The Stimulus Package

[Jason1]

Originally Posted by Professor S

but I'm confident enough to say that this stimulus bill will fail.

Riiiiiight. This is the same person who said Obama would never be able to win a general election, then oh no changed his opinion to say that Obama will win, but it will be a very close election...GIVE ME A BREAK MAN! Obama won by 8 million votes!

I dont know why anyone even bothers to read your posts anymore...

People said I embarrased myself with my opinions...at at least when im confident in something I actually end up being right...

[BlueFire]

sigh...

[Professor S]

Originally Posted by Jason1

Riiiiiight. This is the same person who said Obama would never be able to win a general election, then oh no changed his opinion to say that Obama will win, but it will be a very close election...GIVE ME A BREAK MAN! Obama won by 8 million votes!

I dont know why anyone even bothers to read your posts anymore...

People said I embarrased myself with my opinions...at at least when im confident in something I actually end up being right...

It's hard to be wrong when you don't say anything substantive... but thats not really the same as being right, is it? Especially when you quote only part of a sentence of my post and ignore any of the previous or continued content or the context in which it is presented...

As for the election, we've already hashed that out long ago with the conclusion you simply ignore the financial collapse in August as a game changer, and I believe it was a game changer (opinion I shared on the day of the collapse). Nothing further needs be discussed as we've said it all before. Call it a difference of opinion.

But in the end, how does this topic have anything to do with the election? We're talking about economics, not politics. If you wish to disagree with my criticisms, all I ask is that you do so on a content basis, and not an emotional one. I don't like the idea that the stimulus will fail. I have a 401k that needs it succeed. But based in the bill' merits, I simply don't see how it will work. I may be wrong, but that is an inherent risk when you put yourself out in the realm of ideas and don't base every argument on anger and spite.

What is it specifically about my concerns do you believe are unwarranted, and why?

What is it about the stimulus do you believe will work, and why?

You seem less convinced that this stimulus will work, than of the idea that I am wrong for the sake of my being wrong. A conversation is not running into a room an screaming "you're a big dummy" and then running out, relishing in your rapier wit. Its an exchange of ideas, and after all these years I'm still waiting for you to share one.

[Jason1]

Look, nobody is saying the stimulus package will make the DOW rise 4000 points in 3 days or anything like that. But the fact of the matter is they say it will create or save at least 3.5 million jobs, and to me, that is money well spent that will help in the long run, and nobody here nor their will change my mind on that.

[Professor S]

Originally Posted by Jason1

Look, nobody is saying the stimulus package will make the DOW rise 4000 points in 3 days or anything like that. But the fact of the matter is they say it will create or save at least 3.5 million jobs, and to me, that is money well spent that will help in the long run, and nobody here nor their will change my mind on that.

I'm not saying the DOW should raise that much in 3 days either, but there is a long history of the markets responding immediately to poltiical decisions they like or dislike. When Clinton was elected during a recession in the early 90's, the markets jumped almost immediately. The market liked Clinton and it showed, and in the end the market was right about his long term economic impact. Measuring immediate market reaction isn't about long term success, but instead an indicator of healthy economic policy, and when the markets immediately retreat, negative reaction.

Jason, I've long given up on the idea that I can change your mind. If anyone is steadfast in their political philosophy, it would be you. I simply want to better understand your point of view, and I have to think that if you believe in progressive politics this strongly, I have to believe there must be convincing reasons beyond class warfare and contempt of wealth.

So, I'm not trying to change your mind, I simply want to understand your reasoning:

What is it specifically about my concerns do you believe are unwarranted, and why?

What is it about the stimulus do you believe will work, and why? (aside from throwing money at the problem)

[Jason1]

I just believe the stimulus will do what they say it will do. For starters, the infrastructure spending is much needed. I also love the money being spent for renewable energy, far too long we have known our dependence on foriegn oil has been a problem yet we have done little to nothing about it. Of course the other things which I would rather not go into detail, are mostly good too. These things will create jobs hopefully soon. Will it be enough to quickly end the recession and see the DOW rise to what it was in 2007? Hardly, but hopefully it will save people's jobs. At the very least, it will do worlds better than just ignoring the problem and giving the rich more tax cuts, which is what John Mcain would have done. How can the Rupublicans get upset over this spending, when they themselves spent ungodly amounts on an unneeded and unnecessairy war. We need to spend a little to get out of this mess that THEY created!

