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

To: DuckTapeSunroof who wrote (45645)	9/7/2010 7:36:37 PM
From: TimF	Read Replies (1) \| Respond to of 71588

Re: "If that's what you meant than the point was correct, but also rather irrelevant to any policy discussion about stimulus. Assuming stimulating spending is really what we need...." Why? That is not exactly what the initial post was about AT ALL. Sure it is. I said "spending" not "government spending". The argument is that the poor would spend more if they had a tax cut than the rich would. That's possibly true, but it isn't shown to be the case by pointing out that the rich spend a smaller percentage of their overall income, because the relevant point is the marginal propensity to spend, not the percentage of total income that is spent. The not-rich are more likely to be struggling with debt, and thus more likely to use the money to pay down debt (which in broader than normal terms can be considered saving, or at least isn't consumer spending). That doesn't mean the rich will spend more of the marginal dollar, it just means its plausible that they might. We really don't know precisely what different groups will do under the current circumstances. And of course all of that is assuming the problem is primarily a shortage of consumer spending which the data at cato-at-liberty.org seems to contradict.