The Logical Inconsistency of the Republican Party

• BoatShoes

  Bruce Bartlett says it better than I ever could. He worked for President's Reagan and George W. Bush as well as Congressmen Ron Paul.
  
  He is the author of "Reaganomics: Supply-Side Economics in Action" (New Rochelle, NY: Arlington House Publishers, 1981). He also co-edited the book The Supply-Side Solution (Chatham, NJ: Chatham House Publishers, 1983).
  
  My opinion on the matter is that this is spot on. Nevermind that we're doing the wrong thing by contracting aggregate demand in a demand side slump....if you're going to do it, at least be logically consistent.
  
  http://www.thefiscaltimes.com/Columns/2011/06/24/Will-Higher-Taxes-Tank-the-Economy.aspx
  
  There is the link. I'm going to post the text here though so people don't just go "Class Warfare, herm derrp"
  
  "The main sticking point in negotiations between Republicans and Democrats on deficit reduction measures to accompany a rise in the debt limit is whether higher revenues should make any contribution. A key Republican concern is that any tax increase would depress the economy.
  
  Given the slow patch that the economy is going through, any realistic threat to growth is one that has to be taken seriously. But the Republican position that spending cuts are expansionary while tax increases are depressing is not logically consistent. Both spending cuts and tax increases affect the economy in roughly the same way in the short run – by reducing aggregate demand. Fiscal contraction, whether on the tax side or the spending side, will have a negative effect under current economic conditions.
  
  Of course, it goes without saying that there will be different economic effects depending on how spending is cut or taxes are raised. But the first-order effect in either case will be to reduce national income and depress growth. In the longer run, some spending cuts could well be expansionary if they altered economic behavior in a positive direction. In general, subsidies are a bad idea because they distort economic decision making and reduce growth below what would occur in a free market environment.
  
  But the same is true for tax subsidies. If someone pays lower taxes because they produce ethanol it is really no different than just getting a government check for doing the same thing. Yet many Republicans oppose abolishing tax-based subsidies because it would be an impermissible and economically depressing “tax increase,” while eliminating budget-based subsidies would be a beneficial “spending cut” that would be economically stimulating.
  
  Economists have known for many years that many tax cuts are nothing more than spending by another name. They call such things “tax expenditures” and there are about $1 trillion worth in the tax code. Getting rid of many of them would have exactly the same economic benefits as reducing on-budget subsidies. Nevertheless, Republicans oppose eliminating tax expenditures unless other taxes are cut because any net tax increase would depress growth. The historical evidence, however, does not necessarily support this view.
  
  Back in 1982, Ronald Reagan was persuaded that the deficit was such a severe impediment to growth that a tax increase to reduce it would be economically beneficial. Many in his party strenuously objected, citing research by Republican economists. For example, on August 12, 1982, U.S. Chamber of Commerce president Richard Lesher sent to Congress an analysis of the proposed tax increase. Said Lesher:
  
  “If H.R. 4961 is passed in these troublesome economic times, we have no doubt that it will curb the economic recovery everyone wants. It will mean a lower cash flow as more businesses pay more taxes, with a depressing effect on stock prices. It will reduce incentives for the increased savings and investment so badly needed to improve productivity and create more jobs. It will mean higher prices for many products and services. It will increase government costs in caring for those who, because the economy is held down, cannot find employment.”
  
  It would be hard to find an economic forecast that was more wrong in every respect. Looking at real gross domestic product, it grew 4.5 percent in 1983 and 7.2 percent in 1984 – an exceptionally strong performance. The stock market had one of its best years ever in 1983 – both the Dow Jones Industrial Average and the S&P 500 Index rose 35 percent. There was no increase in the rate of inflation, which was exactly the same in 1983 and 1984 as it was in 1982. The unemployment rate fell from 10.6 percent in December 1982 to 8.1 percent by December 1983 and 7.1 percent in December 1984.
  
  The Chamber was not an outlier. Virtually every Republican economist made similar dire predictions. Economist Arthur Laffer told his clients on July 26, 1982, that the Tax Equity and Fiscal Responsibility Act, which raised taxes by about one percent of GDP, “will stifle economic recovery,” “retard economic growth,” and undercut “the economy’s ability to enter into a period of expansion.” On August 20, 1982, he told his clients that TEFRA “will tend to lengthen and deepen the recession.” Writing in the New York Times on September 12, 1982, economist Norman Ture said the administration’s claim that TEFRA would promote economic growth was “bizarre.” He said it would “weaken the impetus for economic growth” and make the economic recovery “less certain and less vigorous.”
  
