Spokane7
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July 17, 2011 in Opinion
Smart Bombs: Budgets need static cling
Politicians in love with supply-side economics and budgeting often discount the findings of the Congressional Budget Office, because its “static” analyses fail to capture the “dynamic” effects of tax cuts.
Jobs will be created. People will work more. The tax base will broaden. The gross domestic product will grow. All of these activities, they say, will work to offset the fact that government will take in less revenue for a while.
So what would a dynamic model of tax cuts look like? Well, the conservative Heritage Foundation applied one to the 2001 tax cuts, and came to this conclusion:
This dynamic analysis shows that President Bush’s tax plan will boost economic activity, create over 1.6 million new jobs, and strengthen the incomes of taxpayers. The plan would reduce excess tax revenue and effectively pay off the publicly held federal debt by FY (fiscal year) 2010. Real economic growth, which recently has slowed dramatically, would rise an average of $147 billion per year from FY 2002 to FY 2011.
Gosh, who could be against that? It didn’t even call for spending cuts. Still, Congress back then paid more attention to the CBO projection suggesting deficits would likely return if the tax cuts were indefinite, so it affixed a 10-year expiration date, which Congress has temporarily extended.
In 2007, before the economy collapsed, the buzzkill crew at CBO reviewed the tax cuts of 2001 and 2003 and concluded:
CBO’s latest analysis of how tax cuts affect economic behavior adds to the growing literature showing that tax cuts can have a modest positive impact on economic performance if they are paid for. But, it also adds to the growing literature showing that even under the best of circumstances, the additional revenue generated by economic activity stimulated by tax cuts offsets only a small percentage of the revenue loss that the tax cuts cause. If tax cuts are deficit financed, the net long-term economic effect could actually be negative, and the revenue losses could be larger, rather than smaller, than the static revenue estimates indicate.
Which assessment do you think reflects reality?
Round and round we go. Frustrated with the budget dance in Washington, D.C.? Find it hard to follow along? It’s actually quite simple once you’ve mastered the Budget Two Step. It works like this:
Call: “Cut spending to lower the deficit.”
Response: “That will kill the economy and jobs.”
Call: “Raise taxes to lower the deficit.”
Response: “That will kill the economy and jobs.”
Call: “More spending to stimulate the economy.”
Response: “That will increase the deficit.”
Call: “Keep the tax cuts to stimulate the economy.”
Response: “That will increase the deficit.”
So what’s the right answer? Depends on which problem you’re trying to solve.
No way around it. As you negotiate the myriad construction zones this summer, try to keep things in perspective. We want the roads improved. This is the only time of year to do that.
Still not mollified? Then consider Carmageddon.
That’s what Californians are calling this weekend’s closure of one of the busiest freeways in Los Angeles for bridge repairs. Each day about a half-million cars traverse the 10-mile section of Interstate 405 that won’t be available. Those motorists need to find another way.
Traffic is expected to be so awful that emergency centers have been opened. LA’s mayor offers this comforting prediction: “It will be an absolute nightmare.”
It’s so bad that Jet Blue is offering $4 flights from Burbank to Long Beach, a 40-mile jaunt. Not sure if there’s beverage service.
So, remember, while we’re near nature, near cones, it could be worse.
Why so blue? Just-fired Spokane police detective Jeff Harvey made $97,800 last year (along with the kind of benefits that private sector workers can only dream of) and wasn’t happy, according to the termination letter that listed episodes of wrongdoing and general workplace bitterness.
Typical workers in Spokane County make about $42,000 a year and their pay and benefits are in decline. So at least they can say they’ve earned their enmity.
Smart Bombs is written by Associate Editor Gary Crooks and appears Sundays on the Opinion page. Crooks can be reached at garyc@spokesman.com or at (509) 459-5026.
Smart Bombs: Greatest generation? Not us 
cheddar on July 17 at 7:45 a.m.
Why taint a decent look at the budget troubles with a strange attempt at inciting class envy? Please try to remember that most spokane workers don’t get shot at for their job. I agree that the detective fired was a bad apple, but to somehow insinuate that detectives don’t earn their pay is pretty low.
