Obama XV: Now, with 20% more rage

[Red Cloud]

Re: Obama XV: Now, with 20% more rage

This is sarcasm, right? I thought the point was clear enough. The problem is with the equation itself.

I love politics as much as the next guy, but the Laffer curve is about as big an overstatement of political control of the economy as you'll see. Both left and right have an inflated sense of their self-importance, and simple equations like that feed right into it. $.02

Hardly being sarcastic, simply pointing out that if the reasoning behind the Laffer curve isn't sound, the only reasonable correlation is that which is simplistic.

 

[ScottM]

Re: Obama XV: Now, with 20% more rage

Tom Coburn not too keen on a Newt Gingrich Presidential run:


http://www.realclearpolitics.com/ar...ikely_presidential_prospects_2012_106951.html

Oh, please. Newt is very committed to marriage. He's been married three(?) times.

 

[amherstblackbear]

Re: Obama XV: Now, with 20% more rage

Hardly being sarcastic, simply pointing out that if the reasoning behind the Laffer curve isn't sound, the only reasonable correlation is that which is simplistic.

Gotcha.

The reasoning behind the theory is sound enough, I think. The problem is that trying to apply the model to the real world isn't straightforward.

Obviously, applying the model to current policy debates hinges first on where you think we are on the curve. But that's really hard. What happens in practice is that people fall back on making crude correlations between short term economic growth and short term tax policy. If you cut taxes and you observe growth, then you must be on the downward slope of the curve right?

No. For the same reason that if you increase taxes and observe growth, you aren't necessarily on the "incline" side. A ton of things influence growth beyond taxes.

Even if we overcome that problem, and we stop using voodoo to identify location on the curve, there's a second problem. The curve tells us absolutely nothing about the marginal effect of taxes on growth (and thus revenue). It could be life-and-death large. It could be vanishingly small. The curve has no answer for us.

And we haven't gotten to the ceteris paribus problem. Even if we could somehow estimate the marginal effect of tax policy on growth and revenue, that estimate is based on the assumption (1) that everything else about the economy remains constant, and (2) taxes have an effect on growth that is completely independent of all other influences. That second one, especially, is a doozy. The idea that there is no interaction between tax policy and other influences just isn't plausible.

So we're back to square one. It's an interesting bit of theorizing. It appeals to pols by overstating their ability to "matter" and by making the process of political influence seem straightforward enough to fit in soundbytes.

And that's about it.

That isn't a criticism. Lots of other theories in social science aren't even powerful enough ideas to generate contemporary debate, let alone continue to generate political debate 20-30 years later.

 

[Red Cloud]

Re: Obama XV: Now, with 20% more rage

That isn't a criticism. Lots of other theories in social science aren't even powerful enough ideas to generate contemporary debate, let alone continue to generate political debate 20-30 years later.

Definitely. It just seems as though government policy, especially these days, has a tremendous effect on economic activity, which is unfortunate.

Just look at Cash for Clunkers. Obama and his crew touted it as a success because new car sales spiked during the month it was in effect. Unfortunately, there was a fairly equal drop below where sales had been prior to C4C in the following months. It didn't really spur sales, it merely moved them up a little bit - people who had cars on the "clunker" list took advantage of the program and bought a new car a month or two earlier than they might have otherwise. The new car market rebounded to where it had been after a few months. A secondary effect of requiring these cars to be destroyed has been noted in a rise in used car prices - which makes it difficult for low-income Americans to purchase a car. The law of unintended consequences.

What I'm arguing, vis a vis the Laffer curve, is that given where we are right now economically, and that we basically agree that there isn't a simplistic correlation of tax hikes raising revenue and tax hikes decreasing revenue, that the best course of action, at this time, is not to increase taxes on an economy already struggling to add jobs. We can generally agree that a more robust economy will lead to an increase in tax revenues, right? At the very least, it might be a good idea to extend the Bush tax cuts or make them permanent.

