The Sunday New York TImes has an article on the effectiveness of the
Bush and Obama stimulus programs. Read the article

http://www.nytimes.com/2009/12/13/bu...1&ref=business

But it essentially says that Keynesian spending does not work as
advertised. Which is pretty obvious as we passed a stimulus program
to keep unemployment below 8 percent, and it did not do the job. And
a recent study by the Romers indicates that tax cuts are about twice
as effective as government spending in stimulating the economy. Since
Christina Romer is the chairwoman of the president's Council of
Economic Advisors, there is hope.

The article ends with this statement.

"A growing body of evidence suggests that the traditional Keynesian
nostrums might not be the best medicine."


Dan

On Sun, 13 Dec 2009 11:38:32 -0800 (PST), "
wrote:
snip
The article ends with this statement.

"A growing body of evidence suggests that the traditional Keynesian
nostrums might not be the best medicine."
snip
==========
This is highly likely, given that Keynes was describing the North
American/North European economies of the 1930s, with limited
tools [i.e. no computers] and restricted data. With the
proliferation of the "brave new world order," Globalization, and
deregulation as a secular religion, the phrase "things are
different this time" appears for once to be accurate.

However in fairness to Keynes, governmental deficit spending
during the down/low part of the cycle on productive
infrastructure improvements such as roads, ports, schools, etc.
was only half of his prescription. The other half, which no
government or politician seems to have ever implemented [or even
considered], was the need for reductions in governmental spending
during the up portion of the business cycle to avoid competing
with private enterprise for limited resources, and the need to
reduce/eliminate the debt incurred during the last down cycle
spending, and as possible accumulate reserves for the next dip.
This would also avoid the "ratchet" effect where government
expands spending during the boom years and then attempts to
maintain the same [excessive] spending levels during the down
years, as well as reducing the capital available during the peak
years thus [possibly] reducing the excesses/bubbles that normally
occurred during this phase.

What is crystal clear is that the
fiscal/financial/economic/geopolitical reality has far
outstripped the theoretical frameworks and models, and
governmental policies and legal/regulatory frameworks [both in
the US and abroad] are totally obsolete. In medical terms, the
governmental administrators, regulators, functionaries and
bureaucrats are attempting to treat HIV/AIDS with sulfa drugs and
chicken soup ala 1932. When they discover this is not working,
they simply apply more, as this is all they know they know how to
do.


Unka George (George McDuffee)
...............................
The past is a foreign country;
they do things differently there.
L. P. Hartley (1895-1972), British author.
The Go-Between, Prologue (1953).

It would be good to put the recent crisis in terms that describe it
adequately, instead of meaningless blabbering about "doctor and patient".

We had insured banks, as well as entities that acted like banks, but
were neither regulated, nor insured. Those entities, collectively,
engaged in large amounts of bad lending that occurred during housing
boom.

Falling house prices, and loan losses, have made it questionable as to
whether banks, as well as quasi-banks, would be able to pay back their
depositors and counterparties.

As a result of this sudden and rational realization, we have
experienced a "panic", akin to the panics of 19th century. The worst
case expectation was that the non-banks, and possibly even banks, will
not be able to pay their depositors. Mass withdrawals ensued and
activities of non-bank lenders, such as securitized loans, auction
rate securities, etc ground to a halt.

Without money to fund payrolls, and such, further loan losses would
have fed this vicious circle, leading to a repeat of Great
Depression. That was the public fear that drove stock prices down to
Dow 6,500.

The Fed and Treasury, at that point, went "all in" and said,
effectively, that they will print as much money as possible to prevent
this spiral from continuing. At that point, I believed them,
personally, and was over 90% in stocks. The reason why I believed it
is that it is not too hard to print money, and much easier than suffer
from another Great Depression (which I think would be much worse than
the original).

It took a while for others to believe the Fed, with the result of the
stock market being where it is, and stabilization of the credit
markets, job market etc.

In other words, we had a confidence problem (for good reasons). The
objective of the Fed, which it achieved, was to restore the public
confidence to the extent that lending is still being done and economic
activity is still conducted, but at the lower level.

The stimulus plan was a part of the same design to restore confidence,
and to the extent that it was restored, it achieved its objectives. In
other words, creating jobs was only one goal of stimulus, and
restoring confidence that things will not fall indefinitely, was
another.

The question that I personally have, is whether attempts to reduce
deficits would lead to recurrence of loan losses and panic, or not. In
other words, I do not know whether the US financial authorities even
have the option of reining in the deficits, without fallnig again into
depression.

Warren Buffett seems to think so (read his New York Times editorial),
and I tend to believe him. However, if he is wrong, then effectively
the only way out of the depression is by repudiation of public and
private debts by means of inflation.

The latter is why gold bugs are piling into gold. I am personally not
one of them because gold is too popular.

i

On Dec 14, 1:17*am, Ignoramus15449 ignoramus15...@NOSPAM.
15449.invalid wrote:
It would be good to put the recent crisis in terms that describe it
adequately, instead of meaningless blabbering about "doctor and patient".

many true statements deleted

The stimulus was to restore confidence but could have been done as
reduction of taxes instead of increase in government spending. At
least that is what the article is saying. The Obama economic team
said that a dollar of tax cuts only increased GDP by 99 cents. But
other studies show that a dollar of tax cuts increases GDP by $3 .
And that increases in government spending decreases GDP.

At least that is what I got from reading the article.

Dan

wrote:
On Dec 14, 1:17 am, Ignoramus15449 ignoramus15...@NOSPAM.
15449.invalid wrote:
It would be good to put the recent crisis in terms that describe it
adequately, instead of meaningless blabbering about "doctor and patient".

many true statements deleted

The stimulus was to restore confidence but could have been done as
reduction of taxes instead of increase in government spending. At
least that is what the article is saying. The Obama economic team
said that a dollar of tax cuts only increased GDP by 99 cents. But
other studies show that a dollar of tax cuts increases GDP by $3 .
And that increases in government spending decreases GDP.

At least that is what I got from reading the article.

Dan


Did you take the time to see who the author of the article was? It was a
former economic advisor to Bush. That ought to tell you where he's
coming from, the business point of view. Maybe you don't understand how
the business and right wing side does things. They are relentless in
their propaganda. Whether it's their cable network, their radio talk
shows, think tanks, their newspapers, magazines, internet websites, and
"experts" they have on TV it's a non stop one sided presentation of what
business wants. That's all this piece is.

First off, the stimulus money has not been spent. Second, the magnitude
of the problems are far greater than anyone imagined, the amount of time
it'll take for things to turn around is going to be a long time, and
there's always enemies of the president who just want to make it appear
that Obama's plans are not working.

The fact of the matter is we already did the tax cuts when Bush took
office. More of them will only increase the deficit, which the right
wing is continuously complaining about. American business is flush with
cash right now and a wave of mergers and acquisitions is coming next
year. All a tax cut will do is give more money to business but since
they see a bad environment they aren't going to invest anyway. The same
is true with the banks. They have been given loads of money at virtually
no interest to loan and they still aren't making loans. A business tax
cut won't do a thing to make them start making loans.

I'm not surprised that a former Bush economic advisor is saying Keynsian
economics won't work. He's probably always thought that. The fact is
this; businesses are not hiring or spending, the consumer has no money
and isn't spending. All that is left to spend and thus stimulate the
economy is the government. Government spending is the only way to get
the economy moving if the other two legs of the economy are not working.
I guarantee that Obama's economic advisors are telling him Keynsian
economics will work. So take your pick, either believe what the Bush and
republicans say we should do about our problems or believe what Obama
and his advisors say we should do. After seeing how the economy fared
under Bush I don't see why anyone would pay any attention to their advice.

Hawke

On Sun, 13 Dec 2009 21:20:27 -0800, Hawke
wrote:
snip
I guarantee that Obama's economic advisors are telling him Keynsian
economics will work. So take your pick, either believe what the Bush and
republicans say we should do about our problems or believe what Obama
and his advisors say we should do.
snip
========
Better Keynesian stimulation than another war which has been the
standard/preferred solution at least since the Romans.

As King Henry IV advises his son Prince Hal"
"By whose fell working I was first advanced
And by whose power I well might lodge a fear
To be again displaced: which to avoid,
I cut them off; and had a purpose now
To lead out many to the Holy Land,
Lest rest and lying still might make them look
Too near unto my state. ==Therefore, my Harry,
Be it thy course to busy giddy minds
With foreign quarrels; that action, hence borne out,
May waste the memory of the former days.==
King Henry IV, Part II
ACT IV SCENE V Another chamber.
Wm. Shakespear (1564-1616)


Unka George (George McDuffee)
...............................
The past is a foreign country;
they do things differently there.
L. P. Hartley (1895-1972), British author.
The Go-Between, Prologue (1953).

On Dec 14, 5:20*am, Hawke wrote:


I guarantee that Obama's economic advisors are telling him Keynsian
economics will work. ......................... Obama
and his advisors say we should do. After seeing how the economy fared
under Bush I don't see why anyone would pay any attention to their advice..