WillyPeter on July 17 at 9:11 a.m.
Cheddar - So what would you pay a young infantry squad leader, responsible for about ten soldiers, who comes “under fire” with routine regularity? What do you think he, and his young troops, “earn?”
gmorton on July 17 at 12:05 p.m.
Gary Crooks wrote (quoting),
“This dynamic analysis shows that President Bush’s tax plan will boost economic activity, create over 1.6 million new jobs, and strengthen the incomes of taxpayers.”
Any economic “analysis” which attempts to predict, quantitatively, the “effects” in 10 years of a change in any economic variable is vacuous, and should be dismissed out of hand, whether it is a “dynamic” analysis or a “static” one, whether it comes from Heritage, Brookings, or the CBO.
Economies are *complex adaptive systems*, and thus are unpredictable in principle, except in the very short term (weather is another such system). CAS’s are influenced by thousands or millions of variables, many of which cannot even be identified, much less quantified at any particular moment.
You can, with intensive analysis, sometimes explain after the fact how a CAS evolved from some previous state to its present state. So you can generalize about how changes in various variables *tend* to alter the system. But that will never allow a reliable prediction of the system’s future behavior. A change in GDP over 10 years will not be the “effect” of a tax change at the beginning of that period. It will be the net effect of the changing states of all of the variables in the system over the entire period.
“Jobs will be created. People will work more. The tax base will broaden. The gross domestic product will grow.”
Yes, a tax cut will *tend* to those effects. But,
“All of these activities, they say, will work to offset the fact that government will take in less revenue for a while.”
It may *work* to offset the reduction in revenue, but whether it will actually offset it is unpredictable. And if the economy does indeed grow strongly following the tax cut, and government revenue indeed increases sufficiently to offset the cut, it will inevitably be the “effect” of changes in many variables, not just the tax rate.
Jeffrey_Grey on July 17 at 12:38 p.m.
I don’t know… There must be something in the air or the water or… I don’t know. In any event, now it’s my turn to congratulate gmorton on a good post.
I agree completely that something as complex as the U.S.’s economy just can’t be reduced to one-liner simplicities. It seems that for every; ‘X factor will produce Y result’, there is an equally valid, ‘But X factor will be canceled out by Z factor and Y won’t result.’ Or, ‘In the absence of X factor, Y sometimes still results.’
At the risk of returning to an already squirming can of worms, this is why I reject the simplistic mantra, ‘Raising taxes kills jobs!’ There is historical precedent that it sometimes does. There is equal historical precedent that at other times it doesn’t. Too many other factors are in play to make the bald assertion alone enough of a basis for policy.
And yet that bald assertion, coupled with a lock-step obedience to partisan dogma, seems to be the basis for the arch-conservative wing of the Republican Party’s continued refusal to even consider raising taxes.
Sometimes raising taxes harms jobs. Sometimes it doesn’t. Meanwhile, numerous respected economists say that the crisis this nation faces as a result of our out of control debt mandates a balanced approach to the problem. ‘Balanced’ being defined as deep but well-reasoned cuts together with modest increases in revenue. (Read; ‘taxes.’)
That’s the expert opinion when it comes to what gmorton correctly identifies as the highly complex, difficult to predict creature that is our economy.
Maybe raising taxes will harm jobs. Maybe it won’t.
Failing to address our out of control debt most certainly will.
In the last analysis, it’s a choice we’re going to have to make one way or the other. And it’s a choice for We, the People who are going to have to live with the consequences.
I’m fond of saying that opinion polls prove only one objective fact and that is that people have opinions. Therefore, even if the poll results were 99.999% to .001% in favor of raising taxes, that wouldn’t objectively prove that raising taxes was a good idea or would do what we hope it will do.
But opinion poll after opinion poll has shown that We, the People have made our choice - and that choice is to couple reducing spending with raising taxes as the solution to our current predicament.
Now, for better or worse, it’s time for our elected representatives to implement that choice.
gmorton on July 17 at 1:34 p.m.
