Economy is peachy?

[Illuminatus Primus]

Can someone please explain to me how exactly his continued chant of 'tax breaks' (repeat ad infinitum) is supposed to help? I took economics, and everything we've been taught there states that increasing your spending while cutting your revenue for an extended period of time is a recipe for economic disaster.

The idea is that there is an ideal tax rate. If taxes are too high, you stifle the economy and that actually reduces your tax revenue. If taxes are too low, you reach a point where the economy won't really grow any faster due to structural limits, so you're just wasting revenue opportunities. And right now, the fiscal conservatives are certain that taxes are too high, so lowering them is supposed to make the economy grow healthier.

This is not an entirely unreasonable argument, but it's pretty hard to be sure whether any individual tax cut is responsible for an economic boom or bust, given that there are so many complicated factors. And unfortunately, the economic growth that the country is experiencing (supposedly as a result of these tax cuts) seems to be benefiting only the wealthy (who also are the biggest beneficiaries of the tax cuts).

To say nothing of their profilgate lying. You'll never catch a conservative complain about the economy or society of the 1950s, but in 1953 the marginal tax rate on the highest earners' dollars over 200,000 was 90%. Today it is only 35%. Some of its lowest in history. And this while we're in debt comparable only to the U.S. immediately after World War 2.

[Master of Ossus]

Nice bullshitting. The point of that graph was to show that the trends do show quite a bit of fluctuation, and not a helluva lot of long-term improvement, so you can't zero in on a narrow time period and declare that we're doing great. You make it sound as if everything's just fantastic, yet there is nothing about the hourly wage figures to indicate that this is actually true for the majority of Americans.

But we are talking about fluctuations in the economy. Clearly unemployment rates will go up and down, over time, and will have a long-run mean. That doesn't invalidate a drop in the unemployment rate as a measure of economic health. And I just gave you data indicating that hourly wages are up .2% the last month for which we have data and over 2% from the year-ago period.

Are you arguing that worker wage stagnation is proof of worker productivity stagnation?

Yes. Marginal Product of Labor=wages. That's how wages are set in competitive labor markets like the US labor market as a whole.

[Darth Wong]

But we are talking about fluctuations in the economy. Clearly unemployment rates will go up and down, over time, and will have a long-run mean. That doesn't invalidate a drop in the unemployment rate as a measure of economic health. And I just gave you data indicating that hourly wages are up .2% the last month for which we have data and over 2% from the year-ago period.

Don't be ridiculous. Peoples' personal economies are not measured literally by the month; they are measured over the last year at an absolute minimum, and for the Bush Administration, they should be measured over the last 6 years. This is like saying that your car is running well because it hasn't stalled in the last 5 minutes.

Are you arguing that worker wage stagnation is proof of worker productivity stagnation?

Yes. Marginal Product of Labor=wages. That's how wages are set in competitive labor markets like the US labor market as a whole.

Please elaborate rather than vaguely appealing to "the way things are done".

[Sikon]

To say nothing of their profilgate lying. You'll never catch a conservative complain about the economy or society of the 1950s, but in 1953 the marginal tax rate on the highest earners' dollars over 200,000 was 90%. Today it is only 35%. Some of its lowest in history. And this while we're in debt comparable only to the U.S. immediately after World War 2.

What people actually paid after all techniques to lower their taxable income was often not at all exactly what marginal tax rates might suggest, but consider recent history like the past few years.

As implied by the references in my last post, federal tax collections already much increased from $1.7 trillion in 1998 to $2.2 trillion in 2005.

There is a simple yet usually accurate model for what Congress does with any amount of money received in recent history:

Except in times of multi-party conflict, typically spend all money received plus some extra. Usually the only limit is the level of deficit spending perceived as excessively harming their popularity with voters.

There was an additional $1.9 trillion of state & local tax collections even back a few years ago.

Total taxes are already $4+ trillion.

Is there any good reason to believe that $5 trillion, $7 trillion, or more wouldn't be completely spent without reducing the debt?

The real problem is not taxing too little. It is the kind of wasteful spending with little positive result that happened when federal spending increased from $1.65 trillion in 1998 to $2.47 trillion in 2005. (References are in my previous post in this thread). Such is a rate of exponential increase which can not be sustained for many more years without much harm. The next 50% increase will make federal spending alone reach $3.7 trillion. The next after that will make federal spending be $5.6 trillion. And that isn't even considering state & local spending that is already about $2 trillion and also increasing fast.

There isn't an unlimited amount of private production remaining. And how much benefit did anyone notice from the last 50% federal spending increase between 1998 and 2005? Given how major it was compared to the $4.1 trillion combined income of 145 million U.S. workers discussed in my last post, most should have noticed huge benefit theoretically, but that didn't actually happen. As shown in my post in this thread, extra spending between 2000 and 2005 amounted to $13000 per worker. The problem wasn't lack of spending but rather the result, with few (if any) receiving even $1000 noticeable benefit.

Yes, theoretically major tax increases will reduce the debt while theoretically major spending increases will provide much benefit, but does recent history suggest that either would actually cause those results?

I couldn't be more opposed to most policies of the Bush Administration, but the problem has much more to do with waste than lack of tax revenues.