Hawke

You did note that Christina Romer is the chairwoman of the president's
Council of
Economic Advisors. So while some of Obama's economic advisors say
that Keynsian economics will work, at least one is saying that it is
not the best way.

One problem is that Obama needs to avoid looking like he is following
Bushes policies even when it may be the best policy.

Dan

wrote:
On Dec 14, 5:20 am, Hawke wrote:


I guarantee that Obama's economic advisors are telling him Keynsian
economics will work. ......................... Obama
and his advisors say we should do. After seeing how the economy fared
under Bush I don't see why anyone would pay any attention to their advice.

Hawke

You did note that Christina Romer is the chairwoman of the president's
Council of
Economic Advisors. So while some of Obama's economic advisors say
that Keynsian economics will work, at least one is saying that it is
not the best way.

One problem is that Obama needs to avoid looking like he is following
Bushes policies even when it may be the best policy.

Dan



I saw Romer on Meet the Press this weekend and have seen her numerous
times on other shows as well. In no way does she advocate doing anything
like what was done under Bush except for the bailout. Obama's economic
team, led by Jared Bernstein, has virtually the opposite view from that
of the Bush team. They believe they know what they are doing and that
they have to spend money to get the country going again. You hear the
opposite of that view from all the conservatives. But as I said, we
tried the trickle down or supply side economics when Bush was president.
We did things their way. It was a disaster. Obama is trying it
differently and it will undoubtedly have a better outcome. What is funny
is to hear the people who did the worst job in history running their
mouths and saying things will be disastrous if we don't do things like
they did them. Now that is nuts, but when you deny reality you do some
really goofy things.

Hawke

"Hawke" wrote in message
...
wrote:
On Dec 14, 5:20 am, Hawke wrote:


I guarantee that Obama's economic advisors are telling him Keynsian
economics will work. ......................... Obama
and his advisors say we should do. After seeing how the economy fared
under Bush I don't see why anyone would pay any attention to their
advice.

Hawke

You did note that Christina Romer is the chairwoman of the president's
Council of
Economic Advisors. So while some of Obama's economic advisors say
that Keynsian economics will work, at least one is saying that it is
not the best way.

One problem is that Obama needs to avoid looking like he is following
Bushes policies even when it may be the best policy.

Dan



I saw Romer on Meet the Press this weekend and have seen her numerous
times on other shows as well. In no way does she advocate doing anything
like what was done under Bush except for the bailout. Obama's economic
team, led by Jared Bernstein, has virtually the opposite view from that of
the Bush team. They believe they know what they are doing and that they
have to spend money to get the country going again. You hear the opposite
of that view from all the conservatives. But as I said, we tried the
trickle down or supply side economics when Bush was president. We did
things their way. It was a disaster. Obama is trying it differently and it
will undoubtedly have a better outcome. What is funny is to hear the
people who did the worst job in history running their mouths and saying
things will be disastrous if we don't do things like they did them. Now
that is nuts, but when you deny reality you do some really goofy things.

Hawke

The general idea is that you use pump-priming stimulus early in an economic
downturn, and then, if taxes are too high, follow it up with tax cuts to
business when the economy is producing positive growth.

But cutting taxes won't work if no one is buying; businesses won't invest or
hire until buyers show their heads. And unless taxes are well up on the
Laffer curve, cutting taxes won't do a damned thing, anyway, except to make
rich people richer. That's what Reagan's intention was, as his Budget
Director, David Stockman, admitted later in the term. Read his interview in
_Atlantic_ sometime.

During Kennedy's term, taxes were much higher than they are today. Tax cuts
then could help, once people started buying. They were much higher during
Reagan's term, too. So I want to get around to Romer's paper soon, and see
what she's saying.

--
Ed Huntress

Ed Huntress wrote:
"Hawke" wrote in message
...
wrote:
On Dec 14, 5:20 am, Hawke wrote:


I guarantee that Obama's economic advisors are telling him Keynsian
economics will work. ......................... Obama
and his advisors say we should do. After seeing how the economy
fared under Bush I don't see why anyone would pay any attention to
their advice.

Hawke

You did note that Christina Romer is the chairwoman of the
president's Council of
Economic Advisors. So while some of Obama's economic advisors say
that Keynsian economics will work, at least one is saying that it is
not the best way.

One problem is that Obama needs to avoid looking like he is
following Bushes policies even when it may be the best policy.

Dan



I saw Romer on Meet the Press this weekend and have seen her numerous
times on other shows as well. In no way does she advocate doing
anything like what was done under Bush except for the bailout.
Obama's economic team, led by Jared Bernstein, has virtually the
opposite view from that of the Bush team. They believe they know
what they are doing and that they have to spend money to get the
country going again. You hear the opposite of that view from all the
conservatives. But as I said, we tried the trickle down or supply
side economics when Bush was president. We did things their way. It
was a disaster. Obama is trying it differently and it will
undoubtedly have a better outcome. What is funny is to hear the
people who did the worst job in history running their mouths and
saying things will be disastrous if we don't do things like they did
them. Now that is nuts, but when you deny reality you do some really
goofy things.

Hawke

The general idea is that you use pump-priming stimulus early in an
economic downturn, and then, if taxes are too high, follow it up with
tax cuts to business when the economy is producing positive growth.

But cutting taxes won't work if no one is buying; businesses won't
invest or hire until buyers show their heads. And unless taxes are
well up on the Laffer curve, cutting taxes won't do a damned thing,
anyway, except to make rich people richer. That's what Reagan's
intention was, as his Budget Director, David Stockman, admitted later
in the term. Read his interview in _Atlantic_ sometime.

During Kennedy's term, taxes were much higher than they are today.
Tax cuts then could help, once people started buying. They were much
higher during Reagan's term, too. So I want to get around to Romer's
paper soon, and see what she's saying.

Sooner rather than later Ed.
She didn't, for instance, either say or imply that tax cuts were a better
solution to the problem at hand.
You even know this.
Are you turning into Tom V EH?

--
John R. Carroll

"John R. Carroll" wrote in message
...
Ed Huntress wrote:
"Hawke" wrote in message
...
wrote:
On Dec 14, 5:20 am, Hawke wrote:


I guarantee that Obama's economic advisors are telling him Keynsian
economics will work. ......................... Obama
and his advisors say we should do. After seeing how the economy
fared under Bush I don't see why anyone would pay any attention to
their advice.

Hawke

You did note that Christina Romer is the chairwoman of the
president's Council of
Economic Advisors. So while some of Obama's economic advisors say
that Keynsian economics will work, at least one is saying that it is
not the best way.

One problem is that Obama needs to avoid looking like he is
following Bushes policies even when it may be the best policy.

Dan



I saw Romer on Meet the Press this weekend and have seen her numerous
times on other shows as well. In no way does she advocate doing
anything like what was done under Bush except for the bailout.
Obama's economic team, led by Jared Bernstein, has virtually the
opposite view from that of the Bush team. They believe they know
what they are doing and that they have to spend money to get the
country going again. You hear the opposite of that view from all the
conservatives. But as I said, we tried the trickle down or supply
side economics when Bush was president. We did things their way. It
was a disaster. Obama is trying it differently and it will
undoubtedly have a better outcome. What is funny is to hear the
people who did the worst job in history running their mouths and
saying things will be disastrous if we don't do things like they did
them. Now that is nuts, but when you deny reality you do some really
goofy things.

Hawke

The general idea is that you use pump-priming stimulus early in an
economic downturn, and then, if taxes are too high, follow it up with
tax cuts to business when the economy is producing positive growth.

But cutting taxes won't work if no one is buying; businesses won't
invest or hire until buyers show their heads. And unless taxes are
well up on the Laffer curve, cutting taxes won't do a damned thing,
anyway, except to make rich people richer. That's what Reagan's
intention was, as his Budget Director, David Stockman, admitted later
in the term. Read his interview in _Atlantic_ sometime.

During Kennedy's term, taxes were much higher than they are today.
Tax cuts then could help, once people started buying. They were much
higher during Reagan's term, too. So I want to get around to Romer's
paper soon, and see what she's saying.

Sooner rather than later Ed.
She didn't, for instance, either say or imply that tax cuts were a better
solution to the problem at hand.
You even know this.
Are you turning into Tom V EH?

--
John R. Carroll

Yes, I know that tax cuts have been debunked as an economic stimulus. The
evidence is overwhelming. But I want to read Romer's paper and see what
she's talking about before commenting about it. Unlike some folks who we
know here, I usually read things before judging them. d8-)

--
Ed Huntress

"Ed Huntress" wrote in message
...

"Hawke" wrote in message
...
wrote:
On Dec 14, 5:20 am, Hawke wrote:


I guarantee that Obama's economic advisors are telling him Keynsian
economics will work. ......................... Obama
and his advisors say we should do. After seeing how the economy fared
under Bush I don't see why anyone would pay any attention to their
advice.