Jeffrey_Grey wrote,
“At the risk of returning to an already squirming can of worms, this is why I reject the simplistic mantra, ‘Raising taxes kills jobs!’”
Predicting that a tax increase of $X will kill Y jobs is an empty claim. Stating that a tax increase of $X will *tend* to kill jobs is (usually) a valid claim.
A tax increase will *tend* to kill jobs for the same reason that, say, an increase in fuel costs, raw materials costs, labor costs, or the costs of any other factor of production will kill jobs. They will all kill jobs, *ceteris paribus*, because they will all force increases in the prices of the product. As prices rise, demand falls, and less of the product can be sold. Less product sold, less manufactured, and thus fewer jobs.
That is not true of all taxes, however – some taxes will tend to increase jobs (thus the “usually” in the statement above). The fuel tax levied to build the interstate highway system probably increased jobs, because although it raised the per-mile costs of highway transportation, it also reduced the time required to move a ton of freight from coast to coast. The savings in labor costs – paying a driver for 3 days work instead of 6 or 7 – easily offset the higher fuel costs. The development of that highway system prompted a huge growth in the trucking industry (largely at the expense of the railroads). So taxes spent to improve elements of public infrastructure can reduce net costs and thus create jobs in some cases.
“And yet that bald assertion, coupled with a lock-step obedience to partisan dogma, seems to be the basis for the arch-conservative wing of the Republican Party’s continued refusal to even consider raising taxes.”
No, that isn’t the basis. The premise is that taxes *tend* to kill jobs, that they are not necessary to balance the budget, and that a *permanent* solution to the debt problem requires freezing the inexorable growth of government, which is the cause of the debt in the first place. You don’t address the underlying problem by giving the government yet more money.
“Meanwhile, numerous respected economists say that the crisis this nation faces as a result of our out of control debt *mandates* a balanced approach to the problem. ‘Balanced’ being defined as deep but well-reasoned cuts together with modest increases in revenue. (Read; ‘taxes.’)”
Who are these “respected economists”? (if you mention Paul Krugman I’ll gag). If there is an economist (other than Krugman) who would argue that balancing the budget “mandates” more taxes, and that this “mandate” derives from economic principles, rather than his social or political preferences, I’d love to hear his arguments.
hawken on July 17 at 1:43 p.m.
Grey: you say….
“Sometimes raising taxes harms jobs. Sometimes it doesn’t.”
Raising taxes doesn’t hurt jobs in a booming economy. Maybe??? I’ll have to do more research to prove your assertion.
Since you make the assertion. Prove it, with historical evidence.
We don’t have a booming economy. We have a chronic, “Progressive Economy. a liberal left, failed, Keynesian Economy.” Obama is Mr. Keynesian on steroids.
We have a coming, greater, Great Depression, repeated, FDR Kenysian left, failed economy.
Please cite your example of when raising taxes doesn’t hurt jobs in a chronic, recession and depression.
I will grant you this,,,, your seem to be one of the most “thinking” members of the liberal left. Therefore, I would expect you to defend your assertion,,,,
“Sometimes raising taxes harms jobs. Sometimes it doesn’t.”
When in a chronic recession, depression,,, does raising taxes NOT hurt the economy?
Jeffrey_Grey on July 17 at 2:44 p.m.
hawken,
A reply with a few initial caveats:
- Since you continue to insist on the gross over-simplicity inherient in your ‘one liner’ chant of faith; ‘Raising taxes harms jobs!’ I will too. Remember, as I easily agreed with gmorton above, the economy is far too complex for any one factor to be determinative. But you demand gross over-simplification so you get over-simplification.
- The following figures deal with the top marginal tax rate. It’s my impression that the tax increases being proposed now will be similarly targeted.
Year: –— Annual Avg Unemployment: –—Tax Rate:
1929 –— 3.2 –— 2.4
1930 –— 8.9 –— 2.5
1931 –— 16.3 –- 2.5
1932 –— 24.0 –- 63.0
1933 –— 24.9 –— “
1934 –— 21.7 –— “
1935 –— 20.0 –— “
1936 –— 16.9 –— 79.0
1937 –— 14.3 –— “
1938 –— 19.0 –— “
1939 –— 17.2 –— ”
Notice how in 1932, well within the Great Depression, taxes were raised a whopping 60%. Unemployment responded by climbing 0.8%, and then dropping from an initial 24.1% to 20% by 1935. Referencing those years and simplistically drawing a conclusion based solely upon tax rate and unemployment numbers ‘proves’ that raising taxes actually reduces unemployment.
