Ideology Before Facts


Everyone knows the economy is still recovering from the worst recession since the Great Depression, but here’s the good news; we know what works.  Research on the Obama stimulus package is in; the tax cuts did little to help the recovery while state fiscal relief and infrastructure investment did the most to boost the economy.  For the layman this means in a recession government spending works and tax cuts do not.

Conservatives want to argue that increasing government spending only crowds out the private sector and actually hinders the economy.  That just isn’t true.  As I have pointed out before the slow growth in the economy is due to a lack of demand.  This means people are not buying things and there are idle dollars sitting around. The “crowding out” argument can only be used during full employment when all resources are being utilized.  This is not our current situation.  Government is spending dollars not being spent; it is not taking away dollars from the private sector.

We know government spending works and it does not hurt the private sector, and we know tax cuts in a recession do not work.  So what does the GOP want to do? They want to lower taxes and cut government spending.  They are demanding these policies because Republicans want to (pre-maturely) shift the main issue from economic recovery to decreasing the national debt.  The problem is Republican proposals (the ones that cut taxes and reduce spending) actually increase the debt.

 

 

 

 

 

 

 

 

 

The GOP has become the party that puts ideology before facts. The Republican candidates’ plans solve neither of America’s biggest problems.  They want to decrease spending, which will hurt the recovery, and they want to cut taxes, which will have little impact on the recovery, but it will increase the national debt.

 

 

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24 thoughts on “Ideology Before Facts

  1. Why can’t liberal economists ever image that tax revenues could increase when you lower tax rates. It makes me laugh that they just assume that when you lower tax rates that revenue automatically falls.

    However, on the flip side they never think that raising taxes will negatively impact economic growth and therefore reduce tax revenue.

    Also, I have to laugh that you say Romney’s plan will cost the country $3.4 trillion. Why do you automatically think that all money is the property of the government and tax cuts cost the government money. It is our Money not the Governments. We pay their bills.

    Again, you complain about all the power being held by a few rich people but you have no problem with a few rich politicians collecting all our money, deciding which of their friends they want to “create demand with” and then waiting for the campaign donations to come back from their friends. I find it amusing that you feel compelled to hand over all that power to a few politicians.

    You all think a few government politiicans creating demand is the answer to our problems. I put my faith in less government control and let the free market work. Europe has implemented your central model and they are mess. This adminstration wants us to be more like Europe – no thanks.

    • Lower taxes can increase revenue but that is when there is full employment. We don’t have that right now. Why you do you deny facts? The tax cuts in the stimulus package did little to boost the economy and in general tax cuts do little to boost growth in a recession. What spurred on economic growth was direct government spending.

      This has nothing to do with the corruption in Washington, which you seem to think is exclusive to Democrats.

      We are nothing like europe. Europe is in a mess because of austerity measures the opposite of stimulus. And actually many of the nordic countries have a much higher tax burden and more central planning and the result; a higher standard of living, better healthcare and a heal. Denmark for example has 4% unemployment. Why can’t you admit government can help the economy?

    • “Also, I have to laugh that you say Romney’s plan will cost the country $3.4 trillion.”

      Dan, I didn’t say Romney’s plan will cost the country $3.4 trillion…the assessment in the article I posted did.

      “I put my faith in less government control and let the free market work.”

      We’ve seen how that idea worked out and it resulted in the Great Recession. We saw how that idea worked out before that and it resulted in the Great Depression. These economic crises were virtual mirror images of each other. Letting the free market reign with little government control/oversight just doesn’t work. Balance between the two does but “getting the government out” is just not a viable approach.

    • “It makes me laugh that they just assume that when you lower tax rates that revenue automatically falls. ”

      Did the Bush tax cuts increase revenue? We had decent employment during his tenure, pretty volatile rates but decent but look at the debt we accrued.

      “However, on the flip side they never think that raising taxes will negatively impact economic growth and therefore reduce tax revenue.”

      Well of course it does once you reach a certain point BUT right now we’re at one of the lowest rates since the middle of the 20th century. The increases being talked about are ONLY in the neighborhood of 3% on the very rich. Somehow, given the historically low rates and the relatively small increases, I don’t see much of a negative impact hitting the economy as a whole. PLUS, the corporate tax rate is more than likely going to drop to be more competitive with the rest of the world but we’re going to close many of the loopholes as well.

