Thank you President Bush for the large tax cuts. Thank you for funding the Iraqi War and the Global War on Terrorism with adding to the national debt. You have told the American public that you wont raise taxes for the current generation of tax payers, but allow America's future/children to pay for it. In other words, taxes will eventually go up because that is the only way to pay for the national debt, you put party before country & for that reason, you did not fullfill your duties as president
if a "plumber" gets this right (are you really one? ;)), why isnt the rest of america waking up? looking forward to when they are. if not, expect a civil war in the us soon.
Lovely video... wonder why it doesn't address out of control government spending... Why are cuts in government spend ever a viable option to resolve deficit/debt?
@WKYanks -- Because it isn't actually out of control. If you look at deficit projections, the large deficits start to disappear in 3-5 years, since they were caused mostly by the wars, the Bush Tax Cuts, and the recession. That leaves the accumulated debt, which can be slowly paid off. This is followed by a long period in which gov't spending starts rising very slowly again, due entirely to the projected costs of medicine. The only real problem we have is medical costs, private and public.
@leearnold ... don't agree with that at all. Defense should be cut back, pork projects should be eliminated, and the government needs to learn to save for a rainy day. We pay 2.5 trillion every year. They need to learn how to balance a checkbook. You guys act like the money is the governments... it's not.
@WKYanks -- CBO long-term budget outlook ASSUMES defense will be cut back. Pork is wrong, but it does NOT account for a significant fraction of the debt. What we pay every year is cycled right back into the economy. Eliminate the Bush Tax Cuts, control the price spiral in private medicine (which determines the price of Medicare), and the economy will do just fine (after the recession is over, which requires a different, short-term set of policy responses).
RepBullCrapiCons do not seem to know basic math.. The Bush Tax Cuts added $4 Trillion to the defecit and added only 1.1 Million jobs that means each job cost the U.S. Tax payers $3.636 Million EACH
I delete comments which use foul language, even if I agree with them.
It ought to be noted that EXTENDING the Bush tax cuts for a few more years was a good idea, as a part of short-term fiscal policy to help fight the recession. I think that's why Obama accepted the extension.
In the long-term, though, the Bush tax cuts must end.
@jjtheslayer69 -- Anyone can disagree with me, as you may read elsewhere in this thread. But I delete foul language, false or misleading information, and anybody who keeps making mistakes because they won't learn the subject matter. Here, you are my guest, so behave. If you want freedom of speech, there are six billion other web pages.
@leearnold i sent you a message to explain alot of what i wanted to say, but on your specific point about bringing in more revenue and that spending goes back into the economy, the main point of people who want less government is that the government doesn't allocate resources effectively. it's just a fact that the government will never allocate resources as efficiently as a free market with millions of consumers making independent decisions in their own best interest. employees of the govt
@Welsh77 -- No, for some kinds of things, government allocates resources much more effectively than the free market. There is no blanket rule. Market is better for capital and consumer goods. Government is better for basic R&D, safety-net, much of environmental protection, etc. There are specific reasons why this is so, and they have been understood for a very long time, despite lots of political propaganda to the contrary. Please study an economic textbook before going any further.
this came out in 06, but the treasury directly contradicted alot of these "facts" in their 2007 income mobility report which showed that since 1985 income mobililty has been increasing at a rapid rate, with more movement among the quintiles than ever before. this looks like a formal video but its making statements that simply aren't true.
@Welsh77 -- Read Treasury 2007 report: it says "degree of mobility" was UNCHANGED. Pew 2007 found mobility closely tied to the previous generation of your family. Boston Fed 2009 found that mobility DECREASED. These are all over different study periods. I used the best information available in 2006. Do all your homework, or your further comments will be deleted. (Income "mobility" is different than "distribution" which is surely more unequal, and median income growth, which stagnated.)
@mr59strat revenues probably looked the same because you looked at taxes as a % of gdp which never varies outside of 15-21%. this is the most overused tax statistic and isn't as important as it is made to seem, if tax revenue as a % of gdp kept growing eventualy it would be too high. tax revenues at 90% of gdp would be a disaster because the government would be deciding what to do with 90% of everything we make. check out rates of real tax revenue change and youll get a different picture
The 35% rate and 15% cap gains went into effect May 28, 2003. From bureau of labor statistics non farm payroll .....May 2003 had 130,067,000 jobs and 6.1% unemployment. Four years later May 2007 had 137,831,000 jobs and 4.5% unemployment. Total of 7,764,000 jobs added four years to the month the rates went into effect.
Excessive SPENDING is what is causing our deficits. Bush and Obama spent too much. Tax rates don't mean anything if we always spend more than we take in.
@leearnold We tend to ebb and flow in and out of recessions in cycles. I was commenting to the theory some have as the Bush tax cuts caused the current recession which it did not. The real estate mess and the mortgage backed securities, exotic derivitives, crazy underwriting, Fannie/Freddie mess etc.
Tax policies can have an effect as cap gains revenue more than doubled 3 years after the rate went from 20 to 15. Forecast had been to decline but used static numbers not accounting behavior.
@Mr59strat -- Actually it is easy to make the argument that the Bush tax cuts caused the current recession specifically, and in two different ways: (1) the tax cut was not spent on greatly increased business investment, it was spent on the real estate and mortgage securities, blessed by Greenspan's hope to increase consumption by the resulting "wealth effects"; and (2) the tax cuts caused a ten-year deficit which hampers fiscal policy to increase demand.
@Mr59strat -- Different economic story and different tax policy, including tax hikes. Again, tax policy may have had little to do with it, though you could argue that the capital gains tax cuts led more quickly to the dotcom bubble and the stock bubble. Clinton ended his presidency looking at balanced budgets.
@leearnold ACES (govt capex source) ,employers non farm capital expenditures, including structures and equipment, went from 975Billion when the 35%/15% rates went into effect to 1.36Trillion in the following 4 years. Thats an increase of 72% in 4 years so that makes assumption #1 invalid as that is strong business investment. I doubt many people in business knew what a MBS was. That's mostly a game for the big boys.
As to #2 revenue went from 1.78 Trillion to 2.56 Trillion. 69.5% increase
@Mr59strat -- Absolute % increases in one variable are almost meaningless, since everything usually grows anyhow. But if you look at the RATE of private investment, such as the ratio of private investment to total GDP, you will see that investment peaked in 2000 and then took a nosedive back to standard levels (around 8% of GDP), before dropping further. By 2006-2007, CBO studies showed that the supply-side effects of the Bush tax cuts had disappeared.
Hard to tell how taxes effect the economy after 2007 when you have major events like all the mortgage defaults started snowballing and triggering the derivitive (insurance) payouts and made one heck of a mess. Still going on.
Curious what you think about the hauser curve, revenue stays mostly the same regardless of rate. I saw a 60 year chart of tax rates and revenue. Rates looked like a roller coaster, the revenue line was almost a straight line
@Mr59strat -- Sorry I meant private BUSINESS investment. Gross investment is larger because it includes RESIDENTIAL investment, which was part of the housing bubble.
I think the relative size of gov't doesn't matter as much as the REASONS. The reasons can change. Now there is a demographic bulge at the same time as medical innovation is increasing the costs. We should just increase revenue to pay for it. Gov't spending is a component of GDP -- it goes right back into the economy anyway.
Paul O'Neil, Secretary of Treasury for the Bush Administration said tax cut + invasion of Iraq is a no go. What happen next? He was fired from the Bush Administration. TAX CUT + MILITARY OPERATIONS (Iraq & War on Terror) = NATIONAL DEFICIT. Get that straight Republicans. Bush always put Politics before the Economy. Atleast Reagan was smart to raise taxes after he realize the national deficit was a problem. Same with H.W Bush, whcih caused his reelection. W Bush lost his mind.
I'm sorry, but the Inquisition has found you guilty of heresy. The Pre-Copernican Church of Economics 101 has decreed for all time that tax cuts increase revenue. Historical and scientific observations are irrelevant; a nuanced position an affront, and if you don't recant, you may be put to the test. Confess! Lay down the heavy burden of cognition. Hide thy math and thy telescope!
@leearnold Well isn't that what Japan has been doing? Look at Japans stimulus during the early 2000's gdp per capita grew .2%. Also we are creating inflation because the money that the banks got was not from bank accounts it was from the fed so that meant it was new money they are loaning not previously existing money.
@dukee155 -- No, Adam Posen's definitive book, Japan's Financial Crisis, shows by Japanese gov't data that Japan delivered much less stimulus than they announced.
A better example is Britain, right now: withdraw stimulus and make the economy worse.
Economists from Adam Smith to MIlton Friedman have known that if new money matches the rate of growth of real goods and services, there is no inflationary pressure from that source. For a fuller discussion, see "Monetary economics" in Wikipedia.
@dukee155 -- No, the U.S. and SE Asia will BOTH see benefits from trade -- see the videos on "comparative advantage" -- but there is no doubt that a first effect is to displace labor in the U.S., and people may not find other work. Free trade only benefits everybody if the losers in each country are compensated. (Douglas A. Irwin, Against the Tide, chapter 12). New jobs in the labor market are presumed (perhaps falsely) to take care of this.
@dukee155 -- "Trade deficit" just means that imports exceed exports. It can go on for many years, if you have the most dynamic economy. Currently only 12% of the U.S. GDP is in export industries. If the U.S. expands its export sector to trade with richer consumers internationally, then (1) there will be more jobs, and (2) the trade deficit will start shifting in the other direction. It isn't bad like a debt, it is just accounting. Please learn basic economics before going on any further.
@dukee155 -- Well your questions are very advanced, so you may really like it. I am doing a series of shorts on econ., but I may not be able to make them fast enough! For you, the first thing to do is crack an economics text to learn all the definitions, because even some simple words (like "investment") are used in a certain special way by economists. AP teachers favor the textbooks by McConnell-Brue-Flynn, Mankiw, Krugman-Wells, McDougall-Littell, Colander, and many others.
@leearnold you are correct, wars, tax cuts (presumably, despite we still today collect 19% of GDP in taxation and the only time we didn't was in 2001 when we collected 21%), and a depressed economy harm increases in spending. However, when entitlements account for $2.2 trillion inspending, does that give you worry? Does an advisory panel make costs so low that doctors don't take Medicare? You seem to think that when taxes go up revenue goes up, but that never happens. Just look at IRS data
@Beckett125 -- The dollar amount of entitlement spending shouldn't worry anyone -- the money doesn't disappear; it gets cycled right back into the economy. The question is about the size of gov't compared to GDP, but even that is unclear. What we have right now appears to be sustainable, until medical costs start to accelerate in a few decades. If we consider medicine to be a growth sector, maybe it will still be a good thing.
@leearnold If the theoretical analysis that higher taxes raise revenue is true, then when the tax rate was 68% in the 1970s we would have had a higher collection rate than 18%. Increasing payroll is fine, but again it seems to be the most direct tax that affects employment. In 1968 we cut payroll and employment increased (along with an expansionary policy by Fed). It would appear that a VAT tax is necessary to continue spending at these historic levels.
@leearnold Not true. In 1975 a Chicago School economist won the Nobel prize for showing that progressive taxation over a long period of time ultimately hampers growth
@leearnold but again you must consider the multiplier. Even Keynesian economists admit that the government multiplier is less than 1. Once you get to around 150% of GDP in aggregate debt, along with economic slowdowns related to dependents outweighing workers, the picture is absolutely unsustainable.
@Beckett125 -- Study the subject first. Google "CBO Long-Term Budget Outlook". Read it.
"Multipliers" are about the efficiency of SHORT-term countercyclical spending. LONG-term debt is a different set of issues. There is no certain percentage such as 150% of GDP. Still, that wouldn't happen for a little while longer, and at that time the entire problem will be medical costs, private + public.
