We shall seize control of this nation as we have seized our two dollar whores on evening last- JP Morgan (dubious)

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-Marty

1986 300E 220,000 miles+ transmission impossible
(Now waiting under a bridge in order to become one)

Reading your M103 duty cycle:
http://www.peachparts.com/shopforum/831799-post13.html
http://www.peachparts.com/shopforum/831807-post14.html

I wish that we could agree on facts. (sigh).
Jolly brings up one that I find pasticularly partisan. He complains the "you republicans" point to Reagan's tax cuts and say, "the deficit grew". That is mixing apples and oranges, as they say.
There are two seperate points involved.
1) Revenue to the US Treasury GREW when the tax rates were cut.period! Cutting tax rates gave the government more money to spend. They did not cost the US Treasury anthing. They were not "taken" frfom the poor to subsidize the rich. Tax cut = more money.
2) The Congress, with the President's approval, overspent. The deficiet grew not becasue of the tax cuts but because of increased over-spending.

They are not related issues, and to continually blur them borders on purposeful deception.

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1982 300SD " Wotan" ..On the road as of Jan 8, 2007 with Historic Tags

Actually, there are three points involved. The aforementioned point is divided into two points.

1) Tax rates were cut and, therefore, revenue to the U.S. Treasury was reduced. That's a fact.
2) The economy, and specifically the stock market, improved and the resulting revenue to the Treasury increased.


They are not necessarily related issues, and to continually blur them borders on purposeful deception.

OK, Maybe I am a dunce, but it seems like you assume that lower rates means less money, and discount any effect they had on the stock market and the economy ion general.
How do you claim that lower tax rates produced less revenue?

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1982 300SD " Wotan" ..On the road as of Jan 8, 2007 with Historic Tags

When you lower the tax rate, less revenue arrives. It's pretty basic.

Then, you wait and hope that the economy and the stock market improve and people earn/make more money and send it in.

There might be some relationship between the two steps.........there might not. Other factors could cause the economy to improve. The current administration will be raising tax rates. By your conclusion, the economy should move downward..........the moment that it occurs..........correct?

When you lower the rate, more money is available to be spent, thereby having more taxes generated. It's simple economics...more in the pocket equals more to be spent on impulse buys, etc.

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1987 560SL
85,000 miles

Hogwash. You think money magically appears? When you are talking about the money supply, you are talking about a pie that must be divied up, not a magic loaf of bread. Economic problems are caused by imbalances. Pure capitalism fixes the imbalances, however, it does so in a way that messes up people's lives. In the case of tax cuts, it is simple: yes, you get a temporary uptick in the economy because more money enters the private markets, but economic expansion does not come without cost to the government, and it also gives a false sense that life will always be rosy thanks to our genius of not paying our bills and spending our money at the local bar instead. So what is the government to do? They can rescind the tax cuts. Well, Republicans just ain't agonna do that. So they borrow money. This borrowed money enters the economy and has the same affect as if they had printed more, now everyone is down at the local bar, and they all think life is wonderful because they have plenty of money to spend at the bar. Sooner or later, sobriety must come.

The reality is that balance must maintained. Economies are not magic. Cutting taxes does not make NEW wealth appear, it creates debt for someone, and gives wealth to someone else. Debt slowly erodes real wealth, because interest payments are an utterly unproductive way of spending money. What really works are tax cuts that are matched by spending cuts. Now real money, not borrowed unicorn money, is entering the economy. The government is not creating future costs that also will erode real wealth. Now, instead of the money coming from an economy inflated by cash that comes from not paying one's bills, it can be invested into things that create real wealth, which does not come from China, it comes from creating a product and selling it for more than you put into it, a practice that Americans have forgotten, like the drunk down at the bar who now forgets to go to work every morning.

So why can't we do it? The Republicans fail us the worst, because they play pretend the worst. The reason we can't cut taxes AND spending, is because the things we spend money on, are things that are very politically popular, and even more important, impact the voter blocks made up of people who show up to vote.

To actually cut taxes in this country, we would all have to stop playing pretend. Republicans need to stop pretending "earmarks" and "government waste" are the problem, they are a pittance. Their top sacred cow, defense spending, is the problem, it's a pig, its always been a pig. The Democrats need to stop pretending we can keep sending checks to everyone who is old, entitlement spending is the problem. But the problem is, at the very heart, the voters. Even if Grandma is making $80,000 a year in retirement off her dead husband's investments, if she doesn't get her SSI check, her whole family is going to howl. If Bubba Sixpack loses his job building jet engines for fighters that cost a billion dollars a copy that we don't need because the Russians and Chinese haven't built a new jet in thirty years, his family is going to howl.

The whole "tax cuts solve everything" financed by borrowing con game has hurt us the worst. It's a con game that is really class warfare, a way for the very rich to transfer huge sums of money to themselves and send us the bill, essentially they are getting filthy, filthy, control-the-world- rich by stealing the future from our grandchildren. At least Democratic entitlement money is recirculateg thru the general economy to average people, and at least the Democrats are honest about the need for higher taxes to pay for Grandma and Bubba. Until we get a leader that can convince the American public that entitlements need to be income-indexed and defense spending needs to be in line with our actual threats instead of some General's wet dream, we will continue to follow the path we are on to destruction.

Right on!

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Michael LaFleur

'05 E320 CDI - 86,000 miles
'86 300SDL - 360,000 miles
'85 300SD - 150,000 miles (sold)
'89 190D - 120,000 miles (sold)
'85 300SD - 317,000 miles (sold)
'98 ML320 - 270,000 miles (sold)
'75 300D - 170,000 miles (sold)
'83 Harley Davidson FLTC (Broken again) :-(
'61 Plymouth Valiant - 60k mikes
2004 Papillon (Oliver)
2005 Tzitzu (Griffon)
2009 Welsh Corgi (Buba)

Read up on the option of the flat sales tax concerning the fair tax...

