Althouse: "Mr. McCain hungers for information. He can regularly be seen reading newspapers from cover to cover..."

August 10, 2008

"Mr. McCain hungers for information. He can regularly be seen reading newspapers from cover to cover..."

"... and aides say he embraces the briefing books given to him each night. His aides say he is especially studious when it comes to economic issues, an area in which he has admitted weakness."

If he really is such a voracious reader of meaty material, why, at 72, isn't he already powerfully knowledgeable about a subject that is central to his line of work?

55 comments:

AllenS said...: At age 72, he's probably forgotten a lot of stuff.; 8/10/08, 8:18 AM
Paddy O said...: With the collapse of the feudal system and the rise of mercantilism McCain got overwhelmed by all the hope and changes, so now has to catch up with the new-fangled approaches.; 8/10/08, 8:21 AM
EnigmatiCore said...: Our candidates are terrible, as they have been for the last several election cycles.

I mean, they are really, really bad.; 8/10/08, 8:30 AM
Anonymous said...: Let's accept this as true. So can we please have a discussion about the issues that's not targeted at 7 year olds.

The economy sucks. Why are we supposed to believe that 4 more years of the same will help matters.

1) How can we eliminate the deficit while lowering taxes, fighting two wars, and Social Security and Medicare about to balloon in size.

2) How do we restore the dollar's strength

3) How do we increase liquidity in the market

These are actually not that difficult to solve, but I'm not hearing any honest answers from McCain. I'm hearing soundbytes.

Obama at least has a plan that adds up, although I'm not a fan of his approach, as I'd personally prefer to solve the problem by eliminating Social Security and Medicare and letting the old people die.; 8/10/08, 9:01 AM
KCFleming said...: Most people don't know any basic economics at all. Obama knows even less than McCain; a fact that should scare people, but doesn't.

Your question could and should be asked about every candidate for every office from City Council to Governor to Senator.

Are you powerfully knowledgeable about economics, a subject that is central to this line of work?

For most candidates, what they know about economics they learned from the papers, high school "social studies", and all but a few college professors, i.e. dangerous socialist nonsense.

I propose a fifty point test for every aspiring candidate, multiple choice.; 8/10/08, 9:02 AM
KCFleming said...: DTL said... "Obama at least has a plan that adds up,"

After his complete meltdown last night, DTL suggests that the anti-NAFTA socialist Obama
--the man who speaks of the economic unicorn called "windfall profits", the man who wants to raise taxes on the only segment of society that actually increases total wealth--
that BHO has a plan that adds up"???

Oh. I get it now.
DTL admitted his great hatred for the USA last night. He voiced his belief that "It'll be enjoyable to watch the shithole of a country known as America sink even further into the ditch."

Voting for an economic disaster via Obama is one way of accomplishing that event.
Well played, DTL!; 8/10/08, 9:12 AM
Salamandyr said...: Here's a speculative question as to why McCain isn't powerfully knowledgeable about economics. It's possible that he has what might be considered "relative ignorance". He knows more about economics that most citizens, but less than senators who specialize in it, and he considers his knowledge of economics to be less than his knowledge of things he feels expert in.; 8/10/08, 9:16 AM
Peter V. Bella said...: downtownlad said...
Let's accept this as true. So can we please have a discussion about the issues that's not targeted at 7 year olds…
I'd personally prefer to solve the problem by eliminating Social Security and Medicare and letting the old people die.

1) How can we eliminate the deficit while lowering taxes, fighting two wars, and Social Security and Medicare about to balloon in size.

2) How do we restore the dollar's strength

3) How do we increase liquidity in the market

Mr. Seven Year Old,

1.) It has been historically and economically proven that lowering taxes actually brings in more tax revenue. The problem is getting those poltroons from both parties to stop spending money like drunken sailors. The government budget can be cut by one third tomorrow and there will be no harm- only certain special interests will suffer.
2.) Money is now a commodity, just like soy beans and pork bellies. Like all commodities it has a market. It is traded on open markets. The strength of the dollar will always rise and fall. Remember if one or more currency rise, others must fall. Markets are not equal or fair. They were never meant to be.

3.) Define liquidity. Markets by their nature are fluid.

But the real problem is foreign trade. We have not produced enough quality products at a price even our own people will pay, let alone foreigners; and have not for generations. This has cost us jobs resulting in less cash available for people to spend. Foreign countries can produce better quality goods at lower prices and even with the high cost of shipping, still sell them in our market at low to reasonable prices. Something we forgot how to do.

