However, in the situation we're in right now, the approach is absolutely sound. Let me repeat what I said earlier. Our revenues dropped several hundred billion dollars between 2007 and 2011. Yet, during that time, we did not change our tax rates. The loss of revenue occurred because of decreased economic activity and lower employment. At the federal level, lower profits means less taxes and fewer workers means less taxes. If you can reverse that, then the revenue will come back. That's not voodoo economics at all. It's quite consistent and documented economic behavior. It's what happens every time you have a recession and then the economy bounces back.
Sorry I missed this earlier. See that part in red, there? That's the part I'm referring to that doesn't happen, has never happened, and won't happen if implemented now.
Let's be really clear here (since I suspect your reading comprehension is a bit off here). The statement in red is in reference to reversing high unemployment and low economic growth. So you are saying that at no point in the past has increased employment and increased GDP growth resulted in increased federal tax revenue? Because that's all I'm talking about here.
I'll even answer for you: Of course increased employment and increased GDP growth will result in increased federal tax revenue. Everything else staying the same (including tax rates), you will collect more total tax dollars if there are more dollars running around for you to tax. We know this is true because in the example I gave (which you completely missed or ignored) our tax revenues dropped by several hundred billion dollars over a 2 year period of time despite our tax rates not changing
. All I was saying was that if can recover the jobs and GDP growth we had in 2007, we will also recover the relative tax revenues we lost. And we can do this without raising a single tax rate.
Lowering taxes doesn't increase production.
Not always. As I've explained many times before (and I thought in one of my earlier posts), it depends on the economic conditions you're in. It also depends on what you're defining as "lowering taxes" and "increase production". You liberals tend to play games with directionality on things like this, calling the lack of a tax increase a tax cut, and the lack of a decrease in production an increase. So forgive me if I'm being cautious about responding to you with your own words.
My argument is (and has been for years) that all we need to do to initiate a rapid recovery from the crash of 2008 is to simply commit to not raising taxes
. It is my contention that the combination of massive spending (making the need to raise tax rates to pay for it more likely) and nearly continuous calls for raising taxes by Democrats and their supporters on the left is the primary reason why our economy has recovered so sluggishly from the recession. Businesses are afraid to invest in long term commitments (which usually involve employment) because they are being told constantly that their taxes will go up. Instead, they're dumping their investment money into commodities and bonds (things that they can shift money in and out of quickly, but which don't cause much if any job creation).
While Romney is also proposing some tax cuts, the primary objective, and primary means by which he plans to fix the deficit is via increased revenues resulting from increased tax base. You recover *first* and you'll see the money come back. The Democrats have been trying to do this backwards and the result has been no real recovery, which means low revenues, which means high deficits.
Point being it's not about lowering taxes, but committing to not raising them. And while this may be a bit unfair to the Democrats, right now the folks with the money who are making those investment decisions trust the GOP to not raise their taxes, while they believe the Dems will. Thus, merely electing a Republican president, even if he does nothing else
, will result in the economy recovering. This is why all your talk about fantasy tax plans amuses the hell out of me. It really doesn't matter. What matters is restoring confidence in the market that they can invest in job creation and not get their hands slapped for doing it. Romney can talk about tax cuts and repealing Obamacare to add to that perception, but at the end of the day, it's the perception that matters more than what he actually does once he takes office.
Never has. Never will.
False. It has on many occasions, but you'll always dismiss those. It's somewhat surprising how often conservative economic predictions come exactly right when we finally fight through the BS you liberals put in our way.
Taxation and production are free floating factors that *are causally not linked in a linear way*. That's the part people laugh about. Amusingly, a guy named Aurthur Laffer did some work on it. Laffer, we laugh at it, har har.
Hah. I'm sure that's what you believe and what you were taught. But it's not true. It can't be true
. Production *today* may not be affected by tax rates today, but production over time absolutely is. Every dollar not taxed is a dollar that contributes to the pool of money that is used to increase future production. Regardless of what ratio of that money actually contributes to production, everything else being the same, if you reduce that pool of money by X%, you will reduce the increase of production over time by some similar relative amount.
Your claim is like saying that how much money someone earns has no casual relationship with how expensive a house he buys. It's ludicrous. Unless your argument is that there's some magical cap on how much money companies and individuals will invest in things that contribute to productivity then your claim must be false. I know it's what you've been taught to believe, but it simply is not true. Everything else being the same, if I have more dollars left after taxes, I'm going to do more of whatever I would normally do with those dollars. Assuming some percentage of what I do with those dollars contributes to economic growth, then having more dollars after tax will increase economic growth.
Just saying something over and over doesn't make it true.
You lower taxes and production increases: See, we should lower taxes more and increase production even more!
You lower taxes and production doesn't increase: See, we didn't lower taxes enough!
You spend money on stimulus and the economy recovers: See, we should spend more money on stimulus and the economy will grow!
You spend trillions on stimulus and the economy doesn't recover: See, we didn't spend enough on stimulus!
Sound familiar? That's your pal Krugman. He's wrong btw. The reason smaller stimulus "works" is because stimulus is only a placebo and has no real effect on recovery after a recession. As long as it's small, it doesn't *hurt* recovery though. The reason it didn't work this time isn't because it was too small, but because it was massively too large.
Funny how you can see the logic, but utterly fail to apply it to your own positions.
All from the obviously false case: "Lowering taxes is good for the economy"
Hmmm... Misstating that a bit though. it's not "lowering" taxes that is good for the economy, but "low" taxes that is. I know that's a subtle difference, but it's really important. I can't say that every time a tax rate is lowered, that this will cause a positive economic outcome. I can say that, everything else being the same, if we can find ways to decrease the total tax burden on our economy, our economy will perform better. It's not just about taxes though, it's also about spending. Which is why Republicans are arguing for cutting spending *and* lowering taxes (or at least not raising them). Democrats, on the other hand, don't really seem to care if the economy is doing poorly. Increased spending is the end they seek, so any excuse they can use to do so will be tossed out there. And if they can somehow convince people that spending more money will make the economy do well, they'll do that. I guess what's shocking to me is how many people continue to believe that lie even when all the evidence that it didn't work is right in front of them.
You get the idea.
Well, probably not. That's the idea, though.
I get the idea just fine. But you can apply that argument to anything, right? Coaches should not bother to try to come up with game strategies because if they work, they'll claim their ideas worked, and if they don't they just didn't implement them well? I mean, it's a cute observation and it certainly does appear in human behavior, but taking it to an absolute is completely useless. Defensive driving works if I don't get into an accident, but if I do then I wasn't defensive enough, right? What's the point? Saying that doesn't mean that driving defensively isn't still a good idea. The fact that you can express something in that form (which btw, you can do for anything) doesn't give us any information at all about whether we should adopt a given position.
What does is when we compare patterns over time, not single events. If those who practice defensive driving get into fewer accidents statistically than those who don't, then we can say it's a good thing to do. Similarly, when we can show that when the US responds to a recession with small short term spending increases and keeping taxes the same or lower we recover with a very predictable 2-3 year pattern, then that's a proven approach. When someone proposes doing something different (large long term spending paid for with increased tax rates) and we don't get that same relatively rapid recovery, it's not wrong at all to suggest that the new idea we tried didn't work and was a bad idea in the first place.
And that ought to be doubly apparent when a host of people told you right from the start that it wouldn't work, and told you exactly why it wouldn't work, but got overruled. I think it's more than fair for that group to say "I told you so", and then expect the population of the US to let them have a crack at the problem. You want us to use meaningless rhetoric to make decisions, but I think that an examination of facts and historical patterns is a much better way.