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Politics : Mainstream Politics and Economics -- Ignore unavailable to you. Want to Upgrade?

To: research1234 who wrote (28389)	9/22/2012 3:07:02 PM
From: gamesmistress	Respond to of 85487

YOUR SIGN IS TOO BIG AND TOO LOUD!!!!!!!!

To: research1234 who wrote (28389)	9/22/2012 3:44:30 PM
From: TimF	Read Replies (1) \| Respond to of 85487

And many others are wrong. Since even with no changes in taxes or spending government income would increase over time (with economic growth, and with bracket creep), to have a deficit increase you need reductions in government revenue, or increases in government spending that add up to over 100% of the increase in the deficit in order to have a larger deficit. This fact enables people who are opposed to certain tax cuts or spending increases to portray those particular changes that they are opposed to as being the main or sole source of the increase in the deficits. I can play that game too. Look at the increase in social spending over the past decade. Its larger then the deficits. Thus in a certain sense social spending increase are responsible for all of the deficit increase. Over 100%. Without them we would have a surplus. That last statement is true. Its also a bit misleading, as are almost all statements of this type. Other factors contributed to the deficit as well. Add up all those factors and you get well over 100%, again because without any changes deficits would decrease and move to surpluses over time, because of economic growth and factors like bracket creep. So when your really considering how much of the change of deficit came from each of various different factors you should compare the size of the different factors to each other, not to the resultant deficit. The biggest dollar factor was the increase in non-military spending. Look at the budgets, its a matter of public record and beyond serious dispute. Also the reduction in tax revenue due to the recession and slow recovery is also a large factor. Other factors include the increase in military spending, and the loss revenue from tax cuts both of which are noticeably smaller then the increase in non-military spending, but they are real. Another thing that people do to exaggerate the effect of tax cuts is they falsely assume that cutting the effective tax rate by x% reduces revenue by x%. But it doesn't do that in the real world for two reasons. 1 - Lower tax rates are positive for the economy. 2 - Lower tax rates reduce the amount of tax avoidance and evasion. Which is not to say that tax cut's pay for themselves. They typically don't over the short to medium run, and tax policy doesn't stay stable over the long run. But they partially pay for themselves. They reduce revenue less than static projections would suggest.