I want to see what you will say when you get old. Maybe you should just kill yourself now and save us the trouble later. SS is a big scam, no doubt about it. But if it was run the way it was originally designed instead of the trough of Presidents and Legislatures it would be stable. Since 1965 every President and Legislature has borrowed from SS to pay finance their failures. Even Bill Clinton did. That is how he falsely balanced the budget; voodoo accounting. The government can never repay SS for all the money it has borrowed. Don’t even get me started on the biggest scam; SSI

So, you see, Mr. Seven Year Old, it is simple. It is basic economics.; 8/10/08, 9:27 AM
Peter V. Bella said...: Pogo said...
Your question could and should be asked about every candidate for every office from City Council to Governor to Senator.

Are you powerfully knowledgeable about economics, a subject that is central to this line of work?

Actually, I would vote for the candidate- no matter his education, even a high school drop out who could answer a more important question; Can you balance a check book?; 8/10/08, 9:29 AM
Freder Frederson said...: It has been historically and economically proven that lowering taxes actually brings in more tax revenue.

This is simply untrue. Tax cuts (at least at the marginal tax rates that we have now) simply do not pay for themselves. Reasonable, honest economist who accurately accounts for all the factors admit that tax cuts do not pay for themselves.

Stop repeating this deceptive statement (if not outright lie).

But the real problem is foreign trade. We have not produced enough quality products at a price even our own people will pay, let alone foreigners; and have not for generations.

And if true (and this claim is questionable), whose fault is that. I would lay the blame squarely on a corporate culture that cares more about short term profit (creating illusory "wealth" as Pogo puts it) over the long term health of the economy. Our corporations care more about the next quarter's stock price or generating dividends than creating actual wealth in the form of building infrastructure, both public and private.

the man who wants to raise taxes on the only segment of society that actually increases total wealth-

Seems to me that the only wealth created during the Bush years has been based on a PONZI scheme of ever rising real estate prices. That is not the creation of wealth, that is creating something out of nothing.; 8/10/08, 9:45 AM
EnigmatiCore said...: "The economy sucks. Why are we supposed to believe that 4 more years of the same will help matters."

The economy has been better, but it doesn't really suck. In fact, considering the mess in the credit markets due to Fannie Mae/Freddy Mac and sub-prime lenders, it is amazingly good.

"1) How can we eliminate the deficit while lowering taxes, fighting two wars, and Social Security and Medicare about to balloon in size."

We can't.

We also cannot eliminate the deficit while raising taxes, fighting one war, and Social Security and Medicare about to balloon in size.

And lastly, we cannot eliminate the deficit while keeping taxes the same. We cannot eliminate it fighting no wars.

The deficit is going to increase, plain and simple until we do something about the growth of entitlements. And by something, I don't mean 'add another big one.'

"2) How do we restore the dollar's strength"

I know that just expressing the desire for restoring the dollar's strength will not do it.

Getting rid of the deficit would help. To do that, we would have to have real entitlement reform (and by reform, I mean bigtime cuts, likely in the form of means testing and raising the retirement age).

"3) How do we increase liquidity in the market"

In what market-- and why would increasing liquidity in and of itself be a good thing. Honest question, because I have no idea what you are talking about with that one.

"These are actually not that difficult to solve,"

For 1 and 2, this is completely untrue. They are extremely difficult to solve.

"but I'm not hearing any honest answers from McCain. I'm hearing soundbytes."

Agree. But the same is true with Obama. His plan that you feel adds up is nothing but soundbytes and unattainable desires. Pass.; 8/10/08, 9:50 AM
KCFleming said...: "Reasonable, honest economist who accurately accounts for all the factors admit that tax cuts do not pay for themselves."

Bullshit.
Unless "pay" refers to "pays the government". If ones underlying paradigm means that government is the aim of all things, that the state owns all and to it all things are owed, only then is your statement true.

But then, that's socialistic nonsense.; 8/10/08, 9:51 AM
rhhardin said...: Economics is just common sense.

Unfortunately it's common sense about perverse outcomes, like if everybody stands on their toes, everybody doesn't see better.

So most people get everything wrong.; 8/10/08, 10:00 AM
EnigmatiCore said...: "This is simply untrue. Tax cuts (at least at the marginal tax rates that we have now) simply do not pay for themselves. Reasonable, honest economist who accurately accounts for all the factors admit that tax cuts do not pay for themselves."

