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

To: TimF who wrote (746973)	8/4/2006 12:35:51 PM
From: DuckTapeSunroof	Read Replies (1) \| Respond to of 769670

"Over a few years, perhaps since Bush's tax cuts took effect. That may well have gained back 10% of the revenue that was lost to lower rates. But growth compounds. Its not a one time effect." [Yes, they KNOW THAT. It was factored into the Treasury Department analysis.] Re: "No it wasn't. The analysis looked at what happened. It didn't project growth out in to the future forever." Yes, it WAS factored into the Treasury analysis. And, there is no need to attempt to 'project growth out to infinity'... (they looked out to and beyond the end of the decade, though), but it is necessary to project the effects of compounding DEBT on growth for the same time period you are projecting benefits from lower tax rates. :-) This is WHAT THEY DID.... [Correct. From this particular 'odd' mix of tax changes they determined that about 10% of the revenue that was lost to the government was 'regained' - at least in the short-to-mid-term - by extra growth. Still, that left 90% of the forgone revenue that was NOT regained through faster growth... and, since government spending was NOT REDUCED by that amount (but, sadly, spending actually increased dramatically), this 'lost revenue' was added directly to the national debt --- where it continues COMPOUNDING and REDUCING the ECONOMY'S GROWTH RATE.] "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....) "... and produces more than 10% as the economy gets bigger and bigger." 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. So did the O.M.B. study, the C.B.O, study, and the dynamic analysis the WH contracted with TrendMacrolytics for: they ALL came to that conclusion. In fact, they are not ANY studies that have come to different conclusions! "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. A 'half-assed' policy (by that I mean: failing to implement controls on the spending side at the same time you cut revenues) fails to achieve beneficial effects. That's the bottom line. There are no points given for 'close'... except in horseshoes and hand grenades. "Its quite possible that the net total effect of Bush's budget changes is to decrease long term economic growth, but that doesn't mean the net effect of each part of the overall package decreased growth." Still... we live in the real world, and we must deal with the macro effects. That is what the Treasury Department investigation illustrates. "However not only was the budget not cut to offset the tax cut, the budget was greatly increased." NO KIDDING! That's the problem.