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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: Neocon who wrote (36294)	9/12/2000 6:06:33 PM
From: iandiareii	Read Replies (2) \| Respond to of 769667

Cato's bias is well known. Although they may have a case to make, I refuse to take seriously any analysis that includes the following junk economics: In 1981 income tax receipts totaled $347 billion; in 1989 they totaled $549 billion, a 58 percent increase. The inflation adjusted difference in the two figures is one percent. The 58 percent figure should find no place in an article purporting to be serious -- it's a bullshit sparkler designed, apparently, to mislead, not to enlighten. The piece also seems to be cooking the revenue books by obscuring the dollar years to which the figures apply. "In 1981" means taxes paid on 1980 income in 1980 dollars; likewise the 1989 figure cited above actually refers to 1988 dollars. So we have nominal figures of 347B and 549B for the years 1980 and 1988 respectively. Adjusted for inflation, the 1980 sum become 543B in 1988, or a difference of ~1 percent. Mind you I've used Cato's numbers to make this comparison, something their statistical sleight-of-hand makes me hesitant to do. In fact I'm hesitant to make any comment since their shading of the truth seems to demonstrate bad faith. I'm open to evidence that I'm mistaken, of course. But, even if there's a case to be made, Cato's brand of tomfoolery only undermines it. Click below for an inflation calculator to do the math yourself: westegg.com

To: Neocon who wrote (36294)	9/12/2000 11:45:49 PM
From: Brumar89	Read Replies (1) \| Respond to of 769667

If the 1980s expansion had been a classic, demand-driven Keynesian recovery, nominal demand should have grown rapidly in the 1980s. However, as Figure 9 shows, over the course of the 1980s the rate of nominal demand growth fell. "Nominal demand". Whatever they mean by nominal demand, figure 9 shows the annual growth in GDP. So GDP equals "nominal demand" - why not just say GDP? The Cato piece seems to be intent in claiming that it wasn't a demand stimulative effect but a "supply-side" effect. Maybe this is due to some allegiance to Say's law - Supply creating it's own demand or something like that. Personally I view "Lafferism" as a form of "Keynesianism". Both prescribe tax and spending policies to stimulate the economy. Whether the stimulative effect is due to the effect on demand or supply seems to be an academic question to me. The Keynesian explanation of the economic recovery in the 1980s is also fundamentally inconsistent with the sharp fall in inflation throughout that decade. If the recovery had been driven by a hike in the demand for goods and services rather than by a supply-side effect of greater output, inflation would have risen rather than fallen. Well, if one pretends that nothing else was shaping the economy during this time. But the Fed remained very dedicated to preventing inflation throughout the 1980's and beyond. Despite this, inflation did increase in the 1986 - 1990 period according to figure 5 in the Cato piece. Finally, if budget deficits are highly stimulative, the post-Reagan period of 1990-95 should have produced strong economic growth. The budget deficits of that period were very nearly of the same magnitude as the deficits of 1982-89 (4.2 percent of GDP versus 3.9 percent of GDP); in the 1980s, however, we had rapid growth and in the 1990s we have had anemic growth. I note that figure 9 in the Cato piece measures economic growth as nominal change in GDP. Figure 9 shows 1981 with an 11% rate of nominal GDP growth. I don't remember 1981 as a gangbuster economic year. But inflation was still pretty high then, I think. I think what they are doing is using nominal growth instead of real growth in order to overstate the economic growth in the early part of the decade. Naturally as inflation fell over the decade, nominal changes would get smaller.