Reasonable obviously defined as "Agrees with the poltical outlook of Freder Frederson."

I think it is obvious that the principles described by the Laffer curve must be true. If taxes were 100%, there would be no revenue because there would be no economic activity. If taxes were 0%, there would be no revenue. Ergo, at some point in between the two extremes is the point where tax revenues is maximized. If taxes are higher than that point, a cut will indeed pay for itself (and then some). If taxes are lower than that point, a tax increase would have the effect of increasing the tax revenue base. If taxes are higher than the point of maximized tax revenue and taxes are increased, tax revenue will not increase but will decrease. If taxes are lower than the point of maximized tax revenue and taxes are decreased, tax revenue will decrease.

Anyone who blindly says that tax cuts pay for themselves or that tax increases add revenue is either being deceptive or is unaware of what must be true. Either way, such people do not inspire confidence and should be looked at with skepticism.

What is the point of maximized revenue? I have no idea, and I bet it is not a constant but changes over time. Further, is it or should it be a goal to maximize tax revenue? Some say no. I don't know about if as a rule it should be, but I think that right now absolutely we should be trying to, until we can retire the debt (not just the deficit) and have upgraded our infrastructure (roads, airports, ports, power grid, and so on) significantly.; 8/10/08, 10:04 AM
Freder Frederson said...: Bullshit.

The statement was made by you and MCG that "tax cuts raise revenues". I countered that this is simply not true, that tax cuts at the marginal tax rates we have now (max rates around 40%) do not pay for them.

By the rules of the game we usually play here, the person who first makes a statement of fact has to defend it. So prove it. Provide a link that shows that recent tax cuts have raised revenue.

Now of course I am assuming that when you say revenue you mean that tax cuts pay for themselves (that revenues after tax cuts are actually higher than they would have been if the tax cuts had not been implemented). If you are simply saying that revenues increase the year after a tax cut, well so what? That doesn't mean they wouldn't have been even higher without the cuts.

Reasonable, honest economists agree that at best tax cuts return at most $.70 or $.80 on the dollar (e.g. you will recover $.75 of a dollar of revenue lost through increased economic activity).; 8/10/08, 10:11 AM
EnigmatiCore said...: "If you are simply saying that revenues increase the year after a tax cut, well so what? That doesn't mean they wouldn't have been even higher without the cuts."

While I would not say that, in a case where we cut taxes and the tax revenue increased, it proves beyond a shadow of a doubt that we had tax rates too high to maximize revenue, it is evidence that is the case. And in such a case, while it is possible that revenues would have been even higher had we raised taxes instead, more likely the opposite would have occurred.; 8/10/08, 10:15 AM
Freder Frederson said...: Ergo, at some point in between the two extremes is the point where tax revenues is maximized.

Which is why I added the caveat of at the marginal tax rates we are at now. We have obviously passed the peak of the Laffer Curve, people like Pogo and MCG are just too dishonest to admit it.

They will not be able to provide any proof that the Bush tax cuts paid for themselves because they simply did not.; 8/10/08, 10:16 AM
Freder Frederson said...: it is evidence that is the case. And in such a case, while it is possible that revenues would have been even higher had we raised taxes instead, more likely the opposite would have occurred.

We are talking about a situation of tax cuts v leaving tax rates alone, not tax cuts v. raises.; 8/10/08, 10:18 AM
EnigmatiCore said...: "Reasonable, honest economists agree that at best tax cuts return at most $.70 or $.80 on the dollar (e.g. you will recover $.75 of a dollar of revenue lost through increased economic activity)."

I assume after reading your other comments, you are asserting that this is the case assuming our current tax rates as the baseline, and that if the tax rates were different, that the $0.70-$0.80 might be $0.40-$0.50 or $1.10-$1.20, right? Or are you saying that you think it is always the case that it is seventy someodd cents?

If it is 80 cents, then some might argue that even though revenues would go down in that case, the increased economic activity makes it worthwhile because more prosperous people require less government spending. So even then it might make sense to cut taxes.

I am not one of them, though. I believe we do need to maximize revenue so as to pay off our debt and to ensure our infrastructure not only gets maintained but improved.; 8/10/08, 10:20 AM
EnigmatiCore said...: "We are talking about a situation of tax cuts v leaving tax rates alone, not tax cuts v. raises."

