Unemployment to Hit 10% this Year Says....Obama

[nathanm]

An actual Stimulus bill would have avoided this.  We know how to do it.  We've done it before, but the practice of lowering taxes and reducing restrictions is not popular with this administration, so rather than learning from history and experience, they will have to learn from hard knocks.  It may be a good thing, because in the process citizens will become more economically educated.

No, in this economic climate all tax cuts will do is give people money to either save or pay down debt with. The government spending $787 billion means $787 billion dollars actually gets spent. But given all the red tape it takes to spend the money (which is a good thing!), it takes these things a while to have an effect.

Gaspar, your argument is probably valid when the top marginal rate is 50% or higher. Tax cuts make a difference then. Once you have the bottom of the barrel rates we have today, each further cut has significantly less effect.

The government spending money on infrastructure projects (and I agree that the stimulus package wasn't nearly enough of that, especially given the large amount that was appropriated to tax cuts, just as you desire, so that folks like yourself would go along..even though there was no way you actually would) is just as stimulating to the economy as any other production, only more so as it is guaranteed that the money will be spent rather than saved or returned to shareholders as profit and then saved.

You're stuck in the late 1970s, apparently.

[Conan71]

No, in this economic climate all tax cuts will do is give people money to either save or pay down debt with. The government spending $787 billion means $787 billion dollars actually gets spent. But given all the red tape it takes to spend the money (which is a good thing!), it takes these things a while to have an effect.

Gaspar, your argument is probably valid when the top marginal rate is 50% or higher. Tax cuts make a difference then. Once you have the bottom of the barrel rates we have today, each further cut has significantly less effect.

The government spending money on infrastructure projects (and I agree that the stimulus package wasn't nearly enough of that, especially given the large amount that was appropriated to tax cuts, just as you desire, so that folks like yourself would go along..even though there was no way you actually would) is just as stimulating to the economy as any other production, only more so as it is guaranteed that the money will be spent rather than saved or returned to shareholders as profit and then saved.

You're stuck in the late 1970s, apparently.

Nathan,

How is it any more likely that individuals would spend more of the $787 bln from the gov't than they would a tax cut?  People either get to keep their money (tax cut) or the gov't gives it back to them ("stimulus") what about either way of going about this modifies spending or saving behavior?  Anyone worried about losing their job or a drop in income is saving money right now, at least any rational person.

Example:  Think about the up to $8000 first time homebuyer credit.  We'd like to think that people would take all that money and spend it at Lowe's, but many I know of who have taken advantage of it are planning on using it to pay down their mortgage to get rid of PMI, paying off a vehicle, or putting it in savings in the event they lose their job.  I even know of one guy who bought a house in Feb. of this year who doesn't plan to file an amdended return.  He's going to wait until he files his taxes next year and plans to pay off a vehicle and save the rest.  Go figure...

[guido911]

This guy clearly is not warming up to Obama's economic plan (warning: language/content):

http://www.youtube.com/watch?v=KWu-efNN8PM

[nathanm]

Nathan,

How is it any more likely that individuals would spend more of the $787 bln from the gov't than they would a tax cut?  People either get to keep their money (tax cut) or the gov't gives it back to them ("stimulus") what about either way of going about this modifies spending or saving behavior?  Anyone worried about losing their job or a drop in income is saving money right now, at least any rational person.

Example:  Think about the up to $8000 first time homebuyer credit.  We'd like to think that people would take all that money and spend it at Lowe's, but many I know of who have taken advantage of it are planning on using it to pay down their mortgage to get rid of PMI, paying off a vehicle, or putting it in savings in the event they lose their job.  I even know of one guy who bought a house in Feb. of this year who doesn't plan to file an amdended return.  He's going to wait until he files his taxes next year and plans to pay off a vehicle and save the rest.  Go figure...

The savings rate has significantly increased in the last year. Therefore, it stands to reason that a tax cut would largely be saved. If the government spends the money, it is by definition being spent and not saved.

The $8000 is like a tax cut. The individual decides what to do with it. You yourself stated that people aren't spending it, therefore it's not stimulating the economy except in cases where it induced someone to purchase a house that otherwise wouldn't have. (and that's only marginally economically useful, IMO)

The choice isn't between the government just up and giving people money and a tax cut, the choice is between the government spending the money and a tax cut that people will mostly save or pay debt with.

That said, talking about the $787 billion stimulus as if it's all going to be spent by the government is a complete fabrication. Half of that is tax cuts. The Democrats, being the morons they are tried to get the Republicans to go along by agreeing to their demands that the stimulus package include a tax cut. As I expected, the Republicans declined to vote for the stimulus despite their demands being met. Thus the Democrats essentially wasted half of the $787 billion package, significantly reducing the economic effect the bill would have.

At this point I think the Democrats are largely idiots and the Republicans are mostly malicious. Bipartisanship only works when both sides are willing to meet in the middle. Since the Congressional Republicans are completely unwilling to do so, the Democrats are shooting themselves in the foot by even considering their demands.

[Cats Cats Cats]

Since numbers were taken... This was when they entered vs left office.
I mean shouldn't Bush have outdone at least Carter?  I am younger and from what I have seen in practice the magical tax cuts haven't produced the blazing job growth that is always claimed.  As I said previously, Bush didn't even meet his forecast for job growth WITHOUT the tax cuts.