Hawke

You did note that Christina Romer is the chairwoman of the president's
Council of
Economic Advisors. So while some of Obama's economic advisors say
that Keynsian economics will work, at least one is saying that it is
not the best way.

One problem is that Obama needs to avoid looking like he is following
Bushes policies even when it may be the best policy.

Dan



I saw Romer on Meet the Press this weekend and have seen her numerous
times on other shows as well. In no way does she advocate doing anything
like what was done under Bush except for the bailout. Obama's economic
team, led by Jared Bernstein, has virtually the opposite view from that
of the Bush team. They believe they know what they are doing and that
they have to spend money to get the country going again. You hear the
opposite of that view from all the conservatives. But as I said, we tried
the trickle down or supply side economics when Bush was president. We did
things their way. It was a disaster. Obama is trying it differently and
it will undoubtedly have a better outcome. What is funny is to hear the
people who did the worst job in history running their mouths and saying
things will be disastrous if we don't do things like they did them. Now
that is nuts, but when you deny reality you do some really goofy things.

Hawke

The general idea is that you use pump-priming stimulus early in an
economic downturn, and then, if taxes are too high, follow it up with tax
cuts to business when the economy is producing positive growth.

But cutting taxes won't work if no one is buying; businesses won't invest
or hire until buyers show their heads. And unless taxes are well up on the
Laffer curve, cutting taxes won't do a damned thing, anyway, except to
make rich people richer. That's what Reagan's intention was, as his Budget
Director, David Stockman, admitted later in the term. Read his interview
in _Atlantic_ sometime.

During Kennedy's term, taxes were much higher than they are today. Tax
cuts then could help, once people started buying. They were much higher
during Reagan's term, too. So I want to get around to Romer's paper soon,
and see what she's saying.

--
Ed Huntress


Overall the tax rate was lower during Reagan and even LBJ. By a bunch.
The max income tax rate was higher, but there were lots of deductions.
Deductions that have gone bye-bye. State and local sales tax, interest
cost for any loan, No Medicare then. A lot lower SS tax rate and ceiling.

Ed Huntress wrote:
"John R. Carroll" wrote in message
...
Ed Huntress wrote:
"Hawke" wrote in message
...
wrote:
On Dec 14, 5:20 am, Hawke wrote:


I guarantee that Obama's economic advisors are telling him
Keynsian economics will work. ......................... Obama
and his advisors say we should do. After seeing how the economy
fared under Bush I don't see why anyone would pay any attention
to their advice.

Hawke

You did note that Christina Romer is the chairwoman of the
president's Council of
Economic Advisors. So while some of Obama's economic advisors say
that Keynsian economics will work, at least one is saying that it
is not the best way.

One problem is that Obama needs to avoid looking like he is
following Bushes policies even when it may be the best policy.

Dan



I saw Romer on Meet the Press this weekend and have seen her
numerous times on other shows as well. In no way does she advocate
doing anything like what was done under Bush except for the
bailout. Obama's economic team, led by Jared Bernstein, has
virtually the opposite view from that of the Bush team. They
believe they know what they are doing and that they have to spend
money to get the country going again. You hear the opposite of
that view from all the conservatives. But as I said, we tried the
trickle down or supply side economics when Bush was president. We
did things their way. It was a disaster. Obama is trying it
differently and it will undoubtedly have a better outcome. What is
funny is to hear the people who did the worst job in history
running their mouths and saying things will be disastrous if we
don't do things like they did them. Now that is nuts, but when you
deny reality you do some really goofy things.

Hawke

The general idea is that you use pump-priming stimulus early in an
economic downturn, and then, if taxes are too high, follow it up
with tax cuts to business when the economy is producing positive
growth.

But cutting taxes won't work if no one is buying; businesses won't
invest or hire until buyers show their heads. And unless taxes are
well up on the Laffer curve, cutting taxes won't do a damned thing,
anyway, except to make rich people richer. That's what Reagan's
intention was, as his Budget Director, David Stockman, admitted
later in the term. Read his interview in _Atlantic_ sometime.

During Kennedy's term, taxes were much higher than they are today.
Tax cuts then could help, once people started buying. They were much
higher during Reagan's term, too. So I want to get around to Romer's
paper soon, and see what she's saying.

Sooner rather than later Ed.
She didn't, for instance, either say or imply that tax cuts were a
better solution to the problem at hand.
You even know this.
Are you turning into Tom V EH?

--
John R. Carroll

Yes, I know that tax cuts have been debunked as an economic stimulus.
The evidence is overwhelming. But I want to read Romer's paper and
see what she's talking about before commenting about it. Unlike some
folks who we know here, I usually read things before judging them.
d8-)

OK, but what you will find is a discussion/analysis that says tax cuts do
not lead to reductions in spending.
What she was considering was the impact on tax cuts VS deficit spending on
debt.
She attributes the economic recovery from the Great Depression almost
entirely to expansion of the money supply.


--
John R. Carroll

"John R. Carroll" wrote in message
...
Ed Huntress wrote:
"John R. Carroll" wrote in message
...
Ed Huntress wrote:
"Hawke" wrote in message
...
wrote:
On Dec 14, 5:20 am, Hawke wrote:


I guarantee that Obama's economic advisors are telling him
Keynsian economics will work. ......................... Obama
and his advisors say we should do. After seeing how the economy
fared under Bush I don't see why anyone would pay any attention
to their advice.

Hawke

You did note that Christina Romer is the chairwoman of the
president's Council of
Economic Advisors. So while some of Obama's economic advisors say
that Keynsian economics will work, at least one is saying that it
is not the best way.

One problem is that Obama needs to avoid looking like he is
following Bushes policies even when it may be the best policy.

Dan



I saw Romer on Meet the Press this weekend and have seen her
numerous times on other shows as well. In no way does she advocate
doing anything like what was done under Bush except for the
bailout. Obama's economic team, led by Jared Bernstein, has
virtually the opposite view from that of the Bush team. They
believe they know what they are doing and that they have to spend
money to get the country going again. You hear the opposite of
that view from all the conservatives. But as I said, we tried the
trickle down or supply side economics when Bush was president. We
did things their way. It was a disaster. Obama is trying it
differently and it will undoubtedly have a better outcome. What is
funny is to hear the people who did the worst job in history
running their mouths and saying things will be disastrous if we
don't do things like they did them. Now that is nuts, but when you
deny reality you do some really goofy things.

Hawke

The general idea is that you use pump-priming stimulus early in an
economic downturn, and then, if taxes are too high, follow it up
with tax cuts to business when the economy is producing positive
growth.

But cutting taxes won't work if no one is buying; businesses won't
invest or hire until buyers show their heads. And unless taxes are
well up on the Laffer curve, cutting taxes won't do a damned thing,
anyway, except to make rich people richer. That's what Reagan's
intention was, as his Budget Director, David Stockman, admitted
later in the term. Read his interview in _Atlantic_ sometime.

During Kennedy's term, taxes were much higher than they are today.
Tax cuts then could help, once people started buying. They were much
higher during Reagan's term, too. So I want to get around to Romer's
paper soon, and see what she's saying.

Sooner rather than later Ed.
She didn't, for instance, either say or imply that tax cuts were a
better solution to the problem at hand.
You even know this.
Are you turning into Tom V EH?

--
John R. Carroll

Yes, I know that tax cuts have been debunked as an economic stimulus.
The evidence is overwhelming. But I want to read Romer's paper and
see what she's talking about before commenting about it. Unlike some
folks who we know here, I usually read things before judging them.
d8-)

OK, but what you will find is a discussion/analysis that says tax cuts do
not lead to reductions in spending.
What she was considering was the impact on tax cuts VS deficit spending on
debt.
She attributes the economic recovery from the Great Depression almost
entirely to expansion of the money supply.


--
John R. Carroll

That sounds about right. I suspect the original post was b.s., but I'd like
to take a look at it.

--
Ed Huntress

Ed Huntress wrote:
"John R. Carroll" wrote in message
...
Ed Huntress wrote:
"John R. Carroll" wrote in message
...
Ed Huntress wrote:
"Hawke" wrote in message
...
wrote:
On Dec 14, 5:20 am, Hawke wrote:


Yes, I know that tax cuts have been debunked as an economic
stimulus. The evidence is overwhelming. But I want to read Romer's
paper and see what she's talking about before commenting about it.
Unlike some folks who we know here, I usually read things before
judging them. d8-)

OK, but what you will find is a discussion/analysis that says tax
cuts do not lead to reductions in spending.
What she was considering was the impact on tax cuts VS deficit
spending on debt.
She attributes the economic recovery from the Great Depression almost
entirely to expansion of the money supply.


That sounds about right. I suspect the original post was b.s., but
I'd like to take a look at it.

The Boehner bunch parsed her statements and eliminated the relevant context
to jump up and down for bigger tax cuts and less spending when the initial
stimulus bill was passed. Romer did all of the Sunday talk shows explaining
herself.


