Obamacare: Now Appearing On Your Restaurant Bill

I was responding only to the first part of his reply, call it a premise, that said government spending cannot increase tax revenue.

 

Got it. I agree with you there - government spending can increase tax revenue when spent smartly. Where we'll probably disagree is in the aspect that government isn't the most efficient at driving increased revenue with spending.

 

May not be the most efficient but there are scenarios where it is only government that can muster the resources and will actually, not just in theory, take the risk and "git er done". Occasionally efficiency has to take the passenger seat. : )

 

As long as it is the exception and not the rule, which becomes more frequent as government grows.

 

Utterly Predictable: Obama’s Budget Includes $5.5 Billion Obamacare Insurance Company Bailouts
By: Matthew Burke Published On: March 5, 2014
In an embarrassing admission that insurance companies cannot survive insuring against risks that have already happened, the newly released 2015 Obama budget includes a provision to establish a $5.5 billion government-controlled fund to bailout insurance companies because of Obamacare. This was easily predictable using the old adages "money doesn't grow on trees" and "there's no such thing as a free lunch...

 

Not at all. I hope you will read it and make up your own mind. I found his argument not convincing, but i'm biased by after-the-fact knowledge of how miserably "trickle down economics" worked during the Reagan years and subsequently. In fact Reagan said it was his greatest disappointment.

( I admire Reagan for his speaking ability and wit. I think he was, of any president in my recall, hands down, the best at delivering a speech. But he was also far better at sports announcing than he was at economics, even though that was his major as an undergraduate at Eureka College. It isn't fair to expect he would be a good economist of course. Majoring in economics as an undergraduate in no way makes one an economist.)

The argument for not expanding medicaid in favor of lowering taxes, as I see it, is a variation of trickle down economics. The benefits are presumably going to trickle down in the form of jobs! Personally, I think more jobs, net, will be created by expanding medicaid. But in any case the author's argument is absurd, because the purpose of expanding medicaid is to bring medical care to those who don't have it, not to create jobs.

He could have saved the reader time had he simply said that lowering Federal taxes should be a higher priority than assuring that everyone has access to medial care. That's what his argument boils down to.

He needn't bother to explain to us that money taken from the States comes back to the States minus federal overhead. We all understand that. It is self evident. Of course money comes back to each States out of proportion to what each State contributes. Proportioning according to need is the reason for cycling the money through the Federal government in the first place. He doesn't seem to appreciate that. If one wants to argue that this proportioning is wrong, or is poorly done, then that's a different argument altogether.

I find Forbes to be, in general, an intellectually weak publication. By that, I mean their editorials, in my personal opinion, are often not well reasoned. And this has nothing to do with whether I agree or not, but rather with the strength of their arguments.

http://en.wikipedia.org/wiki/List_of_Presidents_of_the_United_States_by_education

 

So PRESIDENT Reagan wasn't good with economics, but "good" with sports announcing? Is Onazi good at picking sports teams? And do you literally believe President Reagan wanted to lower taxes so YOUR parasites (who would kill you in a NY minute), could have freebie healthcare? Btw, you like the rest of the rest of the few fascists here, couldn't write correct grammar to save your asses! Love you "smart" guys who write so well...

 

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Good points, especially ''free lunch''. LOL And if only Lehman +Bear had been bailed out;
then we could make a 100% accurate prediction on bailouts.Why everyone wrongly ''knew' they were big to fail;get another loan.

FLA had so few sign up for ACA;
probably many of ''Gators'' types wiil simply'' opt out''
for another eat place.

 

If you'll stop and think for a moment , you'll realize that your post is absurd, as it implies that during a recession, when the government is leveraging up by borrowing and injecting money into the economy, that, if those who claim federal spending increases revenues were right, the additional Federal revenues should "close" the budget gap. What makes this absurd is that you have totally disregarded time!

Of course increased government spending in the domestic economy, given a little time, does increase Federal revenues. There has never been any question about that. At first, the increase in Federal revenues is only a small fraction of the additional money spent. Over time, however, the revenues returned to the Treasury, per each dollar injected into the economy typically increases as the injected money circulates in the economy at an accelerating velocity as recovery occurs. Meanwhile, assuming the injected money was borrowed, the Treasury will pay interest on the borrowed money. In good times, however, injecting money faster than justified by productivity and growth is harmful! The central bank may have to remove some of the money injected during a recession once good times return.

But regardless, Federal spending in the economy does, in general, increase Federal Revenues. And Federal spending is typically increased during recovery from recessions to compensate for reduced spending in the private sector and to spur demand and get the economy moving again.

No economy can grow forever without limit. The ideal inflation rate is exactly zero with absolute stability in the economy at full employment (5-6% unemployment). That is impossible to maintain, however, without incurring great risk of deflation. Therefore, the Fed sets an inflation target near 2%. Setting a higher target allows too much inflation, and setting a lower target risks deflation.

(Intentionally reducing revenue to increase revenue by lowering tax rates does not, sadly, increase revenues. Unfortunately, the result of reducing tax rates is just what any uninformed sixth grader might have guessed, i.e., a reduction in revenue. An uninteresting and disappointing result to be sure! As we later learned, all of the increased revenues during our trickle down experiment of the 1980s came from massively increased government spending, none came from lower tax rates. This was the great disappointment of the 1980s. Today, those trickle down ideas seem silly. Back then we theorized that both private and public sectors could become "richer" by moving money around in a way that would increase productivity in the private sector. To our dismay, the thing that did prove effective in increasing private sector productivity was to increase demand by spending more federal dollars! Just moving money around, by itself, did not increase productivity -- To save face, Dr. Laffer had to deny knowing anything about that infamous cocktail napkin that Dick Cheney remembered so clearly.)

A recent concern of the Fed has been the build-up of bank reserves. That is to say when the Fed recapitalized the banks during the recent crisis, much of that money sat idle in the bank's reserve accounts at the Federal Reserve and was not circulating. Obviously this idle money was not producing nearly as much Federal revenue nor private sector productivity as the Fed would have liked, so the Fed pursued various means, it has many arrows in its quiver, of getting banks to lend once again.

Obviously, there are recessions so deep that money injection alone, via lowered interest rates for example, is an ineffective cure. In good times, responsible governments only inject in proportion to growth in the economy. During recessions, they inject money to stem further retraction and to get money moving again by increasing demand. If the demand is not coming from the private sector then it must come from the government sector via government spending. If it turns out that too much money has been injected, and as a result inflation is heating up, money can be taken back out of the economy. The Fed has the tools for doing that as well.

 

No, what's totally absurd is that gov't can borrow money, then spend it and call it gdp. What a load of nonsensical liberal crap.