That's another thing that has annoyed me to some degree. I've heard a lot of Obamatons claiming that the Bush tax cuts expiring isn't a tax hike, just the expiration of a temporary program. Bogus. The tax cuts have been in effect for years, and next year, without an extension, those taxes will be higher than they were. That's NOT a tax increase?

 

[Craig P.]

Re: Obama XV: Now, with 20% more rage

So you can't blame Clinton or any of his / the Fed's policies for inflating a dot-com bubble that burst in '01, but you can blame W for the housing bubble that burst around the time of Obama's election?

Well, there is a substantial difference. The dot-com bubble was purely a stock speculation problem, whereas the housing bubble was fueled by structural problems in the granting and risk assessment of loans. There's a reasonable argument to be made that the regulatory problems should have been foreseen and addressed. I doubt it would have made the bubble go away, but it would have made it less likely that we would need extraordinary measures to keep it from bringing down the entire world financial system.

 

[MinnFan]

Re: Obama XV: Now, with 20% more rage

Very good article...

Our Macroeconomic Fetish

It is easy to kill entry-level jobs to support high minimum wages in a down economy. It is easy to get corporate firms to think about overseas plans by showing continued support for organized labor. It is easy to wreck state governments and to do nothing whatsoever to combat the massive and indefensible growth in public pensions.

 

[Kepler]

Re: Obama XV: Now, with 20% more rage

And we haven't gotten to the ceteris paribus problem. Even if we could somehow estimate the marginal effect of tax policy on growth and revenue, that estimate is based on the assumption (1) that everything else about the economy remains constant, and (2) taxes have an effect on growth that is completely independent of all other influences. That second one, especially, is a doozy. The idea that there is no interaction between tax policy and other influences just isn't plausible.

So we're back to square one. It's an interesting bit of theorizing. It appeals to pols by overstating their ability to "matter" and by making the process of political influence seem straightforward enough to fit in soundbytes.

And that's about it.

That isn't a criticism. Lots of other theories in social science aren't even powerful enough ideas to generate contemporary debate, let alone continue to generate political debate 20-30 years later.

A day with a new word is a good day.

Pols are going to want to have it both ways: when times are good, they did it, when times are bad, it's way complex. Sometimes I wonder whether the most effective tax structure would simply be one guaranteed not to change. How much waste and inefficiency are introduced by investors constantly having to hedge their bets against future political flip-flops?

From another part of the forest, an interesting read on how to engage (or not engage) those we disagree with.

 

[geezer]

Re: Obama XV: Now, with 20% more rage

From another part of the forest, an interesting read on how to engage (or not engage) those we disagree with.

good site, thanks!
er, rather
IDIOT! why should I read your stupid links??! you didn't even provide a background check of the author!

 

[Old Pio]

Re: Obama XV: Now, with 20% more rage

http://www.dailymail.co.uk/news/wor...Sakineh-Mohammadi-Ashtiani-hanged-stoned.html

These guys are a laugh a minute. Our president wants to "engage" them. I'd favor the kind of "engagement" suggested by Charlie Wilson: from 50,000 feet in a B-2.

 

[Kepler]

Re: Obama XV: Now, with 20% more rage

http://www.dailymail.co.uk/news/wor...Sakineh-Mohammadi-Ashtiani-hanged-stoned.html

These guys are a laugh a minute. Our president wants to "engage" them. I'd favor the kind of "engagement" suggested by Charlie Wilson: from 50,000 feet in a B-2.

You're not the only one who favors that sort of engagement.

These guys are nuts, but I haven't seen any practical ideas about limiting their power to do bad things. Stoning adulterers there is like DOMA here. Vox populi.

 

[pirate]

Re: Obama XV: Now, with 20% more rage

Let's go back to the Bush tax cuts.

The Bush/Gore campaign hit on two different ideas on what to do with our newfound surplus. Bush wanted tax cuts to return the surplus to the people. Gore wanted to use the surplus to pay down debt.