  Despite these erroneous predictions, Republican economists said pretty much the same thing when Bill Clinton proposed a tax increase in 1993. On April 12, 1993, the Republican members of the Joint Economic Committee predicted that the unemployment rate would be 0.3 percent higher in 1994 and 1995, 0.5 percent higher in 1996, and 0.6 percent higher in 1997. Real GDP growth would be 0.4 percent slower in 1994, 0.5 percent slower in 1995, 0.8 percent slower in 1996, and a full percentage point lower in 1997.
  
  On August 20, 1993, Laffer told his clients, “Clinton’s tax bill will do about as much damage to the U.S. economy as could feasibly be done in the current political environment.” He said that interest rates would rise and the stock market would fall.
  
  Once again, it would be hard to find a forecast that was more completely wrong. The unemployment rate fell from 7.1 percent in January 1993 to 5.4 percent by December 1994. Real GDP growth rose from 2.9 percent in 1993 to 4.1 percent in 1994. Stock prices rose and interest rates fell. More importantly, the 1993 tax increase and accompanying spending controls, which were opposed by every Republican in Congress, laid the foundation for the phenomenal growth of the late 1990s that actually produced budget surpluses before Republican tax cuts in the 2000s dissipated them.
  
  Despite these facts, it is Republican dogma that tax increases are so offensive that they are willing to walk away from trillions of dollars of spending cuts that the Obama administration has agreed to and risk defaulting on the national debt just to prevent so much as $1 of tax increase from being enacted. While obviously any tax increase needs to be carefully considered, there is no doubt that closing loopholes and eliminating many tax subsidies would have the same effect as cutting spending. If Republicans believe that cutting spending is stimulative, they can’t logically oppose cuts in spending through the tax code."
• believer

  

  I still do not understand the mindset that if you run trillion dollar deficits we must spend our way to prosperity. It's like saying the best way to a better lifestyle after maxing out your credit cards is to apply for another credit card.
  
  What this rant ignores is the fact that when gubmint raises taxes, it only uses the new revenues to SPEND EVEN MORE MONEY. It never - NEVER - goes to paying down the debt.
  
  Big Government must spend us to economic nirvana. If you insist. :rolleyes:
• Writerbuckeye

  

  Keynesian economic strategies have failed miserably every time they've been used -- but here's boat once again pushing for more. Just as Biden and Obama are still talking about another "stimulus" package -- even as they can still smell the stench of failure from the last one.
• gut

  I'd debate that Keynesian strategies fail every time. The classic theory is consumer's reduce spending in anticipation of future tax increases, but in practice this doesn't happen (which in retrospect should have been obvious, since that gives entirely too much credit to the taxpayer). So in the short-run I do believe deficit spending can prop things up a bit, but of course you never get $1 for $1 with the gubmit. The main failing here is we've pursued Keynesian strategies for the better part of 3 decades and have never paid the piper. A smoothing strategy necessitates that you build a surplus in good times, and except for like 1-yr under Clinton (thanks to some nifty accounting tricks) this hasn't happened.
• derek bomar

  

  believer;816546 wrote:I still do not understand the mindset that if you run trillion dollar deficits we must spend our way to prosperity. It's like saying the best way to a better lifestyle after maxing out your credit cards is to apply for another credit card.
  
  What this rant ignores is the fact that when gubmint raises taxes, it only uses the new revenues to SPEND EVEN MORE MONEY. It never - NEVER - goes to paying down the debt.
  
  Big Government must spend us to economic nirvana. If you insist. :rolleyes:

  
  multiplier effect
• QuakerOats

  It is quite simple:
  
  If you want less of something, tax it more.
  If you want more of something, tax it less.
• coyotes22

  

  Repeal obamacare, save money
• Belly35

  

  coyotes22;818736 wrote:Repeal obamacare, save money

  Repeal Obama and save our America
• Footwedge

  Writerbuckeye;816685 wrote:Keynesian economic strategies have failed miserably every time they've been used -- but here's boat once again pushing for more. Just as Biden and Obama are still talking about another "stimulus" package -- even as they can still smell the stench of failure from the last one.

  
  The article says nothing about Keynesian economics. It speaks of tax increases. Those are mutually exclusive events.
• Footwedge

  gut;816763 wrote:I'd debate that Keynesian strategies fail every time. The classic theory is consumer's reduce spending in anticipation of future tax increases, but in practice this doesn't happen (which in retrospect should have been obvious, since that gives entirely too much credit to the taxpayer). So in the short-run I do believe deficit spending can prop things up a bit, but of course you never get $1 for $1 with the gubmit. The main failing here is we've pursued Keynesian strategies for the better part of 3 decades and have never paid the piper. A smoothing strategy necessitates that you build a surplus in good times, and except for like 1-yr under Clinton (thanks to some nifty accounting tricks) this hasn't happened.

