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Politics : PRESIDENT GEORGE W. BUSH
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To: DuckTapeSunroof who wrote (746975)8/4/2006 12:56:05 PM
From: TimF  Read Replies (1) of 769670
 
"The 10% is recovered after a relatively short time. Its already been recovered."

Yes. (Just as growth has ALSO been lost due to the extra compounding DEBT....)

"The economic growth continues"

(So does the LOWERED GROWTH from the extra debt....)

Government debt doesn't directly lower growth (except perhaps if it reaches the point where investors lose confidence and invest overseas or nowhere). Interest has to be paid on the debt, and that money needs to be taxed or borrowed. The additional taxation or borrowing is what lowers economic growth.


Well, THAT DEPENDS on whether the LOST GROWTH (from the new debt) is GREATER then the extra growth (from the lowered rates). In this specific example, the Treasury calculated that the lowered growth potential from the run-away debt would SWAMP ALL of the benefits of the lower taxes, and THEN SOME MORE.

Now they didn't. The fact that the treasury department estimates that the amount of tax income lost by the cuts is 90% of what a straight calculation of lower rates would equal, and that only 10% "pays for itself", does not mean that the negative side is nine times as big as the positive gain when it comes to economic growth. The fact that its 10% rather than a negative percentage means the estimate is that economic growth has increased. If economic growth decreased because of the tax cuts than the loss would not be 90% it would be over 100%.

"Extra spending may have a larger effect than the tax cuts and may reduce economic growth more than the tax cuts increased them, but the issue is the tax cuts themselves."

Respectfully, no.

The 'issue' is WHAT WORKS. What combination of policies produces the most cost/effective results.

If you are trying to figure out if tax cuts work than the issue is indeed the tax cuts themselves. Other negative policies are not part of the tax cuts and you factor them in you distort the results of your calculation.

If I offered $100 and hour for unskilled labor, but shot every tenth applicant in the head, the fact that people stopped applying for the job would not be evidence that offering $100 an hour is an ineffective way to attract employees.

Similarly its unreasonable you can't prove that "tax cuts without spending cuts hurt the economy", by finding that the economy might be hurt when spending increases massively.
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