President                            Jobs created
            
George W. Bush                          3.0 million    
Bill Clinton                                  23.1 million    
George H.W. Bush                   2.5 million
Ronald Reagan                          16.0 million
Jimmy Carter                          10.5 million
Gerald Ford                             1.8 million
Richard Nixon                            9.4 million
Lyndon Johnson                           11.9 million
John F. Kennedy                            3.6 million
Dwight Eisenhower                     3.5 million
Harry Truman                            8.4 million

[Gaspar]

Since numbers were taken... This was when they entered vs left office.
I mean shouldn't Bush have outdone at least Carter?  I am younger and from what I have seen in practice the magical tax cuts haven't produced the blazing job growth that is always claimed.  As I said previously, Bush didn't even meet his forecast for job growth WITHOUT the tax cuts.

President                            Jobs created
            
George W. Bush                          3.0 million    
Bill Clinton                                  23.1 million    
George H.W. Bush                   2.5 million
Ronald Reagan                          16.0 million
Jimmy Carter                          10.5 million
Gerald Ford                             1.8 million
Richard Nixon                            9.4 million
Lyndon Johnson                           11.9 million
John F. Kennedy                            3.6 million
Dwight Eisenhower                     3.5 million
Harry Truman                            8.4 million

I love that citation.  Research congressional actions during those periods.

[Gaspar]

No, in this economic climate all tax cuts will do is give people money to either save or pay down debt with. The government spending $787 billion means $787 billion dollars actually gets spent. But given all the red tape it takes to spend the money (which is a good thing!), it takes these things a while to have an effect.

Gaspar, your argument is probably valid when the top marginal rate is 50% or higher. Tax cuts make a difference then. Once you have the bottom of the barrel rates we have today, each further cut has significantly less effect.

The government spending money on infrastructure projects (and I agree that the stimulus package wasn't nearly enough of that, especially given the large amount that was appropriated to tax cuts, just as you desire, so that folks like yourself would go along..even though there was no way you actually would) is just as stimulating to the economy as any other production, only more so as it is guaranteed that the money will be spent rather than saved or returned to shareholders as profit and then saved.

You're stuck in the late 1970s, apparently.

That premise has been proven incorrect historically. . . many many times.

[nathanm]

That premise has been proven incorrect historically. . . many many times.

No more than your own.

Actually, now that I think about it WWII is one incredible example of how government spending can turn the economy around. Hell, even during the depression upswings in employment and spending were directly correlated to government spending. When Roosevelt kowtowed to the Republicans and reduced the deficit spending things went right back down into the crapper until the war and its massive deficit spending.

But my premise is the one that's been proven incorrect historically. After all, the 1987 crash, the early 80s recession, and all the rest weren't actually happening in a climate of near continual tax rate reductions. That's just a figment of my imagination.

As Jimmy Stewart said in Harvey "Well I've wrestled with reality for over 35 years, doctor, and I'm happy to say I've finally won out over it." 

[Cats Cats Cats]

I love that citation.  Research congressional actions during those periods.

Lets use a simple sample of oh, say 16 years.

Cut taxes, + 3 million
Raise taxes, +23 million

So raising taxes is worth 20 million more jobs

[Conan71]

The $8000 is like a tax cut. The individual decides what to do with it. You yourself stated that people aren't spending it, therefore it's not stimulating the economy except in cases where it induced someone to purchase a house that otherwise wouldn't have. (and that's only marginally economically useful, IMO)

It's down to hair-splitting at this point Nathan, you're just parsing words.  You can call it a tax cut to prove your point, I can call it gov't spending to prove mine.  One would assume a tax cut means a cut in remittance to the collecting authority.  Stimulus spending would be in the form of a check from the gov't.  It's most definitely not a tax cut for someone who buys a house that only paid in $4000 in federal tax this year and they get $8000 back upon filing an amended return.  It's the gov't giving back money already paid in taxes and even giving away money they collected from others who don't qualify for such programs. 

The scary economy, credit drying up and job picture has far more to do with the savings rate being up than whether it's the government giving money away or lowering taxes.  +1 to Gaspar's dead horse.

[nathanm]

It's down to hair-splitting at this point Nathan, you're just parsing words.  You can call it a tax cut to prove your point, I can call it gov't spending to prove mine.  One would assume a tax cut means a cut in remittance to the collecting authority.  Stimulus spending would be in the form of a check from the gov't.  It's most definitely not a tax cut for someone who buys a house that only paid in $4000 in federal tax this year and they get $8000 back upon filing an amended return.  It's the gov't giving back money already paid in taxes and even giving away money they collected from others who don't qualify for such programs. 

The scary economy, credit drying up and job picture has far more to do with the savings rate being up than whether it's the government giving money away or lowering taxes.  +1 to Gaspar's dead horse.

You missed one very important word, so this time I'll italicize it for you.

The $8000 is like a tax cut.

It has the effect of a tax cut in that whether it is spent or saved is up to the individual receiving it. From what I can tell, most people are saving at least half of it.

Government spending is by definition spent on goods and services. I don't understand what's so difficult to grasp about the concept.