--
John R. Carroll

"John R. Carroll" wrote in message
...
Ed Huntress wrote:
"John R. Carroll" wrote in message
...
Ed Huntress wrote:
"John R. Carroll" wrote in message
...
Ed Huntress wrote:
"Hawke" wrote in message
...
wrote:
On Dec 14, 5:20 am, Hawke wrote:


Yes, I know that tax cuts have been debunked as an economic
stimulus. The evidence is overwhelming. But I want to read Romer's
paper and see what she's talking about before commenting about it.
Unlike some folks who we know here, I usually read things before
judging them. d8-)

OK, but what you will find is a discussion/analysis that says tax
cuts do not lead to reductions in spending.
What she was considering was the impact on tax cuts VS deficit
spending on debt.
She attributes the economic recovery from the Great Depression almost
entirely to expansion of the money supply.


That sounds about right. I suspect the original post was b.s., but
I'd like to take a look at it.

The Boehner bunch parsed her statements and eliminated the relevant
context
to jump up and down for bigger tax cuts and less spending when the initial
stimulus bill was passed. Romer did all of the Sunday talk shows
explaining
herself.


--
John R. Carroll

Aha. No surprise. Krugman calls them "The Tax-Cut Zombies." I keep this
paragraph around to remind me:

"Since the 1970's, conservatives have used two theories to justify cutting
taxes. One theory, supply-side economics, has always been hokum for the
yokels. Conservative insiders adopted the supply-siders as mascots because
they were useful to the cause, but never took them seriously. The insiders'
theory - what we might call the true tax-cut theory - was memorably
described by David Stockman, Ronald Reagan's budget director, as "starving
the beast." Proponents of this theory argue that conservatives should seek
tax cuts ... because ... budget deficits will lead to spending cuts that
will eventually achieve their true aim: shrinking the government's role back
to what it was under Calvin Coolidge."

It's good to remind people that Krugman was on Reagan's Council of Economic
Advisors, so he knows what actually happened there. And every child in
America should have to read Stockman's interview, "The Education of David
Stockman," before they're allowed to graduate from high school:

http://www.theatlantic.com/doc/198112/david-stockman

--
Ed Huntress

On Dec 16, 5:47*am, "Ed Huntress" wrote:

Yes, I know that tax cuts have been debunked as an economic stimulus.
The evidence is overwhelming. But I want to read Romer's paper and
see what she's talking about before commenting about it. Unlike some
folks who we know here, I usually read things before judging them.
d8-)

--
Ed Huntress

The major thing that stood out to me is that the Romers analysis was
that the effect of a 1 tax increases corrolated to a 3% decrease in
GDP. Now this could or could not mean that a 1 % decrease would lead
to a 3 % increase in GDP. Very tempting to say it does, but that is
not in the Romers analysis. I have not found or read the other
studies mentioned.

Dan

"CalifBill" wrote in message
m...

"Ed Huntress" wrote in message
...

"Hawke" wrote in message
...
wrote:
On Dec 14, 5:20 am, Hawke wrote:


I guarantee that Obama's economic advisors are telling him Keynsian
economics will work. ......................... Obama
and his advisors say we should do. After seeing how the economy fared
under Bush I don't see why anyone would pay any attention to their
advice.

Hawke

You did note that Christina Romer is the chairwoman of the president's
Council of
Economic Advisors. So while some of Obama's economic advisors say
that Keynsian economics will work, at least one is saying that it is
not the best way.

One problem is that Obama needs to avoid looking like he is following
Bushes policies even when it may be the best policy.

Dan



I saw Romer on Meet the Press this weekend and have seen her numerous
times on other shows as well. In no way does she advocate doing anything
like what was done under Bush except for the bailout. Obama's economic
team, led by Jared Bernstein, has virtually the opposite view from that
of the Bush team. They believe they know what they are doing and that
they have to spend money to get the country going again. You hear the
opposite of that view from all the conservatives. But as I said, we
tried the trickle down or supply side economics when Bush was president.
We did things their way. It was a disaster. Obama is trying it
differently and it will undoubtedly have a better outcome. What is funny
is to hear the people who did the worst job in history running their
mouths and saying things will be disastrous if we don't do things like
they did them. Now that is nuts, but when you deny reality you do some
really goofy things.

Hawke

The general idea is that you use pump-priming stimulus early in an
economic downturn, and then, if taxes are too high, follow it up with tax
cuts to business when the economy is producing positive growth.

But cutting taxes won't work if no one is buying; businesses won't invest
or hire until buyers show their heads. And unless taxes are well up on
the Laffer curve, cutting taxes won't do a damned thing, anyway, except
to make rich people richer. That's what Reagan's intention was, as his
Budget Director, David Stockman, admitted later in the term. Read his
interview in _Atlantic_ sometime.

During Kennedy's term, taxes were much higher than they are today. Tax
cuts then could help, once people started buying. They were much higher
during Reagan's term, too. So I want to get around to Romer's paper soon,
and see what she's saying.

--
Ed Huntress


Overall the tax rate was lower during Reagan and even LBJ. By a bunch.
The max income tax rate was higher, but there were lots of deductions.
Deductions that have gone bye-bye. State and local sales tax, interest
cost for any loan, No Medicare then. A lot lower SS tax rate and ceiling.

You have some misconceptions there, Bill. First, the overall income tax
rates hardly budged throughout the Reagan years. Second, the maximum income
tax was LOWERED by Reagan, from 70% to 50% and then to 28%. Deductions went
up and down throughout the various tax bills passed during Reagan's term,
but, yes, overall they were reduced.

As for Medicare, it's been around since 1965. Rates went UP during Reagan's
term. Likewise, SS withholding went UP, not down.

If you want to see the net effects, take a look at this report from the CBO.
Note particularly Table 1A:

http://www.cbo.gov/ftpdocs/53xx/doc5...es.htm#table1A

--
Ed Huntress

wrote in message
...
On Dec 16, 5:47 am, "Ed Huntress" wrote:

Yes, I know that tax cuts have been debunked as an economic stimulus.
The evidence is overwhelming. But I want to read Romer's paper and
see what she's talking about before commenting about it. Unlike some
folks who we know here, I usually read things before judging them.
d8-)

--
Ed Huntress

The major thing that stood out to me is that the Romers analysis was
that the effect of a 1 tax increases corrolated to a 3% decrease in
GDP. Now this could or could not mean that a 1 % decrease would lead
to a 3 % increase in GDP. Very tempting to say it does, but that is
not in the Romers analysis. I have not found or read the other
studies mentioned.

I'll try to get to it after I write down the butter piecrust recipe. g

--
Ed Huntress

"Ed Huntress" wrote in message
...

"CalifBill" wrote in message
m...

"Ed Huntress" wrote in message
...

"Hawke" wrote in message
...
wrote:
On Dec 14, 5:20 am, Hawke wrote:


I guarantee that Obama's economic advisors are telling him Keynsian
economics will work. ......................... Obama
and his advisors say we should do. After seeing how the economy fared
under Bush I don't see why anyone would pay any attention to their
advice.

Hawke

You did note that Christina Romer is the chairwoman of the president's
Council of
Economic Advisors. So while some of Obama's economic advisors say
that Keynsian economics will work, at least one is saying that it is
not the best way.

One problem is that Obama needs to avoid looking like he is following
Bushes policies even when it may be the best policy.

Dan



I saw Romer on Meet the Press this weekend and have seen her numerous
times on other shows as well. In no way does she advocate doing
anything like what was done under Bush except for the bailout. Obama's
economic team, led by Jared Bernstein, has virtually the opposite view
from that of the Bush team. They believe they know what they are doing
and that they have to spend money to get the country going again. You
hear the opposite of that view from all the conservatives. But as I
said, we tried the trickle down or supply side economics when Bush was
president. We did things their way. It was a disaster. Obama is trying
it differently and it will undoubtedly have a better outcome. What is
funny is to hear the people who did the worst job in history running
their mouths and saying things will be disastrous if we don't do things
like they did them. Now that is nuts, but when you deny reality you do
some really goofy things.

Hawke

The general idea is that you use pump-priming stimulus early in an
economic downturn, and then, if taxes are too high, follow it up with
tax cuts to business when the economy is producing positive growth.

But cutting taxes won't work if no one is buying; businesses won't
invest or hire until buyers show their heads. And unless taxes are well
up on the Laffer curve, cutting taxes won't do a damned thing, anyway,
except to make rich people richer. That's what Reagan's intention was,
as his Budget Director, David Stockman, admitted later in the term. Read
his interview in _Atlantic_ sometime.

During Kennedy's term, taxes were much higher than they are today. Tax
cuts then could help, once people started buying. They were much higher
during Reagan's term, too. So I want to get around to Romer's paper
soon, and see what she's saying.

--
Ed Huntress


Overall the tax rate was lower during Reagan and even LBJ. By a bunch.
The max income tax rate was higher, but there were lots of deductions.
Deductions that have gone bye-bye. State and local sales tax, interest
cost for any loan, No Medicare then. A lot lower SS tax rate and
ceiling.