The only thing that will work are piecemeal steps in cost-reductions, e.g. Obamacare.
the top earners in america are all business owners people want to be business owners but they cannot because running a business in America is very expensive because of all the taxes and regulations included in starting a business so people dont want to. This is why we should de regulate and lower taxes to allow more businesses to come up.
@dukee155 -- No, this appears to be Chamber of Commerce propaganda -- business start-ups have decreased for decades (not including self-employment), and taxes and regulation haven't had much to do with it. It is much more complicated. The current cause is the reduction of supply-side credit and reduction of consumer demand, caused by the recession. Please Google "ESA: Business Startups: Why Entrepreneurs Didn't Start Up in 2009 and Why That's Likely to Change" and read it very carefully.
@leearnold The fact that the banks are not lending is a good thing because that means that they are not giving out all this money that the fed recently created and this is keeping hyper inflation from happening.
@dukee155 -- No, investment cannot lead to inflation if it leads to the production of real goods and services. But this recovery (such as it is) doesn't need business investment for as long as "capacity utilization" remains low, because that means there is idle private physical capital which can be utilized, before private investment becomes necessary again. Instead, we need to stimulate consumer demand by something that is worthwhile, such as gov't spending on infrastructure and green energy.
how can any economist vote for a republican after they have come out for the past decade saying "lowering taxes increases revenue" errr... these people make me so mad, because people will believe them if they don't research into it...
Wealth distribution stats must be corrected for increasing life span, which naturally favors people who living unprecended lengths of time and naturally enjoy disproportionate wealth compared to the increase in the very young and recent immigrants. Debt is taxed less then equity ownership, Correcting this would require allowing corporations to deduct dividends from thier income or alternatively the elimination of interest deductions.
The notion of job creation through tax cuts for bank-robbing billionaire crooks is the biggest lie in history next to WMDs in Iraq. What jobs? Economic growth is just barely budging. They ruined the economy and shipped all of our good jobs overseas and got rewarded. And we're left with Wal*Mart and McDonalds! Those are the jobs being created! We don't create much of anything in the US except for trouble for the rest of the world. That's why we're a laughing stock when we're not being reviled.
Lee, do you believe it would be a wiser move for this country to, at this time, either return to the Clinton-era tax rates or roll even further back to the pre-Reagan tax rates?
@VoiceHunter -- It looks like Clinton tax rates would basically erase any fears about the deficits for the bond markets. The deficits would continue for about 5 more years and then the budgets would be almost balanced (though we will still owe accumulated interest). Then, if we continue to take various steps to reduce medical cost explosion (some are in PPACA), that solves all problems. That's why one of the political parties won't allow minor tax hikes: it removes their "fear of debt" issue.
@leearnold Demos (a think tank) concurs with your proposition. However, do you honestly think that increasing taxes in a recession will stimulate growth, or increase revenue? And in arithmetic, perhaps the tax increases will calm the bond markets, but if you allow the nation to fall into depression mathematics (like Greece and its outrageous tax hikes to please the bond vigilantes) the bond markets will recognize that those tax hikes will kill growth and they'll sell.
Its amazing that this guy has proven that all our problems come from tax cuts, despite the fact that the bottom 40% pay absolutely no taxes, and they in fact receive money from the government to the tune of about 10 billion a year. Why not look at like this, maybe people are getting poorer because they're choosing to be poorer. If you don't get taxed for being poor, and then you get taxed for growing your income, do you really want to increase your wealth? No income tax period.
@Beckett125 -- No, the bottom 40% pay payroll taxes. In fact they paid excess payroll taxes, to guarantee Social Security. Then that $2 trillion "trust fund" disappeared into the income tax cuts that mostly benefitted the upper 20%.
Considering all taxes together, fed, state & local, tax rates are nearly flat. The upper 20% pay a little less rate than either of the next 2 quintiles.
No one chooses to be poorer.
I delete false or misleading comments. Yours will be deleted shortly.
The "rich" employers have to pay half that AND pay for their own ENTIRE self employment tax on top of all other taxes, all of which are taxed at much higher rates and on larger amounts of money than those in the lower brackets.
Fairness aside, raising taxes on people above 250k to 100% wouldn't come close to balancing the budget even if this didn't discourage good work ethic and they still all made the same salaries, gains, and dividends.
@TheMetalPerson -- The half of payroll tax paid that is paid by employers has ALWAYS been considered as a part of labor compensation.
Ending the Bush tax cuts, after the recession, will reduce deficits enough to make it a non-issue, until medical spending starts its burden in 20-30 years. This whole fight is about the difference between a 34% and 39% top marginal rate. That is how ridiculous it is.
There is NO evidence that slightly higher tax rates discourage work at the high end.
@leearnold Indeed. There was an excellent article by William Saletan (I think) in Slate recently showing how the GOP "lowering taxes raises revenue" screed is nothing more than a fairy tale. Lowering top earners' rates has a few times in history increased revenue in a few select brackets but overall tax receipts decrease significantly. Each time that policy has been enacted the federal deficit soars.
@TheMetalPerson "employers have to pay half that AND pay for their own ENTIRE self employment tax on top of all other taxes, all of which are taxed at much higher rates..."
Wrong. One-half of all payroll or self-employment taxes are self-deductible. Furthermore, most "rich" employers aren't self-employed, they are employees of the company which they own. At that point they are paying lower payroll taxes than the truly self-employed.
@leearnold It was on NPR some time in december, but the CBO said that regardless of whether or not that part was in the bill the net deficits would still be reduced. I think it was either on December 13 or December 10 of 2010.
@TaffyAlpha -- One judge ruled against the mandate and two have ruled in favor of it. The individual mandate is not removed, and the issue is likely to be headed to the Supreme Court. At the present time I am doing a series on textbook economics. I hope to get back to current policy issues later this year.
@TaffyAlpha In my opinion it's dumb. It's a step in the right direction, but what really needs to be done is the buy out of many private hospitals by the gov't. Check the differences in healthcare costs between the US and countries with socialised health care. If the costs of healthcare can be reduced, so can the cost of medicare/medicaid. Also, the US needs a tax-scale that is way more progressive, as well as more auditing of corporations.
@1rendezvous -- It doesn't affect Social Security much at all although it may become a political argument for reducing benefits. We'll have to see how it all works out, but we can already say with certainty that (1) this isn't permanent, (2) nothing is ever permanent, (3) when the economy comes back, the deficits will shrink in relative size, and become far less urgent.
The people of the u.s.a seem very conservative. i dont think the people are open for change to even happen. I wouldnt be surprised if the shifty bush tax cuts became permanent, because it seems like few people are voting against them, unfortunately. Obama had the plan but fox gets more ratings.
credit contraction is credit contraction I don't know if you were alive in the late 70s early 80s but getting a mortgage was near impossible and I am sure business loans were the same. High interest cause credit contraction
the panic we had cause a credit contraction though the lack of liquidity of some paper investments.
@brewmaster95060 -- "Credit contraction is credit contraction"? No, credit contraction is a symptom of different things. In the late 70's? High inflation. In the late 2000's? Bad loans on bank balance sheets.
So in the early 80's the Fed killed inflation, then lowered real interest rates to improve credit availability while Reagan pumped the economy with massive deficits. This time, the Fed CAN'T lower interest rates--they are ALREADY near zero. And the deficit spending wasn't big enough.
@brewmaster95060 -- Very different conditions. Reagan had a different kind of recession. It was purposefully caused by high interest rates engineered by Paul Volker's Fed, in order to end the inflation. That recession began to turn around after inflation slowed and interest rates were lowered. The current recession was triggered by a financial credit crisis, like the Great Depression, and interest rates went down to nearly zero DURING the recession, with little growth.
Why do we assume that raising taxes on the "rich" will not affect their quality of life? The upper middle class, those intellectuals and truly hard workers who may earn slightly above $250,000 (let's say $300,000) are always getting shafted and ignored. We already pay the highest tax bracket, same as billionaires who earn tens of thousands of times our income, whilst working longer, more challenging, and more skilled hours than your average Joe. Why do you lump us all together, besmirch our nam
This is misleading in so many way's. I will point out just a few. the top several Percentile who make hundreds of thousands to millions of dollars a year are More likely than not small to large business owners. In times of economic expansion, say for example the supposed economic expansion under the Clinton administration, These business owners are most definitely take the opportunity to expand their businesses further increasing their own income in the process as well as creating jobs.
@leearnold Let me be more specific, and forgive me if I'm misreading your explanation here, but from what I gather it seems that you credit the Bush tax cuts as the leading contributing factor to the off set of wealth between the poor (or at least the lower Percentile) and the rich. The Point I am trying to bring out is You haven't taken into account that during times of economic expansion wealthy business owners at least try to expand their businesses effectively increasing their wealth more.
@thebluemaggot -- Yes you are misreading. Bush's tax cuts did not greatly widen the gap between rich and poor. It was already huge! But the tax cuts ALSO did not create enough growth to start to close the gap -- yet economic growth is supposed to close it. (If this is not so, then we are going to need a new system of reality.) Indeed the gap got bigger. So whatever the wealthy business owners are supposed to do, they didn't do it very well.
@leearnold Why shouldnt there be a spread in wealth? People are different...not the same.
By the way (in your zeal and fantasy to pull down successful others) you forget you're voting for the gov(stupid politicians) to be wealthy and steal money from privates citizens,waste money in fraud and continue the downward socialist spiral of the US(public schools,public welfare,and public medicine)
@lillatmd -- Everything you say could be flipped upside down, too. The differences among people are not as great as the differences in wealth. (Adam Smith thought everybody was pretty much the same.) The private sector is rife with fraud -- look at the financial crisis. The private economy has been in a downward spiral of jobs. Basically we have corporate socialism. Etc. etc.
This animation is not against success. I delete comments which misrepresent the ideas or intentions of anyone.
@leearnold (continued) Now going to the lower Percentile, typically they have no businesses or assets to expand upon during times of economic expansion so of course their wealth isn't going to grow by any considerable factor because they have no wealth making assets to expand upon. If I may make a suggestion you should try analyzing the growth of wealth in the Top Percentile during the "period of economic expansion" under the Clinton administration Before the Bush tax cut's.
@thebluemaggot -- Give the lower percentiles jobs with wages equal to the growth in productivity (= output/manhour) They will have higher living standards and more credit to start their own businesses.
NO class of people has more creativity than another class. (Clearly we omit people who are hurt and suffering.)
Long-term economic growth is from education and technological development, not from WallSt/WashDC creating deficits to give the rich more money, claim Social Security is broke, etc.
@leearnold education is failing...yet you continue to pretend that we're going to get longterm growth by wasting money on creating college dropouts on a massive scale. Lets look at the FAILURES of our socialist programs(we are 23rd in education! )
@lillatmd -- The upper 22 are even more "socialist". Long-term growth only comes from a few things. Improving education is not the same thing as "creating college dropouts on a massive scale." Not all government programs are failures, nor are all private businesspeople greedy crooks. Why is everything an absolute, with you?
@Beckett125 -- No, the actuary said that according to the middle-cost scenario, the prepaid credit account (Trust Fund) will be exhausted in 2042, given today's economic conditions. After that time, Social Security will pay out at about 73% of scheduled benefits. To avert this "crisis" in 30 years, at this moment we need only increase payroll taxes about one dollar a week. Please find something else to worry about.
It's a sick world, but I'm not just going to dwell around where I am financially and hope for the government to help. I am thankful that I live in a capitalist nation where economic prosperity is possible, however politicians try time and time again to impede this system. There is lots of inequality, however the government cannot be trusted to solve this. Any tax break is good in my opinion. Less money going to the government, and as a result they are forced to cut their frivolous spending.
@TTUsucks88 -- No one should be waiting for the gov't to help. Gov't can never solve inequality, it can only help alleviate the worst effects of it. It might help if you tell us which gov't spending is frivolous and should be cut.
