Another government Stimulas package

[run_to_win]

...we have already tried giving tax cuts to the obscenely wealthy and the whole trickle-down Reaganomics junk.  It failed.

How so?  Is it "an issue of fairness" or are we trying to increase revenue?

From 1997

Tax Cuts vs. Government Revenue

In each of the last three cuts in marginal tax rates, revenues received by the U.S. Treasury have increased. Coolidge cut income tax rates in the 1920s, Kennedy cut marginal income tax rates in the 1960s, and Reagan cut them in the 1980s.

Under Coolidge, marginal income tax rates were cut from the top rate of 73% to 24%. The economy rewarded this policy by expanding 59% from 1921 to 1929. Revenues received by the federal treasury increased from $719 million in 1921 to more than $1.1 billion 1929. That's a 61% increase (there was zero inflation in this period). Growth averaged more than six percent annually. We are currently growing at 2.5%.

Under Kennedy, marginal income tax rates were cut from a top rate of 91% to 70%. In real dollar terms, the economy grew by 42%, an average of 5 percent a year from 1961 to 1965. Tax revenue to the U.S. Treasury increased by 62%. Adjusted for inflation, they rose by one-third.

Under Reagan, marginal income tax rates were cut from a top of 70% to 28%. Revenues (from all taxes) to the U.S. Treasury nearly doubled. According to the Budget of the U.S. Government, FY 1997, Office of Management and Budget. Revenues increased from roughly $500 billion in 1980 to $1.1 trillion in 1990.

In each case, the personal income taxes paid by "the rich" increased when their tax rates were cut.  The top 10 percent of earners in the Reagan years paid 48% of the income tax burden between 1981 and 1988.

Regarding your remarks about tax hikes, there is a correlation between the Bush and Clinton tax hikes and a change in the revenue received by the Treasury. Martin Feldstien, professor of economics at Harvard, estimates that the U.S. Treasury would have collected two-thirds more revenue during the first three years of the Clinton presidency had his administration NOT raised taxes. It should be stressed, however, that the economy of the 1990s has grown moderately, in spite of tax increases, not because of them.

The reason that much of this data is ignored in debates is politics, pure politics. It pays to engage in class warfare if you are a politician because it divides voters against each other. When the perception is that only the "rich" will profit from a tax cut, such policies become difficult to sell because those labeled as "rich" tend to be in the minority.

In addition, politicians have a stake in keeping the tax code complex because it allows them to extract campaign donations and favors from people and corporations who derive huge benefits from special tax laws and exemptions in return.

http://www.mackinac.org/article.asp?ID=676

[Spider-Dan]

How so?

Income levels have stratified more and more; the rich are becoming the insanely rich, while the middle class is steadily shrinking.  It seems to me that the era of gov't as a mechanism to turn multimillionaires into billionaires has passed, and the era of gov't as a mechanism to help expand the middle class has returned.

[run_to_win]

Income levels have stratified more and more; the rich are becoming the insanely rich, while the middle class is steadily shrinking. 

Prior to the housing crunch, where were the middle class going - up or down?  I've heard talking heads argue both explanations.

It seems to me that the era of gov't as a mechanism to turn multimillionaires into billionaires has passed

I'd agree, but government never served this function as government doesn't create wealth. 

and the era of gov't as a mechanism to help expand the middle class has returned.

By moving the poor up or the rich down?

[Spider-Dan]

Prior to the housing crunch, where were the middle class going - up or down?  I've heard talking heads argue both explanations.

Actual wages have been stagnant for a long time.  The middle class was only "going up" if you count the imaginary value of their bubble-powered real estate.  Take that away (which we have) and you see exactly how poorly the middle class has been doing for the last 8 years.

I'd agree, but government never served this function as government doesn't create wealth. 

Defense contractors would disagree with you.

But the point I was getting at was primarily the increasing deregulation; the policies that have removed any restraints from corporations (and their increasing super-wealthy executives) gouging the middle class in the name of "free market capitalism."

By moving the poor up or the rich down?

Both.  But that's oversimplifying.

