The Obama Stimulus Threatens the Republican Party's Future Viability
As usual congressional Republicans are calling for more tax cuts while congressional Democrats are insisting on more government spending. There are political and ideological considerations playing into the debate. Republicans losses in the last two election cycles have left the party in serious jeopardy of becoming a regional party. The idea of enlarging government, while theoretically contrary to Republicans principles, is in line with their form of governing, as evidence by the last 8 years. Some Republicans believe that this situation gives them the opportunity to regain their 'smaller government' trademark. Democrats have the opportunity to expand on their recent wins and gain long term control of Congress and the Presidency.
All that said, it turns out that, according to Moody's Investors Service, the best way to stimulate the economy is government spending. Moody's is best known for their rating services. Their "customers include a wide range of corporate and governmental issuers of securities as well as institutional investors, depositors, creditors, investment banks, commercial banks, and other financial intermediaries." Their reputation is built on years of unbiased analysis.
The following chart, based on Moody's analysis, outlines the effects of tax cuts and government spending on economic stimulation as measured by GDP. Values above 1.0 stimulate while those below have the opposite effect.
According to Moody's, the best ways to stimulate the economy includes unemployment insurance (UI) and food stamps. The folks who are most likely to spend dollars allocated to them, are those who are most in need. Higher income brackets are more likely to save or pay down debt which would do nothing to stimulate the economy. Additionally, knowing that help (food stamps and UI insurance) was available if needed improves consumer confidence among unemployed and employed workers alike.
The Republican supported "tax cuts" does less to stimulate the economy. Most tax cuts lead to contraction of GDP. Permanent cuts targeted at those who pay taxes are the worse, as they return on the dollar amount to a loss in GDP. Refundable tax cuts, which includes sending checks to both taxpayers and those who pay no taxes, and tax cut holidays (for tax payers only), provide a modest stimulus, but not as much as government spending. In spite of this, most Congressional Republicans continue to propose more tax cuts as ideology trumps the facts. Understandable, these facts threaten one of fundamental memes of the Republican Party, that tax cuts are the answer to everything.
Here is Moody's estimation of the effect of Obama stimulus bill as of Jan 21, 2009 on future unemployment rates.
They predict the unemployment rate will level off at 9% in the first quarter of 2010 and begin to decline during the third quarter, just in time for the 2010 Congressional elections.
The Obama stimulus, as evaluated by Moody's, would likely lead to Democrats improving on their 2006 and 2008 gains. Politically, Republicans have good reason to oppose the stimulus. The future of their party is at stake.
Late Update: I find it interesting to consider that the turn of events (financial crisis) have created the opportunity for democrats to simultaneously do the right thing (government spending skewed towards the less fortunate) and build their base. In fact, the turn of events are to some extent the fruition of the "financial deregulation," "trickle down" and "tax cut" policies adopted by Ronald Reagan in the 1980's .
If you found this post enjoyable, provocative, or believe others might benefit from reading it please recommend. Thanks.
I agree with your conclusion and congratulate you on a good argument for my side. I know this is exactly why the reps are against this.
But I think that things are going just fine.
The reps have nothing to offer in two years or four years but the same old manure.
February 2, 2009 8:29 PM | Reply | Permalink
I put up that first chart in a post I made last week. Since then I've searched out MSM or wingnut sites posting nonsense and put it up there too. The kicker is Moody's chief economist is Mark Zandi one of McCain's campaign adviser. Johnny boy really ought to have a talk with him.
February 2, 2009 10:21 PM | Reply | Permalink
You're using Moody's as a source? Is that supposed to be a joke?? It's the same firm that rubber stamped triple-A ratings on a bunch of crappy mortgage backed securities.
I'm laughing really hard about your use of the term "unbiased analysis". I guess that's why they're being sued.
But if you read what he says, even Zandi favors tax cuts as part of the solution. Somehow you failed to mention that?
http://washingtonindependent.com/26620/zandi-supports-balance-of-spending-tax-cuts-in-dems-stimulus-plan
Maybe we should focus more on reduction in spending rather than increases in spending? Congress has been spending like a drunken sailor for the last 8 years and it hasn't served us very well.
PS - the last time we cut the corporate tax rates back in 2004 we saw a big increase in tax receipts as a % of GDP - the highest level in 20 years.
February 2, 2009 10:33 PM | Reply | Permalink
I didn't say all tax cuts were contracting. Some cuts could help. I think a combination of cuts and spending might be a viable solution. The cuts should be a temporary tax cut holiday or a refundable rebate. Not permanent tax cuts to the upper income brackets, which is what some republicans are advocating.
February 2, 2009 11:32 PM | Reply | Permalink
If your agrument that blowing money on welfare and social programs and otherwise promoting bumming an slovenly behavior held an ounce of water, Cuba, North Korea and the Soviet Union would be economic powerhouses wouldn't they!!
But I forgot for a moment, Reagan 'supply sided' the Soviets plum out of existence, didn't he!!Har har har.
February 3, 2009 3:05 PM | Reply | Permalink
Can those factors be applied to the various parts of the recovery/stimulus bill?
I think Obama's economic staff had a different chart, but with similar ideas.
in re your Late Update: "Rahm Doctrine" or similarly _The Shock Doctrine_
February 2, 2009 10:50 PM | Reply | Permalink
I still find it humorous that you think Moody's is unbiased.
February 3, 2009 5:33 AM | Reply | Permalink
In the context of this discussion, where would you put Moody's bias? Please offer some references for your POV.