You have some misconceptions there, Bill. First, the overall income tax
rates hardly budged throughout the Reagan years. Second, the maximum
income tax was LOWERED by Reagan, from 70% to 50% and then to 28%.
Deductions went up and down throughout the various tax bills passed during
Reagan's term, but, yes, overall they were reduced.

As for Medicare, it's been around since 1965. Rates went UP during
Reagan's term. Likewise, SS withholding went UP, not down.

If you want to see the net effects, take a look at this report from the
CBO. Note particularly Table 1A:

http://www.cbo.gov/ftpdocs/53xx/doc5...es.htm#table1A

--
Ed Huntress


As I stated. The tax effective tax rate was lower in LBJ time. Even though
LBJ paid for part of the VN war by promising more SS benefits in the future
and raising SS taxes then. The maximum tax rate was lowered from 70% to
50%. Big deal. Who paid 70%? You could deduct sales tax, interest on
credit cards, casualty losses were more deductible, maybe more medical. Had
great insurance and did not pay much for medical care. 1962 my SS tax was
$330. That was the maximum you paid and the company matched. 1% of the
first $3300 of income. About September we always looked at the raise in
take home pay. Table 1A does not go back far enough. I read, but do not
remember where, that the overall tax burden in 1953 was 22% of a families
income. That was the total taxes. Sales, excise, income. Now it is closer
to 43%. This depression is not going to turn around when the government is
spending about $2.73 for every $1.00 takes in. California raised it's sales
tax to 9.75% in most areas. Varies by 0.25%. That has driven people to
shop online, or buy when out of state. I bought new tires for the truck in
St. George, UT. Costco, same price as at home, but 4% less tax. On $800
adds up. How much do you think the state has actually gained in revenue
from the higher taxes? This is not Democrat thing. The Republicans are as
guilty of the overspending.

The general idea is that you use pump-priming stimulus early in an
economic downturn, and then, if taxes are too high, follow it up with
tax cuts to business when the economy is producing positive growth.

But cutting taxes won't work if no one is buying; businesses won't
invest or hire until buyers show their heads. And unless taxes are
well up on the Laffer curve, cutting taxes won't do a damned thing,
anyway, except to make rich people richer. That's what Reagan's
intention was, as his Budget Director, David Stockman, admitted later
in the term. Read his interview in _Atlantic_ sometime.

During Kennedy's term, taxes were much higher than they are today.
Tax cuts then could help, once people started buying. They were much
higher during Reagan's term, too. So I want to get around to Romer's
paper soon, and see what she's saying.

Sooner rather than later Ed.
She didn't, for instance, either say or imply that tax cuts were a better
solution to the problem at hand.
You even know this.
Are you turning into Tom V EH?



She did say that the amount of growth that comes from stimulus spending
was somewhere over three dollars for every dollar spent. But tax cuts
only provided a dollar and change for every tax dollar cut. From that I
got where she was coming from

Hawke

"Bill McKee" wrote in message
news

"Ed Huntress" wrote in message
...

"CalifBill" wrote in message
m...

"Ed Huntress" wrote in message
...

"Hawke" wrote in message
...
wrote:
On Dec 14, 5:20 am, Hawke wrote:


I guarantee that Obama's economic advisors are telling him Keynsian
economics will work. ......................... Obama
and his advisors say we should do. After seeing how the economy
fared
under Bush I don't see why anyone would pay any attention to their
advice.

Hawke

You did note that Christina Romer is the chairwoman of the
president's
Council of
Economic Advisors. So while some of Obama's economic advisors say
that Keynsian economics will work, at least one is saying that it is
not the best way.

One problem is that Obama needs to avoid looking like he is following
Bushes policies even when it may be the best policy.

Dan



I saw Romer on Meet the Press this weekend and have seen her numerous
times on other shows as well. In no way does she advocate doing
anything like what was done under Bush except for the bailout. Obama's
economic team, led by Jared Bernstein, has virtually the opposite view
from that of the Bush team. They believe they know what they are doing
and that they have to spend money to get the country going again. You
hear the opposite of that view from all the conservatives. But as I
said, we tried the trickle down or supply side economics when Bush was
president. We did things their way. It was a disaster. Obama is trying
it differently and it will undoubtedly have a better outcome. What is
funny is to hear the people who did the worst job in history running
their mouths and saying things will be disastrous if we don't do
things like they did them. Now that is nuts, but when you deny reality
you do some really goofy things.

Hawke

The general idea is that you use pump-priming stimulus early in an
economic downturn, and then, if taxes are too high, follow it up with
tax cuts to business when the economy is producing positive growth.

But cutting taxes won't work if no one is buying; businesses won't
invest or hire until buyers show their heads. And unless taxes are well
up on the Laffer curve, cutting taxes won't do a damned thing, anyway,
except to make rich people richer. That's what Reagan's intention was,
as his Budget Director, David Stockman, admitted later in the term.
Read his interview in _Atlantic_ sometime.

During Kennedy's term, taxes were much higher than they are today. Tax
cuts then could help, once people started buying. They were much higher
during Reagan's term, too. So I want to get around to Romer's paper
soon, and see what she's saying.

--
Ed Huntress


Overall the tax rate was lower during Reagan and even LBJ. By a bunch.
The max income tax rate was higher, but there were lots of deductions.
Deductions that have gone bye-bye. State and local sales tax, interest
cost for any loan, No Medicare then. A lot lower SS tax rate and
ceiling.

You have some misconceptions there, Bill. First, the overall income tax
rates hardly budged throughout the Reagan years. Second, the maximum
income tax was LOWERED by Reagan, from 70% to 50% and then to 28%.
Deductions went up and down throughout the various tax bills passed
during Reagan's term, but, yes, overall they were reduced.

As for Medicare, it's been around since 1965. Rates went UP during
Reagan's term. Likewise, SS withholding went UP, not down.

If you want to see the net effects, take a look at this report from the
CBO. Note particularly Table 1A:

http://www.cbo.gov/ftpdocs/53xx/doc5...es.htm#table1A

--
Ed Huntress


As I stated. The tax effective tax rate was lower in LBJ time.

Well, you stated during LBJ's time *and* Reagan's time. Reagan is easy to
check. LBJ is not, and I don't think it's very relevant, anyway. The
impression that many people have is that Reagan greatly reduced taxes. As
you can see from the CBO report, the effective tax rates, across the board,
hardly moved during Reagan's term. There was a lot of smoke and wind, but
they really didn't do squat. Some effective rates actually moved *up*.

If you're looking at the total tax burden on the economy, the effect of
Reagan's various tax bills was roughly zero. But if you look at what their
plan was, see Stockman's comments. He was Reagan's budget director, and he
says the basic idea was to cut taxes for the rich and let the money "trickle
down" to everyone else. It was a redistribution -- to the wealthy. That fits
with the theories that the Republicans were following from the mid-'60s
until now.

Even though LBJ paid for part of the VN war by promising more SS benefits
in the future and raising SS taxes then. The maximum tax rate was
lowered from 70% to 50%. Big deal. Who paid 70%? You could deduct sales
tax, interest on credit cards, casualty losses were more deductible, maybe
more medical.

Pull together a summary like the one the CBO produced that began in 1979,
and it will be interesting to look at. But Medicare was instituted during
LBJ's time. They were trying to hide the cost of a war. A lot of taxes got
jacked all around, and a simplistic view of it isn't going to help.

Neither will anecdotes. g

Had great insurance and did not pay much for medical care. 1962 my SS
tax was $330. That was the maximum you paid and the company matched. 1%
of the first $3300 of income. About September we always looked at the
raise in take home pay. Table 1A does not go back far enough. I read,
but do not remember where, that the overall tax burden in 1953 was 22% of
a families income. That was the total taxes. Sales, excise, income. Now
it is closer to 43%. This depression is not going to turn around when the
government is spending about $2.73 for every $1.00 takes in. California
raised it's sales tax to 9.75% in most areas. Varies by 0.25%. That has
driven people to shop online, or buy when out of state. I bought new
tires for the truck in St. George, UT. Costco, same price as at home, but
4% less tax. On $800 adds up. How much do you think the state has
actually gained in revenue from the higher taxes? This is not Democrat
thing. The Republicans are as guilty of the overspending.

--
Ed Huntress

On Dec 17, 4:07*pm, "Ed Huntress" wrote:



The
impression that many people have is that Reagan greatly reduced taxes. As
you can see from the CBO report, the effective tax rates, across the board,
hardly moved during Reagan's term. There was a lot of smoke and wind, but
they really didn't do squat. Some effective rates actually moved *up*.

If you're looking at the total tax burden on the economy, the effect of
Reagan's various tax bills was roughly zero.
Ed Huntress

The total tax burden may have been the same, but there were a lot of
changes that affected what one did. The deduction for interest other
than mortgages went away for example. Another was lowering the cap
gains tax, so people were more likely to sell and reinvest where the
investment might be more needed and profitable. So in my opinion the
changes reduced the distortions caused by loopholes ( not the best
word, but conveys the idea ) in the tax code. So I think the changes
were beneficial to growth, even though the total tax burden was the
same.