It's more like reducing the factors that suck much of the resources away from the middle-class and the poor (e.g. healthcare costs, taxes) while reinstating the factors that restrict the super-wealthy from exploiting the markets with little regard for the overall impact on society (e.g. more financial regulation).

[Dphins4me]

  I'm just trying to figure out how this is an " emergency " stimulus that has to be passed right this very minute, when so little will be in the economy within the next 12 months.

[Spider-Dan]

...as opposed to the amount that will be in the economy in the next 12 months if we sit around and do nothing?

It's not like this is some sort of surprise action.  Obama has been saying that this would be coming since, what, September?  He campaigned on it.

[run_to_win]

Good stuff Dan.

Defense contractors would disagree with you.

Agreed, to a point.  The government contracts for a new weapon and the company spends millions or billions in R&D meeting the specs.  It wouldn't be feasible the other way, "Hey, we just spent millions creating this prototype for a new weapon ... do you like it?"

But the point I was getting at was primarily the increasing deregulation; the policies that have removed any restraints from corporations (and their increasing super-wealthy executives) gouging the middle class in the name of "free market capitalism."

Gouging in what way?  Except for fuel, haven't prices have been fairly stable for quite a while?  As we learned last summer, fuel prices are market driven and the alleged profit margins of the companies is way below average.  

Then we get massive corporations like Walmart which have lower prices than anyone and we complain how they treat their workers and that all their merchandise is from China.

I just don't see the middle class as a bunch of mindless sheep willingly allowing themselves to be gouged.

[Dphins4me]

...as opposed to the amount that will be in the economy in the next 12 months if we sit around and do nothing?

It's not like this is some sort of surprise action.  Obama has been saying that this would be coming since, what, September?  He campaigned on it.

  Sounds like you just want a knee jerk reaction instead a well thought out action.  The first half of this bail out was a knee jerk reaction & as you can tell.  It did little to nothing.   

Been reading that something like .13 cents for every dollar in this package is actually considered stimulus.  The rest is agenda related.

Again, why the rush if we are not going to be seeing any of this money for over 12 months?   

Again, one of Obama's main concerns with the Patriot Act was it was rushed through.  Why is this different?

[Spider-Dan]

  Sounds like you just want a knee jerk reaction instead a well thought out action.  The first half of this bail out was a knee jerk reaction & as you can tell.  It did little to nothing.

The TARP bailout was a joke.  We went from "the fundamentals of the economy are strong" to "the sky is falling and we need to act NOW" in the course of a couple of weeks.

This stimulus has been planned since September; Obama campaigned heavily on it.  To act like this is being suddenly sprung upon the American people (like the TARP bailout was) is silly.

Been reading that something like .13 cents for every dollar in this package is actually considered stimulus.  The rest is agenda related.

Semantics.  If, say, half of the package was in green energy infrastructure creation, is that "stimulus" or is that "agenda?" 

There is such a thing as long-term stimulus; it doesn't necessarily mean handing out paper cash.

Again, why the rush if we are not going to be seeing any of this money for over 12 months?

You do realize why this money is taking time to enter the market, right?

Unlike the TARP bailout, this package is not designed to throw money at problems without any sort of plan.  The reason why it will take a while to execute is because it is being rolled out as the other pieces come into play.  You can't just say, "OK, we are going to spend $100B on roads and bridges... what can we get started by next week?"

Fast spending is not better than smart spending, as the TARP bailout shows us.

Again, one of Obama's main concerns with the Patriot Act was it was rushed through.  Why is this different?

9/11 happened on, well, 9/11/01.  PATRIOT ACT was signed into law on 10/26/01.  6 weeks.
Fannie and Freddie takeover was on 9/7/08.  It has been nearly six months since then.

[Spider-Dan]

Gouging in what way?

Financial deregulation.

Limits which were put in place to protect the market (e.g. banning of credit-default swaps) were repealed in the name of free-market capitalism.  Wall Street then abused this lack of regulation, which led us to where we are now.

