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

To: TimF who wrote (43133)	5/8/2010 4:53:29 PM
From: DuckTapeSunroof	Read Replies (1) \| Respond to of 71588

I believe that the MOST IMPORTANT LESSON to learn from the 30 years of modern economic experimentation is that: 1) cutting taxes (by itself) does not reduce the size of government... as long as deficits can be run, and as long as sovereign currency can be printed, the size and growth of government remains unscathed by mere reductions in tax rates. SPENDING must also be reduced. And, 2) The only way that modern governments have been able to eliminate major deficits is by maintaining GROWTH (which produces a steadily increasing stream of revenue to government, as well as rising incomes all around and REDUCING SPENDING. Reducing tax rates has clear benefits but --- unless DEFICIT SPENDING is also reduced at the same time --- than reducing tax rates is ultimately completely ineffective at controlling either the size of government, or the debts that it leaves behind. And rising DEBT is clearly a tax in itself... simply one that defers for a few years the reckoning.

To: TimF who wrote (43133)	5/8/2010 5:01:24 PM
From: DuckTapeSunroof	Read Replies (1) \| Respond to of 71588

Re: [Unfortunately there is no evidence that the big 1981 tax cut enacted by Reagan did anything whatsoever to restrain spending. Federal outlays rose from 21.7% of GDP in 1980 to 23.5% in 1983, before falling back to 21.3% of GDP by the time he left office.] "So they where lower when he left office than they where in 1980, despite the general upward trend. "No evidence" would seem to be a false statement, although something like "no conclusive evidence" would still be reasonable." A few quick points: By that point in time Reagan had taken back well over half his original tax cuts (thus: raising revenues significantly), and. Federal outlays (as a percent of GNP, the metric we both agree is the fairest and most useful way to measure such things) went from 21.7% of GNP to 21.3% over Reagan's two terms --- a mere statistical wobble. However Federal outlays went from 22.1% of GDP in 1992 to 18.2% of GDP by the time Clinton left office --- a far more statistically significant reduction in the size of government, reduced from anything seen in the Reagan years, and soon reversed* by the latter day Bush Presidency....