In 1936 - deep in the Great Depression - the unemployment rate stood at 16.9%. (Roughly where it stood back in 1931 before taxes where raised 60%.) In that year taxes were raised another 19%. Unemployment promptly fell 2.6%. Again ‘proving’ that raising taxes reduces unemployment.
Of course, this oversimplification doesn’t ‘prove’ any such thing. There were many factors in play, as discussed above. However, if you insist on limiting yourself to the parrot-squawk simplicity of, “Raising taxes [in a depression/recession] inevitably harms jobs!’, the evidence is clearly against you.
[See:
http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=213
and:
http://www.shmoop.com/great-depression/statistics.html
for the source of the numbers used.]
Jeffrey_Grey on July 17 at 3:26 p.m.
gmorton,
I would like to see some hard numbers put to the concept of “tends”.
Here are some while you’re looking for your own:
http://www.bloomberg.com/news/2011-06-02/raising-taxes-isn-t-a-kiss-of-death-for-employment-growth-history-shows.html
Then there’s this complicating factor: Even granting that raising taxes might ‘tend’ to harm the economy short-term, what about long-term? (Or do we not concern ourselves with the long-term health of our nation’s economy?) For my source for an answer to that, let me cite Phillip Swagel, who served George W. Bush as assistant Treasury secretary for economic policy. “In the short run, yes, if you raise taxes, it’s generally harmful to growth. In the long run, it doesn’t have to be.” (“Generally” - same as “tends to”, no? If so; see my first point above.)
So we’re back to ‘maybe yes, maybe no’.
[ibid]Last but not least - and this is important - maybe the argument is wrongly stated to begin with. Maybe what’s being proposed (or ought to be proposed) isn’t ‘raising taxes’ at all.
[ibid]In any event - I think we agree on this fundamental point: “Predicting that a tax increase of $X will kill Y jobs is an empty claim.” The economy is simply far too complex to support that. As to what might ‘tend’ to happen…
Well, that’s the question and as I say, the American electorate has made their preferred answer plain.
pjc on July 17 at 3:39 p.m.
Hey Gary, carmageddon turned out to be as big a bust as that Rapture thing a few months ago. Once again, big media hype and nothing happened.
hawken on July 17 at 6:23 p.m.
Grey:
Thank you…. you write:
That would be like a drowning man coming up for breath, 2 inches, in desperation… only to fall back from 24 feet to 20 feet, before he drowns to death.
Here are the actual numbers you skirt:
Top Tax Rate:
1932-35: 63%
1936-39: 79%
1940-41: 81% (before the bombing of Pearl Harbor, on the morning of December 7, 1941.
It’s a very good thing the Republicans have not allowed Obama to raise taxes like FDR. Otherwise, we would already be in the Greater, Great Depression.
Apparently, you want us all to believe that raising taxes during the Great Depression, “didn’t hurt?”
Apparently, you want us all to believe that raising taxes didn’t prolong the Great Depression?
Apparently, you want us all to believe that raising taxes NOW will not prolong the chronic “Obama Recession.”
Apparently, you want us all to believe that raising taxes now will not create more unemployment?
Of course, all of the questions above are rhetorical. The answer to each is obvious, rhetorically and functionally.
I will give you this: Raising taxes in a “booming economy” does not hurt jobs. It only expands the Nanny state, for which we pay for in a down economy, which always follows a “boom economy.” As you might know, it’s called the “Business Cycle.”
Government intervention will only prolong the “natural,”,,, Business Cycle. Like it or not.
In a booming economy, tax revenues to the Treasury “sky rocket.” That is precisely when Nanny state liberals make their move to expand the nanny state.
