Out of debt with more debt?!!

[BDashe 0]

This is to expand/further my point on another thread from a couple days ago. Keep in mind 2006, where they are pulling income stats, was a great year here financially...

(I forgot/never knew how to make links clicky!!!)

http://online.wsj.com/article/SB123561551065378405.html

here are what i find to be the most pertinent paragraphs if you dont feel like reading the whole article:

he promised that households earning less than $250,000 won't see their taxes increased by "one single dime."

...But let's not stop at a 42% top rate; as a thought experiment, let's go all the way. A tax policy that confiscated 100% of the taxable income of everyone in America earning over $500,000 in 2006 would only have given Congress an extra $1.3 trillion in revenue. That's less than half the 2006 federal budget of $2.7 trillion and looks tiny compared to the more than $4 trillion Congress will spend in fiscal 2010. Even taking every taxable "dime" of everyone earning more than $75,000 in 2006 would have barely yielded enough to cover that $4 trillion...

...The bottom line is that Mr. Obama is selling the country on a 2% illusion. Unwinding the U.S. commitment in Iraq and allowing the Bush tax cuts to expire can't possibly pay for his agenda. Taxes on the not-so-rich will need to rise as well.


Can someone please give me rational thought on how all this spending and taxing is actually going to help? when consumer exchanges make up over 2/3s of our economy- how is taking money from consumers going to help?

If you run a busniness and you're near bankruptcy, do you go out and buy 3 times your normal amount of merchandise with money you dont have?

Maybe my logic is actually illogical, please explain.

So there I was...

Making friends and playing nice since 1983

[StreetScooby 5]

It's not explainable. Didn't you know Uncle O can walk on water, if he really wanted to?

We are all engines of karma

[DrewEckhardt 0]

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It's not explainable. Didn't you know Uncle O can walk on water, if he really wanted to?

Don't mock Jesus Christ in His Second Coming.

[nerdgirl 0]

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Can someone please give me rational thought on how all this spending and taxing is actually going to help?

It's a tenet of Keynesian economics to stimulate growth during economic stagnation, recession, or depression.

A couple good references:

Paul Krugman on 'There's Something About Macro'

and

"Keynesian Economics" from the Concise Encylcopedia of Economics.

/Marg

Act as if everything you do matters, while laughing at yourself for thinking anything you do matters.
Tibetan Buddhist saying

[BDashe 0]

fell asleep in the first article, maybe you could dumb it down for me.

the second article kind of confirms the dems "magic wand" theory:

Ummm- by magic this happens?

So Keynesian models generally either assume or try to explain rigid prices or wages. Rationalizing rigid prices is a difficult theoretical problem because, according to standard microeconomic theory, real supplies and demands should not change if all nominal prices rise or fall proportionally.

But Keynesians believe that, because prices are somewhat rigid, fluctuations in any component of spending—consumption, investment, or government expenditures—cause output to fluctuate. If government spending increases, for example, and all other components of spending remain constant, then output will increase. Keynesian models of economic activity also include a so-called multiplier effect; that is, output increases by a multiple of the original change in spending that caused it. Thus, a ten-billion-dollar increase in government spending could cause total output to rise by fifteen billion dollars (a multiplier of 1.5) or by five billion (a multiplier of 0.5). Contrary to what many people believe, Keynesian analysis does not require that the multiplier exceed 1.0. For Keynesian economics to work, however, the multiplier must be greater than zero.


this is just plain trash:

Keynesians’ belief in aggressive government action to stabilize the economy is based on value judgments and on the beliefs that (a) macroeconomic fluctuations significantly reduce economic well-being and (b) the government is knowledgeable and capable enough to improve on the free market.

DO you realize who runs our government? HA HA HA!


This is EXACTLY my point, fro article 2:

"But when it comes to the large issues with which I have concerned myself, nothing much rides on whether or not expectations are rational."

So there I was...

Making friends and playing nice since 1983

[billvon 3,120]

>Can someone please give me rational thought on how all this spending
>and taxing is actually going to help?

Spending increases economic activity. Tax cuts increase money available to spend. (There are $277 billion in tax cuts in the stimulus package.)

[nerdgirl 0]

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the second article kind of confirms the dems "magic wand" theory:."

The "magic wand" metaphor reminds me of another one invoked by Friedman and the Chicago Boys: the "invisible hand" as part of neo-liberal economics.

/Marg

Act as if everything you do matters, while laughing at yourself for thinking anything you do matters.
Tibetan Buddhist saying

[GeorgiaDon 380]

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the second article kind of confirms the dems "magic wand" theory:

As opposed to the Republican "I got mine, everybody else can go to hell" theory?

Don

_____________________________________
Tolerance is the cost we must pay for our adventure in liberty. (Dworkin, 1996)
“Education is not filling a bucket, but lighting a fire.” (Yeats)

[Andrewwhyte 1]

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the second article kind of confirms the dems "magic wand" theory:."

The "magic wand" metaphor reminds me of another one invoked by Friedman and the Chicago Boys: the "invisible hand" as part of neo-liberal economics.

/Marg

Actually the invisible hand was coined by Adam Smith in "The Wealth of Nations."

[jerryzflies 0]

Income tax is not the only source of government revenue. Your model is flawed.

If you can't fix it with a hammer, the problem's electrical.

[nerdgirl 0]

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the second article kind of confirms the dems "magic wand" theory:."

The "magic wand" metaphor reminds me of another one invoked by Friedman and the Chicago Boys: the "invisible hand" as part of neo-liberal economics.