@TTUsucks88 Why not make the Bush/Obama middle-class tax cuts permanent and make the Bush tax cuts for over 250,000 dollar income extended only for two more years. Now you have stopped the possibility that the Republican party will hold the middle-class tax cuts hostage ever again. Why is this not obvious to our Congressmen and Senators?? to Obama?
The Republican's manta is: Cut the deficit! But when it comes to asking that the ultra rich to pay 3% more in taxes which would help pay on the deficit at the tune of 7 to 9 billion a year, they say, oh hell no! Their argument is that by doing that, big corporations won't be able to hire. Really? Well during the bush administration the corp's tax rate was 36% and look how many jobs were created. The unemployment rate is at a record high, so that experiment didn't work. Unbelievable!
@phillipmarch22 what's 7 billion when you have a President running defecits of a trillion plus a yr?..keep the money where it belongs..in the hands of those that earned it.and under the Bush tax cuts unemployment went down.an unargueable fact.under the Obama stimulus that was to keep the rate under 8% we sit at almost 10%.The US has the highest corporate tax rates of the G7 countries.And besides,corporations don't really pay taxes.they just pass the added cost to the consumer.
@chrycohauler -- This is all very misleading. It is also true that, after the Bush Tax Cuts, incomes shrank for two years (unprecedented), wages stagnated, growth was pitiful, and the deficits started to skyrocket. (Obama is continuing Bush's trend on spending, trying to fight this recession).
So, write no more of these over-simplified "cause & effect" scenarios, here. It is really partisan cheerleading. Please study an economics textbook, or your further comments will be deleted.
@leearnold Why not make the Bush/Obama middle-class tax cuts permanent and make the Bush tax cuts for over 250,000 dollar income extended only for two more years. Now you have stopped the possibility that the Republican party will hold the middle-class tax cuts hostage ever again. Why is this not obvious to our Congressmen and Senators?? to Obama?
Fact: Bush tax cuts have been in place nearly a decade so where r the jobs? why is unemployment #s so high! Republicans=JobKillers! Economic growth you talk about is in China! Republicans=JobCreatorsforCommies! CASE CLOSED!
@chrycohauler -- The Bush Tax Cuts didn't cause it. After RAISING taxes, the Clinton boom was over twice as long, with higher growth rates.
The truth is: at the U.S.'s relatively low levels of taxation (compared to other countries), changes in taxes don't have as much effect on growth as other more basic factors.
Although, it has begun to look like more wealth concentration itself has a negative effect on growth -- because the extra gambling in financial assets doesn't create real production.
@leearnold you cannot be serious..raisng taxes doesn't expand an economy it shrinks it by reducing disposable income a fact that cannot be reasonaly and truthfully agrued
@chrycohauler -- GDP = C+G+I+(X-M) = Consumption + Gov't spending + Investment + (Exports minus Imports). Tax hikes go immediately into Gov't spending, so there is NO change in GDP.
Taxes shouldn't be raised at this moment, because of the recession. They are actually a form of deficit spending.
The argument as to whether tax hikes reduce long-term potential growth, and whether this is WORSE than damage by high budget deficits "crowding out" private investment spending, is another subject.
@patriotJW -- Kennedy's new tax rates were also much higher than now. There is an informed discussion of the Kennedy, Reagan, and Bush tax cuts, with income, revenue, and spending graphs, at: econdatausDOTcom/taxcutsDOThtml [replace the DOTs with "."]
Govt. has so distorted the concept of natural consequences that people believe that NOT spending in a time of economic crisis would be a disaster. Those that believe this either have lost sight of fundamental human behavior and logic, or believe that a manmade construct (like govt.) is better than natural consequences. No argument — on deregulation, wealth creation, Bush tax cuts, economic growth, — is worth arguing while this fundamental distortion exists and people agree with it.
@patriotJW --The world is getting so complicated that individuals CAN'T KNOW everything necessary to avoid harm: Which industrial products are toxic; which financial institutions are hiding insolvency? These and thousands of other questions are MULTIPLYING, not disappearing. People naturally have formed committees since the dawn of man. The "natural consequence" of a complicating world is MORE gov't, not less. Of course this has dangers. But making a bad recession worse is not the answer.
@leearnold You didn't pay attention to any other of my comments. Again you didn't account for the fact that England has a much higher and more stringent progressive tax, they have higher income equailty than the United States, and they only take in 29% in receipts from the top 1% vs the United States (41%). I have no doubt that raising payroll will avert that "crisis", but your condescension does not account for lack of revenue, or revenue that must be taken from the SS fund
@Beckett125 -- Cross-country comparisons have to take into account dozens of other variables.
You have to look at what the CAUSES of unsustainable U.S. deficits are -- not deficits, but UNSUSTAINABLE deficits. In the SHORT term: (1) Bush tax cuts + (2) war + (3) reduced revenue due to the recession. In the LONG term (i.e. after about 10 years) those causes disappear (presumably) and the ONLY problem we have is skyrocketing medical costs: private and therefore also public, i.e. Medicare.
Businesses invest in new ideas even (and sometimes especially) in unusual economic times. Cottage industries often spring up during these times. Reducing govt. will NEVER be a bad thing since its overreach is out of control! Govt. created this recession through legislation facilitating homebuying to minority groups in the '70s. It snowballed into this mess. We do not need spending for the sake of spending. We do not need the govt. manipulating our economy.
@patriotJW -- Gov't also created this recession by deregulating capital requirements on leverage.
Right now, reducing gov't spending would be a disaster.
Wealth is created by anyone with an idea for business. The rich don't have any special dispensation for "job creation". In fact they got the biggest tax cuts in the history of the world -- the Bush Tax Cuts -- and economic growth WASN'T ANY BETTER than it might have been otherwise.
Long-term growth is based on education and infrastructure.
@leearnold did you ever stop to think that the "rich" pay more in taxes?Long term growth is based on consumer spending.And for the record..the Bush Tax Cuts worked.After 9/11 unemployment went up slightly and then went to a low of 4.5%.One grows weary of this pissing and moaning about the rich.Kepp using confiscatory tax rates on them and they will take their money elsewhere like they did when Bush the Elder introduced that idiotic luxury tax.They shopped shopped elsewhere.and I don't blame them
@chrycohauler -- The rich don't pay more in taxes. They pay more in income taxes. Taking all taxes together, the tax rate is nearly FLAT for everybody, down to around $20,000 a year.
Long-term growth is not based on consumer spending. it is based on education and technological improvement.
To economists, the Bush Tax Cuts were dismal as both short-term stimulus and long-term growth. Unemployment ALWAYS drops after a recession is over -- tax cuts don't necessarily get the credit.
The wealthy typically have businesses, invest in business and otherwise engage in activity that stimulate the economy significantly more than a low- or middle-income person would. Higher taxes would curtail their activity. Their contribution to fixing the recession is important. The best way to solve the recession is tax cuts for EVERYBODY, elimination or reduction in govt. programs, and fixing trade and business laws to be pro-small business and productivity.
@patriotJW -- (1) Further along in the business cycle, tax cuts for the wealthy may help. But in a recession, "capacity utilization" is lower (i.e., existing business capacity is under-used). So, businesses DON'T invest big-time ("investment" = "real capacity expansion"), because it won't pay-off until there is more consumer spending.
(2) Reduction of gov't programs = less market demand (i.e., gov't spending is a part of GDP). Reducing gov't spending is a VERY bad thing to do in a recession.
You said in your video that rich people don't spend the money that they save from the tax cuts, they save it. My point was that that statement was wrong. Do you agree?
@patriotJW -- My point at that time in the video is about the best recession-fighting policy. The following is the narration, nearly in full, continued over the space limitation of these comments, and numbered to keep the sequence clear:
[1] "Tax cuts for the wealthy may help long-term growth -- just may -- but it will not cure a recession. Why? Because a recession reduces labor, creating unemployed, reducing income, reducing spending, reducing output below capacity.
[2] The best way to solve that is tax cuts for the poor and middle class to buy things, not the rich. Then there's more sales, then rehiring, and then, when capacity gets up near full use, businesses will invest in expansion. "Fat city" for everybody!
But that's not what happened. President Bush gave the wrong tax cuts, as honest economists said at the time. Most of his tax cuts went to the richest, but they don't do as much consumer spending. They mostly just save it.
@leearnold how does one give tax breaks to the poor ? I thought the evil rich tax breaks were on the backs of the poor?nearly 40% of americans pay no tax at all..is that fair?.one gets increasingly tired of this class warfare and envy.no one ever got a job from a poor person
@chrycohauler -- A poor person might need help starting a business. That's where it begins.
40% of the people pay little INCOME tax. BUT there are many other taxes: all together, taxes are nearly flat, down to the top of the bottom quintile. Actually the Bush Tax Cuts shifted the burden of total taxes downward.
You give tax breaks to the poor at the fed level on gasoline taxes, etc. Current tax deal may lower payroll taxes, for another example. Puts more money in poor pockets.
@leearnold and if they are poor where do they get the capital to start a business?..if they are poor How do they afford the car to get your tax cut on gasoline? And who is the gov't to give money away like they earned it?The gov't never has and never will create wealth..they just steal it and redistribute it in the name of compassion
@chrycohauler -- Normally, you start a business by borrowing the money from a bank. There are very inexpensive used cars available. Governance is an integral part of wealth production, through institutional and legal stability, infrastructure investment, counter-recession policies, and even R&D (which is where the internet started). Please study an economics textbook.
[3] There was some new investment for productivity growth, but that doesn't hire many more people, and it would have happened later anyway.
So incomes shrank for two years -- the first time since the Depression. Wages went into the toilet. Unemployment was stagnant for three years. To get by, people borrowed money -- three dollars for every dollar of output. Household debt is still at an historic high... This was the consumption pump, not real growth. [end]
Now, I also think it is evident that wealth concentration at the top can begin to inhibit long-term economic growth. But the section you have quoted is about the Bush Tax Cuts as short-term countercyclical policy -- and they were a big mistake.
"[the richest] don't do as much consumer spending; they mostly just save it." Who do you think buy second homes, luxury boats, private jets? Provide seed money for start-ups? Create endowments and scholarships? Rich people save more, spend more, investment more and pay more taxes because they HAVE more. A consumption tax (FairTax) would would leverage high-earner spending, while rebating taxes to the poverty level so the poor would not be taxed. It is so fair, that redistributionists hate it.
@patriotJW -- To get out of a recession, luxury items do NOT provide enough consumer demand, and investment spending doesn't do it, because there is no need for real capital expansion when consumer demand is low and factories are idle.
Rich people pay more taxes than others -- but they are paying LESS, as percentage of income, than they used to. Yet this has not led to any more economic growth than usual.
@EpicGifted -- Anyone may disagree, as you can learn from reading other comments. But here, I have almost no tolerance for people who are not studying the subject matter. Here, there is no free speech -- you are MY guest. So behave. Misinformation, propaganda, willful misinterpretation, repetition, cheerleading, name-calling, obscenities -- it ALL gets deleted. Your comment will be deleted shortly.
Hey great video ...after the decision Barack Obama made this week to extend the Bush tax cuts for the wealthiest Americans, though not an avid YouTube vlogger, I knew I had to make a video outlining what that really means especially considering this countries previous tax policies and its effect on growth and disproportionate distribution of wealth BUT when I saw this I think there is no need. I wouldn't have been able to do it justice the way you have and you made this 4 years ago! Well done!
Your presentation is well done and presented clearly. Of course, it’s one model and not the end all, many could argue your points. While I don’t disagree with you on most items, you make the assumption that only the rich can save money, buy stocks or bonds, or make wise investments. I am a strong believer that taking from the more fortunate and distributing to the less is a bad model and eventually fails, as shown in socialist countries where this model is followed.