What’s exceptionally insane, is that Obama has done it (expand the nanny state by 25%) in a chronic recession. And, is trying to do the same even today.
gmorton on July 17 at 6:50 p.m.
Jeffrey_Grey wrote,
“In the five years after a $241 billion tax increase in 1993, which Republicans criticized as the largest ever, the U.S. economy created more than 15 million jobs and grew at an average annual rate of 3.8 percent.”
You’re still at it – trying to attribute an effect in a complex system to a single cause. Many other things were occurring during that period, especially the appearance of two new “monster” technologies, the Internet/WWW and cellular phones. Both were revolutionary, both created hundreds of thousands of jobs and billions in profits.
Come up with something comparable and you could probably get away with repealing the Bush tax cuts, too.
“Even granting that raising taxes might ‘tend’ to harm the economy short-term, what about long-term? (Or do we not concern ourselves with the long-term health of our nation’s economy?).”
Well, you made your Non Sequitur of the Day. It does not follow from, “In the long run, it doesn’t have to be” [meaning that raising taxes may not harm the economy in the long run] that not raising them *will* harm the economy in the long run.
All Swagel is saying is that the harmful effects of a tax increase may dissipate in the long run, as the economy finds workarounds and ways to adapt.
If you think that not raising taxes will in fact harm the economy in the long run, you need some basis for that conjecture – some mechanism by which that “harm” might be inflicted.
“‘It’s just hard to say that’s the kiss of death for economic growth,” Slemrod said.’”
I agree. Saying it will be the “kiss of death” is hyperbole, and unsupportable. All you can say is that by raising taxes you are added another negative factor to recovery. How weighty that factor would prove to be is unpredictable.
“What matters for growth is tax rates.”
That’s false. What matters for economic growth is the *total tax burden*. The business doesn’t care what label is attached to a cost increase; if it increases the cost of doing business, it will have a depressive effect, whether it’s in the form of a rate increase or removal of deduction. Both are built into the pricing structure of the firm’s products.
There are good reasons for repealing all of those spurious deductions. But their repeal should be revenue-neutral, so that the *total tax burden* on the economy is not increased.
gmorton on July 17 at 7:12 p.m.
Hawken wrote,
“In a booming economy, tax revenues to the Treasury ‘sky rocket.’ That is precisely when Nanny state liberals make their move to expand the nanny state.”
Excellent point. “Ah, things are going well, revenues are up, the budget is balanced, so let’s serve up another free lunch – maybe for farmers, or students, or local school districts, or seniors. Think of all the votes we’ll get!”
And when the boom subsides, as they always do, the deficits soar and the spendthrift demagogues howl, “We have to raise taxes!.”
Jeffrey_Grey on July 17 at 8:17 p.m.
hawken,
I didn’t skirt them. They’re right there in my post. (Well, except for 1940-41. The figures I found for unemployment stopped at 1939. But it doesn’t matter. There was more than enough evidence to make my point.)
The numbers YOU HAVE skirted are the unemployment figures. Why? If the allegation is the effect of taxes on unemployment, aren’t unemployment figures relevant? Why don’t you list them too and correlate them to the tax rates? Why do you instead go on at great length trying to distract attention with only half the story? Is it because all the facts taken together disprove your allegation that, “Raising taxes kills jobs!”
1931 - Tax rate: 2.5%. Unemployment rate: 16.3%
1939 - Tax rate: 79%. Unemployment rate: 17.2%
Tax rate increases an utterly unprecedented 76.5% from 2.5% to 79%. Unemployment increases an almost statistically irrelevant 0.9%.
As demonstrated, when you couple tax rates to unemployment figures, there is historical precedent that rising taxes actually accompanied lower unemployment. (Notice that I said ‘accompanied’, not ‘caused.’)
There are the numbers. Right there. Very plainly cited. Why do you only shout out the taxes but omit the unemployment figures? Why? Do you think we’re too stupid to notice the omission - or, seeing the numbers, to draw the obvious conclusion: that your simple-minded chant of, “Raising taxes during a depression/recession kills jobs!” simply isn’t borne out by the numbers? All the numbers.