Actually the invisible hand was coined by Adam Smith in "The Wealth of Nations."

I know that. He also wrote another volume that gets much less attention, which I suspect you might know as well, The Theory of Moral Sentiments:

"How selfish soever man may be supposed, there are evidently some principles in his nature which interest him in the fortune of others and render their happiness necessary to him though he derives nothing from it except the pleasure of seeing."

One might imagine two invisible hands if one goes to Smith's works. The 20th Century Chicago School economists ignored one.

Before Smith, the predominant belief was that without poverty people would not want to work and that everyone would be lazy and pursue leisure (as did many aristocrats who owned virtually all of the property -- because remember before liberalism the concept of private property was extremely limited). The predominant view among English conservatives at Smith's time was that the poor were poor because God meant them to be so. It's also connected to Protestant work ethic, i.e., God looked with favor upon people of wealth and success in business.

Before Smith, poverty was largely perceiveed as what we might today call an 'economic stimulus.'

Otoh, Smith, asserted that more wealth to common people would benefit the nation's economy and society as a whole - the invisable hand. He proposed market economics as the economic policy to accomplish that. Smith proposed *limited* intervention that would include things likely poverty-elimination efforts not *no* intervention.

How the 'invisible hand' is regarded and invoked in the late 20th and early 21st Century as purely/exclusively a free-market, no government intervention, neo-liberal economics concept, imo, speaks more about us, our time, and 'nuggetizing' history than about what Adam Smith wrote, i.e., why I referenced Friedman and the Chicago Boys.
/Marg ... more of a Smith-liberal economics wonk than Keynesian

Act as if everything you do matters, while laughing at yourself for thinking anything you do matters.
Tibetan Buddhist saying

[StreetScooby 5]

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How the 'invisible hand' is regarded and invoked in the late 20th and early 21st Century as purely/exclusively a free-market, no government intervention, neo-liberal economics concept...

And, imo, the neo-cons have made an absolute mess of things. Personally, I was a bit stunned and appalled when I started reading about Leo Strauss. What's moderate conservative to do these days?

We are all engines of karma

[BDashe 0]

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>Can someone please give me rational thought on how all this spending
>and taxing is actually going to help?

Spending increases economic activity. Tax cuts increase money available to spend. (There are $277 billion in tax cuts in the stimulus package.)

There will also be shitloads of tax increases as i'm sure youre well aware.

I actually agree with you on something! spending increases economic activity... but CONSUMER spending, not red tape covered debt filled government spending. again, consumer spending accounts for the majority of our economic activity, relying on the government doesnt exactly sound very much like a democracy... nor does it help that we have to pay china and others back somehow. Wait: Ah, yes... the magic wand.

as for the "i got mine" theory, yes, that is partially true. But no one "gets theirs" without supplying thousands or millions that have needs by fulfilling those needs with goods, services, jobs, etc. our way of life is founded on the opportunity to "get yours" without the government taking over half of it away from you to piss away, and then borrow more from abroad to piss even more away.

So there I was...

Making friends and playing nice since 1983

[BDashe 0]

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Income tax is not the only source of government revenue. Your model is flawed.

No shit... we're talking about the main revenue stream. Incidentally, it's the other forms of revenue where Obama will gain the cash he needs from the lower tax brackets, streams that arent as overt as income tax.

So there I was...

Making friends and playing nice since 1983

[jcd11235 0]

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spending increases economic activity... but CONSUMER spending, not red tape covered debt filled government spending.

On what basis do you consider only "CONSUMER", but not government, spending to increase economic activity? After all, the government is also a consumer in the economy.

Math tutoring available. Only $6! per hour! First lesson: Factorials!

[billvon 3,120]

> spending increases economic activity... but CONSUMER spending, not
> red tape covered debt filled government spending.

Money is money. Government money employs hundreds of thousands of people making body armor, missiles, rocket engines, radars, environmental monitoring gear and the like. Indeed, many private companies (mine included) try quite hard to get government contracts, because they are more stable and less likely to "go south" after a few months.

>relying on the government doesnt exactly sound very much like a democracy...

You're confusing economics with politics. Those are two separate issues. You can have a 100% socialist democracy and a 100% free market monarchy.

>our way of life is founded on the opportunity to "get yours" without
>the government taking over half of it away from you to piss away

I could easily reword that as "our way of life is founded on a stable society without idiots pissing away most of their money on cheap consumer goods" and be just as accurate. (i.e. not very.) Indeed, we sort of rely on people pissing away their money on cheap consumer goods, just as we rely on the government for things like national defense, roads, air traffic control etc (all of which both provide important services and jobs.)

[riddler 0]

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But let's not stop at a 42% top rate

Your information is as red-colored as your source.

The top tax rate in the US, for individuals in 2009, is 35%, and the individual rate comes with a generous $24,000 subtraction. What tax rate are you referring to?

Edit for color

Trapped on the surface of a sphere. XKCD

[kelpdiver 2]

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But let's not stop at a 42% top rate

The top tax rate in the US, for individuals in 2009, is 35%, and the individual rate comes with a generous $24,000 subtraction. What tax rate are you referring to?

Likely FICA - which is 7.65% up to about 100k, and 1.65% after that. The 35% bracket kicks in much higher, so you have to do some blending, and thus would not get to the 42% mark. If you're only looking at the marginal tax rate, it would be 36.45%. But in CA, that would be 43% or so.