Economy and that scary "R" word

[saden1]

Fuck the Bush tax cut, I wipe my ass with that measly $300 I got back. I'm getting screwed and I know it, how anyone else doesn't is beyond me. And when did we go from "the tax cut is wonderfully awesomely godsend" to "we would be in a far worse position without it???" Psst, the government is running in RED, what that means to you is that you're getting chickenfeed while the wealthy bleeds this country dry.

[mheisig]

NAFTA is the biggest turd of legislation ever. There, I've agreed with dmek for the first time

Tax rebates ($300, $800, $1,600 whatever) seem like a good idea at first glance, but most economists agree that they are a pretty bad idea. Not to mention the fact that most people end up putting that rebate in savings instead of spending it, so the impact is negligible at best.

[hooskins]

Originally Posted by mheisig

NAFTA is the biggest turd of legislation ever. There, I've agreed with dmek for the first time

Tax rebates ($300, $800, $1,600 whatever) seem like a good idea at first glance, but most economists agree that they are a pretty bad idea. Not to mention the fact that most people end up putting that rebate in savings instead of spending it, so the impact is negligible at best.

Exactly there is no incentive to put that money back into the economy. A tax cut is better because you will have direct disposable income.

[Schneed10]

Originally Posted by saden1

Fuck the Bush tax cut, I wipe my ass with that measly $300 I got back. I'm getting screwed and I know it, how anyone else doesn't is beyond me. And when did we go from "the tax cut is wonderfully awesomely godsend" to "we would be in a far worse position without it???" Psst, the government is running in RED, what that means to you is that you're getting chickenfeed while the wealthy bleeds this country dry.

You're getting the tax cuts and tax rebates confused. The rebate was the one-time $300 check. Which I agree, amounts to a hill of beans in the long run.

However the tax cuts have been in place all along. We're all paying less taxes every pay period, especially the wealthy, because of the tax cuts. That is the move that made such a good impact on our economy.

[saden1]

Originally Posted by Schneed10

You're getting the tax cuts and tax rebates confused. The rebate was the one-time $300 check. Which I agree, amounts to a hill of beans in the long run.

However the tax cuts have been in place all along. We're all paying less taxes every pay period, especially the wealthy, because of the tax cuts. That is the move that made such a good impact on our economy.

How has it been good for the economy? We are spending more money than we generate. I'm no economist but my take is that you don't give a tax cut without a balanced budged and a surplus.

[Schneed10]

Originally Posted by saden1

How has it been good for the economy? We are spending more money than we generate. I'm no economist but my take is that you don't give a tax cut without a balanced budged and a surplus.

1) If the tax cut wasn't put in place, unemployment would have hit sky high levels.

2) Government deficits don't stall economic growth. They weaken the dollar, which is a bad thing in that you can't go to Europe for vacation as cheaply, and you can't import goods as cheaply. But it's a good thing because people from other countries invest more in our companies (their currency is stronger against the dollar, so one Euro can buy more shares of Coca Cola than it normally could). Our businesses then take that cash and invest in new products and markets, creating jobs and generating more tax revenue for the US government.

[hooskins]

Originally Posted by Schneed10

1) If the tax cut wasn't put in place, unemployment would have hit sky high levels.

2) Government deficits don't stall economic growth. They weaken the dollar, which is a bad thing in that you can't go to Europe for vacation as cheaply, and you can't import goods as cheaply. But it's a good thing because people from other countries invest more in our companies (their currency is stronger against the dollar, so one Euro can buy more shares of Coca Cola than it normally could). Our businesses then take that cash and invest in new products and markets, creating jobs and generating more tax revenue for the US government.

Right but point two only lasts for a bit. Severe weakening leads to depreciation of the dollar, and in the LR can lead to inflation. Nations will pull out their investments for fear of failure. See Asian nations crisis and what happened to several Latin American countries from 70's-90's. The cycle goes back around.

Just studied this stuff last semester as an International Economics major.

[Schneed10]

Originally Posted by hooskins

Right but point two only lasts for a bit. Severe weakening leads to depreciation of the dollar, and in the LR can lead to inflation. Nations will pull out their investments for fear of failure. See Asian nations crisis and what happened to several Latin American countries from 70's-90's. The cycle goes back around.

Just studied this stuff last semester as an International Economics major.

Asian and Latin American countries don't have the underlying resources and skill sets to continue driving profit from investment. The United States is positioned strategically with natural resources and, despite growth in other nations, still contains the most highly skilled and educated workforce in the world. You're right, investment from overseas investors will not last long, but that is the case because American businesses will invest the cash in new products and markets successfully, driving profits up, driving tax revenues to the government up, driving the deficit down, and ultimately strengthening the dollar. The strengthening dollar is what will curtail overseas investment. That's the cycle that will take place in the US, not a downward spiraling cycle, but the typical business cycle we've observed over the past fourty to fifty years.

There's a reason that US government bonds yield the lowest return of all government bonds in the world. It's the most stable economy on Earth, and hence least risky to invest in.

And while we're mentioning academic credentials, BS in Finance/Economics with a minor in math, and an MBA in finance.

