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Politics : American Presidential Politics and foreign affairs -- Ignore unavailable to you. Want to Upgrade?

To: Steve Dietrich who wrote (32680)	2/13/2009 7:12:26 PM
From: TimF	Read Replies (1) \| Respond to of 71588

Revenue went down 3 straight years starting with 2001 and didn't recapture 2000 levels until 2005. Interesting selection of data for your argument. 1 - A recession started in 2001. So government revenue would be expected to go down. 2 - The Bush tax cuts where not finished until 2003 and passing a bill in 2003 means that you reduce taxes for 2004, not long before the point which you specify that previous tax revenue levels where reached. Even ignoring those points the idea that the deficits where caused mostly by the tax cuts is silly, since the spending increases where larger, and since if spending had not increased we would have had surpluses during Bush's 2nd term.

To: Steve Dietrich who wrote (32680)	2/14/2009 7:49:40 AM
From: DuckTapeSunroof	Read Replies (1) \| Respond to of 71588

Re: "Bush's record setting fiscal failure was more about revenue failure than anything else..." No. I don't think so. (At least, not directly. The 'revenue failure' you refer to was a result of mutually reinforcing bad trends and policies: too HIGH spending/borrowing and too LOW growth in the economy.) Both 'reduced revenues' and increased federal borrowing and national debt so there were at least two big sides to the problem: Failure to reduce borrowing (caused, of course, by failure to keep spending within the bonds of revenue) AND failure of the economy to grow with at least our historic average vigor and strength (sub-par growth, with the middle class making no economic progress net of inflation over the period). The two main factors which contributed to the sub-par economic record in America over his two terms (very large real additions to the federal debt, a hollow economy propped-up by mortgage equity withdrawals in a vain attempt to make up for below-normal numbers of jobs produced and wage stagnation - the MEWs evidencing a bubble which eventually runs out of air when there is no more net equity to withdraw....) each fed-back into each other. So it becomes impossible to separate the two things: 1) Economic gains from cutting taxes (an economic good per se), were reversed and more by the fifth year of Bush's Presidency (nearly exactly on schedule, as predicted by CBO and GAO and private econometrics firms --- who had warned during the President's first year, as tax cuts were being proposed and debated, that the gains from the cuts would eventually be outmatched by the negative effects of rising deficit spending... unless spending was cut). Eight years straight of deficit spending (on top of the slight revenue decreases occasioned by tax cuts) eventually depressed national economic growth down LOWER then it would have been had no changes been made. 2) Sub-par economic growth (without the MEWS the nation came close to averaging somewhere between 0.5% and 1% growth over the eight years... final numbers will be calculated by the government by the end of this year), extremely LOW job production and near total stagnation in wages, etc., combined in a sort of feed-back loop to exacerbate the damages being down by the uncontrolled deficit spending.... You see --- historically --- whenever administrations have succeeded in producing large reductions in the real national debt... it was mostly because those two factors played-out in reverse of how they did with Bush: when spending and normal revenue sources are at least roughly in balance, AND the economy grows at a higher-then-normal clip... it's the 'rising tide of the economy' (along with at least a bit of spending restraint from the politicians) that causes federal revenues to begin to rise... and ultimately allows the US to need to borrow less, so the reduction in borrowing combined with the normal maturation of existing Treasury debt, is what brings down the federal debt. Almost exactly the opposite of how things played-out with either Bush. The extremely poor economic growth reduced the growth rate for federal revenues, thus causing the deficit to soar again like under the earlier Bush. U.S. GDP Growth Net of Mortgage Withdrawals, (U.S. GDP growth over the last decade with and without the mortgage equity withdrawals which have now collapsed): (GDP averaged only around 1%, or a bit less, over the Bush years, once you factor out the effects of people withdrawing equity from their homes through mortgage equity withdrawals....) ...Digging a bit deeper into Net Mortgage Equity Withdrawal "MEW", we see just how much U.S. homeowners tapped into their homes (think ATM machines) when values were rocketing. The ability of homeowners to monetize the capital appreciation of their homes offset the stagnant wages we have seen over the past 7-8 years. Unfortunately, MEW has now come to a screeching halt (YTD 2008 in the chart below is through Q2): Real corporate taxes (net taxes paid on earnings) after deductions/loopholes/'special tax preference items' and other such complications introduced by our corrupted codes reduce the nominal statutory rate: