The Housing Bubble

Wow Lou,
You really do know Texas!

How about El Paso? My sister used to live there, and I’ve been there to visit. Now that place sucks!

Yes, Houston is better than Dallas. And Abilene is as bad as or worse than Wichita Falls; I’ve lived in both.

Your second scenario is exactly what I’m looking for.

GEE, with the anonymity of our stage names on this blog…

MAYBE BOTTOMFISHMAN IS TOM BARRACK. seems like a likely nickname he could make for himself.

Wouldnt that be a hoot! Anywho….

As of this post- I am logging off the blog for about a week… won’t be near my computer. But if I find anything else out, I’ll let you know. Talk at ya all when I get back from my TRIP. SB BB

So let’s see, Dr. Bernanke, (PHD from M.I.T.) who has spent his life studying the issue and believes deflation can be defeated, is wrong, and you Mr. Blogger are right.

He spelled out his reasoning in several books and recent speeches, and your reasoning is what? Rates can’t go below zero, and investors will sell $US. Oh no, I bet Dr. Bernanke forgot to think about those obstacles.

Try reading his most recent speech and maye you’ll realize that he knows at least a little bit more on this subject than you or I do:
http://www.federalreserve.gov/boarddocs/speeches/2002/20021121/default.htm

Add Dr. Milton Friedman to the list that thinks you are wrong. And, add the fact that every deflation has been defeated by reflating.

BTW: M3 will no longer be reported because it’s costly to gather the info and doesn’t provide useful info to the fed. They will continue to report M2, however, which does include the monetary base. So reflating will show up there.

Or, maybe you’re right, it’s just another government plot to cheat the little guy and make republicans rich.

The French studied WWI in excruciating detail, too. The result was the Maginot Line. Bernanke’s all set to fight the last depression, not the next one.

They’ve updated their frame of reference to include Japan’s recent failures. Has that much changed from one asset bubble to the next? Perhaps, but I’m sure they are aware of new developments and will factor them in as best they can.

BTW, what alternative do they have?
Be scared to death, as advised by some of our fellow bloggers.

I agree with both parties in this line of thinking. The Fed will do whatever possible to keep deflation from taking hold. Also, I am fully aware that “whatever possible” is far beyond my knowledgle of the Federal Reserve. That being said, the housing issue, to be specific, (again, in my humble opinion) is way out of reach of the Fed’s powers. They may be able to stop the OVERALL economy from kicking in the reverse thrusters, but they can’t make people fall in love with housing again.

Come Robert Cote I was looking forward to a flame war between Mr. D and you with whom I have crossed swords.

You gotta fight back!

Mr. D, do you also hold Greenspan in high regard as well? Some people would blame him for the dire situations we face now. Sure, it was a fun ride, and I’m somewhat wealthy from it, but the upcoming recession is going to hurt everyone.

M3 was not even a fraction of the budget. It did fail to give the Fed and analysts traditional indications, but there is good reason to believe they are trying to hiding the printing press now.

Please read Randy’s thoughts on the Fed.

[Sunsetbeachguy] “Come Robert Cote I was looking forward to a flame war between Mr. D and you with whom I have crossed swords.”

My 2×4 of certitude is in the shop due to recent overuse. I’m also a little busy in a back and forth discussion with a really nice guy over the applicability and adaptability of qualitative measures incorporated in the CPI/PPI statistics. He is pretty smart but keeps reminding us that his opinions are his and not those of the rest of the Board of Governors. Mr. D is one of those who aren’t going to back down just because of silly things like facts and reasoning. He’s already gone where I just won’t follow; “not only are you wrong but because you disagree with me you must also be stupid.” Bernanke is indeed fully prepared to fight the last war. I am generally familiar with his line of reasoning and I don’t buy it. (The helicopter comment is/was a minor distraction.) His problem is he cannot print different colors of money. Any attempt to reflate with the one color at his disposal is going to pour into all the wrong places and send the wrong messages overseas.

There is too a discount rate below zero - in fact, Paul Krugman advocated Japan going to it a few years ago (I believe the BOJ was at or very close to a 0.0% discount rate) - you pay people to borrow money. There is literally no distinction between that scenario and one where nominal rates are below real rates, as they were when the fed rate was at 1%. Judging by the continued increase in the price of gold and other commodities, I’d say real rates are probably still higher than the fed rate.

Maybe the silliness of the policy is a little bit more blatant with a negative nominal interest rate, but, not unsurprisingly, at least one “prominant” “economist” with a ph.D and a bunch of books thought it was a good idea to “fight deflation.”

Robert Cote: I don’t resort to name calling, sorry if it appeared that I was. My point was that you seemed to imply that you knew the shortcomings of future fed. policy, and that Dr. Bernanke had somehow overlooked them. I simply disagree.

I look forward to discussing any facts you might present. So far you seem to be relying solely on your opinion that reflation attempts would cause the $US to drop sharply (indeed it probably would), and would lead to deflation. In fact, a weaker currency would be inflationary, and help the fed’s cause in fighting deflation.

It’s not that Bernanke overlooked any facts, it’s that he can’t do anything about the current facts he is going to have to deal with.
If you believe that the reason the Fed (who operates off budget and prints their own money) is discontinuing M3 because it costs 1.5M/yr to calculate, I’ve got a bridge to sell you.
In addition to that, there is another whole school of economic theory (Austrian) that raises the bullshit flag on
Keynesian economic theory so readily accepted as the gospel by this government. You might at least accept the possibility that this government has us in over our heads with this debt and that there is an alternative outcome that isn’t so optimistic as you believe.

…you seemed to imply that you knew the shortcomings of future fed. policy, and that Dr. Bernanke had somehow overlooked them. I simply disagree.

Bernanke hasn’t overlooked the shortcomings he openly admits the limitations of the Fed powers. People often forget that the Fed is charged with a stable money supply roughly reflecting the underlying economy, it isn’t responsible for the economy. What we have is an extensive and pervasive lending practices fiasco over which the Fed has insufficient control.

I guess if we aren’t going to get into a pissing contest Sunsetbeachguy will have to go elsewhere for a good fight.

We’re facing stagflation, wherein the items you need to survive (food, energy, raw materials, etc.) are inflating …
___________
Agree with you…don’t forget **healthcare***. The most important “need” right after food and water, IMHO.

Every sector with rising prices is one where either supply is constrained by government regulation (housing & oil) or demand is subsidized (college tuition and health care).

That isn’t staglation, it’s the natural result of liberals enacting wrongheaded policies.

As for oil rich nations delinking from the $US: Name a viable alternative. If there were one, they’d have delinked by now, don’t you think? Surely they aren’t using $USs because they like us.

Mr. D,

How would you handle healthcare? I hope my tone doesn’t come across as offensive. I am genuinely interested in hearing your ideas.

In particular, I’d like to know how we could provide healthcare to all/most who need it…OR…if we don’t, what should we do with all the sick people? Are sick people more productive than healthy ones? I think most industrialized nations understand the benefits of having a healthy workforce, and THAT is why we have subsidized care.

“How would you handle healthcare?”

My main point was that rising healthcare costs are not symptomatic of inflation, so I wouldn’t handle them by raising interest rates.

As for my solution, you have to ration demand or increase supply. In socialized countries, they ration demand by letting granny die. I don’t want to do that. Here, everybody wants the lexus of health care services, and also low prices. That’s not realistic. So we try to use HMO’s to bully doctors to lower prices, and tell patients no to services they want. Sort of a balancing act that nobody likes.

I think we all want the best of care, so we should stop complaining about prices. Rising prices beats being told no by a govenment beauracrat.

BTW, I should’ve been clearer: I didn’t mean to imply that I opposed subsidizing demand for health care, which I don’t (oh know, I’ll get kicked out of the GOP for sure).

I do oppose drilling restrictions that limit our supply of oil, irrational fear of nuclear power, and zoning restrictions that push up the cost of housing.

BTW: I also oppose gas guzzling SUVs and giant energy consuming houses. I say put the terrorist enabling oil producers in the Middle East and Venezuela out of business. Go nuclear, drill offshore and in Alaska, pass a gas tax, and burn ethanol or whatever the market can develop to compete with $3 gas.
Now, back to home prices..

if you put those countries out of business too agressively youre not giving them time to adapt their economy. The result will be more poverty and more power to terrorist recruiters. Better to let the foreign oil exporters die a slow death that they can see with both eyes. no surprises…

Your case rests on the false assumption that production isn’t being added in emerging markets. Our trade deficits feeds a lot of poor Chinese workers.

And, allows them to boost consumption. In China, consumption is actually growing faster than production, so at least in that case, you are wrong.

“My guess is that we will find out we were not as smart as we thought we were.”
I do on a regular basis, as do most people with the passage of time and an open mind.

But as for Japan: They cut rates much too slowly after their bubble popped (Greenspan cut rates in half the time). They also foolishly imposed a sales tax at the first sign of rebound (which killed their first rebound). Finally, after Milton Friedman and Dr. Bernanke had recommended it years earlier, they adopted quantitative easing (turned on their printing presses) and it has been effective, as it always has been in the past.

So we learned to cut rates quickly, and also not rely solely on low rates to reflate. I’m confident we won’t repeat those mistakes. However, I do acknowledge that we are likely to make new ones.

The main risk is that because the fed’s been so successful, risk premiums have disappeared, and speculation has run rampant.

“I’m confident we won’t repeat those mistakes. However, I do acknowledge that we are likely to make new ones.”

The mistakes have already been made. No new ones have to be made. The piper has to be paid.

All the interest rate cuts have done is to keep the music playing a few year longer and increased the payment due. Japan chose to pay sooner rather than later. The imbalances that were in place by 2000 have to be corrected, they can’t be corrected by putting other parts of the economy even more out of balance. This stack of cards will come down. It will come down with either a deflationary crash or a hyperinflationary crash, both of which are very unfriendly experiences. I feel the deflationary crash is the most likely, at least in the beginning.

You rule out a possible alternative. The housing sector stagnants or weakens moderately, while other sectors grow. Clearly that’s happening now, as housing weakens and the GDP is on track to grow 5% in the first quarter.

On a longer term basis, it happened from 1991 through 1995. Recall housing prices peaked in 1989 and did not bottom until 1995. However, after a recession in 1990, the economy did grow afterwards, while housing prices continued to fall.

Leaders: How about technology, how about energy, how about alternative energy (we sure could sell alot of hybrid cars), how about biotech or pharma, defense spending, and let’s not forget exports. Once the fed. eases, the $US should weaken and exports should rise.

Besides, what piper are you talking about? Besides speculators, and those that bought with mortgages they couldn’t afford in the last year, most homeowners are in good shape with ample equity cushion.

“The imbalances that were in place by 2000 have to be corrected, they can’t be corrected by putting other parts of the economy even more out of balance.”
Why is that? The tech bubble was corrected and the economy continued to grow because other sectors picked up the slack. Why can’t the housing bubble now correct while other sectors pick up the slack?

Mr. D,

I am not at all an economist, and appreciate your insight here.

While taxes were cut in 2003, wasn’t the govt also increasing money supply? Would that have an effect on tax revenues? Could more spending have also contributed to greater tax revenues (war spending)?

as ca renter suggests, cause and effect aren’t always that simple. With a booming economy fueled by cheap credit and deficit spending, I’m not convinced that revenues are up solely, primarily, or even partially because of tax cuts.

government spending can boost the economy, and probably did.

However, tax cut opponents factored in government spending increases and still wrongly concluded that cuts wouldn’t pay for themselves.

Clearly they were wrong, because revenue grew even faster than spending and the deficits fell in F.Y. 2005 and so far this year.

Betamax: “I’m not convinced that revenues are up solely, primarily, or even partially because of tax cuts.”

Fine, I will concede that revenue may have risen every time taxes rates have been cut, in spite of those tax cuts, if..

Tax cut haters and partisans will at least stop saying that tax cuts cause deficits or don’t pay for themselves, when in fact, they always have.

So let them say, despite the fact that cuts in marginal tax rates have always been followed by surges in tax revenues in the past, I don’t think it will this time, because….I just can’t stand anybody paying lower taxes.

I am tired of cleaning up Mr. D’s garbage.

Do you get paid by the Heritage foundation, the RNC or are you on W’s payroll directly??

here is what the IRS says (not some micky mouse newspaper analysis)
http://www.irs.gov/taxstats/compliancestats/article/0,,id=97168,00.html
In 2000 the us collected 2,096,916,925 in taxes
in 2001 the us collected 2,128,831,182 in taxes
in 2002 the us collected 2,016,627,269 in taxes
in 2003 the us collected 1,952,929,045 in taxes
in 2004 the us collected 2,018,502,103 in taxes

Notice anything???
yes the math is real simple, simple enough even for a republican.
we collected more in taxes in 2000 when W showed up than we did 4 years later. W never met a problem that a tax cut wouldnt solve and started cutting immediately. If Mr. D’s bogus premise were correct we should have increased revenues immediately and persistently.

and here is another link

http://www.cbo.gov/ftpdocs/69xx/doc6908/12-01-10PercentTaxCut.pdf

go there and read it all, but read the summary on the front page, it basically says no matter how rosy they made the scenario for increased economic activity due to lower taxes revenues were lower.

We can debate if government not taking in enough money to pay its bills is a good thing or not , but you cant come in here and spew garbage, you sound like David Lerah, the people here are too smart for your crap take it to the yahoo message boards. I come here for a real discussion about real numbers not your neo-con fantasy land.

Mr. D,

Any change in tax policy will usually cause a short-time rise in revenues. Obviously, there are extreme cases (e.g. cancel income tax) that don’t, but most do, and here’s why:

Consider a 20% capital gains tax. People know tax rates aren’t constant forever, and so avoid selling an asset with substantial gains.

If you raise capital gains to 40%, revenues go up: people quickly sell and pay the govt 20%. Revenues rise!

If you lower capital gains tax to 10%, people quickly sell once the law is in effect. Revenues rise!

Pick a tax change, and the govt will generally be able to show it raises revenues in the year it was passed. Rich people (those with options) benefit over the long term from tax changes, those living hand to mouth tend to suffer more. The more rapid the tax policy changes, the more the rich benefit.

The Right Wing Noise Machine Economics Division has several themes running through their policy pronouncements and analysis. Their greatest canard is “tax cuts pay for themselves.” The underlying facts directly contravene this assertion, but that doesn’t stop various pundits from continually advancing their agenda. The primary reason is Republican economic statements are not centered around policy but instead on selling a message.

Tax Cuts Pay for Themselves is perhaps the greatest Republican canard. It’s popular because at the root of the message is an easy sell; you can get something for nothing. Compounding the degree of obfuscation is that RWNM pundits continually rewrite the history, usually “forgetting” key facts.

The editorial pages of the Wall Street Journal originally started to advance this idea in the mid to late 1970s. The idea is based on a graph drawn by Arthur Laffer (reportedly on a cocktail napkin) and is usually represented by a simple semi-circle. The horizontal line represents tax rates and the vertical line represents tax revenue. The curve’s central idea is there is an optimal level of taxation, represented by the semicircle’s apex. It the level of taxation is above or below the apex, tax revenue will be lower than the theoretical optimal level.

There are several problems with this idea and its implementation.

There is no way to derive this model from any set of existing data. Supply and Demand, marginal cost equaling marginal revenue and all other bedrock economic concepts can be derived from existing data. The Laffer Curve can’t be derived from existing data. Ever notice that whenever the Republicans start talking about tax cuts they never say “according to the data, a cut of this magnitude will increase revenue this much”? That’s because they can’t. Theories are nice, but if reality can’t back-up the theory, the theory probably doesn’t exist in reality. The scientific method prevents the acceptance of a theory which reality cannot substantiate.

The underlying assumption is taxes are always too high. The assumption of all Republican ideologues is taxes are always to the right of the semicircle’s apex. Therefore, lowering taxes will increase revenue. What they forget to mention is according to the Laffer curve, if tax rates are left of the apex, lowering taxes could also decrease revenue. Because there is no way to extrapolate any “laffer” curve from any data there is no way prove or disprove the underlying assumptions of any tax increase or decrease. Because it is easier to sell tax cuts instead of tax increases, the assumption that rates are to the right of the apex fits in with a marketing plan, but has no basis in any actual evidence.

The academic version of conservative economic theory mandates that for every cut in taxes there must be a proportionate cut in government expenditures. Note this theory does not state that tax cuts pay for themselves. Instead, they argue for a 1 for 1 reduction in tax levels and government spending. In other words, if taxes are cut 10% then government spending should be cut by 10%. The problem with the actual implementation of laffer curve ideology is at the same time Republicans cut taxes, they disproportionately increase spending creating deficits.

Reagan and Bush II have implemented laffer curve theory. The actual results from both President’s terms is available from the Congressional Budget Office http://www.cbo.gov/, the Bureau for the Public Debt http://www.publicdebt.treas.gov/opd/opdhisto4.htm and the Bureau of Economic Analysis http://www.bea.gov/beahome.html. The actual evidence from the historical record directly contravenes RWNM assertions.

Reagan cut taxes in 1981. For the years 1981-1984, tax revenue from individual taxpayers (in billions) was 286, 298, 289 and 298. In other words, there was a total of 12 billion dollars of difference between the lowest total revenue collection and the highest point of revenue collection. It is just as easy to argue the rate from which the cuts occurred weas already to the left of the apex, indicating a tax decrease would lower revenue. After all, revenue didn’t increase, did it?

In fairness, part of the reason for the decrease in revenue was a slow economy. The US economy grew 2.5% in 1981 and -1.9% in 1982. But, the US economy grew 4.5% in 1983 (the income taxes for 1983 were collected in 1984). Yet, tax revenue increased a measly 3.1%. This bolsters the argument that tax rates were already to the left of the laffer curve’s apex, largely because there was no dramatic increase in tax revenue as the laffer curve would stipulate despite a growing economy.

For the years 1985-1988 tax revenues increased in each year. The respective total amounts were (in billions) 335, 349, 392 and 401. While it looks like the tax cuts eventually increased revenue, that isn’t the case. While the RWNM continually touts Reagan’s 1981 tax cut, they forget several ofReagan’s tax increases:

The following year, Reagan signed another big tax increase in the Deficit Reduction Act of 1984. This raised taxes by $18 billion per year or 0.4 percent of GDP. A similar sized tax increase today would be about $44 billion.

The Consolidated Omnibus Budget Reconciliation Act of 1985 raised taxes yet again. Even the Tax Reform Act of 1986, which was designed to be revenue-neutral, contained a net tax increase in its first two years. And the Omnibus Budget Reconciliation Act of 1987 raised taxes still more.

The year 1988 appears to be the only year of the Reagan presidency, other than the first, in which taxes were not raised legislatively. Of course, previous tax increases remained in effect. According to a table in the 1990 budget, the net effect of all these tax increases was to raise taxes by $164 billion in 1992, or 2.6 percent of GDP. This is equivalent to almost $300 billion in today’s economy.

(The previous section is from Townhall.com.)

For each year between 1985 and 1988, tax revenue increased from 334.5 billion to 401.2 billion - an increase of 20%. But for each of those years when tax revenue increased, there was also a legislative tax increase of one kind or another.

The total overall increase in tax revenue under Regan was 40.70%. Compare Reagan’s increase to the Clinton administration’s increase of 97% (from 509.7 billion in 1993 to 1.004 trillion in 2000) which raised taxes on upper-income taxpayers. Again, this bolsters the argument US tax rates are to the left of the laffer curve apex because a tax increase increased tax revenue.

Compounding Reagan’s fiscal problems were his massive increases in discretionary spending. Discretionary spending was 307.9 billion in 1981 and 488.8 billion in 1989 - a 58% increase. So, while government revenue increased 40% during Reagan’s presidency, discretionary government spending increased 68%. Reagan never balanced a budget. To pay for the difference, Reagan increased total US debt from 1.028 trillion in 1981 to 2.8 trillion in 1989. The debt/GDP ratio of debt under Reagan increased in every year of his presidency from 32.8% in 1981 to 51% in 1989.

The RWNM often advances the argument the US needed that spending to win the cold war. The problem is we have never paid that debt back. We are still paying for the cold war - 15 years later. Basically, the US is paying the interest on its national charge card.

Bush II implemented Reagan’s concept to a T. Bush II has also achieved the exact same result.

Bush II cut taxes twice - once in 2001 and once in 2003 (the RWNM has started to only talk about Bush 2003 cuts, conveniently forgetting the first). Tax revenue from individual tax payers was 994 trillion in 2001 and 927 billion in 2005 - a 6.7% decrease. Some of this stagnation is from weak economic growth. US GDP grew 1.6% in 2002. However, the economy grew 2.7% in 2002, 4.2% in 2003 and 3.5% in 2005. Starting in the second quarter of 2004, the economy grew at better than 3% for 10 quarters. Yet, from 2003 - 2004, tax revenue from individual taxpayers increased from 797 billion to 809 billion.

Even comparing the growth in tax revenue from individual taxpayers over a longer time frame does not help Bush’s overall figure. Going back 9 years (1 longer than Bush’s two terms) gives Bush a 41% increase in individual taxpayer revenue (from 656 billion to 927 billion). Again, Clinton’s tax increase on the rich which led to a 97% increase in revenue from individual taxpayers provided more government revenue (while still growing the economy at a healthy clip and eventually balancing his last three budgets).

Bush has also declined to use the other side of standard conservative economic thinking - a proportionate cut in government spending - coinciding with his tax cuts. Bush’s discretionary spending increased from 649 billion to 967 billion - a 48% increase. Compare this increase to the “tax and spend” liberal Clinton, whose disrectionary spending increased from 539 billion in 1993 to 614 billion in 2000 — a 13% increase.

