounds the debt problem. Policies promoting economic growth, as Reagan did, is the answer. But under BO, we will not see economic growth...we will see more debt.

Here is a good column to consider....Americans are losing their freedoms, including economic freedoms, at a rapid pace

The Reagan Revolution has been reversed. Since the turn of the millennium, America’s standing as one of the most free and prosperous economies has eroded, dropping from 2nd to 16th in the world.
This reversal is the major political and economic shift of our times, with far-reaching implications for our future well-being. An unprecedented two-decade boom of prosperity and progress driven by the bipartisan support for free markets of the Reagan-Clinton era has been replaced by an era of stagnation driven by bipartisan support for big government under the Bush and Obama administrations.
The election of 1980 ushered in new rhetoric about economic policy based on Ronald Reagan’s vision of individual initiative, limited government and opportunity — essentially, economic freedom. This rhetoric was soon followed by policy revisions and changes in public attitudes toward the role of government and the private sector. Reagan promised to get “the government off the people’s back,” and the people responded with newfound optimism about their ability to be productive and prosperous in this new era.
In fact, average U.S. income rose by more than 50 percent from 1980 to 2000 — growing from $25,000 to more than $39,000 (adjusted for inflation). Unemployment dropped from 6 percent to a historic low of 3.9 percent over the same period.
The policy reforms that led to the surge in economic freedom were accomplished with bipartisan support under the Democrat-controlled Congresses. Tax reform, including lower tax rates, more restrained monetary policy and deregulation transformed American economic policy and economic performance.
The Clinton administration continued this transformation by substantially opening channels for global trade. Congress passed the North American Free Trade Act with the support of then-President Clinton, and the measure won public approval in no small part thanks to the thumping Vice President Al Gore gave the protectionist Ross Perot in a critical debate on “Larry King Live.”
The Clinton-Gingrich welfare reform and Mr. Clinton’s self-styled “new Democrat” persona moved his party away from its liberal image of the past and further solidified the era culturally, rhetorically and politically as one of individual responsibility and less reliance on government. The sentiment of the age was famously captured by Mr. Clinton’s 1996 declaration that “the era of big government is over.”
The record of the Reagan-Clinton era could not be more clear. Under these policies, the United States boasted the highest economic freedom rating of any major country in the world (only behind the free-market city-states of Hong Kong and Singapore) and enjoyed two decades of unparalleled economic growth and innovation. The environment laid the foundation for a technological boom — computer software, the Internet, biotechnology and telecommunications — to name a few innovations. Needless to say, this progress and prosperity greatly improved the welfare of American families.
The rhetoric of the George W. Bush campaign in 2000 suggested this era of freedom and prosperity would continue. Yet, the reality proved far different. The tragedy of Sept. 11, 2001, marked a cultural watershed when the people looked to government leadership in a time of crisis, and Washington politicians from both parties wasted no time taking advantage of that sentiment to undo, one by one, the policies and progress of the Reagan-Clinton era.
The size of government exploded as spending soared, not just for military and anti-terror programs, but across the board on domestic programs. Trade protectionism made a comeback, riding a wave of public anxiety. Massive, new entitlement programs were instituted. Monetary policy shifted away from a stable, long-run focus toward fine-tuning. The regulatory state mushroomed under Sarbanes-Oxley and almost 14,000 new pages of regulation added to the Federal Register. All the while, nothing was done to limit the newly rampant culture of corporate cronyism.
Barack Obama’s 2008 campaign took advantage of this disconnect between free-market rhetoric and big-government reality and hung the nation’s economic woes around the neck of economic freedom, rejecting the ideas and policies of the Reagan-Clinton era and formally welcoming back the era of big government. Runaway government spending has accelerated, the regulatory state has expanded, and corporate handouts and cronyism have become the norm.
After 12 years, the Bush-Obama era has resulted in our economic freedom plummeting. With the freest large economy in the world in 2000, the United States now ranks 16th behind Australia, Estonia and the United Arab Emirates. It is projected to fall even farther, according to Canada’s Fraser Institute.
http://www.washingtontimes.com/news...t-problem/?utm_source=RSS_Feed&utm_medium=RSS

 

[dogtowner]

marginal rates have little impact on revenew but significant impact on gdp.
do you really think damaging gdp is a good idea ?
i much prefer something thst has always worked over something that has never worked.