@Blackkight350FPS -- I do NOT argue that only the rich can save money, etc. In the business cycle, however, it is well-established that they are not the ones who pull the economy out of a "demand" recession. Which is where we are now, in Dec. 2010.
On your other point, government safety nets and countercyclical policy do NOT cause socialism. This has never happened.
There are more government handouts and programs designed to keep the poor dependent on the government than ever in US history…yet our poverty level continues to increase. I was fortunate to have two loving parents who taught me morals and values and that if I worked hard and was honest, Id succeed in life. I did and I am. I always saved a bit of my paycheck and invested in savings and IRAs, cut back on my expenses and controlled my spending vs. income ratio.
@leearnold I agree with you on the “wall street” bailouts, although let’s face it, they were bank bailouts. Banks they gave loans to individuals that could not afford to pay them back. They should have been allowed to fail and the people that toke the loans as well. Correcting bad behavior with a reward is just asinine.
@Blackkight350FPS -- The banks are also the system of our money accounting. The loan problem was so big, that all banks would have failed. This would have frozen the entire system of bank accounts and credit: No paychecks, no mortgage and car payments, no Wall Street. EVERYBODY would be thrown out on the street. Right now we'd STILL all be in bankruptcy court, sorting it out.
Is there another way to solve the next crisis (which is sure to come), except tougher regulation on finance?
@Blackkight350FPS I don't mean to get harsh here, but only a fool believes that programs are 'designed' to keep poor people dependent. That'd be quite an insult to all those good churches that started charity hospitals and homeless shelters. If you think their 'design' was to keep people dependent, u should have a talk with the good Lord.
Sure, some take advantage of the system, but it's nothing compared to the corporate welfare in this country.
@demmmmm1 When I refer to “programs”, I’m referring to government sponsored programs, not charities. Many govt. sponsored programs penalize individuals for working or reward them for having more children than they can afford.
I worked hard for what I have, and regardless of how much wealth I have or do not have, you’re not entitled to it. If this nation were to focus on teaching people the value of hard work and discipline, rather than a give me, give me attitude, we would be a much better society.
@Blackkight350FPS -- We all work pretty hard! I'm not sure where you are hearing this "give me" attitude. Is it from Wall Street bankers? From people who can't afford health care? From people losing their jobs by corps getting tax breaks to go overseas? The idea that everybody is a bum except you is a little too easy, isn't it? Perhaps it might be more helpful to consider a specific problem, and propose a solution could that work.
@leearnold I disagree with your statement "we all work pretty hard" because it is simply not true. I hear the give me give me attitude every time I turn on the tv or read a newspaper. I never said everyone except me is a bum, did I? My specific problem is people expecting others to pay their way when they have done nothing constructive to help themselves. My solution: Don't force me to give away my wealth, instead offer govt. donation programs and I would be happy to contribute.
@Blackkight350FPS well there you have it ...I guess you've told us ...you forget one minor detail though ...you statement may be all well and good but lets see if you or your children or your children's children still have a country to speak of. My god we are asking for responsible tax policies based on sound economic models like those hinted to in the video above ...this whole Me & my money vs everyone else may satisfy you in the short term but will be devastating for you children's children!
@slimdeala4life I too am asking for sound tax policies and for my children to have a country to speak of. My opinion is that current policy of taking from the more fortunate and distributing to the less with no consideration to a persons work ethic is a model that will fail. I belive we should all pay the same basic tax rates up to a certain salary level, and then perhaps increase that rate over said salary. I have zero tolerance for people that expect everything and give nothing.
"If this nation were to focus on teaching people the value of hard work and discipline, rather than a give me, give me attitude, we would be a much better society."
Then how are the hard working Japanese working so hard that they reduce the number of people required for the same tasks, not only because of their robots, but also because of their work ethic? They have no trade deficit, yet they still have massive unemployment and lots of deadbeat dads. So explain that....
@kmarinas86 -- After three years of comments, a commenter finally hits upon the apparent problem:
The increasing time-rate of innovation in our advanced industrial economy, PLUS the huge spurt in worldwide trade in advanced products (i.e., "globalization"), appear to cause more people to fall lower, in the size-distribution of income.
For how long? The spread between rich and poor has been growing for over 30 years.
What to do about it? More education, and provide the safety-net?
"What to do about it? More education, and provide the safety-net?"
Education is treated with higher priority in Asia. But does it increase equality? No, it increases opportunity. Does it increase living standards? Yes! When those living standards are higher, do manufacturers move operations to a place where they are lower? Some do. If Chinese surpass the income of Mexicans, do some jobs move back to Mexico? This is now happening despite China making its currency artificially cheap.
@kmarinas86 -- Increasing education might also prepare the mind for creativity, and give people new ideas for making new things. So the phrase "increases opportunity" should go beyond the simple jockeying for available jobs, to really adding your own growth. But I agree, it does not look like it will solve the whole problem.
In the very long term, world living standards will equalize. So, globalization is a long-term pressure, but not permanent. Already, offshoring sometimes reverses.
@kmarinas86 I’m not talking about Japan or any other country for that matter, I am discussing U.S. policy so I won’t even try to answer your question. I will say that the same technology you condemn has also created new businesses with jobs and opportunities, i.e. the Internet. All I’m saying is that I disagree with people feeling they are entitled to others wealth..they are not.
@poisonapple16 -- The premise should be made clear: There are NO people in the "business firms" symbol -- ALL are in the violet hex.
Why didn't the Bush Tax Cuts create more growth than usual, the first time around? Answer: the phony, false equivalence between 'getting rich' and 'staying creative'.
Joint Committee on Taxation says: upper-class portion of Bush Tax Cuts falls on only about 3% of small businesses. Therefore it could also be easily relieved under creative policy.
@poisonapple16 -- ANY stimulus "creates growth", in the short term. Those effects are LONG over. Question is, did the tax cuts stimulate long-term potential growth? It turns out they were poorly designed: those effects are over, too.
That said, should we increase any taxes in a bad recession? No.
The fact that you can file business taxes as income tax is already included in the Joint Committee's finding on the incidence of the over-$250k marginal rates on business activity: almost none.
@poisonapple16 -- No, as I just wrote, taxes should not be increased in a recession.
I delete comments with false and misleading statements, or that willfully misinterpret other comments, or that make personal insults. Your comment will be deleted shortly.
@poisonapple16 Listen. Republicans are wrong. It's a fact now. Obama's a corporate sellout, but Warren Buffett who all the money-grubbing brand of Republicans love has REPEATEDLY said INCREASE MY TAXES. We are only paying interest on this debt. This is ridiculous. This madness WILL STOP. Sure we're in a recession, but note Eisenhower taxed 91% of income on Multi-millionaires.
All persons should pay the same tax rate. All taxes should be sales tax with no exemptions. This would be fair and take much of the corruption out of the government.
@frugazz -- When you add ALL taxes -- federal, state and local -- then everybody (but the bottom 20%) ALREADY pays close to the same rate. In fact, the richest 20% pay a little less than the next two quintiles (roughly, the middle class).
@BonerMaroner he didn't, he abolished pay as you go
parismetro14 1 week ago
Plummer who explains like a professor.
I'm university drop out too now I drive trucks.
Knowledge and intelligence are not lost.
Great video
PacificCircle1 2 months ago
Thank you President Bush for the large tax cuts. Thank you for funding the Iraqi War and the Global War on Terrorism with adding to the national debt. You have told the American public that you wont raise taxes for the current generation of tax payers, but allow America's future/children to pay for it. In other words, taxes will eventually go up because that is the only way to pay for the national debt, you put party before country & for that reason, you did not fullfill your duties as president
wtong89 2 months ago
if a "plumber" gets this right (are you really one? ;)), why isnt the rest of america waking up? looking forward to when they are. if not, expect a civil war in the us soon.
stevomil 3 months ago
Lovely video... wonder why it doesn't address out of control government spending... Why are cuts in government spend ever a viable option to resolve deficit/debt?
WKYanks 4 months ago
@WKYanks -- Because it isn't actually out of control. If you look at deficit projections, the large deficits start to disappear in 3-5 years, since they were caused mostly by the wars, the Bush Tax Cuts, and the recession. That leaves the accumulated debt, which can be slowly paid off. This is followed by a long period in which gov't spending starts rising very slowly again, due entirely to the projected costs of medicine. The only real problem we have is medical costs, private and public.
leearnold 4 months ago
@leearnold ... don't agree with that at all. Defense should be cut back, pork projects should be eliminated, and the government needs to learn to save for a rainy day. We pay 2.5 trillion every year. They need to learn how to balance a checkbook. You guys act like the money is the governments... it's not.
WKYanks 4 months ago
@WKYanks -- CBO long-term budget outlook ASSUMES defense will be cut back. Pork is wrong, but it does NOT account for a significant fraction of the debt. What we pay every year is cycled right back into the economy. Eliminate the Bush Tax Cuts, control the price spiral in private medicine (which determines the price of Medicare), and the economy will do just fine (after the recession is over, which requires a different, short-term set of policy responses).
leearnold 4 months ago
@WKYanks How exactly did Bush2 pay for these tax cuts I don't remember ?
BonerMaroner 1 month ago
Cool video. I can tell that a lot of a work and thought went into this.
EvanQuinto 4 months ago
RepBullCrapiCons do not seem to know basic math.. The Bush Tax Cuts added $4 Trillion to the defecit and added only 1.1 Million jobs that means each job cost the U.S. Tax payers $3.636 Million EACH
It does not add up!!!!
m530bc 6 months ago
I delete comments which use foul language, even if I agree with them.
It ought to be noted that EXTENDING the Bush tax cuts for a few more years was a good idea, as a part of short-term fiscal policy to help fight the recession. I think that's why Obama accepted the extension.
In the long-term, though, the Bush tax cuts must end.
leearnold 6 months ago
@leearnold thats lame, you dont support free speach, cuz i do
jjtheslayer69 6 months ago
@jjtheslayer69 -- Anyone can disagree with me, as you may read elsewhere in this thread. But I delete foul language, false or misleading information, and anybody who keeps making mistakes because they won't learn the subject matter. Here, you are my guest, so behave. If you want freedom of speech, there are six billion other web pages.
leearnold 6 months ago
@leearnold -- Correction: there are at least 6 Billion people in the world and there are at least 13 Billion other web pages.
Please continue to make more insightful videos and deleting potty mouths. Your videos are way more enjoyable to me, than the evening news.
ChineseFoodSucks 5 months ago
@leearnold i sent you a message to explain alot of what i wanted to say, but on your specific point about bringing in more revenue and that spending goes back into the economy, the main point of people who want less government is that the government doesn't allocate resources effectively. it's just a fact that the government will never allocate resources as efficiently as a free market with millions of consumers making independent decisions in their own best interest. employees of the govt
Welsh77 6 months ago
@Welsh77 -- No, for some kinds of things, government allocates resources much more effectively than the free market. There is no blanket rule. Market is better for capital and consumer goods. Government is better for basic R&D, safety-net, much of environmental protection, etc. There are specific reasons why this is so, and they have been understood for a very long time, despite lots of political propaganda to the contrary. Please study an economic textbook before going any further.
leearnold 6 months ago
this came out in 06, but the treasury directly contradicted alot of these "facts" in their 2007 income mobility report which showed that since 1985 income mobililty has been increasing at a rapid rate, with more movement among the quintiles than ever before. this looks like a formal video but its making statements that simply aren't true.
