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

To: TimF who wrote (746860)	8/4/2006 5:08:59 AM
From: DuckTapeSunroof	Read Replies (1) \| Respond to of 769670

Re: "Its quite likely that we are at a tax rate that is past the point where the Laffer curve turns down." Possible, I suppose.... The important thing then - when evaluating 'Laffer Curve effects' on proposed public policy - would be to know WHERE YOUR COUNTRY IS ON THE CURVE! (Left side, right side, top of the curve, within a S.D. of a certain position, etc.) So, how does one arrive at that determination? (Because it's not very ACTIONABLE intelligence without knowing the answer to that most important question!) Re: "... tax cuts decrease revenue in the short term. But even if this is true it doesn't mean that they do not increase revenue in the long term." The Devil is (as always!) in the DETAILS. For example: HOW MUCH (percentage-wise) of an effect, either positive or negative, does the proposed cut have on those estimated future revenues? The Treasury Department 'dynamic analysis' (assumes the TRUTH of 'Laffer Curve' effects), for example arrived at the answer that Bush's tax cuts can be expected to increase potential economic growth enough to recapture (through higher growth/revenues) about 10% of the revenues that were lost by lowering the taxes --- But ONLY if federal SPENDING was cut to counter-act the increases to the deficit that are occassioned by the decline in tax revenues. In other words, they DO project SOME 'Laffer Curve benefits' from the tax cuts... but ONLY IF SPENDING IS ALSO SLASHED --- (which it HAS NOT BEEN). If spending is not cut, they project the negative effects to feed-back and the country to be WORSE OFF then if no changes had been made at all. Worse off because of LOWERED ECONOMIC GROWTH RATES. Incidentially, this latest Treasury Department analysis came to the exact same conclusions as all the previous other big economic analysises of these tax code changes: the C.B.O. analysis, the O.M.B. study (both were 'static', non-Laffer curve studies), and the previous 'dynamic analysis' that the WH commissioned from a private econometrics firm PRIOR to proposing their tax code changes to Congress originally. ALL came to pretty much the same conclusions: that unless spending was SLASHED to counter-act the forgone revenues... that by approximately 'mid-decade' (where we are right now) the NEGATIVE EFFECTS caused by the extra federal debt would begin to OVERWHELM the initial beneficial effects from the lower tax rates --- and that by the end of the decade we would be in a world of hurt... with LOWER ECONOMIC GROWTH then would have been the case if no changes had been made, & SOARING DEFICITS, just as the Boomers began to retire in numbers.... There ARE NO FREE LUNCHES... even in Washington. Debt does matter....