February 3, 2009 7:31 AM | Reply | Permalink
Moodys used to NOT receive fees from debt issuers. They used to get paid by the people who wanted to read their research/ratings. Then they decided to have the issuers pay the fees. Can you say "conflict of interest"??
I think it's better to quote an independent source, such as an economist from a university.
February 3, 2009 12:55 PM | Reply | Permalink
But how does that influence this topic at hand? How does Moody's receiving fees from a debt issuer they are rating, pertain to an analysis on what effect tax cuts or government spending have on GDP? How does charging a fee to perform due diligence on a debt issuer bias their ability to determine that tax cuts to the poor are more stimulative than to those in higher tax brackets, or that unemployment benefits and food stamps work better as a stimulus?
February 3, 2009 1:41 PM | Reply | Permalink
Tonny - I never said that their ratings "expertise" had anything to do with the stimulus plan. Somehow that was in your original post. I've pasted it below here:
All that said, it turns out that, according to Moody's Investors Service, the best way to stimulate the economy is government spending. Moody's is best known for their rating services. Their "customers include a wide range of corporate and governmental issuers of securities as well as institutional investors, depositors, creditors, investment banks, commercial banks, and other financial intermediaries." Their reputation is built on years of unbiased analysis.
So I was just correcting the mistake in your original post which said that "their reputation is built on years of unbiased analysis". There could be nothing further from the truth.
February 3, 2009 8:59 PM | Reply | Permalink
when you look into political and ideological consideration that playing into the debate, less tax cut and more government spending will be stepping stone rather than a stumbling block.so there is light in american future
February 3, 2009 7:09 AM | Reply | Permalink
Well, if government spending is so good for the economy, then why not nationalize all wealth and let the government spend it all??
This was tried several times in the 20th century. Each and every time it was tried in major countries, it resulted in millions of deaths, both at the hands of the totalirian regimes, and by starvation from the economies which resulted.
What could you possibly have against the American people which would cause you to wish such misery upon us?? Are you so envious of those around you that you feel such punitive measures are justified against us?
February 3, 2009 3:13 PM | Reply | Permalink
Well if water is so good, why not drink 10 gallons instead of 8 cups?
Because, Renaye, extremism is a poor solution. But thanks for playing the straw man game.
February 3, 2009 3:23 PM | Reply | Permalink
It's not a straw man.
You dole out money to bums, you get a bum economy, get it?
If you make it easier for businesses to operate, you get a business economy.
Which you rather have, a bum economy like Cuba, or the business economy we've traditionally had here which made us the economic power of the world??
February 3, 2009 4:06 PM | Reply | Permalink
Look around Renaye. We have loss 40% of our wealth in the past year.
February 3, 2009 4:12 PM | Reply | Permalink
Hell, it's been stolen and being stolen!! Look at who is being bailed out!!
There is precedent for what's going on here, but you'll have to look back at early 20th century Europe. The thieves were penned up and dealt with before that century was half over. This is just a replay!!
February 3, 2009 4:21 PM | Reply | Permalink
That's part of our capitalist system, especially when the regulators don't regulate.
February 3, 2009 5:07 PM | Reply | Permalink
I'll sure as hell agree with that!! It's called selective law enforcement, and it's getting worse and worse.
February 3, 2009 5:10 PM | Reply | Permalink
I had no idea it was a choice between one or the other. Here I was thinking that the world somehow accomodated many ideas of varying degrees of ideology and authenticity. Now I know otherwise.
February 3, 2009 4:15 PM | Reply | Permalink
The "spending like a drunken sailor" was directed, ironically, to the military industrial complex, where there is little bang for your buck at home. Spending money on destruction accomplishes just that goal. You spend a lot of money building things to blow other things up in places we don't belong.
Spending money on construction (i.e., increased infrastructure spending) accomplishes several goals: people go to work and have money to spend, thereby creating more private sector jobs; all those people pay taxes; and the money cycles back through the economy - not to mention that our bridges fail to collapse; we wean ourselves off foreign oil because every public building is powered by solar, wind, or geothermal technology, lowering the price so that private owners can now afford to refurbish their own energy systems; our electrical grids can withstand winter storms; we can zip from grand American city to grand American city on high-speed rail; and New Orleans won't drown again.
February 3, 2009 7:17 AM | Reply | Permalink
What a concept! I don't think the repubs understand it though.
February 3, 2009 10:18 AM | Reply | Permalink
I think enough of them do. The problem is they think what the public to believe that government should be drowned in the bathub. In order to stay in power, the public needs to believe that government can do no 'right.' (pun intended)
Other than the military, Government = Democratic Party.
February 3, 2009 10:44 AM | Reply | Permalink
Correction: The problem is they want the public to believe that government should be drowned in the bathub.
February 3, 2009 11:01 AM | Reply | Permalink
That's Grover Norquist's "starve the beast" idea.
February 3, 2009 5:23 PM | Reply | Permalink
That's a concept anyone with an IQ over sixty would find incomprehensible!!!!!
February 3, 2009 3:07 PM | Reply | Permalink
That must be why you can understand it so well. PS -- Making something understandable for people with low IQ's does not necessarily make it good. It doesn't rule it out either.
Sometimes, Renny, solutions are c-o-m-p-l-i-c-a-t-e-d. Doesn't mean the explanation, or even the use of it has to be, but figuring out the solution means you have to consider lots of different aspects.
Oh, and to govern, the aspect has to be more than your republican Mantra: "What's in it for me?" (And please don't throw in your tired, "I'm a registered Democrat." You told us before that you voted in the Dem primaries solely to get the least desirable challenger for a repub.)
