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You can’t cut your way to prosperity. It’s as simple as that. The US chose investment and stimulus and is pulling out of the crisis. Meanwhile, Europe chose austerity and has double dip recession in UK and Spain (coming soon to others).
you cant tax and spend your way out either. the US choose spending, and now we have deficits and debt that is out of control, and it will come back to bite us. remember when japan was the economic powerhouse in the 80s? well they did the SAME thing when they had their fiscal meltdown that we are doing now, and it took them more than 10 years before they started getting out of their fiscal problems. in fact they are STILL feeling the effects of bad fiscal policy.
as for what you call investment, that was in fact garbage spending. real investment would have been improving the infrastructure, like building and repairing roads, repairing damns, upgrading the electrical grid, etc. not refurbishing airports that get little use, and train stations that get no use.
you cant tax and spend your way out either. the US choose spending, and now we have deficits and debt that is out of control, and it will come back to bite us. remember when japan was the economic powerhouse in the 80s? well they did the SAME thing when they had their fiscal meltdown that we are doing now, and it took them more than 10 years before they started getting out of their fiscal problems. in fact they are STILL feeling the effects of bad fiscal policy.
as for what you call investment, that was in fact garbage spending. real investment would have been improving the infrastructure, like building and repairing roads, repairing damns, upgrading the electrical grid, etc. not refurbishing airports that get little use, and train stations that get no use.
I totally agree.
Britain wasn't in a position to spend, it had just bailed out the banks and is currently concentrating on reducing it's debts and deficit.
The trouble with trying to spend your way out of a crisis is you have to have the money to do it, as borrowing money can lower credit ratings and increase inflationary pressure.
Britain has had it's fingers burnt by Keynesian economics before, most notable back in the 1970's.
That is crap, I have a cousin in Canada and he told me they reversed everything by reducing social programs, reducing lots of government employees and he thinks the health care there is going to be dealt with next because it is a problem.
Nope, nope and nope.
Government spending was reduced somewhat, but it was more or less holding the line until tax revenues outgrew expenses. They did. There were no tax cuts, either, but rather tax increases. That's what the US needs, and nobody will admit.
And the other point, that the Conservative government tipped Canada back into deficit, is completely on the ball. They're now getting praise for "solving" the deficit problem, but it was a problem they created with their governance! The Liberals left them with surpluses.
you cant tax and spend your way out either. the US choose spending, and now we have deficits and debt that is out of control, and it will come back to bite us. remember when japan was the economic powerhouse in the 80s? well they did the SAME thing when they had their fiscal meltdown that we are doing now, and it took them more than 10 years before they started getting out of their fiscal problems. in fact they are STILL feeling the effects of bad fiscal policy.
as for what you call investment, that was in fact garbage spending. real investment would have been improving the infrastructure, like building and repairing roads, repairing damns, upgrading the electrical grid, etc. not refurbishing airports that get little use, and train stations that get no use.
For the record, taxes now are among the lowest in modern history. Your assertion that "deficits and debt that is out of control" is disputed by authorities such as the CBO and also by common sense. The debts accumulated by WWII were far higher than today, as a p% of GDP, yet the country was able to handle that debt. The difference is that today, half the Congress has pledged to never raise taxes for any reason at all.
In terms of economic activity, while it makes sense to spend money productively, from a macro standpoint what's important is just employing people and getting disposable income in their hands. Remember, wars have been notoriously good stimulus even though they are absolutely unproductive.
For the record, taxes now are among the lowest in modern history. Your assertion that "deficits and debt that is out of control" is disputed by authorities such as the CBO and also by common sense. The debts accumulated by WWII were far higher than today, as a p% of GDP, yet the country was able to handle that debt. The difference is that today, half the Congress has pledged to never raise taxes for any reason at all.