This massive increase in government spending at a time when government revenue is decreasing has once again led to an increase in total national debt. The debt/GDP ratio under Bush has increased in every year of his presidency, rising from 57% in 2001 to 63% in 2005.

Conclusion
Under Reagan, the tax cuts led to stagnant government revenue from individual taxpayers. It wasn’t until he started raising taxes the government revenue started to increase. However, Reagan spent like a “tax and spend” liberal, increasing the debt/GDP ratio in each year of his presidency from 33% to 51%.

Under Bush II, the tax cuts led to a 6.7% decline in revenue for the first 4 years of his presidency. Because his spending increases far outpaced the decrease in government revenue, the total national debt outstanding increased 41%.

To compare, Clinton increased taxes on the upper-income taxpayers, which led to a 97% increase in government revenue. He grew the economy at a health pace. He decreased the debt/GDP ratio starting in 1995 of his presidency.

The two attempts to prove “tax cuts pay for themselves” have failed. It is clear that if the laffer curve exists, the US tax rates are clearly to the left of the curve’s apex indicating a tax cut will in fact decrease revenue.

Now Mr. D(avid Lerah) how about you STFU about tax cuts increasing revenue.

Now, now. Let’s be nice. While I am most assuredly NOT a Republican, and cringe whenever I hear Larry Kudlow speak, Mr. D does have some good insights. We can’t know that our own theories and ideas are good until we’ve debated them against people with opposing/different perspectives. They help us round-out our ideas and keep us from singing to the choir all the time.

Best regards to all here!

I am done being nice, this is the third time Mr. D has posted the same damn thing and the third time I have corrected him.

He is either ignorant (which I dont believe based on some of his other comments) or he has an agenda. He is David Lerah except we dont know who is paying him.

Poof. Mr. D and it’s spewage disappears when faced with the facts. Unfortunately, Mr. D has a good economics and monetary bankground. The problem is that that knowledge is obscured by either a payroll check from the RNC or just plain ol’ misguided thinking.

Kennybabes:
Here are your figures:
In 2000 the us collected 2,096,916,925 in taxes
in 2001 the us collected 2,128,831,182 in taxes
in 2002 the us collected 2,016,627,269 in taxes
in 2003 the us collected 1,952,929,045 in taxes
in 2004 the us collected 2,018,502,103 in taxes

I wrote that a tax cut passed in 2003 caused revenues to increase afterwards. Can you not see that they did indeed rise in 2004? Can you not also see that they were falling before the cut?
They may have risen coincidentally, or for other reasons, but they did rise AFTER the tax cut.

Here’s the fiscal year numbers from the CBO (I used them because they are updated for 2005)
FY ended September
2000 $2,026
2001 1,991
2002 1,853
2003 1,783 (tax cuts passed)
2004 1,880 (can you see that’s higher than in 2003?)
2005 2,154 (a 15% increase, highest in 25 years)
If you cannot see that revenue is at record levels for the fiscal year ended September, 2005, I am sure other more objective readers can.
http://www.cbo.gov/budget/historical.pdf
*** note pdf file, scroll down to page 2.

BTW, revenue is up an additional 10% for the first four months of this fiscal year:
http://www.cbo.gov/ftpdocs/70xx/doc7040/02-2006-MBR.pdf

Those are the facts from the non-partisan CBO. They show that AFTER tax rates were cut, revenue rose. Show me otherwise, or I will continue to dispel the myth that cutting tax rates causes the government to bring in less money.

Bull$hit

Bush has been in charge an cutting taxes since day one.

You dont get to pick some abitrary date and say look it works.

Take your crap number and crap analysis to the NAR they could use spinmeisters like you.

We STILL DO NOT HAVE THE SAME AMOUNT OF REVENUE WE DID IN 2000….What is your agenda.

Who is paying you to come make willful misreperentations of the facts to intelligent people.

Go read the CBO report that I linked to in the previous post—the organization you love to use.

They say your premise is crap, the numbers say your premise is crap, I say you are full of crap.

Mr. D(avid Lerah) I call Bull$shite on you.

Seeing as neo-cons like to use revenue as a % of GDP, lets take a closer look.

FY Revenue

2003 16.5 A 40+ year low.

2004 16.3 Another 40+ year low

2005 17.5 And another low not seen since another republiKKKan president practiced voodoo economics

Mr. D, Looking at economic data through the lens of a political ideology makes you look like…… well….. an idiot.