Welsh77 6 months ago
@Welsh77 -- Read Treasury 2007 report: it says "degree of mobility" was UNCHANGED. Pew 2007 found mobility closely tied to the previous generation of your family. Boston Fed 2009 found that mobility DECREASED. These are all over different study periods. I used the best information available in 2006. Do all your homework, or your further comments will be deleted. (Income "mobility" is different than "distribution" which is surely more unequal, and median income growth, which stagnated.)
leearnold 6 months ago
@mr59strat revenues probably looked the same because you looked at taxes as a % of gdp which never varies outside of 15-21%. this is the most overused tax statistic and isn't as important as it is made to seem, if tax revenue as a % of gdp kept growing eventualy it would be too high. tax revenues at 90% of gdp would be a disaster because the government would be deciding what to do with 90% of everything we make. check out rates of real tax revenue change and youll get a different picture
Welsh77 6 months ago
The 35% rate and 15% cap gains went into effect May 28, 2003. From bureau of labor statistics non farm payroll .....May 2003 had 130,067,000 jobs and 6.1% unemployment. Four years later May 2007 had 137,831,000 jobs and 4.5% unemployment. Total of 7,764,000 jobs added four years to the month the rates went into effect.
Excessive SPENDING is what is causing our deficits. Bush and Obama spent too much. Tax rates don't mean anything if we always spend more than we take in.
Mr59strat 7 months ago
@Mr59strat -- The unemployment rate always improves when the economy is coming out of a recession. Tax policies have little to do with it.
leearnold 7 months ago
@leearnold We tend to ebb and flow in and out of recessions in cycles. I was commenting to the theory some have as the Bush tax cuts caused the current recession which it did not. The real estate mess and the mortgage backed securities, exotic derivitives, crazy underwriting, Fannie/Freddie mess etc.
Tax policies can have an effect as cap gains revenue more than doubled 3 years after the rate went from 20 to 15. Forecast had been to decline but used static numbers not accounting behavior.
Mr59strat 7 months ago
@Mr59strat -- Actually it is easy to make the argument that the Bush tax cuts caused the current recession specifically, and in two different ways: (1) the tax cut was not spent on greatly increased business investment, it was spent on the real estate and mortgage securities, blessed by Greenspan's hope to increase consumption by the resulting "wealth effects"; and (2) the tax cuts caused a ten-year deficit which hampers fiscal policy to increase demand.
leearnold 7 months ago
@leearnold So you have the same opinion of the Clinton tax cuts?
Mr59strat 7 months ago
@Mr59strat -- Different economic story and different tax policy, including tax hikes. Again, tax policy may have had little to do with it, though you could argue that the capital gains tax cuts led more quickly to the dotcom bubble and the stock bubble. Clinton ended his presidency looking at balanced budgets.
leearnold 7 months ago
@leearnold ACES (govt capex source) ,employers non farm capital expenditures, including structures and equipment, went from 975Billion when the 35%/15% rates went into effect to 1.36Trillion in the following 4 years. Thats an increase of 72% in 4 years so that makes assumption #1 invalid as that is strong business investment. I doubt many people in business knew what a MBS was. That's mostly a game for the big boys.
As to #2 revenue went from 1.78 Trillion to 2.56 Trillion. 69.5% increase
Mr59strat 7 months ago
@Mr59strat -- Absolute % increases in one variable are almost meaningless, since everything usually grows anyhow. But if you look at the RATE of private investment, such as the ratio of private investment to total GDP, you will see that investment peaked in 2000 and then took a nosedive back to standard levels (around 8% of GDP), before dropping further. By 2006-2007, CBO studies showed that the supply-side effects of the Bush tax cuts had disappeared.
leearnold 7 months ago
@leearnold2007 had 10% of gdp investment.
Hard to tell how taxes effect the economy after 2007 when you have major events like all the mortgage defaults started snowballing and triggering the derivitive (insurance) payouts and made one heck of a mess. Still going on.
Curious what you think about the hauser curve, revenue stays mostly the same regardless of rate. I saw a 60 year chart of tax rates and revenue. Rates looked like a roller coaster, the revenue line was almost a straight line
Mr59strat 7 months ago
@Mr59strat -- Sorry I meant private BUSINESS investment. Gross investment is larger because it includes RESIDENTIAL investment, which was part of the housing bubble.
I think the relative size of gov't doesn't matter as much as the REASONS. The reasons can change. Now there is a demographic bulge at the same time as medical innovation is increasing the costs. We should just increase revenue to pay for it. Gov't spending is a component of GDP -- it goes right back into the economy anyway.
leearnold 7 months ago
HOLD-ON FOLKS! All that wealth should be trickeling down at any minute now.
HolyCity2012 7 months ago
Paul O'Neil, Secretary of Treasury for the Bush Administration said tax cut + invasion of Iraq is a no go. What happen next? He was fired from the Bush Administration. TAX CUT + MILITARY OPERATIONS (Iraq & War on Terror) = NATIONAL DEFICIT. Get that straight Republicans. Bush always put Politics before the Economy. Atleast Reagan was smart to raise taxes after he realize the national deficit was a problem. Same with H.W Bush, whcih caused his reelection. W Bush lost his mind.
wtong89 8 months ago
I'm sorry, but the Inquisition has found you guilty of heresy. The Pre-Copernican Church of Economics 101 has decreed for all time that tax cuts increase revenue. Historical and scientific observations are irrelevant; a nuanced position an affront, and if you don't recant, you may be put to the test. Confess! Lay down the heavy burden of cognition. Hide thy math and thy telescope!
pyro4opteryx 9 months ago
@leearnold Well isn't that what Japan has been doing? Look at Japans stimulus during the early 2000's gdp per capita grew .2%. Also we are creating inflation because the money that the banks got was not from bank accounts it was from the fed so that meant it was new money they are loaning not previously existing money.
dukee155 9 months ago
@dukee155 -- No, Adam Posen's definitive book, Japan's Financial Crisis, shows by Japanese gov't data that Japan delivered much less stimulus than they announced.
A better example is Britain, right now: withdraw stimulus and make the economy worse.
Economists from Adam Smith to MIlton Friedman have known that if new money matches the rate of growth of real goods and services, there is no inflationary pressure from that source. For a fuller discussion, see "Monetary economics" in Wikipedia.
leearnold 9 months ago
@leearnold The problem is that all the production is going on in countries in SE Asia so we wont see any benefit.
dukee155 9 months ago
@dukee155 -- No, the U.S. and SE Asia will BOTH see benefits from trade -- see the videos on "comparative advantage" -- but there is no doubt that a first effect is to displace labor in the U.S., and people may not find other work. Free trade only benefits everybody if the losers in each country are compensated. (Douglas A. Irwin, Against the Tide, chapter 12). New jobs in the labor market are presumed (perhaps falsely) to take care of this.
leearnold 9 months ago
@leearnold However we have a trade deficit as a result of this.
dukee155 9 months ago
@dukee155 -- "Trade deficit" just means that imports exceed exports. It can go on for many years, if you have the most dynamic economy. Currently only 12% of the U.S. GDP is in export industries. If the U.S. expands its export sector to trade with richer consumers internationally, then (1) there will be more jobs, and (2) the trade deficit will start shifting in the other direction. It isn't bad like a debt, it is just accounting. Please learn basic economics before going on any further.
leearnold 9 months ago
@leearnold To tell the truth I'm still in High School I did not take AP economics yet but I am interested in the subject.
dukee155 9 months ago
@dukee155 -- Well your questions are very advanced, so you may really like it. I am doing a series of shorts on econ., but I may not be able to make them fast enough! For you, the first thing to do is crack an economics text to learn all the definitions, because even some simple words (like "investment") are used in a certain special way by economists. AP teachers favor the textbooks by McConnell-Brue-Flynn, Mankiw, Krugman-Wells, McDougall-Littell, Colander, and many others.
leearnold 9 months ago
@leearnold thanks man
dukee155 9 months ago
@leearnold you are correct, wars, tax cuts (presumably, despite we still today collect 19% of GDP in taxation and the only time we didn't was in 2001 when we collected 21%), and a depressed economy harm increases in spending. However, when entitlements account for $2.2 trillion inspending, does that give you worry? Does an advisory panel make costs so low that doctors don't take Medicare? You seem to think that when taxes go up revenue goes up, but that never happens. Just look at IRS data
Beckett125 8 months ago
@Beckett125 -- The dollar amount of entitlement spending shouldn't worry anyone -- the money doesn't disappear; it gets cycled right back into the economy. The question is about the size of gov't compared to GDP, but even that is unclear. What we have right now appears to be sustainable, until medical costs start to accelerate in a few decades. If we consider medicine to be a growth sector, maybe it will still be a good thing.
leearnold 8 months ago
@leearnold If the theoretical analysis that higher taxes raise revenue is true, then when the tax rate was 68% in the 1970s we would have had a higher collection rate than 18%. Increasing payroll is fine, but again it seems to be the most direct tax that affects employment. In 1968 we cut payroll and employment increased (along with an expansionary policy by Fed). It would appear that a VAT tax is necessary to continue spending at these historic levels.
Beckett125 8 months ago
@Beckett125 -- Minor changes in tax rates have had very little effect on long-run growth rates, one way or the other.
leearnold 8 months ago
@leearnold Not true. In 1975 a Chicago School economist won the Nobel prize for showing that progressive taxation over a long period of time ultimately hampers growth
Beckett125 7 months ago
@Beckett125 -- The 1975 economics Nobel went to Kantorovich and Koopmans "for their contributions to the theory of optimum allocation of resources".
leearnold 7 months ago
@leearnold but again you must consider the multiplier. Even Keynesian economists admit that the government multiplier is less than 1. Once you get to around 150% of GDP in aggregate debt, along with economic slowdowns related to dependents outweighing workers, the picture is absolutely unsustainable.
Beckett125 7 months ago
@Beckett125 -- Study the subject first. Google "CBO Long-Term Budget Outlook". Read it.
"Multipliers" are about the efficiency of SHORT-term countercyclical spending. LONG-term debt is a different set of issues. There is no certain percentage such as 150% of GDP. Still, that wouldn't happen for a little while longer, and at that time the entire problem will be medical costs, private + public.
The only thing that will work are piecemeal steps in cost-reductions, e.g. Obamacare.
leearnold 7 months ago
the top earners in america are all business owners people want to be business owners but they cannot because running a business in America is very expensive because of all the taxes and regulations included in starting a business so people dont want to. This is why we should de regulate and lower taxes to allow more businesses to come up.
dukee155 9 months ago
@dukee155 -- No, this appears to be Chamber of Commerce propaganda -- business start-ups have decreased for decades (not including self-employment), and taxes and regulation haven't had much to do with it. It is much more complicated. The current cause is the reduction of supply-side credit and reduction of consumer demand, caused by the recession. Please Google "ESA: Business Startups: Why Entrepreneurs Didn't Start Up in 2009 and Why That's Likely to Change" and read it very carefully.
leearnold 9 months ago
@leearnold The fact that the banks are not lending is a good thing because that means that they are not giving out all this money that the fed recently created and this is keeping hyper inflation from happening.
dukee155 9 months ago
@dukee155 -- No, investment cannot lead to inflation if it leads to the production of real goods and services. But this recovery (such as it is) doesn't need business investment for as long as "capacity utilization" remains low, because that means there is idle private physical capital which can be utilized, before private investment becomes necessary again. Instead, we need to stimulate consumer demand by something that is worthwhile, such as gov't spending on infrastructure and green energy.
leearnold 9 months ago
how can any economist vote for a republican after they have come out for the past decade saying "lowering taxes increases revenue" errr... these people make me so mad, because people will believe them if they don't research into it...
MrMvt333 9 months ago
Wealth distribution stats must be corrected for increasing life span, which naturally favors people who living unprecended lengths of time and naturally enjoy disproportionate wealth compared to the increase in the very young and recent immigrants. Debt is taxed less then equity ownership, Correcting this would require allowing corporations to deduct dividends from thier income or alternatively the elimination of interest deductions.