In terms of economic activity, while it makes sense to spend money productively, from a macro standpoint what's important is just employing people and getting disposable income in their hands. Remember, wars have been notoriously good stimulus even though they are absolutely unproductive.
comparing todays economy to that of world war two and the early post war years is absurd as the conditions were completely different then. back then we were THE manufacturing force in the world, today we have strong competition around the world.
News flash: fractions have denominators. When British spending rose to 51.1 percent of GDP from 43.9 percent of GDP, it was because GDP fell not spending rose.
Newsflash as a percentage it was still too high. The significant cuts never came about.
Quote:
Originally Posted by MTAtech
As for taxes, the American stock market boomed at the time capital gains was 39%. If you're arguing that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what’s happened since then: lower tax rates and far lower job creation.
sigh When Clinton dropped the capital gains tax from 28 to 20 percent THAT caused the economy to jump start.
What happened since was government ruined the economy by regulating the housing market.
I have a great idea lets make mortgage loans to people with little to no down payment, while lowering standards as far as credit history and ability to pay the loan back. What could possible go wrong?
For the record, taxes now are among the lowest in modern history. Your assertion that "deficits and debt that is out of control" is disputed by authorities such as the CBO and also by common sense. The debts accumulated by WWII were far higher than today, as a p% of GDP, yet the country was able to handle that debt. The difference is that today, half the Congress has pledged to never raise taxes for any reason at all.
In terms of economic activity, while it makes sense to spend money productively, from a macro standpoint what's important is just employing people and getting disposable income in their hands. Remember, wars have been notoriously good stimulus even though they are absolutely unproductive.
The economy during WW2 was horrible. The workforce was sub par. You couldn't purchase much, quality wise. The reason people saved back then, there was nothing to buy.
Little difference in working and being unable to buy a quality product and not working much and being unable to afford a quality product.
We came out of the bad times after the war when government spending dropped and the people spent their money.
Newsflash as a percentage it was still too high. The significant cuts never came about.
sigh When Clinton dropped the capital gains tax from 28 to 20 percent THAT caused the economy to jump start....
The DJIA in Jan 1982 was 845. In January 1992 it was 3200. That's a big gain -- 3.5X in 10 years when the capital gains rate was 39%. Thus, investors aren't shy because they have to {gasp} pay taxes.
Below is a graph of Real GDP (economic growth). During this period, there were various tax-rates. If the theory is that low tax rates cause more economic growth, I'd like to have someone tell me, based upon this graph, when there were high rates and when there were low rates. It sure seems to me that GDP rises regardless of tax-rates.
To me, government spending is a component of GDP and cutting government spending necessarily cuts GDP when the economy is depressed. It's different when the economy is overheated and government crowds out credit. But that's not in the tea leaves now.
In addition, when millions of workers are unemployed the top priority is getting the workers back to work so they can restart paying taxes and that, in itself, will reduce deficits. Reducing the deficit in the short-term is self-defeating.
LOL.
First it wasn't big enough.
Then as it's "run its course" the economy slowly starts to pick back up.
Then, in a nasty display of rhetorical gymnastics & hoping everyone is a complete idiot with a gnat sized brain and the memory of a full blown Alzheimer's patient, the claim is not that it wasn't all that it could have been but it's the sole reason the U.S. isn't in a death spiral.
Meanwhile, back on the ranch, the calls for repairing the unsustainable budget deficits are as still as loud as ever from the CBO to the IMF to OMB.
The DJIA in Jan 1982 was 845. In January 1992 it was 3200. That's a big gain -- 3.5X in 10 years when the capital gains rate was 39%. Thus, investors aren't shy because they have to {gasp} pay taxes.
Below is a graph of Real GDP (economic growth). During this period, there were various tax-rates. If the theory is that low tax rates cause more economic growth, I'd like to have someone tell me, based upon this graph, when there were high rates and when there were low rates. It sure seems to me that GDP rises regardless of tax-rates.
Why don't you simply separate the graph in its 5 year periods and make not of where the line graph intersects those 5 year periods. The pickup is obvious.
Not that that has anything to really do with economic growth though.
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