Now if the deduction for interest on mortgages had been eliminated,
the housing bubble would have been smaller.

Dan

wrote in message
...
On Dec 17, 4:07 pm, "Ed Huntress" wrote:



The
impression that many people have is that Reagan greatly reduced taxes. As
you can see from the CBO report, the effective tax rates, across the
board,
hardly moved during Reagan's term. There was a lot of smoke and wind, but
they really didn't do squat. Some effective rates actually moved *up*.

If you're looking at the total tax burden on the economy, the effect of
Reagan's various tax bills was roughly zero.
Ed Huntress

The total tax burden may have been the same, but there were a lot of
changes that affected what one did. The deduction for interest other
than mortgages went away for example. Another was lowering the cap
gains tax, so people were more likely to sell and reinvest where the
investment might be more needed and profitable. So in my opinion the
changes reduced the distortions caused by loopholes ( not the best
word, but conveys the idea ) in the tax code. So I think the changes
were beneficial to growth, even though the total tax burden was the
same.

Possibly. Again, impressions are one thing, and actual numbers are another.
I'd need to see the numbers before commenting about it, and that's a big
job.


Now if the deduction for interest on mortgages had been eliminated,
the housing bubble would have been smaller.

Sure. Fewer people would own houses, for one thing. d8-)

Housing and the housing bubble are tough issues. There's a very large
economic benefit, and an even larger social benefit, to having people own
their own homes. How that stacks up against the effect on housing inflation
is another issue that would have to be explored in terms of actual numbers.

As for the bubble, the dynamics really don't change by adding or subtracting
interest deductions. What shifts is some combination of house prices and
affordability. More people own houses, but there also is a shift toward
higher prices. As always, we'd need the numbers rather than the philosophy
to see what actually happened.

--
Ed Huntress

Ed Huntress wrote:
wrote in message
...
On Dec 17, 4:07 pm, "Ed Huntress" wrote:



The
impression that many people have is that Reagan greatly reduced
taxes. As you can see from the CBO report, the effective tax rates,
across the board,
hardly moved during Reagan's term. There was a lot of smoke and
wind, but they really didn't do squat. Some effective rates actually
moved *up*.

If you're looking at the total tax burden on the economy, the effect
of Reagan's various tax bills was roughly zero.
Ed Huntress

The total tax burden may have been the same, but there were a lot of
changes that affected what one did. The deduction for interest other
than mortgages went away for example. Another was lowering the cap
gains tax, so people were more likely to sell and reinvest where the
investment might be more needed and profitable. So in my opinion the
changes reduced the distortions caused by loopholes ( not the best
word, but conveys the idea ) in the tax code. So I think the changes
were beneficial to growth, even though the total tax burden was the
same.

Possibly. Again, impressions are one thing, and actual numbers are
another. I'd need to see the numbers before commenting about it, and
that's a big job.


Now if the deduction for interest on mortgages had been eliminated,
the housing bubble would have been smaller.

Sure. Fewer people would own houses, for one thing. d8-)

You'd think that wouldn't you, Ed.
It is not, however, reflective of any reality I know of.
IOW, it isn't true and the numbers back me up on this.
Nearly 100 percent of the tax deduction for mortgage interest has lead to
higher prices ( for everything )
in about the amount of that subsidy.



--
John R. Carroll

"John R. Carroll" wrote in message
...
Ed Huntress wrote:
wrote in message
...
On Dec 17, 4:07 pm, "Ed Huntress" wrote:



The
impression that many people have is that Reagan greatly reduced
taxes. As you can see from the CBO report, the effective tax rates,
across the board,
hardly moved during Reagan's term. There was a lot of smoke and
wind, but they really didn't do squat. Some effective rates actually
moved *up*.

If you're looking at the total tax burden on the economy, the effect
of Reagan's various tax bills was roughly zero.
Ed Huntress

The total tax burden may have been the same, but there were a lot of
changes that affected what one did. The deduction for interest other
than mortgages went away for example. Another was lowering the cap
gains tax, so people were more likely to sell and reinvest where the
investment might be more needed and profitable. So in my opinion the
changes reduced the distortions caused by loopholes ( not the best
word, but conveys the idea ) in the tax code. So I think the changes
were beneficial to growth, even though the total tax burden was the
same.

Possibly. Again, impressions are one thing, and actual numbers are
another. I'd need to see the numbers before commenting about it, and
that's a big job.


Now if the deduction for interest on mortgages had been eliminated,
the housing bubble would have been smaller.

Sure. Fewer people would own houses, for one thing. d8-)

You'd think that wouldn't you, Ed.

I'm being slightly facetious but it's provable that sales of houses are
*very* sensitive to tax rates, mortgage interest rates, and housing
inflation. The best way to look at it is that people buy houses as soon as
they can afford them, and they buy the most expensive houses they can
afford. In the main.

So tax deductions for mortgage interest is one small factor that influences
sales rates. Unfortunately, houses, and real estate in general, have little
to do with replacement costs. Prices are based on what people can afford and
will buy. That's the real driver in residential housing sales numbers and
prices.

It is not, however, reflective of any reality I know of.
IOW, it isn't true and the numbers back me up on this.
Nearly 100 percent of the tax deduction for mortgage interest has lead to
higher prices ( for everything )
in about the amount of that subsidy.

I suspect that's close to being right. I also suspect there is a small
residual benefit, in terms of numbers of houses sold, that can be isolated
as being the result of tax deductions. Most of the gain gets eaten up by
housing inflation, but a small residual remains. I think. g

A problem with tax deductions for houses is that they're regressive -- most
of the benefit accrues to people in the highest brackets. That's not where
you want to pump up housing, because they're going to buy houses anyway.

This is where you need a good econometrician who's handy with multivariate
analysis. I'll ask my son when he graduates in June. d8-)

--
Ed Huntress

wrote:
On Dec 17, 4:07 pm, "Ed Huntress" wrote:



The
impression that many people have is that Reagan greatly reduced
taxes. As you can see from the CBO report, the effective tax rates,
across the board, hardly moved during Reagan's term. There was a lot
of smoke and wind, but they really didn't do squat. Some effective
rates actually moved *up*.

If you're looking at the total tax burden on the economy, the effect
of Reagan's various tax bills was roughly zero.
Ed Huntress

The total tax burden may have been the same, but there were a lot of
changes that affected what one did. The deduction for interest other
than mortgages went away for example. Another was lowering the cap
gains tax, so people were more likely to sell and reinvest where the
investment might be more needed and profitable.

LOL
What happened then has happened again since the tax cuts of the Bush jr
administration. Profit taking.
Anytime you tax something you get less of it.
Taxing profits doesn't mean people suddenly quit working. What it means is
that they leave their money in
their businesses where it isn't taxed, or at least can be protected by
putting it to work.


So in my opinion the
changes reduced the distortions caused by loopholes ( not the best
word, but conveys the idea ) in the tax code. So I think the changes
were beneficial to growth, even though the total tax burden was the
same.

The changes did real long term damage to the American work force.



--
John R. Carroll

On Thu, 17 Dec 2009 08:34:03 -0800 (PST), "
wrote:
snip
Another was lowering the cap
gains tax, so people were more likely to sell and reinvest where the
investment might be more needed and profitable.
snip
While this sounds good in theory, in reality all it did was fuel
speculation and create bubbles in everything from the dot cons to
commodities. It also provided the motivation to transfer wealth
through sham transactions structured as "capital gains" that are
taxed at lower rates than earned income, even if these severely
distort the marketplace/economy, e.g. executive stock options.

It is not at all clear why income derived by "capital gains"
should be taxed at a lower rate than earned income, while
classifying most "capital gains" as unearned income with a higher
tax rate would seem to be logical and reasonable, with one of the
very few exceptions being where an individual grows their own
business or farm.

FWIW -- unless the stock is an IPO, none of the "investment" in
stocks provides a dime to the corporation to expand their plant
or product line.

The general rule is that if you want more of something subsidize
it, and if you want less of something tax it. The current tax
treatments appear to subsidize speculation and profiteering while
discouraging productive, value added labor resulting in earned
income. The same observation applies to cash savings accounts
currently paying less than the rate of inflation with full tax
effect on the interest earned.

*HIGHER* capital gains tax rates than those applied to earned
income would seem appropriate, especially if these are *MUCH*
higher for short-term/flipped assets, e.g. less than 90 days.


Unka George (George McDuffee)
...............................
The past is a foreign country;
they do things differently there.
L. P. Hartley (1895-1972), British author.
The Go-Between, Prologue (1953).

On Dec 17, 9:23*pm, F. George McDuffee gmcduf...@mcduffee-
associates.us wrote:


snip
While this sounds good in theory, in reality all it did was fuel
speculation and create bubbles in everything from the dot cons to
commodities. *It also provided the motivation to transfer wealth
through *sham transactions structured as "capital gains" that are
taxed at lower rates than earned income, even if these severely
distort the marketplace/economy, e.g. executive stock options.