[hooskins]

Originally Posted by Schneed10

Asian and Latin American countries don't have the underlying resources and skill sets to continue driving profit from investment. The United States is positioned strategically with natural resources and, despite growth in other nations, still contains the most highly skilled and educated workforce in the world. You're right, investment from overseas investors will not last long, but that is the case because American businesses will invest the cash in new products and markets successfully, driving profits up, driving tax revenues to the government up, driving the deficit down, and ultimately strengthening the dollar. The strengthening dollar is what will curtail overseas investment. That's the cycle that will take place in the US, not a downward spiraling cycle, but the typical business cycle we've observed over the past fourty to fifty years.

There's a reason that US government bonds yield the lowest return of all government bonds in the world. It's the most stable economy on Earth, and hence least risky to invest in.

And while we're mentioning academic credentials, BS in Finance/Economics with a minor in math, and an MBA in finance.

All good points about resources and skill sets, and clearly you know a bit more about this than I do lol. I was just stating my background just the older folk don't jump all over me not to undermine you.

And I agree with the last point as well, that is other nations keep buying our govt's bonds, t-bills, etc.

[mheisig]

Originally Posted by Schneed10

Asian and Latin American countries don't have the underlying resources and skill sets to continue driving profit from investment. The United States is positioned strategically with natural resources and, despite growth in other nations, still contains the most highly skilled and educated workforce in the world. You're right, investment from overseas investors will not last long, but that is the case because American businesses will invest the cash in new products and markets successfully, driving profits up, driving tax revenues to the government up, driving the deficit down, and ultimately strengthening the dollar. The strengthening dollar is what will curtail overseas investment. That's the cycle that will take place in the US, not a downward spiraling cycle, but the typical business cycle we've observed over the past fourty to fifty years.

There's a reason that US government bonds yield the lowest return of all government bonds in the world. It's the most stable economy on Earth, and hence least risky to invest in.

And while we're mentioning academic credentials, BS in Finance/Economics with a minor in math, and an MBA in finance.

And Schneed wins the thread.

Where'd you get your MBA? I've been looking at doing my MBA in Finance while still working...aw hell, I'll PM you some time.

[saden1]

Originally Posted by Schneed10

1) If the tax cut wasn't put in place, unemployment would have hit sky high levels.

2) Government deficits don't stall economic growth. They weaken the dollar, which is a bad thing in that you can't go to Europe for vacation as cheaply, and you can't import goods as cheaply. But it's a good thing because people from other countries invest more in our companies (their currency is stronger against the dollar, so one Euro can buy more shares of Coca Cola than it normally could). Our businesses then take that cash and invest in new products and markets, creating jobs and generating more tax revenue for the US government.

This sounds all peachy but are tax cuts a good long term solution and how long should we rely on tax cuts to "stimulate" the economy? Should the tax cuts be permanent? Do you expect the increase tax revenues to eventually balance the budget? How long should the government be in a deficit?

[Schneed10]

Originally Posted by saden1

This sounds all peachy but are tax cuts a good long term solution and how long should we rely on tax cuts to "stimulate" the economy? Should the tax cuts be permanent? Do you expect the increase tax revenues to eventually balance the budget? How long should the government be in a deficit?

Tax cuts are the best long term solution for the generation of jobs. Tax cuts are not a one-time shot in the arm. Think of the government like a dam in a river, where the dam opens and closes the flow of money coming downstream to the town below where all the corporations and citizens live. As the government increases taxes, they choke off the river, and money's a little harder to come by to the town folk. It gets harder to fish and you can't irrigate as many crops because you don't have as much water (money to invest with) at your disposal. But when a tax cut comes along, the government eases the dam, and money flows more freely. As long as the tax cut is in place, more money continues to flow to our businesses, and they continue to put those resources to use.

A tax rebate on the other hand, is like when someone comes along and dumps a big bucket of water (money) right along the shore where the people live. It's a one-time thing. You can use it to water an extra field and get an extra field's worth of corn that year, but once you use it up, you're back to dealing with the same choked-off river you were before.

So yes, the tax cuts should be permanent.

[dmek25]

Originally Posted by Schneed10

You're getting the tax cuts and tax rebates confused. The rebate was the one-time $300 check. Which I agree, amounts to a hill of beans in the long run.

However the tax cuts have been in place all along. We're all paying less taxes every pay period, especially the wealthy, because of the tax cuts. That is the move that made such a good impact on our economy.

its seems like we disagree all those tax cuts did was try to balance out the ever rising rate of inflation. so now your taxes are a wee bit lower, but your paying more for your actual purchases

[Schneed10]

Originally Posted by dmek25

its seems like we disagree all those tax cuts did was try to balance out the ever rising rate of inflation. so now your taxes are a wee bit lower, but your paying more for your actual purchases

I'd rather see higher inflation than higher unemployment. You'd think the democrats, who decry the rich and seem to be the party for the lower and middle class, would get this. But they don't seem to.

Inflation and unemployment go hand in hand. If you're taking steps, like cutting taxes and running a deficit, you're going to end up keeping unemployment nice and low, but you put inflation pressures in place. Sure enough inflation is at 4% right now, and unemployment is real low, below 5%.

Inflation costs me more money. But I'm willing to pay more for my milk and my gasoline if it means more Americans have a chance at jobs, especially the lower and middle class who need the jobs so much. Democrats love to balance the budget and love to bring in tax revenue, but they never acknowledge that these moves put a ton of lower-middle class workers out of work.