Same difference. If you cut rates and revenues go up, it doesn't disprove the idea that revenues would have increased even more had the rates been left alone, but it definitely suggests it.

In fact, in such a case, if the goal is to maximize revenue (again, what I see as a desirable goal), then the smart approach would be to cut rates again, and keep doing so until revenues drop, and then undo the last cut, and then thereafter have small cuts and small increases accordingly based on if the last move seemed (emphasis on the word seemed) to have helped or hurt.; 8/10/08, 10:23 AM
Freder Frederson said...: I assume after reading your other comments, you are asserting that this is the case assuming our current tax rates as the baseline, and that if the tax rates were different, that the $0.70-$0.80 might be $0.40-$0.50 or $1.10-$1.20, right?

That is what I am saying and that is how the Laffer Curve, if you actually look at the damn thing, is supposed to work. However, the Pogos of the world think that the Laffer Curve is actually a slope and a cliff where the optimal tax rate is somewhere around .1%. Of course I am being hyperbolic--all the extreme flat tax fans seem to have settled on somewhere around 17% as the magic number (although most of the schemes I have seen want to tax capital gains at 0%, making the "fair tax" anything but).; 8/10/08, 10:27 AM
Sloanasaurus said...: Althouse, you of all people should know that the more we read the less we know. Scholarship is a lifetime vocation. It isn't something that you just do once and a while.

Of course maybe this is the answer you were trying to prod out of your readers.....testing our intelligence.; 8/10/08, 10:31 AM
Freder Frederson said...: In fact, in such a case, if the goal is to maximize revenue (again, what I see as a desirable goal), then the smart approach would be to cut rates again, and keep doing so until revenues drop, and then undo the last cut

Of course the problem is that it is highly speculative to say how much the economy would have grown if you hadn't messed with the tax rates. While some economists might say you recover $.80 or a tax cut, others might use different assumptions to say only $.40 (or even less) was recovered. There are just too many variables.; 8/10/08, 10:34 AM
Sloanasaurus said...: This is simply untrue. Tax cuts (at least at the marginal tax rates that we have now) simply do not pay for themselves. Reasonable, honest economist who accurately accounts for all the factors admit that tax cuts do not pay for themselves.

In fact it is true. If your economy is over taxed, economic growth will be reduced and your overall total government revenues will decline relative to what they could have been. So if you cut taxes and increase growth (increase the size of the total pie), total revenues will increase relative to what it would have been with higher taxes.

The main reason for this fact is because the government is less efficient at creating assets than the private sector. It always has been and always will be.; 8/10/08, 10:36 AM
KCFleming said...: "We have obviously passed the peak of the Laffer Curve"

I'm calling bullshit on your premise, and your subsequent statements. Those are bullshit primarily because the premise is bullshit.

Your unstated premise is that there is some agreed upon definition of "pay for themselves". There isn't. What does it mean to you?

Moreover, taxes do not in any way stimulate an economy to grow per se. If you suggest that beyond the military, a basic infrastructure and legal defense of property rights, a state causes growth, you need to prove it. You haven't. Instead you offer boilerplate Robert Reichisms; whose stature as an economist is even smaller than his size.

Although you did say "Tax cuts (at least at the marginal tax rates that we have now) simply do not pay for themselves", a specific claim that can be proven (but you offered none), you then followed with a very general statement: "Reasonable, honest economist etc etc admit that tax cuts do not pay for themselves."
Flatly false.; 8/10/08, 10:51 AM
Freder Frederson said...: Flatly false.

Pogo, you keep making these assertions without offering a shred of evidence. When I do this I am asked to prove it.

So please do so by providing a link that demonstrates that that your confident assertions are true. Here is a CBO report on the issue that backs up my assertion. Please provide a link that that backs up your unsupported faith in endless tax cuts.; 8/10/08, 11:14 AM
Freder Frederson said...: Although you did say "Tax cuts (at least at the marginal tax rates that we have now) simply do not pay for themselves", a specific claim that can be proven (but you offered none)

You offered no proof for your assertions of faith either, so how you can criticize me (and now I have provided proof) is just unbelievable.; 8/10/08, 11:17 AM
KCFleming said...: Freder, the burden of proof is on you, who made the positive assertion. I am not required to prove false your claim that "Reasonable, honest economist etc etc admit that tax cuts do not pay for themselves.", you are.