I have a conservative professor who said as he watched the speech last night his wife was furious when Obama again mentioned the tax raise for the wealthy. She claimed that just because they worked hard, got an education and have been successful they shouldnt have to pay more taxes than everyone else. I honestly understand that opinion, but my thinking is that rich people wont suffer from paying more than poor people, and its for the good of the country. This professors wife was also born and raised in Germany. If she dosent like it, go back to Germany I say.

[Professor S]

First I'd like to thank you for your thorough and level headed response.

I understand why you would want the rich to pay a higher percentage than the poor, if in the end the result was higher revenue to the government. But according to the CBO charts Bond posted earlier in this thread, thats not the case. Revenue actually increased a percent when taxes were lowered on the wealthy. The leading explanation is that when taxes or lowered, more wealth enters the economy and in the end more revenue is created by taxing more wealth less.

Lowering capital gain taxes has been proven to increase revenue to the government by more than that.

So my question is this: If raising taxes lowers revenue in many cases (not all), then to what end do we raise those taxes? Is it fairness? If so, is the purpose of our tax system a means to exact social justice, or solely a means to create revenue to run the government?

[Jason1]

Im not sure I believe those charts and graphs, and the theory that increasing taxes lowers government revenue. The revenue was probably coming from somewhere else.

[TheGame]

Originally Posted by Jason1

Im not sure I believe those charts and graphs, and the theory that increasing taxes lowers government revenue. The revenue was probably coming from somewhere else.

I agree with Jonbo, I still don't buy it. There has to be more factors that cause the numbers to appear that way. I don't think taking $5 more from every working person in america is going to bring down revenue. Nor do I think allowing people to keep $5 more of their check will bring revenue up.

But there's something more to it, take into consideration how the value of the american dollar has changed in the last 10 years, and the population. Is the slant of the GDP rising more steep then the one of the value of our money going down? Did higher tax cuts for the rich people really create more jobs in the last 6 years?

[Professor S]

Originally Posted by TheGame

I agree with Jonbo, I still don't buy it. There has to be more factors that cause the numbers to appear that way. I don't think taking $5 more from every working person in america is going to bring down revenue. Nor do I think allowing people to keep $5 more of their check will bring revenue up.

But there's something more to it, take into consideration how the value of the american dollar has changed in the last 10 years, and the population. Is the slant of the GDP rising more steep then the one of the value of our money going down? Did higher tax cuts for the rich people really create more jobs in the last 6 years?

In saying there is more to it, absolutely. Economics is terribly complicated, but I think it's very hard to ignore the numbers the CBO put together especially when they are from such a robust and lengthy sample.

As for inflation, the numbers use a percentage of revenue compared to GD(N)P, which I believe makes inflation irrelevant in this context. If we were comparing hard numbers, then I would agree adjustments would need to be made to acount for inflation. Even if there are adjustments that need to be made, those numbers are still impossible to ignore, IMO.

As for unemployment, for the majority of the last 6 years we enjoyed historically low unemloyment numbers which I think can be very much attributed to letting those that create jobs keep the revenue they need to generate them. As for the crash, that has more to do with unethical behavior and unrealistic home buying regulations than with the tax rate. When you start mixing taxes with ethics, you begin to use our tax system as a means to create your view of social justice, and they become a punishment rather than a means to generate funds.

In the end it's common sense when it comes to unemployment: The poor and middle class do not create jobs, they benefit from the opportunity to have them. The wealthy provide the opportunity to have a job through their wealth, based on the idea that the job will give them the opportunity to create more wealth than they are spending to create the job. When the welthy are taxed, they simply adjust their spending and hiring and in the end we pay for their taxes through added fees and costs (remember how prices of goods increased along with gas, it works the same with taxes) and also with reduced opportunities for employment.

When you take wealth from the wealthy, you reduce their capacity to invest in their own business and create more and better paying employment opportunities, and real unemployment rises (I do not consider work created by the government for the sake of providing jobs "real", but instead temporary replacements as they were proven to be during the Great Depression). This is shown in many European countries that view double digit unemployment as normal, such as Germany and France.