  And again. The article says nothing about Keynesian economics. It speaks of tax increases. Those are mutually exclusive events.
• believer

  

  Footwedge;819133 wrote:And again. The article says nothing about Keynesian economics. It speaks of tax increases. Those are mutually exclusive events.

  Perhaps not directly, but we all know that any tax increases would not be used to pay down the debt. The purpose of the tax increases would be to fuel the Keynesian economics.
  
  The massive national debt must be addressed first. Let's start by CUT SPENDING and then we'll talk about tax increases to allow inefficient and often corrupt Big Gubmint spending to "prime the pump."
• BoatShoes

  believer;819318 wrote:Perhaps not directly, but we all know that any tax increases would not be used to pay down the debt. The purpose of the tax increases would be to fuel the Keynesian economics.
  
  The massive national debt must be addressed first. Let's start by CUT SPENDING and then we'll talk about tax increases to allow inefficient and often corrupt Big Gubmint spending to "prime the pump."

  
  No you silly goose. Increasing taxes, just like cutting spending, would be a mistake in the short run according to keynesian ideas because both contract demand and the purpose is to stimulate aggregate demand. A Keynesian would say that either idea is bad and that we ought to borrow more money at these basement low interest rates.
  
  Conservatives and our President on the other hand suggest that the Short Run be damned and that we ought to focus on long run deficits and not try to fix the unemployment problem. except Conservatives and the President differ in their deficit-reuduction strategy in that for the Pubs there is only one way to do so, cutting direct spending, but they will not cut tax expenditures (must of them) which are just spending by a different name nor will the allow the Bush Tax Cuts to expire or raise taxes in any fashion which both have the same effects on demand as spending cuts; hence the logical contradiction. Furthermore they use false claims about the devastating effects of marginal tax raises which have been proven false twice in the last 30 years but empiricism means nothing; nevermind the irony when they claim that they are worried about its effect on jobs and unemployment when contracting aggregate demand in the short run will have a negative effect on the unemployment rate whether it is done through tax raises or spending cuts.
• BoatShoes

  Writerbuckeye;816685 wrote:Keynesian economic strategies have failed miserably every time they've been used -- but here's boat once again pushing for more. Just as Biden and Obama are still talking about another "stimulus" package -- even as they can still smell the stench of failure from the last one.

  This is miserably false. The IMF has run experiments with real nations proving that Keynesian ideas work. Austerity on the other hand should be reserved for good economic times because it makes downturns recessions and recessions depressions.
• BoatShoes

  QuakerOats;817658 wrote:It is quite simple:
  
  If you want less of something, tax it more.
  If you want more of something, tax it less.

  
  This is exactly what I'm talking about. I provide you with a Conservative Economist who refutes such ungrounded assertions and you again respond with an assertion that has no foundation.
• BoatShoes

  Belly35;818751 wrote:Repeal Obama and save our America

  
  Repeal Obamacare and you can say goodbye to Private Health Insurance and bring on Medicare for all faster than you can imagine.
• BoatShoes

  gut;816763 wrote:I'd debate that Keynesian strategies fail every time. The classic theory is consumer's reduce spending in anticipation of future tax increases, but in practice this doesn't happen (which in retrospect should have been obvious, since that gives entirely too much credit to the taxpayer). So in the short-run I do believe deficit spending can prop things up a bit, but of course you never get $1 for $1 with the gubmit. The main failing here is we've pursued Keynesian strategies for the better part of 3 decades and have never paid the piper. A smoothing strategy necessitates that you build a surplus in good times, and except for like 1-yr under Clinton (thanks to some nifty accounting tricks) this hasn't happened.

  I agree that we haven't done the right things during boom times. That I concede...but that doesn't mean we shouldn't learn from our mistakes and do so in the future. We could rectify that mistake simply by allowing the Bush Tax Rates to expire once demand picks up as those were justified by our previous surplus.
• coyotes22

  

  BoatShoes;819348 wrote:No you silly goose. Increasing taxes, just like cutting spending, would be a mistake in the short run according to keynesian ideas because both contract demand and the purpose is to stimulate aggregate demand. A Keynesian would say that either idea is bad and that we ought to borrow more money at these basement low interest rates.
  