Once you define and offer evidence, I will respond in kind. Anything else is just a waste of time.; 8/10/08, 11:21 AM
garage mahal said...: Clinton increased taxes that resulted in a 97% increase in government revenue, while growing the economy at a healthy clip. Wondering if Pogo could explain how that could possibly be?; 8/10/08, 11:26 AM
Anonymous said...: Freder has a point. (extensive links are provided within the article.)

Tyler Cowen wrote about that article:

"I didn't find any false or questionable claims in the Surowiecki piece. Personally I might have stressed more the work on incentive effects by Feldstein, Summers, and others but I think the piece is right on the mark."; 8/10/08, 11:27 AM
Freder Frederson said...: Freder, the burden of proof is on you, who made the positive assertion.

No, middle class guy made the positive assertion that tax cuts raise revenues. I made a counter-assertion that you disputed. I have provided proof of my assertion while all you have provided is unsupported statements and expletives.

You and Middle Class Guy are full of shit and don't know the first thing about basic economics.; 8/10/08, 11:36 AM
KCFleming said...: yes, Freder has a point, but maybe if he wore a hat, no one would notice.

You can start with defining what you mean by "pay for themselves", and why you think that is the correct definition, and why think it is of primary importance here.

The article is typical of left-liberal thinking. At the outset is the assumption, baldly stated: "that, after cutting taxes, the government actually ends up with more revenue - has little or no support within the mainstream economic profession, and no hard empirical data to back it up.

This point is not to be missed. For lefties, the primary function of tax policy is that "the government actually ends up with more revenue"

Garage admits as much, stating "Clinton increased taxes that resulted in a 97% increase in government revenue" even though the economy was growing a healthy clip because it was in an unsustainable financial bubble like tulipomania.

Their first principle -and maybe their only concern- is increasing government revenue.

let's just say I disagree.

BTW, the rest of the article is crap and Surowiecki is an idiot. He leaves off that government spending also needs to be cut so that personal spending can go up, skipping the nonproductive bureaucrat middleman.; 8/10/08, 11:40 AM
KCFleming said...: Freder, I see.
Then you offered an opinion disguised as fact. That's fine.
So did I.
But you are now trying to claim that 'reasonable honest economists' say such and such and agree with you.
I call bullshit.
Which economists?
What did they actually say?
As usual, it will all depend on definitions.

MCG did state that lowering taxes actually brings in more tax revenue, but if and only if "those poltroons from both parties ...stop spending money like drunken sailors."

Surowiecki's piece only 'discovered' what any fool should already knows: cutting taxes without cutting spending increases deficits.

1980
Federal Receipts: $517.1 billion
Federal Outlays: $590.9 bilion

1988
Federal Receipts: $909.3 billion
Federal Outlays: $1064.5 billion

2000
Federal Receipts: $1,827 billion
Federal Outlays: $1,703 billion

The Laffer Curve is indisputably true at high rates. The US raised more tax revenue as a percent of GDP in 1988 and again in 2000 under a 40% top tax rate than it ever did in 1980 (or prior) under a 70% top tax rate. The US was on the punitive side of the Laffer curve in 1980, which should be kept in mind by those who clamor for more government spending.

And even if revenues are higher in the long-run, it's impossible to cut the deficit if you spend more than you collect.

Who can possibly argue against that?; 8/10/08, 11:58 AM
Anonymous said...: AA said: "why, at 72, isn't he already powerfully knowledgeable about a subject that is central to his line of work?"

Every subject is central to his line of work, though he does not sit on any finance or banking committees. Should have thought that would be obvious. And Obama appears to be ignorant on every subject (well, except Hope and Change, and race law), which is apparently what makes him your waffley choice, though he sits on the Subcommittee for Federal Financial Management and clearly cannot spell "financial". Gagh.

Knowledge

McCain 1

Obama 0; 8/10/08, 11:58 AM
Freder Frederson said...: This point is not to be missed. For lefties, the primary function of tax policy is that "the government actually ends up with more revenue"

Pogo, the assertion I originally disputed, you supported (and called my dispute of "bullshit" and "flatly false"), was MCG's contention that "[i]t has been historically and economically proven that lowering taxes actually brings in more tax revenue."

I carefully defined what I am talking about. You have gone off on a tangent about whether or not taxes and government expenditures are too high. That is an entirely different question altogether.