It is not at all clear why income derived by "capital gains"
should be taxed at a lower rate than earned income, while
classifying most "capital gains" as unearned income with a higher
tax rate would seem to be logical and reasonable, with one of the
very few exceptions being where an individual grows their own
business or farm.

FWIW -- unless the stock is an IPO, none of the "investment" in
stocks provides a dime to the corporation to expand their plant
or product line.

The general rule is that if you want more of something subsidize
it, and if you want less of something tax it. *The current tax
treatments appear to subsidize speculation and profiteering while
discouraging productive, value added labor resulting in earned
income. *The same observation applies to cash savings accounts
currently paying less than the rate of inflation with full tax
effect on the interest earned.

*HIGHER* capital gains tax rates than those applied to earned
income would seem appropriate, especially if these are *MUCH*
higher for short-term/flipped assets, e.g. less than 90 days.

Unka George *(George McDuffee)
..............................
The past is a foreign country;
they do things differently there.
L. P. Hartley (1895-1972), British author.
The Go-Between, Prologue (1953).

I have to disagree with you here. If you hold something for a long
time, inflation increases the number of dollars that you will get for
it. But the actual value is liikely the same. Say I bought a ton of
nickel twenty years ago. And now sold it. It is still just a ton of
nickel. But inflation will mean I get maybe 4 times as much money for
it. The dollars I get are only worth 25% of the dollars I paid. So I
would be fine with normal income tax on capital gains as long as I
could adjust for inflation. So there would be a difference between
the tax you paid if you only held something for a year versus
something you held for thirty years.

Dan

Special for Ed and John (and anyone else that is trying to
understand what went wrong). A new study is out:

This Time is Different:
Eight Centuries of Financial Folly
Carmen M. Reinhart & Kenneth S. Rogoff
http://press.princeton.edu/titles/8973.html

For a video clip about their study see
http://www.pbs.org/newshour/business...rt-questi.html
snip
The authors dug through mountains of data on every financial
crisis they could uncover back to the 1300s, hoping to uncover
common elements. And uncover them they did: Rapid deregulation,
bubbles in real estate, and an influx of foreign savings are
often tell-tale signs of a financial crisis to come.
snip
======

Available Amazon 19.97$US
http://www.amazon.com/This-Time-Diff.../dp/0691142165


Unka George (George McDuffee)
...............................
The past is a foreign country;
they do things differently there.
L. P. Hartley (1895-1972), British author.
The Go-Between, Prologue (1953).

"F. George McDuffee" wrote in message
...
Special for Ed and John (and anyone else that is trying to
understand what went wrong). A new study is out:

This Time is Different:
Eight Centuries of Financial Folly
Carmen M. Reinhart & Kenneth S. Rogoff
http://press.princeton.edu/titles/8973.html

For a video clip about their study see
http://www.pbs.org/newshour/business...rt-questi.html
snip
The authors dug through mountains of data on every financial
crisis they could uncover back to the 1300s, hoping to uncover
common elements. And uncover them they did: Rapid deregulation,
bubbles in real estate, and an influx of foreign savings are
often tell-tale signs of a financial crisis to come.
snip
======

Available Amazon 19.97$US
http://www.amazon.com/This-Time-Diff.../dp/0691142165


Unka George (George McDuffee)
..............................
The past is a foreign country;
they do things differently there.
L. P. Hartley (1895-1972), British author.
The Go-Between, Prologue (1953).

That looks like a very important book, George. I read Leonard's review a
while back and I came to the conclusion that it's too wonkish for the time I
have available these days. I need the Reader's Digest version. g

But I hope we hear more about it. It ought to be important in policy
circles.

--
Ed Huntress

On Thu, 17 Dec 2009 19:40:22 -0500, "Ed Huntress"
wrote:

That looks like a very important book, George. I read Leonard's review a
while back and I came to the conclusion that it's too wonkish for the time I
have available these days. I need the Reader's Digest version. g
==========
If you have a good internet connection watch
http://www.booktv.org/Watch/11133/Th... l+Folly.aspx
whole thing is about a hour and covers their major findings. Dr.
Reinhart indicated they will be placing their data in the public
domain and posting to the web.



Unka George (George McDuffee)
...............................
The past is a foreign country;
they do things differently there.
L. P. Hartley (1895-1972), British author.
The Go-Between, Prologue (1953).

"F. George McDuffee" wrote in message
...
On Thu, 17 Dec 2009 19:40:22 -0500, "Ed Huntress"
wrote:

That looks like a very important book, George. I read Leonard's review a
while back and I came to the conclusion that it's too wonkish for the time
I
have available these days. I need the Reader's Digest version. g
==========
If you have a good internet connection watch
http://www.booktv.org/Watch/11133/Th... l+Folly.aspx
whole thing is about a hour and covers their major findings. Dr.
Reinhart indicated they will be placing their data in the public
domain and posting to the web.

Aha! Very good. I'll curl up with the netbook and watch that one. Thanks.

--
Ed Huntress

wrote in message
...
On Dec 17, 9:23 pm, F. George McDuffee gmcduf...@mcduffee-
associates.us wrote:


snip
While this sounds good in theory, in reality all it did was fuel
speculation and create bubbles in everything from the dot cons to
commodities. It also provided the motivation to transfer wealth
through sham transactions structured as "capital gains" that are
taxed at lower rates than earned income, even if these severely
distort the marketplace/economy, e.g. executive stock options.

It is not at all clear why income derived by "capital gains"
should be taxed at a lower rate than earned income, while
classifying most "capital gains" as unearned income with a higher
tax rate would seem to be logical and reasonable, with one of the
very few exceptions being where an individual grows their own
business or farm.

FWIW -- unless the stock is an IPO, none of the "investment" in
stocks provides a dime to the corporation to expand their plant
or product line.

The general rule is that if you want more of something subsidize
it, and if you want less of something tax it. The current tax
treatments appear to subsidize speculation and profiteering while
discouraging productive, value added labor resulting in earned
income. The same observation applies to cash savings accounts
currently paying less than the rate of inflation with full tax
effect on the interest earned.

*HIGHER* capital gains tax rates than those applied to earned
income would seem appropriate, especially if these are *MUCH*
higher for short-term/flipped assets, e.g. less than 90 days.

Unka George (George McDuffee)
..............................
The past is a foreign country;
they do things differently there.
L. P. Hartley (1895-1972), British author.
The Go-Between, Prologue (1953).

I have to disagree with you here. If you hold something for a long
time, inflation increases the number of dollars that you will get for
it. But the actual value is liikely the same. Say I bought a ton of
nickel twenty years ago. And now sold it. It is still just a ton of
nickel. But inflation will mean I get maybe 4 times as much money for
it. The dollars I get are only worth 25% of the dollars I paid. So I
would be fine with normal income tax on capital gains as long as I
could adjust for inflation. So there would be a difference between
the tax you paid if you only held something for a year versus
something you held for thirty years.

Dan

Reply:
Gives an incentive to invest long term. Causes more jobs to be created as
the money does not have to be turned over a lot to keep up with inflation.

On Thu, 17 Dec 2009 18:36:30 -0800, "Bill McKee"
wrote:


wrote in message
...
On Dec 17, 9:23 pm, F. George McDuffee gmcduf...@mcduffee-
associates.us wrote:


snip
While this sounds good in theory, in reality all it did was fuel
speculation and create bubbles in everything from the dot cons to
commodities. It also provided the motivation to transfer wealth
through sham transactions structured as "capital gains" that are
taxed at lower rates than earned income, even if these severely
distort the marketplace/economy, e.g. executive stock options.

It is not at all clear why income derived by "capital gains"
should be taxed at a lower rate than earned income, while
classifying most "capital gains" as unearned income with a higher
tax rate would seem to be logical and reasonable, with one of the
very few exceptions being where an individual grows their own
business or farm.

FWIW -- unless the stock is an IPO, none of the "investment" in
stocks provides a dime to the corporation to expand their plant
or product line.

The general rule is that if you want more of something subsidize
it, and if you want less of something tax it. The current tax
treatments appear to subsidize speculation and profiteering while
discouraging productive, value added labor resulting in earned
income. The same observation applies to cash savings accounts
currently paying less than the rate of inflation with full tax
effect on the interest earned.

*HIGHER* capital gains tax rates than those applied to earned
income would seem appropriate, especially if these are *MUCH*
higher for short-term/flipped assets, e.g. less than 90 days.

Unka George (George McDuffee)
..............................
The past is a foreign country;
they do things differently there.
L. P. Hartley (1895-1972), British author.
The Go-Between, Prologue (1953).

I have to disagree with you here. If you hold something for a long
time, inflation increases the number of dollars that you will get for
it. But the actual value is liikely the same. Say I bought a ton of
nickel twenty years ago. And now sold it. It is still just a ton of
nickel. But inflation will mean I get maybe 4 times as much money for
it. The dollars I get are only worth 25% of the dollars I paid. ==So I
would be fine with normal income tax on capital gains as long as I
could adjust for inflation.== So there would be a difference between
the tax you paid if you only held something for a year versus
something you held for thirty years.