 

[Lagboltz]

I am not sure I understand your position. Are you claiming that since BO inherited low marginal tax rates when compared with years earlier, this has resulted in more government debt? This would indicate that you believe if tax rates were returned to the confiscatory rates of decades ago, our debt would decrease. Yet you admit that the tax take is constant at 20-22%. Do you see my confusion?

It would seem you are not considering the fact that government spending under W and BO has increased dramatically, while revenues to the treasury have stagnated. Spending is the problem in my view...not revenue.

Yes it is confusing and seemingly contradictory and I have no explanation. I am showing generally undisputed historical facts graphically. With Reagan, papa Bush, baby Bush and BO, the debt rose and taxes were low. Clinton is the exception, but his taxes were higher. Why is there a inverse relation? Is it all just due to spending during their regimes? If so, I don't see why baby Bush and BO are any worse than the earlier presidents. Look at how the deficit rose during Reagan and papa Bush. I don't see why the Repubs are so concerned with rolling back the tax rate for the top 2%. It may possibly start helping the deficit. In view of the graph, I have seen no convincing reason not to.

The other major problem ignored by BO and his followers is what they have done to the private sector. If you denigrate, regulate, and tax the private sector in punishing fashion, the private sector will shrink. Shrinkage results in less to the treasury, which only further compounds the debt problem. Policies promoting economic growth, as Reagan did, is the answer. But under BO, we will not see economic growth...we will see more debt.

I don't see the tax rate during Reagan and Clinton as punishing. You think economic growth at the cost of a large debt is OK? I agree that some regulations are very bad, and also there is a need for other regulations that would stabilize the economy such as how Wall Street handles derivatives without concern of the ramifications.

There was a local survey of small business owners on how regulations were hurting them, and there was a lot of griping. The outcome was that the city and county regulations were the worst for them and only a small percent mentioned any federal regulations. I understand that the bulk of US employment is in small businesses. I don't have a good grasp of what Federal regulations conservatives want removed, and can't comment on that.

Here is a good column to consider....Americans are losing their freedoms, including economic freedoms, at a rapid pace

I read the column and thought it had good points. I looked up the Sarbanes-Oxley regulations, and they didn't seem oppressive in principle, but seemed to be an attempt to ward off Enron type accounting. And yes I agree we should cut spending considerably.

What regulations of Obama's do you think should be deleted in order to make the economy grow.

 

[Gipper]

Yes it is confusing and seemingly contradictory and I have no explanation. I am showing generally undisputed historical facts graphically. With Reagan, papa Bush, baby Bush and BO, the debt rose and taxes were low. Clinton is the exception, but his taxes were higher. Why is there a inverse relation? Is it all just due to spending during their regimes? If so, I don't see why baby Bush and BO are any worse than the earlier presidents. Look at how the deficit rose during Reagan and papa Bush. I don't see why the Repubs are so concerned with rolling back the tax rate for the top 2%. It may possibly start helping the deficit. In view of the graph, I have seen no convincing reason not to.

I don't see the tax rate during Reagan and Clinton as punishing. You think economic growth at the cost of a large debt is OK? I agree that some regulations are very bad, and also there is a need for other regulations that would stabilize the economy such as how Wall Street handles derivatives without concern of the ramifications.

There was a local survey of small business owners on how regulations were hurting them, and there was a lot of griping. The outcome was that the city and county regulations were the worst for them and only a small percent mentioned any federal regulations. I understand that the bulk of US employment is in small businesses. I don't have a good grasp of what Federal regulations conservatives want removed, and can't comment on that.

I read the column and thought it had good points. I looked up the Sarbanes-Oxley regulations, and they didn't seem oppressive in principle, but seemed to be an attempt to ward off Enron type accounting. And yes I agree we should cut spending considerably.

What regulations of Obama's do you think should be deleted in order to make the economy grow.

I think you are making incorrect conclusions from the data you have reviewed.
1. lower tax rates does not result in higher debt.
2. higher tax rates does not result in lower debt.
3. W and BO are by far the worse spenders. This is clear when you look at the size of deficits they generated. Claiming they are no different from previous presidents who ran deficits fails to comprehend the size of deficits to GDP that these two progressive fools incurred. BO is much much worse than any prior president. Running $1.5 Trillion annual deficits, as BO is doing, is precedent setting.
4. The Rs are NOT talking about "rolling back the tax rate on the top 2%." Where are you getting this information?
5. I was not referring to tax rates of Reagan and BJ Bubba when I used the word confiscatory. I was referring to the top rate prior to Reagan and even JFK when it was something like 70%.
6. Regulations are killing small business. Big business can adjust to heavy handed regulations or buy off the regulators. It is clear regulations hurts small business, but the establishment does not care. If BO were regulating Wall Street heavily, most Americans would find that acceptable, but he is not. He is part and parcel of Wall Street. Crony capitalism is in full flourish under BO.
7. What regulations of BO???? Obamacare is 2,700 pages of regulations. Dodd Frank is similar. I would say those two for starters. But the EPA and other agencies are doing damage too.

