Well, one final note before I go. The notion that "taxes don't pay for themselves"...what does that mean, exactly? Even if taxes don't effect wealth creation (they do), if I keep 10 cents of every dollar i earn, instead of paying it to Government, in the form of taxes, how does that money saved "not pay for itself"? I have the money in my pocket to spend on goods and services I need, instead of the Government doing it for me. How could the Government do it any more efficiently than myself? I keep the 10 cents. They have to collect it (which costs 2 cents), plus they've got a massive overhead, employees, pensions, salaries, budgets, buildings all to "administrate" that 10 cents, before it even goes out the door, to pay for the same services, I'll receive, eventually? The premise central to the notion "tax cuts don't pay for themselves" is a logical fallacy. It assumes that Government revenue should be held constant, when taxes are reduced. But that's not the case, at all. When people are taxed less, the need for Government services becomes less, because people can finance their own needs instead of having the middleman (Government) do it for them. Therefore, there is no reason to maintain that bloated Government at the size and scope it is today, when taxes are cut. Cut taxes, then cut Government. It's that simple. The money not spent in taxes, is then freed up for people to spend on themselves, thus relieving the need for a bloated nanny-state to do it on their behalf. So at the least, tax cuts are revenue neutral, after cutting the excess bureaucracy.
It means that economies with burgeoning budget deficits cannot afford tax cuts. Kindly refer to a few of the eleven links I provided earlier in this thread for details, because you clearly haven't yet done so: Once again, presented for your convenience: http://www.time.com/time/magazine/article/0,9171,1692027,00.html http://economix.blogs.nytimes.com/2011/10/13/can-tax-cuts-pay-for-themselves/ http://thebroadermarket.com/post/2580791366/no-tax-cuts-do-not-pay-for-themselves http://www.theatlantic.com/business...r-reagan-and-they-wont-under-pawlenty/240616/ http://www.cnbc.com/id/38810267/Haines_Tax_Cuts_Do_Contribute_to_Nation_s_Deficit http://www.thefiscaltimes.com/Colum...y-Tax-Cuts-Dont-Pay-for-Themselves.aspx#page1 http://economistmom.com/2011/06/do-tax-cuts-pay-for-themselves-sorry-no/ http://gulzar05.blogspot.ca/2010/07/do-tax-cuts-pay-for-themselves.html http://economistsview.typepad.com/e...gusto-tax-cuts-do-not-pay-for-themselves.html http://www.forbes.com/sites/briando...les-jfks-advisor-said-tax-cuts-raise-revenue/ http://www.slate.com/articles/busin...x_cuts_ever_increase_government_revenues.html
Yes, I see the articles. It's not as simple, as I already mentioned. But fine, what difference does it make if we don't cut taxes? Where do the spending cuts come from? We're 1.6 Trillion in the hole. Nothing of substance will materialize anyway. I thought we were having an theoretical discussion as to whether tax cuts pay from themselves, over the long term. That again, is subject to a host of confounding variables in a time series data set that need to be teased out and beyond me, at the moment. Tax hikes and spending cuts will lead to a depression. So will just tax hikes, or spending cuts. We're beyond the point of no return, and have been for a while now. I don't see a solution to any of this. If you do, feel free to point it out. Or anyone, for that matter.
Well, if you're going to be defeatist about it, then discussing the matter, let alone arguing about it, is arguably moot. As for what can be done to narrow the deficit to manageable levels, or even reversing it in time, taxes will have to be raised and spending will have to be cut, following the stimulus spending that saved the country from a depression. Where and how much is above both my pay grade and yours.
ahah you crack me up, man. Listen, put something on the table. If you want hikes, by how much? On who? If you want cuts, by how much? On who? I say no hikes, and cut 1.6 Trillion across the board, and another .3 Trillion, the following year, so we're in a surplus. But this is all fantasy football cause nobody will listen to us. If we cut like that, we get Great D 2.0. There's no avoiding it. There's no rejiggering around to find the sweet spot. The sweet spot is Shangdong, China, in a Foxconn factory making ipads for export to America. Taxes on the rich is played out. It's a drop in the bucket. I did the math a while ago in the p&r. Im sure you could pull it up if you were so inclined. It's something like 200 billion in additional revenue off a 1.6 Trillion deficit. Peanuts. Like Max said, it's more the token gesture, than the actual contribution liberals want in their relentless pursuit of "social justice". So lets cut. Half a trillion from Defense. Half a trillion from welfare. And half a trillion from medicare/obamacare/medicaid. Fuck the old timers. They got us into this mess. Now they can get us out. How's that inflammatory? Gnight.
oversimplification> There is no significant "point of no return" unless that is an environmental point. As long as groups can produce a surplus, one which meets both their immediate needs and their trade needs, then currency can be treated for what it is: utterly made up. (That includes the value of gold, btw.) There are two main types of parasites we need to rid ourselves of, by putting both to work. First, the well known parasites, the poor, and second, the rentiers. Until these are put to work, basically either growing, mining, or one of the close relations to those, the rest of us are going to be carrying their load. A growing population and rising consumption is not helping matters. /oversimplification>
I only know the direction that needs to be taken, not the speed at which it should do so. And neither do you. So please let's not pretend. And as for your proposed over-the-top spending cuts, you just want to precipitate the very economic Armageddon that you're "predicting." Talk about moral hazard, eh?
Apparently it's above Geithner's and Bernacke's, too, cause they don't know what the fuck they're doing either. At what point does this stimulus spending end? We're ~15% UE with shitty NFP prints. What did the ADP come in at today? 119K...below expectation... anyway, who gives a fuck. You or I don't know. Summers and Geither, don't know. Obama sure as shit, doesn't know. Who knows? We can't borrow at these rates for the next 5 years. So the recovery must come soon, and strong. Nowhere to be found so far. The jobs are gone, bro. To China. And India. And down the rathole of overpriced McMansions that ain't worth crap. The jobs won't be coming back for a long time. Ricter and I spoke about this. We need 400K numbers, MoM, for the next 3 years, to get back to breakeven. Ain't happening. That's the hail mary everyone is holding out for. Where is it?
Just a rhetorical question, since I don't see any point in arguing about this stuff... Along the lines of what Hugh Hendry has been arguing for, could the Hail Mary be simply the reversal of the marvellous Chinese miracle? So what if China is, in fact, overleveraged and experiences a sharp contraction? What if Japan finally follows suit? I would say 400k numbers are easy in such a case... Just a thought.