HOW DID THAT WORK FOR YA, RENNY? HAHAHAHAHAHHA!
February 3, 2009 7:04 PM | Reply | Permalink
Didn't work well at all.
February 3, 2009 7:10 PM | Reply | Permalink
Nice analysis.
It should not be a hard argument to make that to get the most bang for your buck out of a stimulus, you need to provide money to those most likely to spend it, and spend it quickly. That is the poor and unemployed. Thus the greater impact from food stamps and unemployment insurance.
To create jobs, you spend money. YOU HIRE PEOPLE. How hard is that to explain? Republicans have done a very effective job of convincing people that spending money is inherently wasteful rather than stimulative to job creation.
What needs to be done is a 180 from Republican philosophy, so of course they will fight it. This is the first true policy test of the Reagan legacy and the Republicans and riding it hard. How hard is it for the Democrats to explain that we have tried tax cuts and rebates - within the past 9 months - and they had NO STIMULATIVE EFFECT.
Make the case!
February 3, 2009 12:48 PM | Reply | Permalink
Mason,
I believe what also needs to be connected for the repubs to put them in trouble with their base is that all that money the poor spends goes to small businesses!!
Which then are able to hire folks as they make more money.
It is all interconnected and more importantly, it makes Dems the ones who are supporting the small business owner...fulfilling O's campaign promises.
February 3, 2009 2:19 PM | Reply | Permalink
How many businesses are started on welfare checks? And I'm not talking about your street corner crack dealer.
People on welfare are consumers, get it?? If their welfare checks are trippled, it only tripples their consumption.
Consumption doesn't create wealth and economic viability. Only production creates wealth and economic viability. Grow up!!
February 3, 2009 3:18 PM | Reply | Permalink
There are policies you enact while an economy is bullish, and others you enact while an economy is bearish. Cutting taxes for upper income earners is not stimulative in a bearish economy because the tendency is to hoard wealth because investment values are declining... liquid versus illiquid wealth. Are you with me?
You are looking at the world with ideological blinders. You hate "bums" so much that you will kick the economy in the teeth just to prove your point. This is about stimulating a falling economy, not ideology. When businesses are failing or paring down, it makes no sense to use an argument that favors businesses. This is where government comes in with the taxpayers as shareholders. This is how the pendulum swings.
February 3, 2009 3:36 PM | Reply | Permalink
Those with wealth ALWAYS tend to horde wealth. That's why they're wealthy, you simpleton.
Some of the wealthy are willing to risk some of their wealth in ventures which necessarily involve hiring people if they feel they have a reasonable chance of increasing their wealth.
When government forcibly confiscates their wealth and gives it to bums a climate is created in which the wealthy are unlikely to assume jobs creating risks.
February 3, 2009 4:34 PM | Reply | Permalink
You really have no idea what you are talking about.
February 3, 2009 4:38 PM | Reply | Permalink
Which is why the Bush years had record levels of job growth, average increases in income, and a permanent GOP legacy of proven economic ideas.
February 3, 2009 4:42 PM | Reply | Permalink
Personal income in real terms has been declining since 1972. It peaked that year, and has been declining ever since.
February 3, 2009 5:22 PM | Reply | Permalink
Renaye,
Maybe you do not understand the issue. Welfare checks and food stamps are SUSIDY for small business.
Small business makes profits from all the government spending. Those people who yell about wanting tax cuts are the same folks who are paying taxes on the money the government spent on welfare checks and stamps.
It is cyclical. Everyone gets paid with tax dollars even those red red red state republicans who think they are small businessmen when in actuality their entire business is a government subsidy.
The taxes they want to cut are the taxes that pay them!!
February 3, 2009 4:41 PM | Reply | Permalink
Oh bullshit,,, you're just too twisted to straighten out.
February 4, 2009 9:19 AM | Reply | Permalink
Mason - when did we have tax cuts over the last 9 months? We've had rebates but that's different. People view rebates as temporary.
If the tax cuts are viewed as permanent, like in 2003, then we should expect an increase in tax receipts. Tax receipts as a % of GDP hit an all-time high in 2004 after the government cut corporate and capital gains taxes in 2003
February 3, 2009 1:04 PM | Reply | Permalink
You're making a connection between the two. Do you have a reference to support the connection? How about the housing bubble? Didn't that contribute to the increase in tax receipts?
February 3, 2009 1:17 PM | Reply | Permalink
Yes I am making a connection. I am observing that tax receipts as a % of GDP increased dramatically after corporate taxes and cap gains taxes were cut.
I think this happened before the real estate "bubble" occurred. The tax receipts surged in 2004 and 2005. And in my opinion the real estate bubble wasn't in full swing until 2006
February 3, 2009 1:46 PM | Reply | Permalink
Now you're just guessing. Good luck with that.
February 3, 2009 1:48 PM | Reply | Permalink
The "bubble" was in full swing? Seriously? Are you Alan Greenspan?
February 3, 2009 2:44 PM | Reply | Permalink
Well a real estate bubble wouldn't cause corporate tax receipts to surge, right? Something else must have...
February 3, 2009 7:09 PM | Reply | Permalink
Bill? First you said "the last time we cut the corporate tax rates back in 2004 we saw a big increase in 'tax receipts' as a % of GDP - the highest level in 20 years" you repeated that several times. Now it's 'corporate income tax receipts.' Well please explain this.
This graph on Corporate Income Tax Receipts show no bump in 2004-05. Why don't you get back to me once you've done your homework? Again, references please.