  2. You guys but way to much faith is a few powerful people in Washington to do the right thing. In you macro, text book thinking it might work but in the real world it doesn’t. They spend, spend, spend to build dependancy on the government. They throw a few crumbles to people just so they can survive and stay dependent on the government and will continue to elect them. The better approach is to simply create an environment where everyone can elevate their lives.

    Europe is a mess because their high government spending has created a dependency on the government that they now cannot afford. Now the government has to cut back and the people are rioting. The Dems in the US strive to foster that same dependency culture that will someday force the US to cut back. This will happen when our debt goes so high that China no longer wants to lend us money to support our dependency culture.

    So you don’t see a negative impact on the 3% increase being proposed? What is the positive reason for a small 3% increase? Will it solve our deficit problem? Not even close. It is amazing that you economists throw around all these numbers but never say why a 3% increase will solve all our economic problems. So if it won’t solve the problem it is either class warfar or there will be more increases coming in th future. The Dems need to be honest of their intentions.

    • Europe is not a mess, the Euro Zone is a mess. This is isn large part because of the single currency, which has allowed a few bad apples e.g. greece, to bring down the rest of the zone. Look at many of the Nordic countries that have high government spending and have been fine throughout this whole crisis.

      I do not see a negative impact of raising the top marginal rate by 3%. We tried this tax cut. It did absolutely nothing for the economy. It did not spur growth like it was supposed too. Conversely raising the rate will reduce the national debt by 1.5 trillion dollars in 10 years. I understand that does not solve the national debt, but it will decrease it with minimal consequences.

  3. Our current deficit is $1.5 Trillion so by your math the tax increase will bring in an additional $1.65 Trillion a year in tax revenue for the next 10 years? Your math appears to imply a $150 billion annual surplus will be created by raising taxes 3% on only the rich. That is the only way you can reduce the National Debt by $1.5 Trillion.

    There is no way a 3%

  4. There is no way a 3% increase will bring in that type of revenue. So cuts will need to be made or other taxes down the road.

    So what will it be. You can’t cut spending because you need to create demand. So I guess more taxes are on the way. Why don’t they just tell us now. Oh because that will kill the growth we have if our high gas prices don’t kill it first.

    • I don’t think anyone said anything about not cutting spending. But there are a TON of unpaid for spending that GW and the GOP left us that STILL are not paid for in large part because of the GW tax cuts. The thing is, those tax cuts were one of the 3 main contributors to the budget deficit which led to the accumulation of the debt we have today.

      “Estimates by the nonpartisan Congressional Budget Office and the Joint Committee on Taxation put the total cost for the tax cuts (including the Working Families Tax Relief Act of 2004) at more than the amount allocated to the Defense Department for military operations in Iraq and Afghanistan.”
      http://www.politifact.com/ohio/statements/2011/apr/29/dennis-kucinich/rep-dennis-kucinich-says-bush-tax-cuts-caused-subs/
      I suggest reading this factcheck article. It’s quite informative.

      Now, in contrast to your assumptions, Dan, I AM (and would think the author is as well) in favor of balanced approaches similar to those put out by the President’s Bipartisan Debt Commission and the Gang of 6. If those plans would have been implemented then we would not have had the downgrade and we would have a substantive plan to debt reduction. S&P stated as much when they downgraded us.

      PLUS, the 3% increase on the wealthiest people will help BUT there will have to be a return to rates similar to those during the prosperous years under Clinton once the recovery is completed.

      • I believe the author of this site said the downgrade happened because the GOP forced the country to the brink of default last summer? Obvious that was just killing the messenger on the author’s part.

        What President ignored the Debt Commission? That is what happens when the President feels he needs to create demand by giving tax dollars to his buddies.

      • “I believe the author of this site said the downgrade happened because the GOP forced the country to the brink of default last summer?”

        The gridlock created because of the efforts on the GOP?tea party side was indeed cited as one of the reasons S&P gave for the downgrade, yes.

        “That is what happens when the President feels he needs to create demand by giving tax dollars to his buddies.”

        How was the President “giving tax dollars to his buddies”??? I don’t believe we saw anything like that. Unless you mean how he gave tax breaks to the American people, the payrole tax cuts for average working individuals. Is that what you mean?

    • I misspoke the President’s budget proposal will reduce the debt by 1.5 trillion in 10 years. 700 billion of that debt reduction will come from the 3% tax increase.