You can't have it both ways, however. If tax cuts end up increasing deficits and thus increasing the debt, then it is absolutely our debt - even though we've gotten more of our money back from the IRS.

This is why people don't take the GOP seriously on their calls for deficit reduction. They've got a 30 year track record of massively increasing the deficit and adding to our debt, and then washing their hands of it and saying that it's not our problem.

Contrast that with the moral overtones about individuals who have borrowed too much or are underwater on their mortgages, and the tone is much different.

In that case there were two distinctly different solutions proposed, each backed strongly by political parties. Each portrayed the other's idea as flawed and of course there could be no solution other than one of those two...no way could we get a compromise.

Now, there are times when compromise is a bad idea...I think when testing competing economic theories, it isn't all bad. So, instead of a more directed tax benefit for certain behaviors, maybe with a cap on the total dollar benefit, with anything above the GOP suggestion for tax rates being used to pay down debt and a simultaneous agreement on expense reduction...we get a "we're gonna shove our solution down your throat".

What does the other party do when they get control? They call it tax cuts for the rich and shove it back down the other guy's throat. What do you think the GOP will re-install if they get power?

Some can call each of those a victory. If temporary victories count then I guess that is fine. Neither is a solution. They are whitewash and greasepaint. So, 50+% claim victory (actually with wafflers, some get to claim victory twice) and think it makes them 'right'.

 

[Bakunin]

Re: Obama XV: Now, with 20% more rage

Well, there is a substantial difference. The dot-com bubble was purely a stock speculation problem, whereas the housing bubble was fueled by structural problems in the granting and risk assessment of loans.

They were both fueled by loose monetary policy, speculation, and greed. Just like the dot-com bubble, people who bought real estate believed the only direction the value could go was up. This is why people bought property at insanely high prices - they believed it would keep getting more valuable. You also seem to ignore the large investor component to the real estate bubble - people were buying and flipping properties like crazy in the 2000s.

There's a reasonable argument to be made that the regulatory problems should have been foreseen and addressed. I doubt it would have made the bubble go away, but it would have made it less likely that we would need extraordinary measures to keep it from bringing down the entire world financial system.

What would've prevented the bubble from being this bad is higher interest rates earlier in the recovery from the 2000 recession. If 30 yr rates had been more average - say 7-7.5% - from 2003 onward, it's unlikely we'd be having this discussion about cratering house values and a nearly-wrecked financial system.

 

[joecct]

Re: Obama XV: Now, with 20% more rage

Let's go back to the Bush tax cuts.

The Bush/Gore campaign hit on two different ideas on what to do with our newfound surplus. Bush wanted tax cuts to return the surplus to the people. Gore wanted to use the surplus to pay down debt.

You can't have it both ways, however. If tax cuts end up increasing deficits and thus increasing the debt, then it is absolutely our debt - even though we've gotten more of our money back from the IRS.

This is why people don't take the GOP seriously on their calls for deficit reduction. They've got a 30 year track record of massively increasing the deficit and adding to our debt, and then washing their hands of it and saying that it's not our problem.

Contrast that with the moral overtones about individuals who have borrowed too much or are underwater on their mortgages, and the tone is much different.

For their efforts, that version of the GOP (many, not all) was sent into the political wilderness in favor of a bullet-proof majority of the other party.

If GOP Mark II does the same thing next time they are in power, then then the people should march on Washington and toss them all into Tiber Creek.

I want an Federal Government that does this:
- Keeps me safe from the Bad Guys
- Promotes American Business
- Always does what is best for the USA.
- Promotes a sane tax policy, not a penalty system.
- Spends only what it needs, not on it's wants.

Now defining what the Government needs to spend vs. what it wants to spend is the crux of the matter, isn't it?

 

[Handyman]

Re: Obama XV: Now, with 20% more rage

I want an Federal Government that does this:
- Keeps me safe from the Bad Guys
- Promotes American Business
- Always does what is best for the USA.
- Promotes a sane tax policy, not a penalty system.
- Spends only what it needs, not on it's wants.