You are trying to change the subject.; 8/10/08, 12:05 PM
Beth said...: Actually, I would vote for the candidate- no matter his education, even a high school drop out who could answer a more important question; Can you balance a check book?

I doubt McCain has ever had to do that, certainly not since he married Cindy.; 8/10/08, 12:09 PM
KCFleming said...: You are trying to change the subject.

Nope; I am discussing the economic question most fundamental to any election: what is the government for?

For on this is all tax policies are derived, and all else flows from that. MCG stated it correctly, a reduction in taxes is followed by increased revenue IF spending is reduced (or perhaps held stable).

But both presidential candidates are big-government boneheads. Their only answer to giving away more goodies is to increase taxes. Neither recognize it will slow growth. One only has to look at the malaise of Europe to see what happens next.

Compare them all to Ireland, which doesn't have a free-money maker like North Sea oil to finance its spending to fall back on, and found that cutting taxes caused its growth to explode in the last decade.

Obama vs. McCain is just two Peters stealing from Paul to pay Suzy, a plan that Suzy really really likes (but pisses off Paul, who might just move elsewhere). Then Peter will hit on Suzy whose earnings are more meager. Peter never cuts his own spending, though.

And that is the idea I am calling bullshit on, the assumption that government spending is a given.; 8/10/08, 12:54 PM
KCFleming said...: Beth said: "I doubt McCain has ever had to do that, certainly not since he married Cindy."

See: Gore, Kerry, Edwards, Kennedy Ted, Kennedy Bobby, Kennedy John, Clinton Bill, Clinton Hillary (after 1980 or so), FDR, Wilson, etc etc.; 8/10/08, 12:57 PM
MadisonMan said...: If he is reading the newspapers from cover to cover, I have to assume he is reading the Want Ads.

So why's he looking for a job? Doesn't he think he's going to win the election?; 8/10/08, 1:11 PM
vbspurs said...: LOL @ Paddy O's response.

I've been LOLing a lot on Althouse today. I'm just a happy girl today, I guess.

On that note:

Senator John McCain is so quick to pick up his gold-colored cellphone

LOL! My mum has a gold Razr too.

Now, as to his reading habits -- people of his generation were huge newspaper readers. JFK read 18 US newspapers per day (of course, he was a speed-reader).

I'm surprised Obama hasn't been seen reading the NYT on a Kindle, as that would cement even more the idea that he's in tune with today's innovations, but still pays media their dues.

Cheers,
Victoria; 8/10/08, 1:30 PM
Sir Archy said...: This comment has been removed by the author.; 8/10/08, 1:47 PM
Sir Archy said...: To Dr. Pogo.

Sir,

As the Ghost of a Person, dead these 250 Years & more, you may imagine the Taxes I had paid in my Age were nothing, as compar'd to the burthensome Imposts so many complain of in this Modern World.

Nay, Sir, nothing were further from the Truth; for, even as a Gentleman of small Estate, I was continually pester'd by greater or lesser Tariffs, Duties, direct & indirect Taxes & nig'ling Fees, that I often considered whether 'twere better to be a Beggar upon the Streets, than to struggle to maintain myself in the Style of a Gentleman. I may tell you that my Cousin & Heir abandon'd his Estate, and took Ship to Charlestown in Carolina in the Year 1763 to 'scape both Debt & Taxes. Perhaps it were Shameful to do so; but I hardly need tell you, Sir, that many would do the same today, were America what it once was.

As that fantastick Nation, the French, have little Meat, but they dress it well, so they have few Words (compar'd to our English), but use 'em neatly.

On the Topick of Taxation, who has fewer & wiser Words than M. Colbert, the last Minister of Finance to the French King, Lewis the XIVth?

"The art of Taxation consists in so plucking the Goose as to obtain
"the largest Amount of Feathers with the least possible Hissing."

In this Modern Age you may talk of Laffer Curves, and have your Judgment drest in the Costume of the Calculus and higher Mathmaticks; but, in my Opinion, Taxation was, and will always remain, an Art.

Political Œconomists may make their Estimates; but, in the end it will always be the Duty of Ministers & Publick Officials to chuse the best Course. They should not want Wisdom when doing so; for, 'tis a Thing not easily pluck'd from the Pages of any Book, whether or not Sens. McCain or Obama had read it.

