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Politics : Mainstream Politics and Economics

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To: RMF who wrote (53563)	9/17/2013 10:42:48 AM
From: TimF	Read Replies (1) of 85487

Tim, all that stuff is hypothetical... No mostly it isn't. Diminished returns to higher tax rates is solidly established by both theory and actual history. Actual US federal government spending cuts being very scarce historically (at least since the beginning of the 20th century and probably much longer than that) is shown by the historical record. That the tax take will go up as a percentage of GDP if no tax "cuts" are made might be considered hypothetical (since we are talking about a projection to the future) but if so its a really solid hypothetical. Probably not a hypothetical at all since the same process has already occurred so you can say the hypothetical has been tested. That the spending of the federal government is out of normal historical bounds isn't at all hypothetical, nor is the point that outside of a brief period during WWII federal taxes have never covered spending this high as a percentage of GDP. The Reagan tax cuts meant NOTHING to the economy. That's both false and not particularly relevant. The later since I wasn't making a specific claim about Reagan's tax cuts, and since the tax cuts are not the primary reason for the deficits at that time or for more recent deficits. Can you imagine...200 years the country had NEVER had a deficit of a Trillion Dollars and then Reagan comes along and in 8 years he runs a deficit of about THREE Trillion..... For most of those years the world's output was a small fraction of a trillion, even a trillion in 1980s money let alone a trillion dollars at the time. The important measure of deficits is as a percentage of GDP, by that measurement (and even more by the nominal dollar measurement you choose), Obama's deficits are much larger. Also by percentage of GDP the US had seen much larger deficits several times. Reagan's deficits where large, but we've had bigger deficits before and since.

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