February 3, 2009 7:18 PM | Reply | Permalink
I'm using the same source (Heritage Foundation) as you are. If you blow up the graph you posted to you'll see the bump I referred to. The scale on your chart was way too small to be able to see it effectively because the chart also had corporate tax rates on the same graph.
http://www.heritage.org/research/features/budgetchartbook/fed-rev-spend-2008-boc-R3-Corporate-Income-Tax-Cuts-Boost.html
Have I now done my "homework"?
February 3, 2009 8:22 PM | Reply | Permalink
Not so fast. You did your homework, but your source is questionable. The Heritage Foundation didn't prove that tax cuts lead to increase corporate tax revenue. Corporate income taxes rise and fall with the condition of the economy. In 1990's corporate tax collections increased upward as the economy improved and in 2001 it dropped as the recession set in. The top corporate rate was increase by Clinton from 34% to 35%.
Corporate income tax collections have also become a more important revenue source for the federal treasury in recent years. During the 1990s, corporate tax collections ticked upward to an average of 10.5 percent of federal receipts. This was due to remarkably strong economic activity and President Clinton’s 1993 tax package, which raised the top statutory corporate income tax rate from 34 percent to 35 percent.
From the Tax Foundation: "As this roller coaster of corporate collections shows, economic conditions are the main determinants of corporate tax revenue. Because corporate profits are volatile—rising sharply in booms and falling steeply in recessions—so too are government receipts from the corporate income tax."
When an economic housing bubble occurs corporate profits increase as consumers spend on their homes and on themselves. Corporate profits rise. Corporate taxes increase.
February 3, 2009 8:48 PM | Reply | Permalink
My source is questionable? Who was it that first cited that source? Let me give you a hint - starts with a "t", ends with a "b" and has "onny" in the middle
February 3, 2009 9:01 PM | Reply | Permalink
I did. I did. Thanks to you, on closer examination I decided it was a crock.
February 3, 2009 9:08 PM | Reply | Permalink
So what drives economic conditions? Is it just random?
February 3, 2009 9:20 PM | Reply | Permalink
So now it sounds like you're arguing that tax rates don't matter and don't impact the "economic rollercoaster". If that's the case then we should just double the corporate tax rate because then tax receipts will double. Businesses won't change their decisions based on the new tax rates.
You also forgot to mention that Clinton cut taxes in 1997. And you'll remember that the economy grew faster in Clinton's 2nd term than in his 1st term
February 3, 2009 9:10 PM | Reply | Permalink
No. I'm not arguing that. And your argument about doubling the corp. tax rate is a straw man. (think bell curve)
I questioned your assertion that reduction in corporate tax rates in 2003 lead to or caused the increase in IRS's corporate tax revenue in 2004-05. I knew that the housing bubble peaked around that time and would have had a profound effect on corporate profits and therefore corporate taxes. People were living it up on the 2nd mortgages and line of credits financed by the rising home values. It turns out that the CBO confirms that 2/3 of the corp tax increases were due to corporate profits and not legislative inputs.
So I was right.
February 3, 2009 9:23 PM | Reply | Permalink
No, you're not right. My example of doubling tax rates was a joke.
Re-read the CBO piece. How do you think that corporate profits outpaced GDP? Businesses were expanding and corporate pre-tax profits were booming.
If you want to show me the data on housing and it's impact on the overall national profit picture, I'm willing to look at the data.
I'm not the one who started throwing around "do your homework" and "references".
February 3, 2009 9:37 PM | Reply | Permalink
From the Congressional Budget Office.
"Corporate Income Tax Revenues. Roughly two-thirds of the increase of 1.5 percentage points in corporate income taxes relative to GDP can be attributed to increases in corporate profits, according to current measures in the national income and product accounts (NIPAs). With the effects of legislation excluded, NIPA profits before taxes increased from about 9 percent of GDP in 2003 to about 13 percent in 2006, which, at prevailing tax rates, boosted corporate revenues by roughly 1.0 percentage point relative to GDP. In addition, legislation directly increased corporate tax receipts by 0.2 percentage points of GDP, mainly by the establishment and subsequent expiration of provisions that allowed partial expensing of investment in equipment; those provisions first reduced, and then increased, the tax base upon which the corporate tax is levied. The remaining 0.2 percentage-point increase in corporate tax revenues relative to GDP is explained by other factors that influenced the effective tax rate on profits, such as capital gains realizations by corporations."
February 3, 2009 8:55 PM | Reply | Permalink
you really lost me on this one. Not sure your point. Of course the increase is due to higher profits. It certainly wasn't due to higher tax rates. For some reason businesses decide to expand which meant bigger profits. Corporate profits grew faster than GDP. So even though tax rates went down, the overall pie got bigger and corporate tax receipts went way up. It's a miracle!!
February 3, 2009 9:32 PM | Reply | Permalink
In 2004, U.S. homeownership rate peaked with an all time high of 69.2 percent. The housing bubble started to collapse in 2005.
The connections between tax cuts and IRS revenue that republicans have tried to make between to events related in time only.
February 3, 2009 1:56 PM | Reply | Permalink
No, there is a short term causal factor re tax cuts there. If you cut capital gains tax, there is a one-time jump in people closing out positions to take gains at the lower rate. That can sometimes produce a spike in revenues. But it's one time only, or one time per tax cut, as "spike" implies. And it's not guaranteed to produce net revenue boost even in the short term.
Lowered CGT rates increases "liquidity", it makes it cheaper to jump from one investment to another. That can be a good or bad thing.
