Re: "superb response."
>>> Thanks, much.
Re: "I think GW's package is already sufficiently skewed towards demand in percentage terms for lower income earners and small businesses; the eliminations of the "marriage penalty" and double-taxation of dividends are also important, imo."
>>> The immediate problem, as I see it, is lack of business demand... and Bush's tax proposals take a pass on that (in the post-Enron era, it was considered 'politically inexpedient' to propose corporate benefits). Also, because of the phased-in aspect of Bush's plans, most economists - even at the Treasury - agree that we get very little immediate stimulus to demand because, after the bulk of the changes are in effect... the recession will have long been over (knock wood) on it's own accord. That is a problem.
>>> The larger problem is that - because current spending is breaking all records - the tax cuts are financed by more deficit borrowing... and as the higher and higher borrowing begins to push up interest rates, and add to the costs of servicing the debt... the 'deficit blow-back' begins to counter-act the beneficial effects of lower taxes - ultimately, over-whelming the good done.
>>> This is what the President's on hand-picked economists at the GAO concluded early this week: wildly imbalanced spending will defeat the good effects of lower taxes, unless spending is slashed.
>>> This is ALSO what the economists at Trend Macolytics LLC (good staunch Republicans all, who made their mark in the Reagan administration) concluded... when they were hired by the House Republican leadership to run the fancy new 'dynamic scoring' economic models for the House. (Dynamic scoring assumes tax cuts always produce more growth, and so, some of the forgone tax revenue is returned later in higher tax receipts).
>>> Since ALL 5 ECONOMIC MODELS (three traditional 'static scoring' models, and two of the new-fangled 'dynamic scoring' models) showed the same results: deficit spending ultimately over-whelming tax cut-produced growth, and pushing growth rates down - and these results come from the economists most favorable to the President's plans... we should all probably pay attention.
Re: "I agree about eliminating tax loopholes (which would include subsidies to particular sectors/industries, various forms of corporate welfare) and dramatically simplifying the tax code for further efficiencies (40-something thousand pages of tax code is well past ridiculous)."
>>> Yes. (US complete federal tax codes - and administrative interpretations - put end-to-end - are longer than a football field.) Lowering annual compliance costs could return an extra $200 - $300 B. to the economy each year. That's 'found money'!
>>> Also, by making the economy more free market oriented, with business making investment decisions for rational economic reasons, not just to pursue some economically arbitrary tax preference, the entire economy would become more efficient and productive and competitive - likely MUCH MORE SO than the $200 - $300 B. savings in compliance costs.
>>> This would be THE BIGGEST BENEFIT.
Re: "I was also disappointed by the rash of spending, particularly on wasteful and counterproductive social programs, and believe much of that was an opening salve to soothe disaffected Democrats from election wounds. If GW was hoping to win over the likes of Daschle, et al, it was a repeat of the same mistake Reagan made. The FDR/Nixon approach of simply using "executive orders" may have been a more effective approach. Daschle, et al, would hardly be whining any more than they are now."
>>> Ya, it was all politics. (Steel tariffs which raised taxes on all consumers... merely to chase votes in PA and WVA... Record high farm subsidies to keep the farm states in the 'red' column.)
Re: "As for Afghanistan and Iraq, Newt Gingrich has made some valid points regarding USaid (and the UN has already shown itself to be miserably inefficient and politically polarized). For all the hand-wringing about "occupation," the US Army and its Corps of Engineers is immensely more efficient and productive at both rebuilding and humanitarian needs (evidence abounds in post-war Europe, Japan, and South Korea). Keep the UN out (and to a certain degree, our own State Department) and let real work be done by those who know how to do it."
>>> Still, occupation/reconstruction will be a drag on the American taxpayer for many years. The US Army War College estimated 50,000 - 80,000 troops would be needed for '5 to 10 years', just to keep the peace... and that's exclusive of rebuilding costs. The potential benefit to the region is large, but I'm afraid it doesn't translate into an economic net-gain to us.
Re: "As for revenues to the Treasury, there is accumulating evidence that both the economy and tax receipts may be at or near a nadir. With business inventories at lower levels and companies operating with greater efficiency and lower payrolls, an upturn (even a small one) may have a larger and more dramatic effect than some economists are predicting (as happened during both the Kennedy and Reagan years). A surprise on that end would be welcome, indeed."
>>> Welcome, yes, but don't hold your breathe. Higher productivity ALSO means less need to hire. Low inventories are a rational response to lack of demand.
>>> And, with Euro zone even deeper into stagnation, and Japan experiencing dis-inflation, there is no one to help us with the heavy lifting. Only China is growing rapidly (and, I'm afraid their trade-surplus status with us, and everyone else, is acting to export deflation to the World. THEY are the reason there will be no robust return of pricing power to manufacturers of hard goods... at least until the WTO forces them to break their currency peg to the dollar - some several years into the future.
>>> (Unless SAS turns into a pandemic there :(
>>> (Now, that is 'out of the frying pan and into the fire')
Re: "Perhaps more significantly, the passage of 20 years has eroded what little was left of the concept of "states rights" which also included a measure of fiscal responsibility. A large percentage of our population no longer thinks of individual states as a significant form of government but merely as a place to renew one's drivers license. The Federal Government now is looked to first, rather than as a means of last resort, to provide healthcare, welfare, education, etc. These are the programs and bureaucracies which continue to mushroom in cost as they become progressively less efficient. Turning this around and re-delegating some of the authority and responsibility back to the states (and cities) will be even more difficult now than in Reagan's time. And the fact that GW is actually adding to these programs right now certainly won't make it any easier. Centralization of everything, rather than local control and authority, is still the trend."
>>> Yes. The 'smaller federal government' movement is dead... or, at least smells that way.
>>> The Republicans of today are the Democrats of the 1960s. |
