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Wages spent on government workers are a relative dead end, as they do not have an "echo effect" of impact on the manufacturing and distribtution that went into the sale of the product as well as the raw materials. Those incomes generated are taxed and greater revenues generated by higher employment. The "echo effect" allows incomes to be taxed several fold. Further the increased sales that occur due to more and higher income generates more sales tax for states.
What on earth are you talking about?
Let's take the school system, for example. Raw materials and manufacturing abound in producing school buildings, textbooks, computers, pencils, notebooks, etc.
Do I need to mention Colt's Manufacturing Company and military/police forces? Is highway pavement not produced from raw materials? What about Hoover Dam?
You can argue that government is more/less efficient than the private sector, but the money is circulated in exactly the same manner.
Let's take the school system, for example. Raw materials and manufacturing abound in producing school buildings, textbooks, computers, pencils, notebooks, etc.
Do I need to mention Colt's Manufacturing Company and military/police forces? Is highway pavement not produced from raw materials? What about Hoover Dam?
You can argue that government is more/less efficient than the private sector, but the money is circulated in exactly the same manner.
What am I talking about? Government jobs vs private sector. Are you actually saying that it does not matter whether jobs are in the private sector vs goverment generated jobs? Why not just have every american quit thier job and we can all be government employees, thus guaranteeing 100% employment?
Buisness drives economies, not government. If the converse was true, the Soviet Union, North Korea, and Cuba would be the ecomic powerhouses of the world. China only experienced tremendous growth when they embraced capitalism to a greater degree.
What am I talking about? Government jobs vs private sector. Are you actually saying that it does not matter whether jobs are in the private sector vs goverment generated jobs?
You claimed government employees don't circulate money in the same manner as private sector employees. You also noted that the private sector utilizes raw materials and manufacturing, but claimed the government doesn't. "Dead end" as you put it. I provided examples to show you are in error. Are you now backing off those claims, or are you just going to change the subject?
Quote:
Why not just have every american quit thier job and we can all be government employees, thus guaranteeing 100% employment?
Buisness drives economies, not government. If the converse was true, the Soviet Union, North Korea, and Cuba would be the ecomic powerhouses of the world. China only experienced tremendous growth when they embraced capitalism to a greater degree.
None of this has anything to do with what we were discussing. However, you are incorrect here as well. Government can indeed drive an economy. You provided three examples yourself. "Driving an economy" is not equivalent to being an "economic powerhouse."
Well, the Republicans spent a lot of money with Bush, so the Democrats are now in charge, and spending with not end in sight. It means that the Republicans will win the next time, and will have to raise taxes to pay for the expense the Democrats are creating today. This in turn will open the door for another Democrat win after, as they will blame the Republicans for raising taxes.
You can't answer a question until you understand what the question is. If you did nothing at all, the expectation would be that revenues would increase simply as a result of the relatively constant pressures of inflation and population growth. Simply pointing to the fact that revenues increased after a tax cut would prove nothing. You need to show that revenues increased by more than they would have have if the tax cut had not been enacted. That side of the question always has to be modeled, as you can't simultaneoulsy have real-world data for the situation of both enacting a tax cut and not enacting a tax cut.
As a momentary aside, by the way, your chart does not show that revenues increased following the the 1981 tax cuts. It shows that they declined. The chart is also misleading in that it fails to make any mention of the sizable tax increases that Reagan enacted in both 1982 and 1983. As a percent of GDP, the 1982 tax increase was larger than the tax increase that Clinton passed in 1993. The 1983 tax increase boosted payroll taxes for an average middle-class family by about 17%. Your chart does, of course, show revenues increasing after these major tax increases were passed, and there were more of those in 1985 and 1986 as well.
To return to the primary point, the initial effect of any tax cut is obviously to reduce revenues. If I tax every dollar of something or other at a 50% rate and then reduce the rate to 30%, I am clearly out 20 cents on every dollar in the tax base. But the tax cut may have some stimulative effect that can cause the tax base -- and therefore revenues -- to expand, thereby providing a secondary effect that can at least partially offset the initial effect. Great. If the secondary effect gain ever exceeds the 20 cent loss of the initial effect, your theory will be upheld. Unfortunately, it doesn't. For an income tax situation, the highest secondary effect recovery that you are going to get will be on the order of 6 or 7 cents. Tax cuts do not pay for themselves. They always result in lower revenues than what would have been the case in the absence of the tax cut. There is simply no serious person who believes otherwise.
You claimed government employees don't circulate money in the same manner as private sector employees. You also noted that the private sector utilizes raw materials and manufacturing, but claimed the government doesn't. "Dead end" as you put it. I provided examples to show you are in error. Are you now backing off those claims, or are you just going to change the subject?
None of this has anything to do with what we were discussing. However, you are incorrect here as well. Government can indeed drive an economy. You provided three examples yourself. "Driving an economy" is not equivalent to being an "economic powerhouse."
Oh yeah? Again, if that is true, the solution is simple- everyone quit their private sector job and we all work for the government. Is that how it works?
Oh yeah? Again, if that is true, the solution is simple- everyone quit their private sector job and we all work for the government. Is that how it works?
If what is true? Solution to what? Stop the rambling. Please.
Again, you claimed "Wages spent on government workers are a relative dead end, as they do not have an "echo effect" of impact on the manufacturing and distribtution that went into the sale of the product as well as the raw materials. "
I guess that saganista's math is the math of socialism- it doesn't add up. Thanks for the facts.
Well, now that you have been enriched by these "facts" of yours, let's see how <saganista>'s thinking might stack up against that of a handful of prominent economics people from within the recently (and fortunately) concluded Bush administration...
Edward Lazear, CEA Chairman...
I certainly would not claim that tax cuts pay for themselves.
Greg Mankiw, former CEA Chairman...
Most economists believe that taxes influence national income but doubt that the growth effects are large enough to make tax cuts self-financing.
Alan Viard, CEA Sr Economist...
Federal revenue is lower today than it would have been without the tax cuts. There's really no dispute among economists about that.
Robert Carroll, Treasury DAS for Tax Policy...
As a matter of principle, we do not think tax cuts pay for themselves.
Ben Bernanke, Federal Reserve Chairman...
I don't think that as a general rule tax cuts pay for themselves. What I have argued instead is that to the extent the tax cuts produce greater efficiency or greater growth, they will partially offset the losses in revenues.
Andrew Samwick, former CEA Chief Economist...
You know that the first order effect of cutting taxes is to lower tax revenues. We all agree that the ultimate reduction in tax revenues can be less than this first order effect, because lower tax rates encourage greater economic activity and thus expand the tax base. No thoughtful person believes that this possible offset more than compensated for the first effect for these tax cuts. Not a single one.
I would guess that all these people must have been somehow blackmailed into engaging in the mathematics of socialism. Would you like to claim that to have been the case???
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