Now defining what the Government needs to spend vs. what it wants to spend is the crux of the matter, isn't it?

What you will get regardless of party:

-Uses half measures and hyperbole to make you feel more safe
-Promotes any business that gives them money
-Always does what is best for themselves and their campaign
-Promotes a tax policy that makes their constituents and donors happy (sane or not)
-Gets needed funds for itself but rails against pork for others

This is not only what you will get, but is a recipe for re-election in most cases!

 

[solovsfett]

Re: Obama XV: Now, with 20% more rage

Let's go back to the Bush tax cuts.

The Bush/Gore campaign hit on two different ideas on what to do with our newfound surplus. Bush wanted tax cuts to return the surplus to the people. Gore wanted to use the surplus to pay down debt.

You can't have it both ways, however. If tax cuts end up increasing deficits and thus increasing the debt, then it is absolutely our debt - even though we've gotten more of our money back from the IRS.

This is why people don't take the GOP seriously on their calls for deficit reduction. They've got a 30 year track record of massively increasing the deficit and adding to our debt, and then washing their hands of it and saying that it's not our problem.

Contrast that with the moral overtones about individuals who have borrowed too much or are underwater on their mortgages, and the tone is much different.

I don't think tax cuts increase the deficit. It's a different POV I guess. The government has the right to tax us of course but not outrageously, and not to pay for programs they want but we don't. they have no right to cut checks for $1000 out of a $50 bank account, yet they continue to do so and say they must tax us more or we'll be increasing the debt by $950 dollars. so then a tax cut in those terms means adding to the debt.


I don't buy it (pardon the pun)

if they'd ever show restraint and responsibility then I'd consider their/your argument. but until then...

 

[solovsfett]

Re: Obama XV: Now, with 20% more rage

What you will get regardless of party:

-Uses half measures and hyperbole to make you feel more safe
-Promotes any business that gives them money
-Always does what is best for themselves and their campaign
-Promotes a tax policy that makes their constituents and donors happy (sane or not)
-Gets needed funds for itself but rails against pork for others

This is not only what you will get, but is a recipe for re-election in most cases!

that pretty much nails it

 

[ScoobyDoo]

Re: Obama XV: Now, with 20% more rage

I don't think tax cuts increase the deficit. It's a different POV I guess.

What I find interesting is just about every report I've seen or heard on the Bush tax cuts lately (even on Fox News) is that there wasn't a single Republican when it was passed that thought the cuts were sustainable. Often saying that they had no way to pay for them.

 

[USAFA Bulldog]

Re: Obama XV: Now, with 20% more rage

What you will get regardless of party:

-Uses half measures and hyperbole to make you feel more safe
-Promotes any business that gives them money
-Always does what is best for themselves and their campaign
-Promotes a tax policy that makes their constituents and donors happy (sane or not)
-Gets needed funds for itself but rails against pork for others

This is not only what you will get, but is a recipe for re-election in most cases!

No doubt.

At the most basic level, both want the government to control others, but it shouldn't control them.

It's the same crap, "stop them they're the bad ones, there's nothing wrong with me so leave me alone".

 

[Old Pio]

Re: Obama XV: Now, with 20% more rage

You're not the only one who favors that sort of engagement.

These guys are nuts, but I haven't seen any practical ideas about limiting their power to do bad things. Stoning adulterers there is like DOMA here. Vox populi.

Moral equivalence is thy middle name.

 

[pirate]

Re: Obama XV: Now, with 20% more rage

What I find interesting is just about every report I've seen or heard on the Bush tax cuts lately (even on Fox News) is that there wasn't a single Republican when it was passed that thought the cuts were sustainable. Often saying that they had no way to pay for them.

I know what you mean but there were thousands of ways to pay for them...it is telling that they couldn't even conceive of cutting back spending to allow people to keep more of what they earn.

At least tax cuts can be reversed...creating new government agencies and giving out more benefits will never be reversed. We'll never know how much we could save by cutting back on benefits...it will never happen.