Dan

Reply:
Gives an incentive to invest long term. Causes more jobs to be created as
the money does not have to be turned over a lot to keep up with inflation.

==========
Sounds good to me. Also adjust the interest paid on savings for
inflation.

Well over 50% of the stock volume on the NYSE and possibly on
others is now generated by computerized high volume, high
frequency "flash" trading which is only a new "high tech," albeit
currently legal way of broker "front running" which the SEC used
to put people in jail for. In some cases these stocks are owned
for milliseconds. This is an example where the capital "gains"
rate should be [much] higher than the earned income rate.


Unka George (George McDuffee)
...............................
The past is a foreign country;
they do things differently there.
L. P. Hartley (1895-1972), British author.
The Go-Between, Prologue (1953).

On Thu, 17 Dec 2009 21:10:31 -0600, F. George McDuffee
wrote:



Well over 50% of the stock volume on the NYSE and possibly on
others is now generated by computerized high volume, high
frequency "flash" trading which is only a new "high tech," albeit
currently legal way of broker "front running" which the SEC used
to put people in jail for. In some cases these stocks are owned
for milliseconds. This is an example where the capital "gains"
rate should be [much] higher than the earned income rate.


Unka George (George McDuffee)

A 0.1% "transaction tax" would damp things down a little!

Hypothecate it to fighting climate change and have all the world's markets
apply it.

Politically/nationally neutral and would probably be supported by 95% of the
world's population.


Mark Rand
RTFM

On Dec 18, 3:10*am, F. George McDuffee gmcduf...@mcduffee-

Well over 50% of the stock volume on the NYSE and possibly on
others is now generated by computerized high volume, high
frequency "flash" trading which is only a new "high tech," albeit
currently legal way of broker "front running" which the SEC used
to put people in jail for. *In some cases these stocks are owned
for milliseconds. *This is an example where the capital "gains"
rate should be [much] higher than the earned income rate.

Unka George *(George McDuffee)
..............................
The past is a foreign country;
they do things differently there.
L. P. Hartley (1895-1972), British author.
The Go-Between, Prologue (1953).


You do realize that the tax on capital gains of things held for less
than a year is the ordinary income tax or 35% whichever is less. So
most anything held for milliseconds does not qualify for special tax
treatment.

Dan

On Fri, 18 Dec 2009 23:33:49 +0000, Mark Rand
wrote:

On Thu, 17 Dec 2009 21:10:31 -0600, F. George McDuffee
wrote:



Well over 50% of the stock volume on the NYSE and possibly on
others is now generated by computerized high volume, high
frequency "flash" trading which is only a new "high tech," albeit
currently legal way of broker "front running" which the SEC used
to put people in jail for. In some cases these stocks are owned
for milliseconds. This is an example where the capital "gains"
rate should be [much] higher than the earned income rate.


Unka George (George McDuffee)

A 0.1% "transaction tax" would damp things down a little!

Hypothecate it to fighting climate change and have all the world's markets
apply it.

Politically/nationally neutral and would probably be supported by 95% of the
world's population.


Mark Rand
RTFM
==========
Indeed!!!

Technical name for this is a Tobin tax, originally proposed for
currency exchange transactions when the fixed currency exchange
rates were scrapped in the 70s.
http://en.wikipedia.org/wiki/Tobin_tax

This concept has been expanded to include all exchange financial
transactions including stocks, bonds, derivatives, commodities,
and other bets.
http://www.ft.com/cms/s/0/cf57a4a4-e...44feab49a.html
http://www.guardian.co.uk/business/2...conomic-policy

The mere mention of the words "Tobin Tax" makes the brokers,
speculators, and arbitragers pee in their Armani suits all over
the seats of their Porches, Ferraris, and BMWs. From their point
of view, the imposition of a "Tobin Tax," even an incomplete and
limited one, would mean the end of civilization, and quite
possibly life, as they know it. The problem being that this will
not only result in some of their profits going to the tax man,
but even worse, it will expose many of the covert and hidden
operations of the market whereby the retail/legitimate customers
are hosed.

A 0.10% [or even 0.25% or higher] transaction tax is so low that
it will have minimal effect on legitimate transactions because
these are rare, but will have a serious impact on profits
generated by high volume high frequency trading [churning/front
running] for speculation and momentary arbitrage.

A Tobin tax also applies the time tested principal "to have more
of something subsidize it, to have less of something tax it" to
speculation and arbitrage.

Look for a Tobin Tax to be imposed at about the same time the
glaciers return in a new ice age.


Unka George (George McDuffee)
...............................
The past is a foreign country;
they do things differently there.
L. P. Hartley (1895-1972), British author.
The Go-Between, Prologue (1953).

On Fri, 18 Dec 2009 15:57:25 -0800 (PST), "
wrote:

On Dec 18, 3:10*am, F. George McDuffee gmcduf...@mcduffee-

Well over 50% of the stock volume on the NYSE and possibly on
others is now generated by computerized high volume, high
frequency "flash" trading which is only a new "high tech," albeit
currently legal way of broker "front running" which the SEC used
to put people in jail for. *In some cases these stocks are owned
for milliseconds. *This is an example where the capital "gains"
rate should be [much] higher than the earned income rate.

Unka George *(George McDuffee)
..............................
The past is a foreign country;
they do things differently there.
L. P. Hartley (1895-1972), British author.
The Go-Between, Prologue (1953).


You do realize that the tax on capital gains of things held for less
than a year is the ordinary income tax or 35% whichever is less. So
most anything held for milliseconds does not qualify for special tax
treatment.

Dan
===========
As the "Queen of Mean" [Leona Helmsley] observed "paying taxes is
for little people."

Under the normal accounting rules for mere mortals, this is
correct, however there are exceptions such as the "carried
interest" classification for hedge fund managers (and given
today's regulatory authority, they may all be hedge fund
managers).

For professional traders, the nominal 35% tax is just a cap and
the starting point for negotiation between their accountants and
the IRS. All sorts of other things come into play such as "carry
forward" tax losses.
http://en.wikipedia.org/wiki/Carried_interest
snip
Because the manager is compensated with a profits interest in the
fund, the bulk of its income from the fund is taxed, not as
compensation for services, but as a return on investment.
Typically, when a partner receives a profits interest (commonly
referred to as a "carried interest"), the partner is not taxed
upon receipt, due to the difficulty of ascertaining the present
value of an interest in future profits.[2] Instead, the partner
is taxed as the partnership earns income. In the case of a hedge
fund, this means that the partner defers taxation on the income
that the hedge fund earns, which is typically ordinary income (or
possibly short-term capital gains), due to the nature of the
investments most hedge funds make. Private equity funds, however,
typically invest on a longer horizon, with the result that income
earned by the funds is long-term capital gain, taxable to
individuals at a maximum 15% rate. Because the 20% profits share
typically is the bulk of the manager’s compensation, and because
this compensation can reach, in the case of the most successful
funds, enormous figures, concern has been raised, both in
Congress and in the media, that managers are taking advantage of
tax loopholes to receive what is effectively a salary without
paying the ordinary 35% marginal income tax rates that an average
person would have to pay on such income.
snip

http://dealbook.blogs.nytimes.com/20...st-tax-change/

Examples of carry forward/back tax loss deductions/abuses
http://biztaxlaw.about.com/od/glossa...rryforward.htm
http://www.irs.gov/compliance/enforc...187267,00.html
http://heinonline.org/HOL/LandingPag...v=13&id=&page=

There are many more dodges and loopholes [other than overt
evasion].


Unka George (George McDuffee)
...............................
The past is a foreign country;
they do things differently there.
L. P. Hartley (1895-1972), British author.
The Go-Between, Prologue (1953).

Mark Rand wrote:
On Thu, 17 Dec 2009 21:10:31 -0600, F. George McDuffee
wrote:


Well over 50% of the stock volume on the NYSE and possibly on
others is now generated by computerized high volume, high
frequency "flash" trading which is only a new "high tech," albeit
currently legal way of broker "front running" which the SEC used
to put people in jail for. In some cases these stocks are owned
for milliseconds. This is an example where the capital "gains"
rate should be [much] higher than the earned income rate.


Unka George (George McDuffee)

A 0.1% "transaction tax" would damp things down a little!

Hypothecate it to fighting climate change and have all the world's markets
apply it.

Politically/nationally neutral and would probably be supported by 95% of the
world's population.


Mark Rand
RTFM

None of you guys have ever run for office (much less been elected),
have you?

ANY elected official voting YEA on such a tax would lose his big campaign
boosters - right quick.

And the people making all this money?
It's not about politics for them.
It's about MONEY!

They don't care what party the candidate represents.
They don't give two cents for his (or her) politics.

They make the same donation to BOTH candidates.
(It's call buying access)

Their only concern is, once elected, will this guy stay bought.
(until the next election at least)