Goodthingmanship 9 months ago
The notion of job creation through tax cuts for bank-robbing billionaire crooks is the biggest lie in history next to WMDs in Iraq. What jobs? Economic growth is just barely budging. They ruined the economy and shipped all of our good jobs overseas and got rewarded. And we're left with Wal*Mart and McDonalds! Those are the jobs being created! We don't create much of anything in the US except for trouble for the rest of the world. That's why we're a laughing stock when we're not being reviled.
tantric38 9 months ago
Lee, do you believe it would be a wiser move for this country to, at this time, either return to the Clinton-era tax rates or roll even further back to the pre-Reagan tax rates?
VoiceHunter 10 months ago
@VoiceHunter -- It looks like Clinton tax rates would basically erase any fears about the deficits for the bond markets. The deficits would continue for about 5 more years and then the budgets would be almost balanced (though we will still owe accumulated interest). Then, if we continue to take various steps to reduce medical cost explosion (some are in PPACA), that solves all problems. That's why one of the political parties won't allow minor tax hikes: it removes their "fear of debt" issue.
leearnold 10 months ago
@leearnold Demos (a think tank) concurs with your proposition. However, do you honestly think that increasing taxes in a recession will stimulate growth, or increase revenue? And in arithmetic, perhaps the tax increases will calm the bond markets, but if you allow the nation to fall into depression mathematics (like Greece and its outrageous tax hikes to please the bond vigilantes) the bond markets will recognize that those tax hikes will kill growth and they'll sell.
Beckett125 8 months ago
@Beckett125 -- Any tax hikes should wait until after the recession is over.
leearnold 8 months ago
Its amazing that this guy has proven that all our problems come from tax cuts, despite the fact that the bottom 40% pay absolutely no taxes, and they in fact receive money from the government to the tune of about 10 billion a year. Why not look at like this, maybe people are getting poorer because they're choosing to be poorer. If you don't get taxed for being poor, and then you get taxed for growing your income, do you really want to increase your wealth? No income tax period.
Beckett125 10 months ago
@Beckett125 -- No, the bottom 40% pay payroll taxes. In fact they paid excess payroll taxes, to guarantee Social Security. Then that $2 trillion "trust fund" disappeared into the income tax cuts that mostly benefitted the upper 20%.
Considering all taxes together, fed, state & local, tax rates are nearly flat. The upper 20% pay a little less rate than either of the next 2 quintiles.
No one chooses to be poorer.
I delete false or misleading comments. Yours will be deleted shortly.
leearnold 10 months ago
@leearnold
"No, the bottom 40% pay payroll taxes"
The "rich" employers have to pay half that AND pay for their own ENTIRE self employment tax on top of all other taxes, all of which are taxed at much higher rates and on larger amounts of money than those in the lower brackets.
Fairness aside, raising taxes on people above 250k to 100% wouldn't come close to balancing the budget even if this didn't discourage good work ethic and they still all made the same salaries, gains, and dividends.
TheMetalPerson 7 months ago
@TheMetalPerson -- The half of payroll tax paid that is paid by employers has ALWAYS been considered as a part of labor compensation.
Ending the Bush tax cuts, after the recession, will reduce deficits enough to make it a non-issue, until medical spending starts its burden in 20-30 years. This whole fight is about the difference between a 34% and 39% top marginal rate. That is how ridiculous it is.
There is NO evidence that slightly higher tax rates discourage work at the high end.
leearnold 7 months ago
@leearnold Indeed. There was an excellent article by William Saletan (I think) in Slate recently showing how the GOP "lowering taxes raises revenue" screed is nothing more than a fairy tale. Lowering top earners' rates has a few times in history increased revenue in a few select brackets but overall tax receipts decrease significantly. Each time that policy has been enacted the federal deficit soars.
kaysandesses 7 months ago
@TheMetalPerson "employers have to pay half that AND pay for their own ENTIRE self employment tax on top of all other taxes, all of which are taxed at much higher rates..."
Wrong. One-half of all payroll or self-employment taxes are self-deductible. Furthermore, most "rich" employers aren't self-employed, they are employees of the company which they own. At that point they are paying lower payroll taxes than the truly self-employed.
kaysandesses 7 months ago
Would it be too much of a stretch to ask you to make a video (or a playlist) explaining how Obama's healthcare plan works and the potential results?
(Lets not forget that the individual mandate of the healthcare bill was removed on 12/10/10)
TaffyAlpha 1 year ago
@TaffyAlpha -- Where is it reported that the individual mandate was struck down?
leearnold 1 year ago
@leearnold It was on NPR some time in december, but the CBO said that regardless of whether or not that part was in the bill the net deficits would still be reduced. I think it was either on December 13 or December 10 of 2010.
Anyway, would you do it? like the animations.
TaffyAlpha 1 year ago
@TaffyAlpha -- One judge ruled against the mandate and two have ruled in favor of it. The individual mandate is not removed, and the issue is likely to be headed to the Supreme Court. At the present time I am doing a series on textbook economics. I hope to get back to current policy issues later this year.
leearnold 1 year ago
@TaffyAlpha In my opinion it's dumb. It's a step in the right direction, but what really needs to be done is the buy out of many private hospitals by the gov't. Check the differences in healthcare costs between the US and countries with socialised health care. If the costs of healthcare can be reduced, so can the cost of medicare/medicaid. Also, the US needs a tax-scale that is way more progressive, as well as more auditing of corporations.
freedomthrough 11 months ago
This A very good video. kudos to the maker
Q3020Q 1 year ago
@ leearnold: what is your assessment of Obama extending the tax cuts for another 2yrs & the cut in payroll tax & how that affects social security?
1rendezvous 1 year ago
@1rendezvous -- It doesn't affect Social Security much at all although it may become a political argument for reducing benefits. We'll have to see how it all works out, but we can already say with certainty that (1) this isn't permanent, (2) nothing is ever permanent, (3) when the economy comes back, the deficits will shrink in relative size, and become far less urgent.
leearnold 1 year ago
The people of the u.s.a seem very conservative. i dont think the people are open for change to even happen. I wouldnt be surprised if the shifty bush tax cuts became permanent, because it seems like few people are voting against them, unfortunately. Obama had the plan but fox gets more ratings.
whereisthesanity 1 year ago
credit contraction is credit contraction I don't know if you were alive in the late 70s early 80s but getting a mortgage was near impossible and I am sure business loans were the same. High interest cause credit contraction
the panic we had cause a credit contraction though the lack of liquidity of some paper investments.
I see no difference.
brewmaster95060 1 year ago
@brewmaster95060 -- "Credit contraction is credit contraction"? No, credit contraction is a symptom of different things. In the late 70's? High inflation. In the late 2000's? Bad loans on bank balance sheets.
So in the early 80's the Fed killed inflation, then lowered real interest rates to improve credit availability while Reagan pumped the economy with massive deficits. This time, the Fed CAN'T lower interest rates--they are ALREADY near zero. And the deficit spending wasn't big enough.
leearnold 1 year ago
I don't think you are correct
How trillions has government blown on stimulation the economy?
This has been the worst recovery in my life time. Unemployment is stuck @ over 9.5%
After the Reagan tax cuts in 1981,1982 and 1983 unemployment dropped from over 10% to 7.5%
brewmaster95060 1 year ago
@brewmaster95060 -- Very different conditions. Reagan had a different kind of recession. It was purposefully caused by high interest rates engineered by Paul Volker's Fed, in order to end the inflation. That recession began to turn around after inflation slowed and interest rates were lowered. The current recession was triggered by a financial credit crisis, like the Great Depression, and interest rates went down to nearly zero DURING the recession, with little growth.
leearnold 1 year ago
I don't think W understands any of this. He just likes all those purty colors.
tantric38 1 year ago
Why do we assume that raising taxes on the "rich" will not affect their quality of life? The upper middle class, those intellectuals and truly hard workers who may earn slightly above $250,000 (let's say $300,000) are always getting shafted and ignored. We already pay the highest tax bracket, same as billionaires who earn tens of thousands of times our income, whilst working longer, more challenging, and more skilled hours than your average Joe. Why do you lump us all together, besmirch our nam
surprisedcabbage 1 year ago
@surprisedcabbage -- Why assume that shifting the burden of taxation downward onto the poor and middle class does not affect their quality of life?
To your other point: I see no reason not to create tax brackets for the extreme high end. But this video is about the BUSH tax cuts.
leearnold 1 year ago
This is misleading in so many way's. I will point out just a few. the top several Percentile who make hundreds of thousands to millions of dollars a year are More likely than not small to large business owners. In times of economic expansion, say for example the supposed economic expansion under the Clinton administration, These business owners are most definitely take the opportunity to expand their businesses further increasing their own income in the process as well as creating jobs.
thebluemaggot 1 year ago
@thebluemaggot -- So far, it is not misleading at all. The Bush tax cuts never created any more growth than usual.
leearnold 1 year ago
@leearnold Let me be more specific, and forgive me if I'm misreading your explanation here, but from what I gather it seems that you credit the Bush tax cuts as the leading contributing factor to the off set of wealth between the poor (or at least the lower Percentile) and the rich. The Point I am trying to bring out is You haven't taken into account that during times of economic expansion wealthy business owners at least try to expand their businesses effectively increasing their wealth more.
thebluemaggot 1 year ago
@thebluemaggot -- Yes you are misreading. Bush's tax cuts did not greatly widen the gap between rich and poor. It was already huge! But the tax cuts ALSO did not create enough growth to start to close the gap -- yet economic growth is supposed to close it. (If this is not so, then we are going to need a new system of reality.) Indeed the gap got bigger. So whatever the wealthy business owners are supposed to do, they didn't do it very well.
leearnold 1 year ago
@leearnold Why shouldnt there be a spread in wealth? People are different...not the same.
By the way (in your zeal and fantasy to pull down successful others) you forget you're voting for the gov(stupid politicians) to be wealthy and steal money from privates citizens,waste money in fraud and continue the downward socialist spiral of the US(public schools,public welfare,and public medicine)
lillatmd 1 year ago
@lillatmd -- Everything you say could be flipped upside down, too. The differences among people are not as great as the differences in wealth. (Adam Smith thought everybody was pretty much the same.) The private sector is rife with fraud -- look at the financial crisis. The private economy has been in a downward spiral of jobs. Basically we have corporate socialism. Etc. etc.
This animation is not against success. I delete comments which misrepresent the ideas or intentions of anyone.
leearnold 1 year ago
@leearnold (continued) Now going to the lower Percentile, typically they have no businesses or assets to expand upon during times of economic expansion so of course their wealth isn't going to grow by any considerable factor because they have no wealth making assets to expand upon. If I may make a suggestion you should try analyzing the growth of wealth in the Top Percentile during the "period of economic expansion" under the Clinton administration Before the Bush tax cut's.
thebluemaggot 1 year ago
@thebluemaggot -- Give the lower percentiles jobs with wages equal to the growth in productivity (= output/manhour) They will have higher living standards and more credit to start their own businesses.
NO class of people has more creativity than another class. (Clearly we omit people who are hurt and suffering.)
Long-term economic growth is from education and technological development, not from WallSt/WashDC creating deficits to give the rich more money, claim Social Security is broke, etc.
leearnold 1 year ago
@leearnold education is failing...yet you continue to pretend that we're going to get longterm growth by wasting money on creating college dropouts on a massive scale. Lets look at the FAILURES of our socialist programs(we are 23rd in education! )
lillatmd 1 year ago
@lillatmd -- The upper 22 are even more "socialist". Long-term growth only comes from a few things. Improving education is not the same thing as "creating college dropouts on a massive scale." Not all government programs are failures, nor are all private businesspeople greedy crooks. Why is everything an absolute, with you?
leearnold 1 year ago
@leearnold Social Security actuary said from his data that social security goes broke in 2042.