“Bush has been in charge an cutting taxes since day one”
Read my post, I was talking about the cut in tax rates that was passed in 2003. It’s not arbitrary, that’s when top marginal tax rates and capital gains taxes were cut. There was a tax cut passed in 2001, but it was a rebate for the child tax credit. That’s not a cut in marginal rates, and obviously won’t pay for itself.

“Take your crap number and crap analysis to the NAR they could use spinmeisters like you.”
I posted facts from the CBO. BTW, why such anger?

“We STILL DO NOT HAVE THE SAME AMOUNT OF REVENUE WE DID IN 2000″
I posted the CBO numbers below. Not only did they rise after the 2003 tax cuts, but they are at record levels. Now what do you say KennyBabes?

“….What is your agenda.”
To dispel myths and try to enlighten angry liberals. I hope to succeed at the first, but I have little hope of succeeding on the second.

Sorry Mr.D,

The numbers can’t be politicized with worn out catch phrases. Let me redirect your attention to the noted post regarding revenues.

We want to hear you response.

Thelingus wrote:
“Seeing as neo-cons like to use revenue as a % of GDP, lets take a closer look.

FY Revenue
2003 16.5 A 40+ year low.
2004 16.3 Another 40+ year low
2005 17.5 And another low (how is 17.5 lower than 16.3?)

The whole point of cutting marginal rates is to grow the GDP (which has happened) so that even though you collect a smaller percentage of GDP, the amount of money raised grows. And BTW, it’s dollars that pay the bills, not percentages.

Mr. D, thank you for acknowledging that revenues have fallen to a 40year low since 2001. And thank God for GW’s stellar economic performance. :):):)

here’s more numbers for you Mr. Lingus (BTW, I’d like a check from the RNC, could you give them a call and arrange it)

As I said, it’s dollars that pays bills:
The two year gain since the top tax rates were cut and capital gains rates were cut (sorry I wasn’t more specific earlier)
2005 vs. 2003 : Increase $371 billion
1995 vs. 1993: Increase $197 (two years after Clinton raised the top marginal rate)
So we can see that rates went up in both cases, but Bush’s tax cuts caused a greater increase in revenue than Clinton’s tax hikes.

Now, to be non-partisan:
When Clinton cut the capital gains rate in 1997, it also caused revenue to grow:
Two year gain afterwards: $249. Not as large as the Bush tax cut, but still a strong gain. So even though RATES were cut, tax revenue rose.

That’s something some people can’t accept, but it has happened every time.

Concession point to be clear:
Except when you just send out rebate checks to everybody who has kids, they don’t pay for themselves.

“Mr. D, thank you for acknowledging that revenues have fallen to a 40year low since 2001″
Now you’re twisting facts there, as I’m sure everybody else can see. Now you see why President Bush rarely conceeds anything. Liberals would just twist it around:)

“Now you’re twisting facts there, as I’m sure everybody else can see. ”

Hello pot, yes the is the kettle, you are black. Project much?

“To dispel myths and try to enlighten angry liberals. I hope to succeed at the first, but I have little hope of succeeding on te second.”

Your damn right I am angry, which has nothing to do with my political philosophy. My father had a great quote one I internalized “I can’t stand a liar or a thief” the republicans in power have demonstrated they are both.

Stop pissing on my leg and telling me it is raining. War is peace, black is white, by taking in less revenue we are taking in more revenue….you tool.

You arent trying to enlighten anybody, you are here to muddy the waters.

Mr. D(avid Lerah) I call Bull$hit on you.

Do you have any facts to show that the cuts in the top marginal tax rate and capital gains rates in 2003 did not boost revenue dollars?

So far, all that you’ve shown is the following:
1) Revenue fell during the recession and early in the recovery
2) Tax rebates didn’t help boost the economy
3) We can all see that the cuts in rates in 2003 did work to spark a rebound in the economy and tax revenue
4) Revenue as a percentage of GDP is still low, but rising. However, we pay our bills with revenue dollars, and they are now at record highs
5) You are angry and have resorted to ad hominem attacks
*** I did call you a liberal, but I don’t consider that an attack. If you do, then I am sorry.

And there you go again. When I state the facts that revenues are at an all time historic low for years 2001-2004, you attack the messenger.

Going from a 1.5 grade point average to a 1.8 isn’t saying much for GW.

Mr D(avid Lerah) does not look objectively at the data and try to extraoplate from it. He takes his premise and then tries to cherry pick peices of data that support it. And no matter how often or how hard you rub his nose in his mess, he keeps making it.