  5. Ok I will address MPBulletin first – it makes me laugh that you would even consider that giving people a tax cut is giving people money. That would assume it is the governments money to start with. That is so far off base I don’t know where to start. It is our money not the governments!. When they government passes a tax cut it is giving people back the money the government took in the first place. You act like we work for the government and then the governments role is to decided how much money we get to keep.

    I meant that Obama took tax dollars and gave it to his buddies at Environmental firms that are now going out of business. He also gave money to unions and other campaign supporters via the stimulas. I call that picking winners and losers with our tax dollars which is not the role of the government. If you don’t support his campaign then the stimulas money to “create demand” goes to others who are buddies of the adminstration.

    AJ – so you agree we have a spending problem since the tax increase will not solve the problem. Then you simply go on to blast the GOP candidates. However, you claim Obama’s budget will reduce the debt by $1.5 Trillion. I gave you some numbers. Tell me where Obama ever said he would decrease real spending by over $1.5 Trillion a year for 10 years in his budget?

    • Well Daniel hold the laughter for a bit. You are trying to argue semantics here my friend. Giving and keeping, it’s all the same here. The payroll tax cuts kept money in people’s pockets period… plain and simple. Regardless, it was that money that the GOP was willing to take from the middle classes in order to keep the cuts for the rich.

      “I meant that Obama took tax dollars and gave it to his buddies at Environmental firms that are now going out of business”

      Yeah I figure you were eluding to that OH SO TIRED claim. The stimulus gave money to A LOT of projects and agencies oh yeah… and STATES. A very large portion of it went to states to shore up their budgets and many of those were REPUBLICAN states like Texas and Arizona. And those unions you are talking about…those were PUBLIC unions that money went to, to keep police officers and firefighters and teachers working. Do you really want to continue criticizing these monies and where they went?

      As far as the environmental companies go…guess Dan, you ONLY hear about the one or two that DID go bankrupt. No one cares to check into the ones that DID NOT and are still operating. You want to criticize these government/private sector partnerships without acknowledging that these have been part of the process for decades to help businesses get started. The government also supported the HUGE oil and gas infrastructure development throughout the past 40 some odd years. In that time how many oil companies that received government money went belly up?? Plenty have. That is what happens. Sometimes investment don’t work out but others do and they do very successfully countering the losses.

      I say, Dan that you seriously need to break away from the bonds of this misinformation rut you’ve gotten yourself into. Stand up and look around… there’s a lot more VALID information out there other than just the skewed right-wing stuff you’ve been depending on.

      • It just amazes me that you so lightly say Giving and Keeping is all the same. That assumes all money is the property of the government and they are just nice enough to give it back to us when they decide to lower our taxes. The GOP was not going to raise taxes on the middle class and lower taxes on the rich. What tax rates were going up on the middle class?

        So you agree a large portion of the stimulas did go to public unions who are major doner to Obama. First responders are a good use of tax dollars but there is more money going to Public Union Workers in non-essential positions – that is the term they use everytime they threaten to shut down the government.

        I feel the oil and gas companies shouldn’t get subsidies either. That just puts more corruption in th system. The Oil and Gas companies give hugh campign donations to gain access and to get tax dollars back – just like the failed environmental companies.

        The bottom line is the government picks winners and losers which is wrong. That puts to much power in the hands of a few people. That is why so much money pours into these crazy campaigns. Strip them of their power and the money stops coming into the campaigns and the money can be used for better things to build wealth for more people in the private sector.

        So I need to branch out? This is from a group that blindly follows a Keynesian theory that with $15 Trillion in debt will push us off the cliff? I think I will stick to my common sense real world experiences rather then some classroom theory that has put the country on an unsustainable economic path where the Dems won’t even approval a budget because things are so bad.

      • “…Giving and Keeping is all the same. That assumes all money is the property of the government and they are just nice enough to give it back to us when they decide to lower our taxes. “

        Uh… no. Well perhaps from a libertarian worldview…

        “The GOP was not going to raise taxes on the middle class and lower taxes on the rich. What tax rates were going up on the middle class?”

        They most certainly were. They were blocking the payroll tax cuts JUST because Obama was in favor of them. AND they have been blocking anything that might increase any tax burden on the wealthy no matter how that impacted the middle and poorer classes. Just look at the assessments of virtually every single GOP presidential candidates’ tax plans. They ALL benefit the wealthiest Americans and shift the burden on to everyone else. These plans are very similar to those being pushed by congressional GOP.

        “So you agree a large portion of the stimulas did go to public unions who are major doner to Obama.”