Beckett125 8 months ago
@Beckett125 -- No, the actuary said that according to the middle-cost scenario, the prepaid credit account (Trust Fund) will be exhausted in 2042, given today's economic conditions. After that time, Social Security will pay out at about 73% of scheduled benefits. To avert this "crisis" in 30 years, at this moment we need only increase payroll taxes about one dollar a week. Please find something else to worry about.
leearnold 8 months ago
It's a sick world, but I'm not just going to dwell around where I am financially and hope for the government to help. I am thankful that I live in a capitalist nation where economic prosperity is possible, however politicians try time and time again to impede this system. There is lots of inequality, however the government cannot be trusted to solve this. Any tax break is good in my opinion. Less money going to the government, and as a result they are forced to cut their frivolous spending.
TTUsucks88 1 year ago
@TTUsucks88 -- No one should be waiting for the gov't to help. Gov't can never solve inequality, it can only help alleviate the worst effects of it. It might help if you tell us which gov't spending is frivolous and should be cut.
leearnold 1 year ago
@TTUsucks88 Why not make the Bush/Obama middle-class tax cuts permanent and make the Bush tax cuts for over 250,000 dollar income extended only for two more years. Now you have stopped the possibility that the Republican party will hold the middle-class tax cuts hostage ever again. Why is this not obvious to our Congressmen and Senators?? to Obama?
eepinow 1 year ago
@eepinow -- There is really no such thing as permanent tax rates.
Also, tax cuts now, mean tax hikes later, unless spending is reduced.
Also, you need 60 votes in the Senate to do anything.
leearnold 1 year ago
The Republican's manta is: Cut the deficit! But when it comes to asking that the ultra rich to pay 3% more in taxes which would help pay on the deficit at the tune of 7 to 9 billion a year, they say, oh hell no! Their argument is that by doing that, big corporations won't be able to hire. Really? Well during the bush administration the corp's tax rate was 36% and look how many jobs were created. The unemployment rate is at a record high, so that experiment didn't work. Unbelievable!
phillipmarch22 1 year ago
@phillipmarch22 what's 7 billion when you have a President running defecits of a trillion plus a yr?..keep the money where it belongs..in the hands of those that earned it.and under the Bush tax cuts unemployment went down.an unargueable fact.under the Obama stimulus that was to keep the rate under 8% we sit at almost 10%.The US has the highest corporate tax rates of the G7 countries.And besides,corporations don't really pay taxes.they just pass the added cost to the consumer.
chrycohauler 1 year ago
@chrycohauler -- This is all very misleading. It is also true that, after the Bush Tax Cuts, incomes shrank for two years (unprecedented), wages stagnated, growth was pitiful, and the deficits started to skyrocket. (Obama is continuing Bush's trend on spending, trying to fight this recession).
So, write no more of these over-simplified "cause & effect" scenarios, here. It is really partisan cheerleading. Please study an economics textbook, or your further comments will be deleted.
leearnold 1 year ago
@leearnold Why not make the Bush/Obama middle-class tax cuts permanent and make the Bush tax cuts for over 250,000 dollar income extended only for two more years. Now you have stopped the possibility that the Republican party will hold the middle-class tax cuts hostage ever again. Why is this not obvious to our Congressmen and Senators?? to Obama?
eepinow 1 year ago
@eepinow -- (1) You need 60 votes in the Senate. (2) No tax rates are ever permanent.
leearnold 1 year ago
Fact: Bush tax cuts have been in place nearly a decade so where r the jobs? why is unemployment #s so high! Republicans=JobKillers! Economic growth you talk about is in China! Republicans=JobCreatorsforCommies! CASE CLOSED!
1rendezvous 1 year ago
the Bush tax cuts saw 51 months of economic growth..no brag ..just fact
chrycohauler 1 year ago
@chrycohauler -- The Bush Tax Cuts didn't cause it. After RAISING taxes, the Clinton boom was over twice as long, with higher growth rates.
The truth is: at the U.S.'s relatively low levels of taxation (compared to other countries), changes in taxes don't have as much effect on growth as other more basic factors.
Although, it has begun to look like more wealth concentration itself has a negative effect on growth -- because the extra gambling in financial assets doesn't create real production.
leearnold 1 year ago
@leearnold you cannot be serious..raisng taxes doesn't expand an economy it shrinks it by reducing disposable income a fact that cannot be reasonaly and truthfully agrued
chrycohauler 1 year ago
@chrycohauler -- GDP = C+G+I+(X-M) = Consumption + Gov't spending + Investment + (Exports minus Imports). Tax hikes go immediately into Gov't spending, so there is NO change in GDP.
Taxes shouldn't be raised at this moment, because of the recession. They are actually a form of deficit spending.
The argument as to whether tax hikes reduce long-term potential growth, and whether this is WORSE than damage by high budget deficits "crowding out" private investment spending, is another subject.
leearnold 1 year ago
BTW, Kennedy tax cuts were greater.
patriotJW 1 year ago
@patriotJW -- Kennedy's new tax rates were also much higher than now. There is an informed discussion of the Kennedy, Reagan, and Bush tax cuts, with income, revenue, and spending graphs, at: econdatausDOTcom/taxcutsDOThtml [replace the DOTs with "."]
leearnold 1 year ago
Govt. has so distorted the concept of natural consequences that people believe that NOT spending in a time of economic crisis would be a disaster. Those that believe this either have lost sight of fundamental human behavior and logic, or believe that a manmade construct (like govt.) is better than natural consequences. No argument — on deregulation, wealth creation, Bush tax cuts, economic growth, — is worth arguing while this fundamental distortion exists and people agree with it.
patriotJW 1 year ago
@patriotJW --The world is getting so complicated that individuals CAN'T KNOW everything necessary to avoid harm: Which industrial products are toxic; which financial institutions are hiding insolvency? These and thousands of other questions are MULTIPLYING, not disappearing. People naturally have formed committees since the dawn of man. The "natural consequence" of a complicating world is MORE gov't, not less. Of course this has dangers. But making a bad recession worse is not the answer.
leearnold 1 year ago
@leearnold You didn't pay attention to any other of my comments. Again you didn't account for the fact that England has a much higher and more stringent progressive tax, they have higher income equailty than the United States, and they only take in 29% in receipts from the top 1% vs the United States (41%). I have no doubt that raising payroll will avert that "crisis", but your condescension does not account for lack of revenue, or revenue that must be taken from the SS fund
Beckett125 8 months ago
@Beckett125 -- Cross-country comparisons have to take into account dozens of other variables.
You have to look at what the CAUSES of unsustainable U.S. deficits are -- not deficits, but UNSUSTAINABLE deficits. In the SHORT term: (1) Bush tax cuts + (2) war + (3) reduced revenue due to the recession. In the LONG term (i.e. after about 10 years) those causes disappear (presumably) and the ONLY problem we have is skyrocketing medical costs: private and therefore also public, i.e. Medicare.
leearnold 8 months ago
Businesses invest in new ideas even (and sometimes especially) in unusual economic times. Cottage industries often spring up during these times. Reducing govt. will NEVER be a bad thing since its overreach is out of control! Govt. created this recession through legislation facilitating homebuying to minority groups in the '70s. It snowballed into this mess. We do not need spending for the sake of spending. We do not need the govt. manipulating our economy.
patriotJW 1 year ago 2
@patriotJW -- Gov't also created this recession by deregulating capital requirements on leverage.
Right now, reducing gov't spending would be a disaster.
Wealth is created by anyone with an idea for business. The rich don't have any special dispensation for "job creation". In fact they got the biggest tax cuts in the history of the world -- the Bush Tax Cuts -- and economic growth WASN'T ANY BETTER than it might have been otherwise.
Long-term growth is based on education and infrastructure.
leearnold 1 year ago
@leearnold did you ever stop to think that the "rich" pay more in taxes?Long term growth is based on consumer spending.And for the record..the Bush Tax Cuts worked.After 9/11 unemployment went up slightly and then went to a low of 4.5%.One grows weary of this pissing and moaning about the rich.Kepp using confiscatory tax rates on them and they will take their money elsewhere like they did when Bush the Elder introduced that idiotic luxury tax.They shopped shopped elsewhere.and I don't blame them
chrycohauler 1 year ago
@chrycohauler -- The rich don't pay more in taxes. They pay more in income taxes. Taking all taxes together, the tax rate is nearly FLAT for everybody, down to around $20,000 a year.
Long-term growth is not based on consumer spending. it is based on education and technological improvement.
To economists, the Bush Tax Cuts were dismal as both short-term stimulus and long-term growth. Unemployment ALWAYS drops after a recession is over -- tax cuts don't necessarily get the credit.
leearnold 1 year ago
The wealthy typically have businesses, invest in business and otherwise engage in activity that stimulate the economy significantly more than a low- or middle-income person would. Higher taxes would curtail their activity. Their contribution to fixing the recession is important. The best way to solve the recession is tax cuts for EVERYBODY, elimination or reduction in govt. programs, and fixing trade and business laws to be pro-small business and productivity.
patriotJW 1 year ago
@patriotJW -- (1) Further along in the business cycle, tax cuts for the wealthy may help. But in a recession, "capacity utilization" is lower (i.e., existing business capacity is under-used). So, businesses DON'T invest big-time ("investment" = "real capacity expansion"), because it won't pay-off until there is more consumer spending.
(2) Reduction of gov't programs = less market demand (i.e., gov't spending is a part of GDP). Reducing gov't spending is a VERY bad thing to do in a recession.
leearnold 1 year ago
You said in your video that rich people don't spend the money that they save from the tax cuts, they save it. My point was that that statement was wrong. Do you agree?
patriotJW 1 year ago
@patriotJW -- My point at that time in the video is about the best recession-fighting policy. The following is the narration, nearly in full, continued over the space limitation of these comments, and numbered to keep the sequence clear:
[1] "Tax cuts for the wealthy may help long-term growth -- just may -- but it will not cure a recession. Why? Because a recession reduces labor, creating unemployed, reducing income, reducing spending, reducing output below capacity.
[continued]
leearnold 1 year ago
[2] The best way to solve that is tax cuts for the poor and middle class to buy things, not the rich. Then there's more sales, then rehiring, and then, when capacity gets up near full use, businesses will invest in expansion. "Fat city" for everybody!
But that's not what happened. President Bush gave the wrong tax cuts, as honest economists said at the time. Most of his tax cuts went to the richest, but they don't do as much consumer spending. They mostly just save it.
[continued]
leearnold 1 year ago
@leearnold how does one give tax breaks to the poor ? I thought the evil rich tax breaks were on the backs of the poor?nearly 40% of americans pay no tax at all..is that fair?.one gets increasingly tired of this class warfare and envy.no one ever got a job from a poor person
chrycohauler 1 year ago
@chrycohauler -- A poor person might need help starting a business. That's where it begins.
40% of the people pay little INCOME tax. BUT there are many other taxes: all together, taxes are nearly flat, down to the top of the bottom quintile. Actually the Bush Tax Cuts shifted the burden of total taxes downward.
You give tax breaks to the poor at the fed level on gasoline taxes, etc. Current tax deal may lower payroll taxes, for another example. Puts more money in poor pockets.
leearnold 1 year ago
@leearnold and if they are poor where do they get the capital to start a business?..if they are poor How do they afford the car to get your tax cut on gasoline? And who is the gov't to give money away like they earned it?The gov't never has and never will create wealth..they just steal it and redistribute it in the name of compassion
chrycohauler 1 year ago
@chrycohauler -- Normally, you start a business by borrowing the money from a bank. There are very inexpensive used cars available. Governance is an integral part of wealth production, through institutional and legal stability, infrastructure investment, counter-recession policies, and even R&D (which is where the internet started). Please study an economics textbook.
leearnold 1 year ago
[3] There was some new investment for productivity growth, but that doesn't hire many more people, and it would have happened later anyway.
