"Stuart Fields" wrote in message
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"Ed Huntress" wrote in message
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"John R. Carroll" wrote in message
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"Ed Huntress" wrote in message
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"Stuart Fields" wrote in message
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I wonder why this hasn't hit some of the news channels. I know that I
have not seen this before.
http://www.worldnetdaily.com/index.p...w&pageId=88218
If the Republicans hadn't gutted money for the states from the House
version of the stimulus bill, the 10th Amendment issue would die in a
hurry.
Don't be surprised to see those funds restored to the conferenced
version of the bill Ed.
What I don't understand is why the bill doesn't contain payroll tax
abatement provisions. That could be accomplished with the stroke of a
pen and would be as quick a stimulous as you could get. Republicans
would have been hoist on their own petard, and they'd have been falling
all over themselves to get behind the bill.
Oh, you underestimate their creativity. I'm sure they'd find something to
bitch about no matter what was or was not in the bill.
To them, this is about trying to score political points, not about
helping the country to recover. If you listen to Limbaugh, that's exactly
what the hard-core wants: failure.
And I'm thoroughly disgusted with McCain's grandstanding and sleazy
manuevering. He had it right the first time, when he said that his
understanding of economics is not one of his strong points.
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Ed Huntress
Ed: I sure didn't vote for McCain but I do share his apparent lack of
understanding of economics (I did get a big fat A in engineering economics
though) but how does decreasing income (tax breaks) and increasing
spending (in spite of an existing and growing large debt) help our
economy? If this is a workable method shouldn't people who recently lost
their jobs(decreasing income)go buy more with their credit cards(increased
spending)? The only difference that I can see is that the Government can
print more money and control the value of the debt.
That's the question of the hour, Stu. I assume you're not asking for my
opinion on it, which is like dust in the wind, anyway, but rather what the
administration's thinking is on their stimulus program. The most compact
answer I could give, of which it will require your considerable analytical
skills to recognize its full implications, is this:
Debt, at the national scale, is a small problem. An inability to PAY for
that debt, without destructive messing around with the currency, is a very
large problem, especially when you're in a downward-spiraling recession.
The growth rates required to stabilize deficit spending and to reduce it to
zero are actually a lot smaller than most people realize. So the bottom
line, to mainstream economists, is to get the growth rate up. That's the
only thing that will get us out of this mess. And the mess will look less
deep and messy if we *do* get growth going again. It doesn't matter how it
grows. What matters is that it *does* grow. And if we don't get it growing,
and quickly, we can kiss our economic ass goodby. g
That's the theory. Something to keep in mind is that a 1% increase in growth
of the GDP directly increases tax revenues by roughly $50 billion (at an
overall tax rate of 33%, including federal, state, and local). Likewise, a
1% decline directly increases deficits by a like amount. There is a
compounding effect from growth because you can tax some things at higher
rates when your economy is growing, without slowing down growth, and also
because a growing economy reduces the percentage of debt represented by a
given dollar amount of previously acquired debt, both of which decrease the
debt burden as a percentage of income. It also reduces the interest rates
the Fed has to pay.
And there are many other complications and caveats, which can be argued six
ways to Sunday. They aren't the point: The point is that deficits are very
sensitive to the growth rate of the GDP and to tax rates.
That's what's driving the administrations policies.
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Ed Huntress