As the proportion of tax sheltered equity in the market increases, CGT will generate less revenues.
February 3, 2009 5:01 PM | Reply | Permalink
I am aware of the one time boost that can occur from tax holidays. Unless you have figures then we are guessing the impact of those 2003 tax cuts on 2005-05 tax revenue.
Certainly a housing bubble would lead to higher tax revenues as well.
February 3, 2009 5:28 PM | Reply | Permalink
Correction: 2004-05 tax revenue.
February 3, 2009 5:42 PM | Reply | Permalink
I will give you figures from Kennedy as well as Bush tax cuts. Just need to dig it up. Will post tomorrow.
February 3, 2009 7:13 PM | Reply | Permalink
It doesn't matter whether they generated a spike in revenues in 04-05. It's not sustained, and not sustainable, that's the point.
With markets well down, those who sell stocks today are taking losses or making rather small very long term gains compared to what they would have if selling a year ago. So tax rates are at most marginal now.
February 3, 2009 7:21 PM | Reply | Permalink
Not that it matters (see my point below about tax receipts vs. job creation), but it is not surprising to see an increase in tax receipts by cutting cap gains tax rates.
Investors holding profits on long term investments will often take advantage of a decrease in cap gains by cashing out and moving the money elsewhere, thus increasing tax receipts for the government.
But again, that does not help job creation.
February 3, 2009 1:57 PM | Reply | Permalink
Doesn't help job creation?? What planet did you just arrive from?? The investing class is the source of all jobs!!!
If you somehow believe massive capital inflow into the 'hoods' are going to create jobs, you're either helplessly ignorant or nuts!!
The only businesses in the 'hoods' are drug dealing operations which are normally single hand businesses.
Money has to be made available to those who create jobs before jobs can be created. Simple.
February 3, 2009 3:37 PM | Reply | Permalink
"The investing class is the source of all jobs!!!"
No, actually small businesses which still have the majority of the economy and provide the most jobs, become available by individuals who only need loans from a bank, not some heroic investor class. Have you noticed what those heroes on Wall Street have been doing of late? Well dressed bums is all they are, well dressed bums.
February 3, 2009 3:52 PM | Reply | Permalink
GD right Gregor. No joke. I am with you all the way.
Perhaps a distinction between the 'trading class' and the "mercantalile class"; those that deal with paper and those that deal with blood, sweat and tears of our workers.
February 3, 2009 3:56 PM | Reply | Permalink
Just when, was the last time, you knew of a small business startup which didn't require 'investment'?
Damn, how dense can you get??
February 3, 2009 3:58 PM | Reply | Permalink
So you think just giving money to the mythical "investor class" will create business and jobs?
Have you been reading papers? IT'S NOT WORKING.
No demand = no investment.
February 3, 2009 4:08 PM | Reply | Permalink
If you believe 'investment' to be a myth, you must proscribe to some economic theory beyond Marxism which I'm unfamiliar with, thus making me unable to discuss the subject with you.
February 3, 2009 4:16 PM | Reply | Permalink
The investment class is not a myth. Only your concept of them.
February 3, 2009 4:20 PM | Reply | Permalink
Thanks for explaining my concepts to me.
February 3, 2009 4:23 PM | Reply | Permalink
Yeah, so where are the jobs that should have been created over the past 8 years?
Could it be that the "investor class" was NOT, in fact, creating jobs but instead creating massive and opaque leveraging schemes using the real assets of average Americans as collateral, endangering the entire world economy in the process?
February 3, 2009 4:02 PM | Reply | Permalink
I don't know if I would include those thieving ethnic banksters in the 'investing class', but otherwise agree with everything you said there.
February 3, 2009 4:38 PM | Reply | Permalink
You wouldn't include Wall Street in the investor class?
Great theory you have there.
February 3, 2009 4:49 PM | Reply | Permalink
Ethinic bankers? Who are they?
February 3, 2009 5:09 PM | Reply | Permalink
Worst kind of thieves. Most legally carry two passports. If things get too hot here for 'em, they just skip out to the homeland.
February 3, 2009 6:00 PM | Reply | Permalink
Who are the ethnic bankers? Names please. Otherwise you are just slandering people based on ethnicity.
February 3, 2009 6:19 PM | Reply | Permalink
Moving money from one part of the stock market to another part of the stock market does not create jobs, it only generates commissions.
February 3, 2009 6:16 PM | Reply | Permalink
You can say that endlessly!! Worthless parasites they are, to a broker!!
February 4, 2009 10:09 AM | Reply | Permalink
"within the past 9 months" was referring to rebates.
The goal now is not to increase tax receipts as a % of GDP. It is to stimlute job growth. The tax cuts under the Bush admin did not stimulate job growth. Job growth was anemic even as the economy grew. It was a jobless recovery.
February 3, 2009 1:26 PM | Reply | Permalink
Why do you think the tax cuts didn't stimulate job growth? Since tonnyb likes to reference Heritage, here's their analysis.
http://www.heritage.org/Research/Economy/wm647.cfm
There were 2 million jobs added during 2004. And that's from www.bls.gov
February 3, 2009 8:46 PM | Reply | Permalink
I didn't say there was no job growth, just that it was anemic. And you should look at the full 8 years, not just one. Bush's job record is dismal.
Bush reduced the marginal tax rates on the highest earners as compared to rates under Clinton. Classic supply side move.
So why were Clinton's job growth numbers so much better than Bush's. Why was the economy in such better shape under Clinton?