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1987 560SL
85,000 miles

Brian,
Upon further reflection, as long as you limit the question as you propounded it, there is no difference between government spending and private spending.
However, that is only half the problem--Where does government get its money?
Only 3 sources I know-
1) Taxes--taking it out of the private sector which reduces private sector spending, (Bad)
2) Passing it on to your grandchildren ( Bad)
3) Printing more. This in really the insidious one as it hurts those who haved saved money. We are constantly told that we, as a nation, are stupid for not having more savings. When government prints money, it takes away all incentive to save as the money becomes worth less and less. (Bad).
Asking the question as you did is akin to the old line, "Other than THAT, Mrs. Lincoln, how did you enjoy the play?"

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1982 300SD " Wotan" ..On the road as of Jan 8, 2007 with Historic Tags

Thank you.

That's the simple point that needed to be made. It's directed at all those who believe that Obama's plan must fail and that he should have simply reduced taxes by the same amount of the additional spending.

To the economy, it's identical.

If plan A would fail, then plan B must also fail.

I think you over simplify.
The reason that plan A and plan B are not identical is the part you simply assumed away. Where does the money for the spending come from? What effect does that have on the economy?
According to your assumption, why should government spend "only" $1T? Why not $10T ot $100T? You assume the money is there to be spent. Many of us, say that the cost of the spending is greater than the hoped for reward.

This ain't beanbag. We are talking about spending so monumental that the debt service could ruin the economy for generations.

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1982 300SD " Wotan" ..On the road as of Jan 8, 2007 with Historic Tags

Where it becomes the same is when both are financed by debt and not by current income. In the end, and I think Brian is trying to get you to see this point, is that there is no difference from a macro-economic perspective when a Republican borrows ten dollars at 6 percent interest in unicorn money for his grand children to pay back in order to give you a so-called "tax cut", and when a Democrat borrows ten dollars at 6 percent interest in unicorn money for his grand children to pay back in order to give Grandma a big fat raise in her Social Security check - both have increased the size of the economic pie by creating money that didn't exist before in the form of a debt owed by people who don't even exist yet. Both have the same effect: they create future costs that must be paid back while creating economic booms that are illusionary, created by money that only exists because we failed to pay our bills, and so far always seem to go bust with a big bang no matter what party is in charge.

My point has always been that at least the Democrats are honest about it, we want to socialize a few things and see that they are paid for by taxes from everyone, we have no smoke and mirrors "tax cuts create wealth" fantasy to sell. Sure they create private wealth when the private sector grows larger and the public sector grows smaller, but Republicans pretty much lie about doing that, in the end both sectors grow, and the resulting economic imbalances blow up in our faces. Now we are going into the Democrat side of the same pendulum swing, but, heck, we'll be honest, we are going to grow the public sector at the expense of the private sector in order to take care of the people the private sector cannot seem to take care of, because we like things all nice and fair.

When you recieve an extra ten bucks in your check from a 'tax cut', you are merely joining the Republican leader in the act of not paying your current debt. Taken to an extreme, all of those enjoying the tax cuts seemed oblivious to the fact that two wars and an enormous new government obligation in the form of the Prescription Drug Bill were being put on a credit card. Why do you think that was necessary? I mean, under your theory, it should not have been necessary, right?

But more to the point, I have illustrated, in a way that anyone can hear explained in any freshman economic class, how money is created from thin air. Can you explain to me how tax cuts create money from thin air, which is what you essentially claim? The increase in income reciepts happens because of the bubble created by the injection of imaginary money into the economy, not from the tax cut itself.

If Republicans were true to their principles, they would tell people this: "Elect us, we will cut government services, but we will lower your taxes". Instead, they know that they would never get elected by telling the truth, so they come up with this baloney, which now has visited a terrible fate on our country. You cannot financed tax cuts with borrowed money, anymore than you can finance a Great Society on borrowed money. They are stupid ideas, both of them, on the left and on the right. If we want tax cuts, we need to swallow the medicine. If we want a Great Society, we need to pay the taxes. For too long we have delivered both to a spoiled nation feed lies by it's politicians, and we shall probably continue to do so to the end, which may not be all that far off.

I think your abhorrence of the debt has clouded your understanding.

Let's review:

Plan A: Obama reduces taxes by $1T, leaves spending at current levels and borrows the $1T that was lost due to the tax reduction. The consumer spends the $1T in the economy.

Plan B: Obama increases spending by $1T and borrows $1T to accomplish it.

Same effect on the economy.

Same effect on the debt.

Brian and Kirk,
It is nice to see the discussion w/o the invective that often is seen, here.

I think where we disagree is that you see the economy as a zero-sum game, a static situation. In this case, any money returned as tax cuts must be paid for by increased borrowing, or decreased spending.
I see the economy as expanding--at least during times of growth. AS JFK said, " A rising tide raises all boats." The economy is not static, but grows. The way tax cuts are supposed to work is that they encourage investors to invest. This capital flowing into the economy fuels the expansion. Tax revenues increase because the pie has gotten bigger. More people earning more money as the economy grows--they pay more taxes.
The question is whether this ideal situation occurs. The problem is that politicans, and idealogy cloud the issue, and we lose sight of the facts. Under Reagan, did the revenues to the Treasury increase? I believe they did. Under Reagan, did the deficit grow? I believe that, also to be true. Is it cause and effect, or coincidence? Ahh--there's the rub.

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1982 300SD " Wotan" ..On the road as of Jan 8, 2007 with Historic Tags