Formerly About Advanced Micro Devices Message Board

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Politics : Formerly About Advanced Micro Devices

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To: i-node who wrote (544278)	1/16/2010 11:42:23 AM
From: RetiredNow	Read Replies (1) of 1574714

Your thinking is too simplistic, i-node. Here's the problem with your simple assertion that decreasing tax rates will automatically lead to increased US GDP. From the last equation I put together, you might deduce that would be the case. In fact, I would agree with you that it will almost always be the case in the short run. However, in the longer run, here's economic reality. When the US decreases tax rates nowadays, but not government spending, that means we have to run a deficit, which means we have to borrow money. That debt carries interest payments, which already are crowding out our government's ability to spend on domestic priorities. That means US GDP or Aggregate Demand will decrease as domestic government spending decreases to accommodate foreign debt payments. Tax policy is very important to get right and is indelibly linked to spending. In that light, what Bush Jr did was the height of irresponsibility. He borrowed money to cut taxes, rather than cutting spending. That has directly lead to our massive debt and out of control deficits. He was on the left side of the Laffer curve and he didn't realize it. However, with 20/20 hindsight, it is obvious now.

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