Tax cuts just aren't the economy saving panacea that Republicans want to make them out to be. They are, however, an excellent way to preserve your wealth if you already have a lot of it.
February 3, 2009 9:04 PM | Reply | Permalink
No. To study the impact on tax cuts you wouldn't look at the next 8 years. You would look at the next couple years. Two millions jobs created in 2004 is a lot of jobs. Bush's overall job record is an apples-to-oranges analysis. We're debating whether tax cuts spur job growth. It's clear that it did after the corporate tax cuts in 2003
February 3, 2009 9:14 PM | Reply | Permalink
If the tax cuts were to "help the rich" and only reduced marginal rates, then why is the top 20% of households (by income) paying a greater percentage of all income taxes? If the tax cuts were meant to help the rich, then wouldn't the rich be paying less of the overall tax burden?
February 3, 2009 9:17 PM | Reply | Permalink
We have been a consumer society these past three decades, more then anything. While it is noble to help the poor, they consume essentials. Groceries and agriculture will benefit. They will not be making house payments or buying cars. We need to get the money to those who spend more, the middle class. This would be middle managers and trades people. But we're putting the money into the top where we know all we might hope to receive is a trickle, which BTW has not come. Funny, it's as though there was a Contract with America that was broken. The people on top took the money elsewhere because nothing has filtered to those below, no signs of any trickles these past 20 years.
February 3, 2009 1:17 PM | Reply | Permalink
We have also become a debtor nation putting our own health (lead paint = lower IQs) and security at risk, unless you feel comfortable becoming a satellite of China.
February 3, 2009 1:59 PM | Reply | Permalink
Talk about bogus information!!
A dollar and seventy three cents back into the economy for every dollar spent in food stamps!! How incredulous!!
Let's see, that dollar cost a farmer probably fifteen cents, a processor was likely out sixty cents, a retailer was out forty cents keeping the grocery on the shelf.
The welfare bum came in the store and bought the dollars worth of groceries. This cost the taxpayer probably fifteen more cents getting his/her lazy ass to and from the store, then another dime for preparing it. The bum(s) then ate the food and went to sleep. Probably cost the municipality another cent to wash the end result to the sewage treatment plant. All I can account for is costs, where is the return?
Where, and how, was the original dollar recovered in this scenario, and how could the additional seventy three cents in wealth possibly have been created?
Someone is doing some heavy duty dreaming!!!
February 3, 2009 2:55 PM | Reply | Permalink
You are assuming that everyone on public assistance is a bum. Tell that to the 20,000 Caterpillar employees who are incrementally going on the dole. Public assistance will keep them able to provide essentials for themselves and their families while the economic storm passes. That sandwich is a product, so sandwich makers have a broader customer base that they wouldn't have without public assistance.
February 3, 2009 3:20 PM | Reply | Permalink
Yeah they're bums, at least the majority of them are.
The reason they're bums is because they were so greedy, they voted for union pressure on their employeer which priced them out of the market.
Far as I'm concerned, they should give Caterpillar their government benefits as restitution for the damage they did to Caterpillar, and it's shareholders.
February 3, 2009 4:02 PM | Reply | Permalink
Did you fall into a coma in 1983 and just now woke up? Or is Michael Savage your only source of information?
February 3, 2009 4:19 PM | Reply | Permalink
Who do you listen to. What type of logic insists that the poor and impoverished are greedy? The shareholders of companies do not create wealth nor do they increase productivity of the corporation. It is the shareholders that are greedy when they press corporations to screw the little guy for a greater profit margin, instead of paying an honest day's wage for honest labor.
In fact, had companies been willing to pay an honest wage for honest labor there would never have been a need for unions.
Unions are the best thing that has ever happened to the working class. Unions are the only wedge between the middle class and the wealth. Without unions the gap in income in this country would be worse than it is. And it is really bad now.
I suppose you think John Thain was a really frugal guy since you think the poor are greedy, eh?
February 3, 2009 4:56 PM | Reply | Permalink
Poor and impoverished are greedy??? Why, that's the silliest damn thing I've ever heard. Likely the least greedy and ambitious.
I'll tell you who's actually greedy. It's not the innovators and hard working people who strove for wealth and gave us this bountiful lifestyle we enjoy.
It's the soulless hucksters who pretend to crusade in behalf of the poor and impoverished for the purpose of buying their votes while enriching themselves. Capitol hill is more full of 'em now than at any point in my lifetime. Look at how many cabinet appointments are tax frauds.
As far as the 'unions' are concerned, you scratch 'em and you smell Marxism. I'm not arguing that point with you. Marxism and unions are two peas in a pod. Just like the environmental movement. And the sexual deviate movements. Phony. Just ancillary Marxist movements.
February 3, 2009 5:08 PM | Reply | Permalink
The "souless" ones are the managers who negotiated with labor and then could not meet the contracts, so they have to point at labor as the problems then their own pathetic negotiating skills. Labor contracts take two parties. One in the same with management are these souless shareholders, who provided capital many years ago and now have latched onto these corporations like leeches demanding eternal gratitude. Labor shows up to work every day and investors show up for a hand out. Those are the ones with no souls living in this one way street where if a company loses money they cannot lose more then their initial investment. However, when the company makes money, for as long as they do, ad infinitum, these investor/leeches want a hand out. It's pretty good deal and my 401k is part of that, I'll admit, but there comes a time where labor needs to be paid to sustain a family before the investors get anything to support their lackadaisical lifestyle!
February 3, 2009 7:37 PM | Reply | Permalink
Look, communist, there are no indentured autoworkers. Get it? Nary damn one of them have a thing to bitch about the company they work for. Nothing.