 

[Dr.Who]

Ok lag, I get more what you are saying. Thanks for clarifying.

 

[Lagboltz]

I think you are making incorrect conclusions from the data you have reviewed.
1. lower tax rates does not result in higher debt.
2. higher tax rates does not result in lower debt.
3. W and BO are by far the worse spenders. This is clear when you look at the size of deficits they generated. Claiming they are no different from previous presidents who ran deficits fails to comprehend the size of deficits to GDP that these two progressive fools incurred. BO is much much worse than any prior president. Running $1.5 Trillion annual deficits, as BO is doing, is precedent setting.
4. The Rs are NOT talking about "rolling back the tax rate on the top 2%." Where are you getting this information?
5. I was not referring to tax rates of Reagan and BJ Bubba when I used the word confiscatory. I was referring to the top rate prior to Reagan and even JFK when it was something like 70%.
6. Regulations are killing small business. Big business can adjust to heavy handed regulations or buy off the regulators. It is clear regulations hurts small business, but the establishment does not care. If BO were regulating Wall Street heavily, most Americans would find that acceptable, but he is not. He is part and parcel of Wall Street. Crony capitalism is in full flourish under BO.
7. What regulations of BO???? Obamacare is 2,700 pages of regulations. Dodd Frank is similar. I would say those two for starters. But the EPA and other agencies are doing damage too.

1. I'm not saying that. I may have been unclear. I'm making a case that there is no evidence that lower taxes will lower the debt.
2. I'm also making a case that there is no evidence that higher taxes will raise the debt. The phenomenological evidence indicates we would probably have no problem raising the taxes of the top 2%.
3. I agree W and BO are the worst. But Reagan and papa Bush are a close second.
4. Right, my poor wording. As everyone knows, the D's want the rate higher for the top 2% and the R's don't, and I don't see why they're so adamant, except for selfish political reasons.
5. That's fine with me. I'll go with Clinton's 40% top rate, and the 21% to 29% capital gains tax.
6. I'm fine with easing regulations for small businesses, but as I said before it's the local regulations that are really hurting them. Yes, Wall Street is where I want the regulations the strongest, and I'm disappointed that BO is not focusing on that more.
Also large businesses are playing the loopholes and getting away with it. For example, GE paid 5.3% tax on 10 billion income, ExxonMobil paid no US taxes but did pay $17B overseas, Ford Motor: 2.3%; the list goes on.
7. Yes, Obamacare is messy. I'm on Medicare, and it is literally a lifesaver for me. Obamacare at 2,700 pages is an easy read. The IRS tax code is in 20 volumes with 16,845 pages. (About $1000 including shipping and handling.)

I think the intent of Dodd-Frank serves a very useful purpose, and if it is inadequate, it should be redone. The problem is that most members of the government are lawyers and like to write long complex documents.

 

[dogtowner]

The problem is that most members of the government are lawyers and like to write long complex documents.

their aides write complex legislation that insures that their benefactors will be taken care of.

lowering taxes will grow the GDP, thats the point of it. it is not intended to lower the debt.

you lower the debt by doing the opposite of what all those guys did which is to not piss away the increased revenues. of course its anathema to politicians to do this simple, sensible thing.

 

[Lagboltz]

their aides write complex legislation that insures that their benefactors will be taken care of.

lowering taxes will grow the GDP, thats the point of it. it is not intended to lower the debt.

you lower the debt by doing the opposite of what all those guys did which is to not piss away the increased revenues. of course its anathema to politicians to do this simple, sensible thing.

Well, their aides are probably lawyers too. I think I heard of cases where lobbyists wrote legislation as a helpful favor, to legislators, but my paranoia may be setting in.

We need to lower the debt too. If the taxes were 10% would Repubs still want to lower them to 7%? 3%? Just where do repubs think it should end?