        Nope. Are we going have an issue with reading comprehension here, Dan? Did I say “most”…? No, I did not. I said MOST of the monies went to states to shore up their budgets and keep public employees in their jobs. Many of those types of jobs were part of unions. So I suppose one could make a stretch of logic and say that by keeping those people IN their jobs, money found its way into the unions that represent them through dues or the like. Was money directly given to them….? Nope sorry, that was a Limbaugh claim that stretched logic yet again.

        “First responders are a good use of tax dollars but there is more money going to Public Union Workers in non-essential positions”

        And what workers would you consider “non-essential”? School teachers? Public health employees? Sanitation workers? Snow plow drivers? Road maintenance crews? City, county and state administrative positions? Food safety inspectors who keep YOUR food is safely produced? I’m just curious what you view as unimportant.

        “I feel the oil and gas companies shouldn’t get subsidies either. That just puts more corruption in th system.”

        No they don’t need them now because they are making such huge profits they don’t need them. BUT this neglects to acknowledge that it was indeed those government-private sector partnerships the developed the energy infrastructure we use on a daily basis and what allowed us to become the successful and globally influential country that we are today. Your view that government should not be involved in any of this simply neglects to acknowledge our history. We have been able to build up this country because of these partnerships that the government has formed with many other companies, industries and institutions. Saying it is a destructive or corrupt force is just inaccurate and illustrates a lack of historical knowledge.

        “The bottom line is the government picks winners and losers which is wrong.”

        No that is not the bottom line because this view is completely inaccurate and as I stated above neglects to recognize recent US history.

        “That puts to much power in the hands of a few people.”

        You want to talk about whose hands the power is in? Really????? Look at the ever increasing inequality in this country. Globally, the US has the largest income inequality gaps.
        http://mashedpotatobulletin.com/2011/12/06/the-daily-scoop-oecd-report-cites-increasing-income-inequality-in-u-s/

        “That is why so much money pours into these crazy campaigns. Strip them of their power and the money stops coming into the campaigns and the money can be used for better things to build wealth for more people in the private sector.”

        Well I’ll agree with you there. We do need to get the money out of politics and campaigns BUT you’re making the insinuation that this is happening only on the Left’s side but the truth is there are A LOT fewer donors to Republican campaigns BUT those few donors are giving TENS of MILLIONS of dollars to those candidates. Obama and the Democrats have TENS OF THOUSANDS of donors giving much smaller donations and they are STILL out pacing the GOP because they have so many more people giving comparatively small amounts. I know you’ll through out Obama’s $10,000/plate meals but that is still very small compared to the MILLIONS that Gingrich, Romney and Santorum are getting from one or two or three individual donors. It shows just by the numbers that the Dems and Obama have many more supports than the GOP does.

        “So I need to branch out? This is from a group that blindly follows a Keynesian theory that with $15 Trillion in debt will push us off the cliff?”

        First, we are not blindly following Keynesian theory because we have reasons for our convictions. Keynesian theory is what pulled us OUT of the Great Depression. Keynesian theory was the main economic theory followed throughout that time, through the end of WWII, all the way through to the 1970’s. By the late 70’s and early 80’s recessions Keynesian economic were employed again to pull us out of them. This was also employed in the early 90’s recession recoveries AND it kept us from falling into another depression as it halted the freefall from the Great Recession. You want to attach the debt to Keynesian theory? Then you’re not paying attention to what happened during the 8 years under GW.

        Unlike you Dan, who blindly dismisses Keynesian theory more than likely because of some word association thing with Kenya and the Right’s belief Obama was born there, those of us who subscribe to this theory have seen it work very well for a long time. BUT we also realize that once the recovery is strong enough then the baton can be handed back to the private sector and the country can continue on a successful path.

        “ I think I will stick to my common sense real world experiences rather then some classroom theory that has put the country on an unsustainable economic path”

        Well given the economic theories that the GOP and libertarians subscribe to it’s quite clear that they do not work. Why is it that virtually every time a longterm GOP administration departs or is about to depart in the past 40 years are we in a recession?? The mere fact that you’re adhering to them shows a LACK of common sense.

        “…where the Dems won’t even approval a budget because things are so bad.”

        That has only happened this go round. We have a lot more examples of how GOP economic policies bring about very negative economic impacts like the large income inequality that increased throughout GOP rule, the recessions in the early 80’s and the recession after Reagan, the worst economic disaster in 80 years after GW. I mean, my god. Where can you possibly see anything that the GOP does that works????????

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