So incomes shrank for two years -- the first time since the Depression. Wages went into the toilet. Unemployment was stagnant for three years. To get by, people borrowed money -- three dollars for every dollar of output. Household debt is still at an historic high... This was the consumption pump, not real growth. [end]
leearnold 1 year ago
Now, I also think it is evident that wealth concentration at the top can begin to inhibit long-term economic growth. But the section you have quoted is about the Bush Tax Cuts as short-term countercyclical policy -- and they were a big mistake.
leearnold 1 year ago
"[the richest] don't do as much consumer spending; they mostly just save it." Who do you think buy second homes, luxury boats, private jets? Provide seed money for start-ups? Create endowments and scholarships? Rich people save more, spend more, investment more and pay more taxes because they HAVE more. A consumption tax (FairTax) would would leverage high-earner spending, while rebating taxes to the poverty level so the poor would not be taxed. It is so fair, that redistributionists hate it.
patriotJW 1 year ago
@patriotJW -- To get out of a recession, luxury items do NOT provide enough consumer demand, and investment spending doesn't do it, because there is no need for real capital expansion when consumer demand is low and factories are idle.
Rich people pay more taxes than others -- but they are paying LESS, as percentage of income, than they used to. Yet this has not led to any more economic growth than usual.
leearnold 1 year ago
you play on words, you don't tell the whole truth. and like the communist you are, you don't allow free speech in your comments.
EpicGifted 1 year ago
@EpicGifted -- Anyone may disagree, as you can learn from reading other comments. But here, I have almost no tolerance for people who are not studying the subject matter. Here, there is no free speech -- you are MY guest. So behave. Misinformation, propaganda, willful misinterpretation, repetition, cheerleading, name-calling, obscenities -- it ALL gets deleted. Your comment will be deleted shortly.
If you have facts, bring them, instead.
leearnold 1 year ago 2
The Bush Tax cuts help people a lot.
heartlessvietboy 1 year ago
Hey great video ...after the decision Barack Obama made this week to extend the Bush tax cuts for the wealthiest Americans, though not an avid YouTube vlogger, I knew I had to make a video outlining what that really means especially considering this countries previous tax policies and its effect on growth and disproportionate distribution of wealth BUT when I saw this I think there is no need. I wouldn't have been able to do it justice the way you have and you made this 4 years ago! Well done!
slimdeala4life 1 year ago
@slimdeala4life -- Thank you! Best, Lee
leearnold 1 year ago
Your presentation is well done and presented clearly. Of course, it’s one model and not the end all, many could argue your points. While I don’t disagree with you on most items, you make the assumption that only the rich can save money, buy stocks or bonds, or make wise investments. I am a strong believer that taking from the more fortunate and distributing to the less is a bad model and eventually fails, as shown in socialist countries where this model is followed.
Blackkight350FPS 1 year ago
@Blackkight350FPS -- I do NOT argue that only the rich can save money, etc. In the business cycle, however, it is well-established that they are not the ones who pull the economy out of a "demand" recession. Which is where we are now, in Dec. 2010.
On your other point, government safety nets and countercyclical policy do NOT cause socialism. This has never happened.
leearnold 1 year ago
There are more government handouts and programs designed to keep the poor dependent on the government than ever in US history…yet our poverty level continues to increase. I was fortunate to have two loving parents who taught me morals and values and that if I worked hard and was honest, Id succeed in life. I did and I am. I always saved a bit of my paycheck and invested in savings and IRAs, cut back on my expenses and controlled my spending vs. income ratio.
Blackkight350FPS 1 year ago
@Blackkight350FPS -- This is incorrect. Welfare spending was reduced under Clinton.
The poverty level has increased however, but whether this is merely a business-cycle phenomenon, or something more ominous, remains to be seen.
The highest "welfare spending" recently was bailing out Wall Street.
We also have a cost spiral in medicine, but that is a different story.
leearnold 1 year ago
@leearnold I agree with you on the “wall street” bailouts, although let’s face it, they were bank bailouts. Banks they gave loans to individuals that could not afford to pay them back. They should have been allowed to fail and the people that toke the loans as well. Correcting bad behavior with a reward is just asinine.
Blackkight350FPS 1 year ago
@Blackkight350FPS -- The banks are also the system of our money accounting. The loan problem was so big, that all banks would have failed. This would have frozen the entire system of bank accounts and credit: No paychecks, no mortgage and car payments, no Wall Street. EVERYBODY would be thrown out on the street. Right now we'd STILL all be in bankruptcy court, sorting it out.
Is there another way to solve the next crisis (which is sure to come), except tougher regulation on finance?
leearnold 1 year ago
@Blackkight350FPS I don't mean to get harsh here, but only a fool believes that programs are 'designed' to keep poor people dependent. That'd be quite an insult to all those good churches that started charity hospitals and homeless shelters. If you think their 'design' was to keep people dependent, u should have a talk with the good Lord.
Sure, some take advantage of the system, but it's nothing compared to the corporate welfare in this country.
demmmmm1 1 year ago
@demmmmm1 When I refer to “programs”, I’m referring to government sponsored programs, not charities. Many govt. sponsored programs penalize individuals for working or reward them for having more children than they can afford.
Blackkight350FPS 1 year ago
I worked hard for what I have, and regardless of how much wealth I have or do not have, you’re not entitled to it. If this nation were to focus on teaching people the value of hard work and discipline, rather than a give me, give me attitude, we would be a much better society.
Blackkight350FPS 1 year ago
@Blackkight350FPS -- We all work pretty hard! I'm not sure where you are hearing this "give me" attitude. Is it from Wall Street bankers? From people who can't afford health care? From people losing their jobs by corps getting tax breaks to go overseas? The idea that everybody is a bum except you is a little too easy, isn't it? Perhaps it might be more helpful to consider a specific problem, and propose a solution could that work.
leearnold 1 year ago
@leearnold I disagree with your statement "we all work pretty hard" because it is simply not true. I hear the give me give me attitude every time I turn on the tv or read a newspaper. I never said everyone except me is a bum, did I? My specific problem is people expecting others to pay their way when they have done nothing constructive to help themselves. My solution: Don't force me to give away my wealth, instead offer govt. donation programs and I would be happy to contribute.
Blackkight350FPS 1 year ago
@Blackkight350FPS -- And exactly who was doing the "give me" attitude when you turned on the tv today? Let's get to some specific problems here.
leearnold 1 year ago
@Blackkight350FPS well there you have it ...I guess you've told us ...you forget one minor detail though ...you statement may be all well and good but lets see if you or your children or your children's children still have a country to speak of. My god we are asking for responsible tax policies based on sound economic models like those hinted to in the video above ...this whole Me & my money vs everyone else may satisfy you in the short term but will be devastating for you children's children!
slimdeala4life 1 year ago
@slimdeala4life I too am asking for sound tax policies and for my children to have a country to speak of. My opinion is that current policy of taking from the more fortunate and distributing to the less with no consideration to a persons work ethic is a model that will fail. I belive we should all pay the same basic tax rates up to a certain salary level, and then perhaps increase that rate over said salary. I have zero tolerance for people that expect everything and give nothing.
Blackkight350FPS 1 year ago
@Blackkight350FPS
"If this nation were to focus on teaching people the value of hard work and discipline, rather than a give me, give me attitude, we would be a much better society."
Then how are the hard working Japanese working so hard that they reduce the number of people required for the same tasks, not only because of their robots, but also because of their work ethic? They have no trade deficit, yet they still have massive unemployment and lots of deadbeat dads. So explain that....
kmarinas86 1 year ago
@kmarinas86 -- After three years of comments, a commenter finally hits upon the apparent problem:
The increasing time-rate of innovation in our advanced industrial economy, PLUS the huge spurt in worldwide trade in advanced products (i.e., "globalization"), appear to cause more people to fall lower, in the size-distribution of income.
For how long? The spread between rich and poor has been growing for over 30 years.
What to do about it? More education, and provide the safety-net?
leearnold 1 year ago
@leearnold
"What to do about it? More education, and provide the safety-net?"
Education is treated with higher priority in Asia. But does it increase equality? No, it increases opportunity. Does it increase living standards? Yes! When those living standards are higher, do manufacturers move operations to a place where they are lower? Some do. If Chinese surpass the income of Mexicans, do some jobs move back to Mexico? This is now happening despite China making its currency artificially cheap.
kmarinas86 1 year ago
@kmarinas86 -- Increasing education might also prepare the mind for creativity, and give people new ideas for making new things. So the phrase "increases opportunity" should go beyond the simple jockeying for available jobs, to really adding your own growth. But I agree, it does not look like it will solve the whole problem.
In the very long term, world living standards will equalize. So, globalization is a long-term pressure, but not permanent. Already, offshoring sometimes reverses.
leearnold 1 year ago
@kmarinas86 I’m not talking about Japan or any other country for that matter, I am discussing U.S. policy so I won’t even try to answer your question. I will say that the same technology you condemn has also created new businesses with jobs and opportunities, i.e. the Internet. All I’m saying is that I disagree with people feeling they are entitled to others wealth..they are not.
Blackkight350FPS 1 year ago
@Blackkight350FPS
"I will say that the same technology you condemn has also created new businesses with jobs and opportunities, i.e. the Internet."
Why are you implying that I am condemning the internet?
kmarinas86 1 year ago
I'm not even going to bother watching the rest of this.
Your premise is wrong, under the current system most small business fall into your 'people' category.
Tax them you eliminate jobs.
Period.
poisonapple16 1 year ago
@poisonapple16 -- The premise should be made clear: There are NO people in the "business firms" symbol -- ALL are in the violet hex.
Why didn't the Bush Tax Cuts create more growth than usual, the first time around? Answer: the phony, false equivalence between 'getting rich' and 'staying creative'.
Joint Committee on Taxation says: upper-class portion of Bush Tax Cuts falls on only about 3% of small businesses. Therefore it could also be easily relieved under creative policy.
leearnold 1 year ago
@leearnold Um yes there are. You can file your small business taxes on your personal income tax. That's a fact.
And the Bush Tax Cuts DID create growth; even the current dough head president had to concede that.
Your credibility is in danger...
poisonapple16 1 year ago
@poisonapple16 -- ANY stimulus "creates growth", in the short term. Those effects are LONG over. Question is, did the tax cuts stimulate long-term potential growth? It turns out they were poorly designed: those effects are over, too.
That said, should we increase any taxes in a bad recession? No.
The fact that you can file business taxes as income tax is already included in the Joint Committee's finding on the incidence of the over-$250k marginal rates on business activity: almost none.
leearnold 1 year ago
@leearnold So increasing taxes will stimulate growth?
Are you high?
poisonapple16 1 year ago
@poisonapple16 -- No, as I just wrote, taxes should not be increased in a recession.
I delete comments with false and misleading statements, or that willfully misinterpret other comments, or that make personal insults. Your comment will be deleted shortly.
leearnold 1 year ago
@poisonapple16 Listen. Republicans are wrong. It's a fact now. Obama's a corporate sellout, but Warren Buffett who all the money-grubbing brand of Republicans love has REPEATEDLY said INCREASE MY TAXES. We are only paying interest on this debt. This is ridiculous. This madness WILL STOP. Sure we're in a recession, but note Eisenhower taxed 91% of income on Multi-millionaires.
HoGraz 1 year ago
All persons should pay the same tax rate. All taxes should be sales tax with no exemptions. This would be fair and take much of the corruption out of the government.
frugazz 1 year ago
@frugazz -- When you add ALL taxes -- federal, state and local -- then everybody (but the bottom 20%) ALREADY pays close to the same rate. In fact, the richest 20% pay a little less than the next two quintiles (roughly, the middle class).
leearnold 1 year ago