See, normally I'd be less inclined to pursue such a class-combative pseudo-socialist tack, but the events of the last six months have convinced me otherwise.  The story that I've been sold is that capitalism allows you to rise and fall based on your own merit and hard work.  But apparently, if you are really rich (like, a FREAKING BANK rich) and you completely screw up, then you get to go to the gov't and have them pay for your mistakes (using money from people who AREN'T rich).  Then you get to STAY rich.

Sorry, f*ck that.  I'm getting off of that train.  It's one thing to argue that the rich should be able to keep their own money, but when my tax dollars go directly to helping wealthy screwups maintain their wealth, the veil is lifted.  It is now clear that despite the arguments of the wealthy, they are quite content with socialist actions when it benefits them... so now let's see it go both ways.

[Dphins4me]

The TARP bailout was a joke.  We went from "the fundamentals of the economy are strong" to "the sky is falling and we need to act NOW" in the course of a couple of weeks.

  You expecting a disagreement?

This stimulus has been planned since September; Obama campaigned heavily on it.  To act like this is being suddenly sprung upon the American people (like the TARP bailout was) is silly.

We knew it was coming.  What we didn't know was what was in it.  Slight detail that most should consider important.

Knowing a storm is coming & knowing a hurricane is coming is also a detail that most consider important.

Semantics.  If, say, half of the package was in green energy infrastructure creation, is that "stimulus" or is that "agenda?" 

This is a economic stimulus package.  Not a policy package.  Going "Green" is not stimulus & this not going to put people back to work.

Very few want to go "Green" more than I.  However, this is not the format to do it. 


NOTE: In saying that.  I've been thinking about a recent comment of mine.  I want to clarify it.  When I say taxes does not create jobs was not accurate.  I should have said, it does not create private sector jobs.  The ones that stimulate the economy.  Taxes create Gov. jobs which in turn increase the size of Gov & increase spending. 

There is such a thing as long-term stimulus; it doesn't necessarily mean handing out paper cash.
You do realize why this money is taking time to enter the market, right?

Unlike the TARP bailout, this package is not designed to throw money at problems without any sort of plan.  The reason why it will take a while to execute is because it is being rolled out as the other pieces come into play.  You can't just say, "OK, we are going to spend $100B on roads and bridges... what can we get started by next week?"

No problem with long term planning.  Long term plans generally following long term planning.  No one is getting the chance to disgest this package.  Its pass it, pass it before anyone truly have a solid grasp on the package.

Fast spending is not better than smart spending, as the TARP bailout shows us.
9/11 happened on, well, 9/11/01.  PATRIOT ACT was signed into law on 10/26/01.  6 weeks.
Fannie and Freddie takeover was on 9/7/08.  It has been nearly six months since then.

How long have the people who are voting on its passage had it in hand to discuss the pros & cons of this package.  Nope, its been here it is.  Pass it.

[run_to_win]

See, normally I'd be less inclined to pursue such a class-combative pseudo-socialist tack, but the events of the last six months have convinced me otherwise.  The story that I've been sold is that capitalism allows you to rise and fall based on your own merit and hard work.  But apparently, if you are really rich (like, a FREAKING BANK rich) and you completely screw up, then you get to go to the gov't and have them pay for your mistakes (using money from people who AREN'T rich).  Then you get to STAY rich.

Sorry, f*ck that.  I'm getting off of that train.

Besides the mega-rich and government, who is on that train? 

It's one thing to argue that the rich should be able to keep their own money, but when my tax dollars go directly to helping wealthy screwups maintain their wealth, the veil is lifted. 

I guess I don't see why we can't have both reasonable taxes on the rich so they're not encouraged to hide their assets, while not funding them with taxpayer money.

It is now clear that despite the arguments of the wealthy, they are quite content with socialist actions when it benefits them...

Doesn't make it right, but this sounds like human nature.

[Spider-Dan]

We knew it was coming.  What we didn't know was what was in it.  Slight detail that most should consider important.

[...]

This is a economic stimulus package.  Not a policy package.  Going "Green" is not stimulus & this not going to put people back to work.

Very few want to go "Green" more than I.  However, this is not the format to do it.

Your responses illustrate my point.

How long should we debate ideas that you are already opposed to?  A month?  2 months?