If they don't like their jobs, they can damn well walk off and keep their stupid mouths shut until they get off private property. Unless of course they happen to own stock in the corporation, they have absolutely zero stake in it. Get it??
None of their business how the people who own the company run it, what they manufacture and sell, what market they target, get it?? None of any of the nonstockholder employees business. Zero, zap.
This is a free country. If an autoworker thinks a car company isn't treating it's workers right, they have every right in the world to start their own company, treat their workers the way they wish, without the interference of the likes of you. Or me.
February 3, 2009 7:48 PM | Reply | Permalink
They also have the right to form a union, free country that it is.
February 3, 2009 8:03 PM | Reply | Permalink
It seems to me that the right to organize is covered with Freedom of Assembly. It also seems to me that, as you so appropriately point out, and which completely supports the argument, there are no indentured servants. Therefore, not being servants equates to being able to tell their management to take that hike you refer to so vigorously. Workers do leave unreasonable employers. It is called a strike. Then corporations can either find a way to work with the strikers, bring in scabs or fold. If they cannot deal with the demands of organized workers, then their business is a farce and should not exist.
February 4, 2009 12:39 AM | Reply | Permalink
Sure you have the right to assemble. Knock yourselves out assembling.
But you don't have a right to form conspiracies. Anytime you 'assemble' adjacent to someone's property making unfounded demands on part of it, that's conspiracy.
It's unfortunate the Marxists among us have to some degree legitimized this kind of conspiracy, because it's blatantly anti American.
If you'll make the observation, you'll find this kind of conspiracy more popular in the Homeaux north, than you'll find it in the more American south.
February 4, 2009 9:15 AM | Reply | Permalink
You are the dumbest little Nazi pooper I ever met, but it's cute how you just keep going and going and going until you get all in a fever and blurt out some squeal like "mulatto" or "deviant" or "protected ethnic group". Do you do that during sex, too? You're getting me kind of hot.
February 4, 2009 9:35 AM | Reply | Permalink
I hope you don't too agitated. It would be a local tragedy if you reproduced.
I'm thinking there's not much worry on that issue in your whereabouts. Seems like you react to the concept of heterosexual activity with revulsion.
February 4, 2009 10:04 AM | Reply | Permalink
What is an "unfounded" demand?
February 4, 2009 10:02 AM | Reply | Permalink
An unfounded demand is one in which you demand property to which you have no justifiable claim.
Really a simple concept. Try to pull your head out of the sand and wrap it around that notion.
February 4, 2009 10:15 AM | Reply | Permalink
Head in the sand? What are you talking about?
February 4, 2009 11:27 AM | Reply | Permalink
Lil girl, lemme 'splain sumptin' to you. When dere was dis dude, King George III, gettin' all greedy in the north, up here. It was da dudes up here dat kicked his ass outta here. See, he thought da place was his till we showed him different. Den dere was dis other dude, had a Presidential like name, 'cept backwards, Jefferson, yeah Jefferson Davis. He was like a President except backwards, kinda like the whole south. He thought he owned his place too, so we kicked his ass. Y'all in da souf, dere. You got it all backwards. You're heroes are the losers. Ya celebrate the Confederacy, who lost. You celebrate the Alamo an, I don't know 'bout you, but when everbody gets keeled, dey ain't no winners.
Now y'all are celebratin' racism, but look who's President now. There's no arguing with someone who lives in a fantasy world. If you tink dere's anodder President other then Obama, please esplain. Cause y'all just lost again. Don't make us have to come down dere and kick y'all ass agin.
February 4, 2009 12:07 PM | Reply | Permalink
We,,--That meaning YOU, most likely haven't done anything. And even more likely not do more than pervert your flash card version of history.
In the greater scheme of things, you're hopelessly insignificant.
February 4, 2009 12:31 PM | Reply | Permalink
You got nuthin'
February 4, 2009 1:36 PM | Reply | Permalink
Nuthin'
But the constitution of the genuinely pious, and the wind of an all powerful and truly wrathful God at my back!!!!
February 4, 2009 2:03 PM | Reply | Permalink
Religious zealotry is your response?!?!
Now I am certain "you got nuthin" if you have to pray to God for back up. That's a sure sign your chamber is empty and only a miracle can save you.
February 4, 2009 2:06 PM | Reply | Permalink
"Anytime you 'assemble' adjacent to someone's property making unfounded demands on part of it, that's conspiracy."
So you cede the adjacent property to the business owners? You would denounce people for simply having another point of view and sharing it with others. You're a corporate fascist. Please put down the flag and slowly back away because you do not know its meaning, or how conspirators came together to create that meaning.
February 4, 2009 2:11 PM | Reply | Permalink
You either need to lower the dosage on some of what you're taking or increase it.
Just print this page out and take it with you next Dr's visit. That may help him make a better evaluation. Good luck!!!!
February 4, 2009 2:16 PM | Reply | Permalink
Yeah, like I said, you got nuthin' Ya been schooled.
Now you're acting like Gonzo talking about the economy preventing his getting a job. No, he's got nuthin to offer except wild-eyed assertions to support a fantasy ideology put forward as a boon to everyone, but actually a gold mine to only the very few, of which you are not one. And neither is Gonzo for that matter.
One day Gonzo will wake up and figure this out. You will too, I hope.
February 4, 2009 2:21 PM | Reply | Permalink
Renny,
That's: "its." "It's" means "it is." Just one more example of your woefully lacking education.