Knowing, Sir, that you want neither Wisdom nor bookish Knowledge, I am,

Sir,

Your humble & obt. Servant,

Sir Archy; 8/10/08, 1:51 PM
Bruce Hayden said...: What Freder claims has yet to be proved, at least here, but it is now liberal mantra. But other than through other liberal posters acting as echo chambers of each other, I have yet to see any real proof of his point.

But I will agree that there are marginal tax rates where an increase would reduce taxes, and marginal tax rates where that doesn't happen. Freder is arguing that we are in the later situation, and I think that we are still in the former, and that he isn't really looking at the true marginal income tax.

But as others have posted, that is only part of the story. What is ignored by the Freders of the world is that with few exceptions, taxation has a bigger negative effect on the economy than the resulting spending has a positive effect. At one point, I think there was a reasonably well accepted position that it could help in situations like our Great Depression, due to (if I remember right) a liquidity trap then. But many economists since then have suggested that the New Deal actually deepened and lengthened the Depression, instead of alleviating and shortening it as had been assumed by a generation of economists brought up on the near godhood of FDR and Keynes.

There is a debate whether or not borrowing money is as bad as raising it through taxation to support government spending. But it has probably been 30 years since there was much debate as to whether our government could spend our economy to growth. This was the infamous Keynesian multiplier.

So, what we have with Obama that DTL seemed to like so much is a plan to raise taxes on the upper middle class (aka "the rich") to make them more "fair" (i.e. tax those paying the most taxes more), and massively increasing federal spending.

We can disagree as to whether Obama's tax increases would result in more or less tax receipts overall. But keep in mind what Freder is really saying here - that the increased tax rate from higher taxes would more than compensate for the lower economic growth caused by the tax increases. What he is not saying, and cannot argue with a straight face, is that a higher tax rate coupled by increased government spending, will increase the economy as quickly as the reverse.

But that doesn't take into account the massive spending increases being proposed by Obama. And only people stuck in 1930s era economics can seriously argue that such would benefit the economy, regardless of how those spending increases are funded.; 8/10/08, 2:23 PM
Beth said...: Pogo, that's an abbreviated list -- it's no secret we're ruled by rich people. At least Clinton grew up watching a single mom have to budget. I don't think McCain's ever had to pay a single thought to where the next meal will come from or if he'd be able to pay the energy bill. How many in Congress have? I'm sure some of them, but not enough. We elect people who can afford to run for office, or who marry people whose income will let them run for office.; 8/10/08, 2:35 PM
Bruce Hayden said...: The Laffer Curve is indisputably true at high rates.

But as Pogo is saying, that asks the wrong question. Laffer essentially said that there was a place where the disincentive effect of tax increases multiplied by the tax rate was greater than any extra taxes that are brought in by the tax rate.

What he didn't say was that raising taxes could ever grow the economy. Rather, the opposite was given, that increasing taxes decreases economic growth. And that has been well accepted for the last 30 years, even when the tax increases are coupled to government spending increases.

Of course, Obama tries to hide this inconvenient fact by calling his government spending increases "investments". But they aren't investments as that word is typically used, and due to the reality that the Keynesian multiplier is invariably less than one, acts just the opposite of what are normally considered "investments" and act as a drag on the economy.; 8/10/08, 2:36 PM
Anonymous said...: I think what Bruce Hayden is saying would amount to one version of the "Wisdom" that Sir Archy refers to.

And, yes, I suspect any increased tax burdens would fall most heavily on the upper middle classes, simply because that is where the money is. It's going to happen whether McCain or Obama, but it will be more intentionally painful under Obama.; 8/10/08, 2:47 PM
blake said...: It's a variant on that old saw:

"Why did you rob the bank?"
"Because that's where the money is."; 8/10/08, 3:30 PM
blake said...: I prefer McCain to remain ignorant if that means he's less inclined toward economic engineering.

These ultra-maroons who think they understand the economy--and can therefore "run it"--are the dangerous ones.; 8/10/08, 3:32 PM
Peter V. Bella said...: To Frederson and all those who advocate raising taxes on anyone:

Raising taxes will do nothing but take money out of the economy and give it to the government which will waste it on financing failure.

Under the Clinton tax increase on the rich, my humble Police Officer's salary took a one hundred dollar a month tax hit. That is one hundred dollars less that I had to save, invest, spend, or waste in the economy. Multiply that by millions of people.