Why do you instead ramble on and on with the usual empty rhetoric and posturing?
johnclarke on July 17 at 8:25 p.m.
Hawken and Gmorton, how is opposite land today? I know it’s hard to see your beliefs proven to be totally wrong by facts, data and history. I understand, I used to believe in Santa Claus. You can’t really consider the Reagan years a good test of the supply side fairy tale, because he raised taxes 11 times, and the debt ceiling 17 times. See this is why I liked Reagan. He may not have been the brightest bulb, but he did adjust when it was pretty darn clear he cut taxes too low. Now that we have had a good solid decade of the Bush tax cuts, I feel like gee, we gave that a shot and it didn’t work. Maybe it’s time to put tax rates back to historically successful levels.
I have to respect your ability to (continually) state your beliefs in the face of such overwhelming evidence against you. You go guys.
Jeffrey_Grey on July 17 at 8:37 p.m.
gmorton,
I have very clearly said, several times, that I recognize our nation’s economy is too complex to point to any one factor as solely causative. I’ve said it so many times and so clearly that I suspect you’re being dishonest in trying to attribute a contrary assertion to me now in order to try to impeach me.
That statement you refer to was was very clearly offered SOLELY to rebut the very same point you yourself also dismissed - that you can’t say ‘Raising $X in taxes causes Y harm to the economy.’ In 1993 taxes were raised yet jobs were created and the economy grew. That ONLY goes to disprove the assertion that, ‘Raising taxes kills jobs.’ Same old story: ‘Correlation does not prove causation but lack of correlation does disprove causation.’
That is ALL that citation stands for.
What he actually said was, “In the short run, yes, if you raise taxes, it’s generally harmful to growth. In the long run, it doesn’t have to be.”
Read as much more into those words as you want. You’ll have to take it up with Mr. Swagel. I only read what is there and that is; ‘Raising taxes in the long run doesn’t have to be harmful to the economy.’
‘Another negative factor’? That might be your opinion. I don’t see it echoed in the quotations I cite. Again, take it up with the experts into whose mouths you’re trying to cram your own words.
Take that up with Prof. Cochrane. (Though I must say the reasoning he cites for distinguishing between tax rates and taxes collected is persuasive.)
-shrug- The original point before you went bounding off on this tangent was that the simple-minded chant of, “Raising taxes kills jobs!” is not supported - neither by the historical record nor for its failure to take into account the complexities of our economy and all the factors that affect it.
gmorton on July 17 at 9:18 p.m.
johnclarke wrote,
“Now that we have had a good solid decade of the Bush tax cuts, I feel like gee, we gave that a shot and it didn’t work.”
Better read the backthread, John (and try to understand it).
johnclarke on July 17 at 9:25 p.m.
gmorton, with all respect (none is due) you can stuff your lectures and lecturing tone. Of course you Cons will respond with “oh it takes longer” and “the economy is too complex” because supply side economics are a sham. The economy and debt could be turned around in little time, and history provides the evidence. This is not a complicated issue, in spite of every attempt by the right to make it seem so.
gmorton on July 17 at 9:29 p.m.
Jewffrey_Grey wrote,
“That ONLY goes to disprove the assertion that, ‘Raising taxes kills jobs.’ Same old story: ‘Correlation does not prove causation but lack of correlation does disprove causation.’”
Egads.
Maybe we can agree on this: Raising taxes is an *inhibitor* of job growth. However, a tax increase will not necessarily reduce jobs or job growth from a given baseline if other factors are simultaneously *stimulating* job growth.
As for the “lack of correlation disproves causation,” I take you didn’t read my response to that assertion a few days ago. In brief, lack of correlation between two variables in a complex system during a given interval no more disproves that A is a cause of B than does its contrary (“correlation proves causation”).
gmorton on July 17 at 9:55 p.m.
Jeffrey_Grey wrote,
“‘Another negative factor’? That might be your opinion. I don’t see it echoed in the quotations I cite.”
You don’t?
“Cochrane said raising tax rates on each extra dollar of income discourages additional work by wealthier individuals who are best-positioned to create jobs.”
–Cochrane
” … raising taxes today would be risky because the economy remains fragile.”