February 5, 2009 11:58 AM | Reply | Permalink
The dollar is recovered because it was never lost in the first place. The margin value of the increased spending is positive because overall value is created.
The alternative to your scenario is not that the same dollar is spent by someone else who is not a "bum" and is not being funded by the government.
The alternative is that the dollar is not spent at all. That is the basic problem with a failing economy.
Now costs are incurred with no return. Production drops. Marginal costs go up, farmers, processors, retailers, grocers go out of business. Even fewer dollars are spent, more cuts to production, more producers going out of business. etc.
February 3, 2009 3:45 PM | Reply | Permalink
The Obama porkulus not only threatens republicans, it threatens our very Republic!!!!
February 3, 2009 4:09 PM | Reply | Permalink
Renaye. This thread is not about lazy people or crack dealers on welfare.
Its about what happens when folks lose their jobs in difficult economic times. When hard working workers are laid off, the reduction in consumption leads to more layoffs. That leads to reduce business investment.
A stimulus package analysis is looking at what happens when you extend UI and increase food stamps. You extend UI because employees are unable to find work in a bearish environment, not because they are to lazy to find jobs. These government handouts keep unemployed hard working workers in their homes, consuming products and helps keep others employed.
In addition, they have the added effect of boosting consumer confidence and causing more spending -- instead of hoarding money (reduced GDP), consumers are more willing to spend, knowing there is a safety net available in case they lose their jobs.
With more spending, business are willing to invest in the economy and keep workers on the roll etc ...
Business don't invest unless they know someone will be there to consume their products.
1.00 spend in food stamps leads to increase consumer confidence and less hoarding. That's how $1.00 leads to $1.73. Everyone spends more knowing they have a safety net.
February 3, 2009 5:05 PM | Reply | Permalink
I'll agree with most of what you said, but that $1.73 figure is puredee BS.
February 3, 2009 7:14 PM | Reply | Permalink
Well thanks. But you are just winging it on the $1.73 figure. Give me some data to contradict that figure.
February 3, 2009 7:22 PM | Reply | Permalink
It's futile arguing about something so patently ridiculous.
February 3, 2009 7:38 PM | Reply | Permalink
Well let just say trust Moody's more than you.
February 3, 2009 7:56 PM | Reply | Permalink
Well let just say I trust Moody's chief economist's opinion more than yours.
February 3, 2009 8:02 PM | Reply | Permalink
FYI, I wouldn't say Moodys is not biased. They get paid by issurers to rate bonds which is a major conflict of interest. Some of the CDOs that they rated AAA are now worth less that 20 cents to a dollar.
February 3, 2009 9:48 PM | Reply | Permalink
Thanks Lisa. I pointed that out too but got blasted by tonnyb for pushing back on it. It doesn't influence the topic at hand - which is the stimulus package and Zandi's view of it.
But it was pretty silly for tonnyb to cite Moody's "reputation of unbiased analysis" in his original post.
Also funny that tonnyb goes on to trash tax cuts and fails to mention that Zandi actually supports having tax cuts as part of the overall package.
February 3, 2009 9:55 PM | Reply | Permalink
You did say "You're using Moody's as a source? Is that supposed to be a joke??"
and now you say "It doesn't influence the topic at hand - which is the stimulus package and Zandi's view of it."
Your telling me not to use Moody's and then you say it's ok.
Re: Tax cuts. You are misrepresenting what I said. I never trashed tax cuts. I specifically mentioned that
Nowhere did I say tax cuts should not be included.
I criticized Republicans for suggesting "more tax cuts" and permanent tax cuts to higher brackets only which has a contracting effect on GDP.
I criticized Republicans for suggesting or rebates to higher brackets only which has a no effect GDP (see chart above under permanent tax cuts).
February 3, 2009 10:53 PM | Reply | Permalink
Sorry Tony - I criticized you for saying that Moodys has a good reputation. I still have no idea why you decided to include that in your original post.
I agree you didn't say "no tax cuts" but never did you say that they should be included. Everything you said about them was negative and slanted. You intentionally omitted that Zandi wants to include tax cuts.
I couldn't quite understand your last sentence, but you claim something has no effect on GDP. Yet all the numbers in the table are positive. "Most tax cuts lead to contraction in GDP" - that's false. GDP still grows but it grows less than the amount of the tax cut (according to Moodys table)
Your analysis is half baked.
February 3, 2009 11:11 PM | Reply | Permalink
1) Saying Moody's was unbias may have been a mistake on my part.
2) "I criticized you for saying that Moody's has a good reputation."
Yes you did. But you also originally criticized me for using Moody's as a source. "You're using Moody's as a source? Is that supposed to be a joke??" In fact you later said "I think it's better to quote an independent source, such as an economist from a university."
Both charts use Moody's as a source. If you meant to criticize my use of unbias, then you shouldn't have said "You used Moody's as a source? Is that supposed to be a joke??"
If you changed you mind about "... Is that supposed to be a joke??" then you then you should say so.
February 3, 2009 11:36 PM | Reply | Permalink
"You intentionally omitted that Zandi wants to include tax cuts."
If we are going to get into reading minds than there is no use in continuing this conversation.
I think most people here know tax cuts are part of the stimulus. Vandi was commenting on the effect of the stimulus bill which obviously included about 30% tax cuts. I didn't see any reason to get into those details.
February 3, 2009 11:49 PM | Reply | Permalink
"Most tax cuts lead to contraction in GDP"
Ok. Most tax cuts have a contracting effect on GDP.
February 3, 2009 11:56 PM | Reply | Permalink