Tax hikes on the rich, the corporations, or windfall taxes are useless. These groups do not pay taxes. They just either aviod them- that is legal- or they pass the cost on to us in higher prices.

The only solution is to lower taxes on everyone and demand that the government stop finaning failure- wasting money. This requires hinest elected officials. That is a pipe dream.; 8/10/08, 3:48 PM
Freder Frederson said...: Raising taxes will do nothing but take money out of the economy and give it to the government which will waste it on financing failure.

The problem is that the government takes in less than it needs to to meet its obligations. If you are willing to provide a clue as to where the cuts to balance the budget are going to come from (and claiming that a third of the budget can be slashed easily is a non-starter) I am all ears.

It is insanity to pretend we can take in less than we spend and that somehow, some time in the future we will miraculously return to solvency. It just ain't going to happen. It is amazing that those of you arguing for economic realism refuse to face facts.; 8/10/08, 5:14 PM
AllenS said...: Taxes take the life out of everybody. In 1967 I earned $1622.36 for the year, I paid Fed taxes of $141.48 and FICA of $73.22. I still have the W2 form. Yes, we have to pay taxes, but at what rate? Don't listen to Freder. I don't know what he does for a living, but, obviously, he's overpaid.; 8/10/08, 5:32 PM
KCFleming said...: "The problem is that the government takes in less than it needs to to meet its obligations."

But that's the whole point, Freder. We are arguing over what are exactly the government's "obligations".

Any income the government secures, it spends, and soon considers those expenditures 'essential'. Ask not 'what to cut', ask instead, "What should we do this year, regardless of what we did last year?"

Begin with Thomas Sowell, who said, "Nothing comes as a 'right' to which we are 'entitled'. Even bare subsistence has to be produced.... The only way anyone can have a right to something that has to be produced is to force someone else to produce it... The more things are provided as rights, the less the recipients have to work and the more the providers have to carry the load."

This must never ever be forgotten.

As of the early 1960s, two-thirds of the federal budget was considered discretionary. Entitlements like Medicare and Social Security have grown exponentially since then, and now only about a third of the federal budget is considered "discretionary" spending. And entitlement spending is increasing faster than the rest of the federal budget.

So democrats make programs non-discretionary, spending money it doesn't have, and making promises it can't keep, calls them "obligations" that can never be touched, and then blames conservatives as 'heartless' for objecting to these Ponzi schemes.

It's a neat trick, Freder, but just the usual statist bullshit.

Slashed 'easily'? Of course not. No matter what we do, the nanny staters and tax-and-spenders of both parties have guaranteed us a painful future.; 8/10/08, 5:39 PM
Simon said...: downtownlad said...
"The economy sucks. Why are we supposed to believe that 4 more years of the same will help matters."

Even pretending that the economy actually sucks (which it doesn't) and assuming (dubitante) that McCain advances "4 more years of the same," the question isn't whether we think four more years of the same, the question is whether four more years of the same is better or worse than four years of what Obama offers. The answer's quite obviously that it would be better - despite your ridiculous claim that "Obama at least has a plan that adds up," even Obama's water carriers at Time Magazine couldn't bring itself to choke down that particular lie, confessing (through the pen of Joe Klein) that "Obama isn't even pretending to balance the budget. His claim to pay for the things he proposes rests on loaves-and-fishes premises, especially the prospect of a Congress mesmerized into acquiesence." Time, August 11 2008, at 34.; 8/10/08, 5:51 PM
Simon said...: Middle Class Guy said...
"Raising taxes will do nothing but take money out of the economy and give it to the government which will waste it on financing failure."

Yep. But the thing to keep in mind is that you're not going to fix government spending until you fix entitlement spending. And by fix, I mean at least eviscerate and preferably abolish. that's the lion's share of the problem, but when you look at what government programs actually consume federal money, you realize - and must learn to live with - the reality that for the government to live within its means, much of what the general public takes for granted today in terms of federal services is going to have to go away. Personally, I'm fine with that, but it's a tremendously politically unpopular position at a time when the nation is collectively whining "mommy!" over healthcare.; 8/10/08, 5:55 PM
Peter V. Bella said...: Freder Frederson said...
It is insanity to pretend we can take in less than we spend and that somehow...

Wrong. Insanity is spending more money than you can take in. Government has very few obligations. These so called obligations were the creation of over forty years of a legislature that has gone wild.; 8/10/08, 6:10 PM