Sen. Grassley Aims for $60bln in tax cuts

Discussion in 'Economics' started by Rickshaw Man, Nov 8, 2005.

  1. This is amazing. we are in debt as far as the eye can see, we are at war, our country just had three major natural disasters in a row, and these frigging son of a bitche$ are extending tax cuts god help this country. im ashamed to say Im a Republican.
  2. It's all by design. The disasters on top of the war are the perfect pretext for dismantling the civilian side of the federal govt. and for cutting back on entitlements.

    This is not all bad, if done correctly. But what we'll see is a meat-axe approach that whacks the good along with the bad programs. If they did it intelligently (for instance...getting rid of corporate welfare) it might actually do some good, but that is NOT how it will happen.

    Meanwhile we have ever-more-shameful favoritism/cronyism/collusion from this administration. Beyond shameful.

  3. One of the more depressing spectacles recently was that of an angry Sen. Ted Stevens of alaska loudly denouncing any attempt to delete the infamous bridge to nowhere from the pork-laden highway bill. You would have thought we were talking about sending his children to a concentration camp.

    Congress and the administration have demonstrated zero ability to manage the budget. Sen. Tom coburn of Ok. has made plenty of enemies pointing htis out and asking for embarrassing projects, like Sen. Steven's bridge, to be dropped. Rep. Mike Pence has done the same in the House.

    It is idiotic to act like every single item in the budget is of equal importance. You have to be in Dc and actually know people who work in these agencies to realize how totally useless a good bit of the budget is. We could cut 25% of most agencies' budgets and no one would ever notice the difference.
  4. We find something to agree on.

    And please do not forget to look at the military. My father was career Army and he knew from the inside how incredibly wasteful the military can be.

    There are places to cut. Lots of them.

  5. Arnie


    We aren't in debt because of tax cuts. Revenues are increasing along with the economy, largely due to tax cuts. So it's a little hard to argue they are the cause. We are indebt because of runaway spending. Think about it. Without the tax cuts, the deficit would be larger, not smaller.
  6. So revenues increased largely due to tax cuts..hmm

    Bread, Circuses, Tax Cuts, and Debt

    As the typical conservative pundit will quickly tell you, federal tax revenues went up under Reagan's two terms, from $517 billion in fiscal 1980 to $909 billion in fiscal 1988.[1] Hence, the massive Reagan deficits were due to spending that grew even faster than revenues.

    However, the "real Reagan record" (to steal the title of a National Review symposium from several years back) is not the clear cut vindication of supply-side economics that the conservative pundits would have us believe. Yes, tax receipts rose by roughly 75.8 percent over the eight-year period, for a growth rate of about 7.3 percent per year.

    But how do we know that this was due to the magic of "tax cuts"? After all, there are all sorts of reasons federal nominal tax receipts might rise over time: inflation, population growth, the upswing of a business cycle, etc. Indeed, federal receipts under Carter's term (fiscal 1976 to 1980) rose from $298 billion to $517 billion. This represents a 73.5 percent overall increase, but since it happened over four years it represents a growth rate of 14.8 percent per year, more than double the average rate under Reagan.

    Of course, the rate of inflation was higher in the Carter years than under Reagan. But even if we switch from nominal to constant (2000) dollars, federal tax receipts rose at an annual rate of 6.5 percent under Carter, while only at a 2.7 percent rate under Reagan.[2]

    Now if I haven't lost the reader completely, let me throw in yet another curve ball: It's not at all clear that Reagan "cut taxes" on net! Yes, he cut tax rates when he first came into office, but in his second term he signed an "emergency deficit reduction act" that "closed loopholes" (and destroyed the real estate market). Thus it is difficult to assess the overall tax drain on the economy.

    Let's be honest: We can bicker about statistics all day. But here's something that I bet will surprise you. Surely a roughly fair measure of the total amount of taxes (we're not even talking about spending, remember) taken by the government would be the percentage of gross domestic product. This particular statistic is not very sensitive to inflation, and it also incorporates the possible benefits of a booming economy. Now if the supply-side version of the Reagan years is generally correct, surely federal tax receipts as a percentage of GDP should be much lower under Reagan than under Carter, right?

    Not really. For the fiscal years for which Carter can be held responsible (i.e. 1977 through 1980), tax revenues as a percentage of GDP were 18.0, 18.0, 18.5, and 19.0. The figures for Reagan's fiscal years (1981 through 1988) are 19.6, 19.2, 17.4, 17.3, 17.7, 17.5, 18.4, and 18.1. Yes, some of the lowest years occurred under Reagan, but the following is also true: The two years in which the greatest fraction of the economy was taxed occurred under Reagan,[3] and two of Carter's yearly figures were both lower than four of Reagan's yearly figures. (In fairness, I admit that the average of the above numbers for Carter is 18.4 percent, while for Reagan it is 18.2 percent. But hardly something to write Thomas Jefferson about.)


    Simply put, the Reagan experience does not prove that tax cuts are the way to balance the budget, because (a) tax revenues increased faster under Carter than under Reagan and (b) it's not even clear how much Reagan "cut taxes" in the first place.