Obama said during the campaign that upon assuming office, one of his first priorities would be to push through a wide-ranging infrastructure plan, designed to both create jobs and reduce our dependence on foreign energy.  If you have a problem with the very concept, how long do we need to discuss the details of it?  You aren't on board, you weren't on board, you won't be on board.  Your objection is noted, now let's move on.  This is precisely what played out in the House of Representatives.

The difference between this package and TARP/PATRIOT is that for those, there was a very short, hectic period of time where the (Bush) administration insisted that there's no time to discuss whether or not these drastic steps are needed and we must act NOW NOW NOW.  We've had six f'ing months (and three since Obama was elected) for the GOP to step up and say "Um, do we really need green energy?  Let's just do more tax cuts instead."  Instead, they have done nothing.  Now it is time to act.

Once again: these plans have been on Obama's website for MONTHS.  Any politician that has a philosophical objection to what he's doing should have spoken up a LONG TIME AGO.

[Spider-Dan]

I guess I don't see why we can't have both reasonable taxes on the rich so they're not encouraged to hide their assets, while not funding them with taxpayer money.

1) The only tax that would be "reasonable" enough for the rich not to hide assets is a tax of 0.  It's not like people stopped hiding them from 1981 forward.
2) We already have funded them with taxpayer money.  That ship has sailed.

Doesn't make it right, but this sounds like human nature.

And that's fine.  But I am no longer interested in hearing the free-market rhetoric, nor am I interested in hearing the word "socialist!" thrown around as an insult.  Socialism is this great danger to the American way of life that must be avoided at all costs... but only when it helps the poor and middle-class.  Otherwise, it's pretty good stuff.

A perfect example of what I'm talking about is the bankers on Wall Street that are objecting (link) to potential federally enacted limits on their bonus pay:

“I think President Obama painted everyone with a broad stroke,” said Brian McCaffrey, 55, a Wall Street lawyer who was on his way to see a client. “The way we pay our taxes is bonuses. The only way that we’ll get any of our bailout money back is from taxes on bonuses. I think bonuses should be looked at on a case by case basis, or you turn into a socialist.”

That's right: the people accepting huge sums of money from the government are COMPLAINING about SOCIALISM.  High comedy.

Here's another gem:

“On Main Street, ‘bonus’ sounds like a gift,” [a financial employee] said. “But it’s part of the compensation structure of Wall Street. Say I’m a banker and I created $30 million. I should get a part of that.”

Of course, unsaid is how much they should give back when they cause $30M to go up in smoke.

[Dphins4me]

Your responses illustrate my point.

How long should we debate ideas that you are already opposed to?  A month?  2 months?

More than a couple of days, before its put to vote.  There is a reason they want to vote on it before any knows what they are voting on or anyone outside the Gov can get the word out.

Obama said during the campaign that upon assuming office, one of his first priorities would be to push through a wide-ranging infrastructure plan, designed to both create jobs and reduce our dependence on foreign energy.  If you have a problem with the very concept, how long do we need to discuss the details of it?  You aren't on board, you weren't on board, you won't be on board.  Your objection is noted, now let's move on.  This is precisely what played out in the House of Representatives.

  Again, policy making & economic stimulus are two different elephants.

The difference between this package and TARP/PATRIOT is that for those, there was a very short, hectic period of time where the (Bush) administration insisted that there's no time to discuss whether or not these drastic steps are needed and we must act NOW NOW NOW.  We've had six f'ing months (and three since Obama was elected) for the GOP to step up and say "Um, do we really need green energy?  Let's just do more tax cuts instead."  Instead, they have done nothing.  Now it is time to act..

  Don't disagree on Bush.  Didn't like it when they pulled it.   

You have to wait for the plan to be rolled out, before you can address it.  Again you are confusing policy making & stimulus.

Once again: these plans have been on Obama's website for MONTHS.  Any politician that has a philosophical objection to what he's doing should have spoken up a LONG TIME AGO.

Again.  Policy making & stimulus are not one in the same. 

This stimulus is simply policy making with the expansion of Gov.  How much Gov do you want in your life?  Each day they are simply trying to make us more & more dependant on them.  That is not America, nor capitalism.