If anyone can prove this to be incorrect using real numbers and resources, and not just opinion based on what they think should work, I would be willing to completely change my entire view of economics and politics.

[Bond]

For the sake of argument, I assumed numbers from the Office of Budget and Management of the United States of America is a reliable source.

Originally Posted by TheGame

I agree with Jonbo, I still don't buy it. There has to be more factors that cause the numbers to appear that way.

That is true with regard to GDP.

I don't think taking $5 more from every working person in america is going to bring down revenue. Nor do I think allowing people to keep $5 more of their check will bring revenue up.

That's not what the graphs were meant to illustrate. They are meant to illustrate that there is no correlation between tax rates and tax revenue, but that there is a surprising correlation between GDP and tax revenue. Nothing more, nothing less.

But there's something more to it, take into consideration how the value of the american dollar has changed in the last 10 years, and the population.

The numbers are "real" numbers, meaning that they are adjusted for inflation circa one year.

[BreakABone]

http://consumerist.com/5157192/hot-c...simple-and-fun

Well this helped me understand how the whole problem came about.

[KillerGremlin]

I like how even though Bond posted hard numbers they are still not being accepted.

[TheGame]

Originally Posted by KillerGremlin

I like how even though Bond posted hard numbers they are still not being accepted.

I accept the numbers, but I also understand that the country is going deeper and deeper into debt.. even before the bailouts were taken into consideration. Since taxes are continuiously lowered, the only conclusions I can come to is either 1) The economy how it is now, and how it was, simply does not work. There's no escaping the end fate of everything crashing down regardless of what we do. Capatilism fails. Or 2) The government over time has been using the wrong strategy when it comes to generating revenue, which for at least the last 30+ years, the main strategy has been tax cuts.

I won't accept that doing the same thing we have been doing is working, because its not. I'm not sure if total counties get credit scores, but I'm sure if they do, the united state's would be horrid.

The thing that disturbs me about the bailout packages, in a system that's supposed to be capitalism, is that in order for it to work properly the companies need to have the countrie's best interest at heart and not just their own. Which I don't think they have, and the government is giving them little incentive to do so.

Just like when Ford was asking for a bailout, when the CEOs realized they had to sacrifice their own pay in order to get the bail out, they decided its not worth it. Only because it hurt themselves financially, even if the money would have done some good for the company and created jobs. That gives me the impression that companies are willing to lie to get more money. (That's only one of many examples too.)

But I'm off subject somewhat. The fact of the matter is the strategy we have been doing has not been working, and if we stick to it, we'll just get pulled futher and further into a deep pit of debt until we find that some circle of rich people pretty much own the contry. Something has to change, period.

[Bond]

Originally Posted by TheGame

I accept the numbers, but I also understand that the country is going deeper and deeper into debt.. even before the bailouts were taken into consideration. Since taxes are continuiously lowered, the only conclusions I can come to is either 1) The economy how it is now, and how it was, simply does not work. There's no escaping the end fate of everything crashing down regardless of what we do. Capatilism fails. Or 2) The government over time has been using the wrong strategy when it comes to generating revenue, which for at least the last 30+ years, the main strategy has been tax cuts.

I'm afraid neither of those conclusions are very accurate. To the first, the basics of our economy and capitalism work very well. For example, look at our wealth creation over the course of our country's brief history: it has been the greatest and the fastest the world has ever known. To the second, again, as I have said before, the problem is government spending above and beyond revenue intake. The problem is not the amount of revenue intake, the problem is excess spending.

The two main causes of the financial collapse were: excessive toxic loans (which destroy a bank's balance sheet) and over reliance on outdated risk management software.

The main cause of our enormous debt is excessive spending.

The thing that disturbs me about the bailout packages, in a system that's supposed to be capitalism, is that in order for it to work properly the companies need to have the countrie's best interest at heart and not just their own. Which I don't think they have, and the government is giving them little incentive to do so.

Not really... in order for the current bailout system to work, the banks must raise their value back up to where the government purchased them (as the government purchased the banks at a premium) or above. So the banks simply need to do what any company is meant to do: return profits to shareholders (in this case, the government).