  Conservatives and our President on the other hand suggest that the Short Run be damned and that we ought to focus on long run deficits and not try to fix the unemployment problem. except Conservatives and the President differ in their deficit-reuduction strategy in that for the Pubs there is only one way to do so, cutting direct spending, but they will not cut tax expenditures (must of them) which are just spending by a different name nor will the allow the Bush Tax Cuts to expire or raise taxes in any fashion which both have the same effects on demand as spending cuts; hence the logical contradiction. Furthermore they use false claims about the devastating effects of marginal tax raises which have been proven false twice in the last 30 years but empiricism means nothing; nevermind the irony when they claim that they are worried about its effect on jobs and unemployment when contracting aggregate demand in the short run will have a negative effect on the unemployment rate whether it is done through tax raises or spending cuts.

  
  Lower taxes fix the unemployment. Its not the Governments job, to create jobs.
• coyotes22

  

  BoatShoes;819352 wrote:Repeal Obamacare and you can say goodbye to Private Health Insurance and bring on Medicare for all faster than you can imagine.

  
  Has Private Healthcare just been around for the last ten years? It seems to have worked for the past 100 to me. Its not the Governments job to regulate, or provide health care. They cant even run the post office, you want them running hospitals?!
• coyotes22

  

  BoatShoes;819354 wrote:I agree that we haven't done the right things during boom times. That I concede...but that doesn't mean we shouldn't learn from our mistakes and do so in the future. We could rectify that mistake simply by allowing the Bush Tax Rates to expire once demand picks up as those were justified by our previous surplus.

  
  No, we will rectify mistakes of the last three years, by getting the socialist, commy out of the White House. Him and his Soro backed cronnies.
• coyotes22

  

  BoatShoes;819351 wrote:This is exactly what I'm talking about. I provide you with a Conservative Economist who refutes such ungrounded assertions and you again respond with an assertion that has no foundation.

  
  How does what he said, have no foundation? Take gasoline. Before the Dems took over the Congress, gas prices were at or below $2/gallon. They come into town, and immediately raise the gas tax, because its not fair that the big bad oil companies make money in "the land of the free, home of the brave". (see redistribution of wealth) Higher gas tax= high price at pump. Oops, gas goes over $3/gallon. Then, they print our money and print and print and print, then obama gets elected, and he prints and prints and prints. Pretty soon, he has done what Soro has wanted for the last ten years, and has devaluled our dollar. Guess what that does,,,,,, Raises gas prices!! Now we have a weak economy, and you expect other countries to sell us their goods, for a reasonable price? Stop the presses, and quit "handing" out money. Quit spending money! First thing I would cut, if elected, Education fund. Government has no buisness in the schools, and we are SPENDING $42 BILLION a year on just education!!!! But yet, according to Obama, we have the dumbest kids in the world. Well, if Im spending money on something, I dont feel is working, IM GONNA QUIT PAYING FOR IT!!!!! Maybe instead of Golfing EVERYWEEKEND, he should do some work!!!!!
• stlouiedipalma

  coyotes22;819392 wrote:Has Private Healthcare just been around for the last ten years? It seems to have worked for the past 100 to me. Its not the Governments job to regulate, or provide health care. They cant even run the post office, you want them running hospitals?!

  coyotes22;819395 wrote:No, we will rectify mistakes of the last three years, by getting the socialist, commy out of the White House. Him and his Soro backed cronnies.

  coyotes22;819399 wrote:How does what he said, have no foundation? Take gasoline. Before the Dems took over the Congress, gas prices were at or below $2/gallon. They come into town, and immediately raise the gas tax, because its not fair that the big bad oil companies make money in "the land of the free, home of the brave". (see redistribution of wealth) Higher gas tax= high price at pump. Oops, gas goes over $3/gallon. Then, they print our money and print and print and print, then obama gets elected, and he prints and prints and prints. Pretty soon, he has done what Soro has wanted for the last ten years, and has devaluled our dollar. Guess what that does,,,,,, Raises gas prices!! Now we have a weak economy, and you expect other countries to sell us their goods, for a reasonable price? Stop the presses, and quit "handing" out money. Quit spending money! First thing I would cut, if elected, Education fund. Government has no buisness in the schools, and we are SPENDING $42 BILLION a year on just education!!!! But yet, according to Obama, we have the dumbest kids in the world. Well, if Im spending money on something, I dont feel is working, IM GONNA QUIT PAYING FOR IT!!!!! Maybe instead of Golfing EVERYWEEKEND, he should do some work!!!!!

  
  These three posts strengthen my argument about wing nuts from the conservative side.
• coyotes22

  

  stlouiedipalma;819521 wrote:These three posts strengthen my argument about wing nuts from the conservative side.

  
  Yep.