–Slemrod
“In the short run, yes, if you raise taxes, it’s generally harmful to growth.”
–Swegel
I know of no economist who has ever said that increasing taxes (subject to the exceptions I mentioned earlier) does not have an inhibiting effect on economic growth. It does not necessarily stifle growth, or preclude growth entirely, but it is always a burden on growth, just as any other increase in costs is a burden on growth.
“In a May 4 New York Times op-ed, Harvard University Professor Martin Feldstein said $278 billion could be raised this year by putting a ceiling on such ‘tax expenditures.’ … That approach ‘doesn’t discourage effort or entrepreneurship and doesn’t reduce saving and risk taking,’ Feldstein, who served as Reagan’s top economic adviser, said in an e-mail. ‘It therefore doesn’t hurt economic growth.’”
Feldstein wins today’s second *Non Sequitur* of the Day. His claim falsely assumes that entrepreneurship, savings, and risk-taking are the only contributors to growth which taxes can inhibit. But prices and disposable income are also factors, and if taxes increase the former or reduce the latter, they will likewise inhibit growth. His “therefore” is a *non sequitur*.
Jeffrey_Grey on July 18 at 3:57 a.m.
The only disagreement is that you state as an inevitable - “Raising taxes is an inhibitor…” - something that you then go on to say isn’t an inevitable after all if other factors are in play. Other factors will always be in play because, as we agree, the economy is a very complex critter.
‘(X) will always produce (Y) result, unless something else occurs to modify the impact of (X) - and something often does occur.’
‘Raising taxes kills jobs!’ … Except when it doesn’t. (See the previously cited extensive historical evidence for when it doesn’t.)
And I take it you didn’t read mine, so I guess we’re even. Except I did read yours and replied that in the case of ‘Raising taxes kills jobs!’, the meme we’re discussing and the only point I’m making; when the assertion is that overly simplistic - ‘A will inevitably cause B’ - then the lack of correlation between A and B does indeed disprove the assertion.
You’re correct that IF the assertion had been, ‘A and B and C together in varying combinations can cause X’, then it’s invalid to base judgments only on one of the variable’s presence or absence. I freely grant you that.
But that isn’t the assertion that I’m challenging because that wasn’t the assertion made. Okay?
I’m challenging only ‘A inevitably causes B’ (‘Raising taxes kills jobs!’) by demonstrating that A sometimes occurs but B doesn’t.
gmorton on July 18 at 8:24 a.m.
Jeffrey_Grey wrote,
“The only disagreement is that you state as an inevitable - ‘Raising taxes is an inhibitor…’ - something that you then go on to say isn’t an inevitable after all if other factors are in play.”
I think I see the problem. Saying that raising taxes *is* an inhibitor or growth does *not* mean, or imply, that any tax increase will produce a measurable decline in growth. It means that, *ceteris paribus*, it will reduce growth (i.e., if the taxes are the only varying factor, and all other variables remain unchanged).
Lightning does not cause all forest fires, and will not cause forest fires if other conditions, such as the forest being saturated after a week of rain, are present. Nonetheless, lightning *is* a cause of forest fires.
MrNatural on July 18 at 1:17 p.m.
Well…I tried once again to grasp this economic mysticism in both the article and the comments…it’s beyond me that ‘s fer sure…but still I’d like to inject what a few of the lucid old timers have been telling me as their take on this mess and how to recover from it.
Support your nation, sacrifice for your nation, quit believing the self-serving sob’s who exploit private wealth at the expense of this nation.
drywitt99 on July 18 at 11:23 p.m.
hawken offers:
“Top Tax Rate:
1932-35: 63%
1936-39: 79%
1940-41: 81% (before the bombing of Pearl Harbor, on the morning of December 7, 1941.
It’s a very good thing the Republicans have not allowed Obama to raise taxes like FDR. Otherwise, we would already be in the Greater, Great Depression.”
So…..between 1935-1941 FDR raised the top rate 44%…..BAD!
On one June day in 1932 Hoover raised that rate 250%…..no comment from hawken????
Typical of the reactionary right!