He doesn’t sound stupid so the only plausible explation is that he is here carrying Water for the republican party or one of their pet (un)think tanks.

I call Bull$hit.

Thanks Max, glad I had the cojones to ask…

“If not the tax rate cuts, then what sparked the turnaround?”

Government spending (war in Iraq, Homeland Security, etc.), housing boom, energy boom. There are many areas of economic activity that experienced a boom in 2003, Mr. D, don’t get too fixated on something so tiny as tax cuts. The primary engine of economic growth started in 2003 I think is a housing boom, when the low rates finally reached the broad masses and percolated into the retail sector.

(BTW, the revenues increased every year from 1996 through 2000 without any tax cuts enacted in that time frame. So there, I claim that leaving taxes alone increases revenue and grows economy. It’s silly, but it’s similar to what you are saying.)

Let’s look at each component that may have been a bigger factor than tax cuts.
*Government spending went up 7.9% in 2002, and 7.4% in 2003, and 6.2% in 2004. So growth there has been slowing, but still contributing to growth. To the point: there was no surge in spending in 2003.

Housing certainly contributed, but was strong from 2001 forward. It didn’t rebound in 2003, so how could it have been the trigger?

As for tiny tax cuts, I never read that description used by opponents at the time.

And the results sure haven’t been tiny:
Revenue gain over the two years since tax rates have been cut, has been 21%, vs. the two years prior to the cut of -10%.

As for revenue going up from 1996 through 2000 without tax cuts, let’s get a comparison:
In 1983, Reagan’s tax cuts were fully phased in
In 1993, Clinton’s tax hikes took effect
Six years later:
Revenue grew 65% over the following six years after Reagan’s tax cuts
Revenue grew 58% over the following six years afer Clinton’s tax hikes

BTW, over the two years following Clinton’s tax hike, revenue rose 15%.
Over the two years following Bush’s 2003 tax cuts, revenue grew 21%.

So revenue will grow if the economy is growing, but has grown faster after tax rates were cut.

Hang it up D. Playing the party shill is your weak hand. Stick with monetary policy.

How’s this for bipartisan:
After the Kennedy tax cuts (actually passed in 1964) revenue grew by 86% over the next six years.
Clinton’s tax hikes grew revenue by 58% over the next six years.

Tax cuts win again, and I support tax cuts, even when passed by a democrat.

Why would you support giving the feds even more money? Doesn’t that fly in the face of the neo-con mantra of less govt? (With exception of the Bushies of course0

Good point. Slash the tax rate on dividends and capital gains on stock to zero, and end the unfairness of double taxation of corporate profits. End the death tax as well, which is either double taxation, or taxation of paper gains.

More to your good point. If cutting tax rates causes revenue to grow, and that’s not our goal what do we do? Keep cutting them until they don’t. 35% is still a lot to fork over to the fed’s, don’t you think. Don’t you agree that taking anything more than 1/3rd of somebody elses money is greedy? If not, what top rate do you think is fair.

Actually, greedy would be expecting protection from external threats, expecting well lit streets, expecting smooth as glass highways, expecting fresh tap water, expecting a toilet the flushes, expecting 911, expecting the garbage to be picked up at the curb, all the while crying about having to pay for it through taxation.

Not sure who you think is greedy? And, you didn’t answer my question. What do you is a fair amount to pay for the federal government’s services?

You asked what was greedy. I gave you an answer.

So no level of taxation is too high if you receive services is your answer. Just pay whatever, and stop complaining.

In fact: The top 10% of wage earners pay 65.84% of all income taxes, and the only complaining I hear is from liberals whining that the rich got a tax cut. The top 50% pay 96% of all income taxes. So 1/2 the country is paying almost the entire income tax bill. Do you think that’s fair?

In comparison, in 1999 (Bill Clinton’s heyday) the top 10% paid 66.5% of all income taxes. Where are the tax cuts for the rich that liberals are complaining about?

Do you want them to pay more? I think we have representation without taxation here already. Time for the bottom half to start paying their fair share, don’t you agree?

” The top 10% of wage earners pay 65.84% of all income taxes, and the only complaining I hear is from liberals whining that the rich got a tax cut. The top 50% pay 96% of all income taxes. So 1/2 the country is paying almost the entire income tax bill. Do you think that’s fair?”

yes

If the current system is fair, I guess we should keep the tax rate cuts in place.
Glad we agree on that.

Once again - let’s hear it for Mr. D!!