Warren Buffet.....

[Dr Mordrid]

is now Arnold Schwarzeneggars economic advisor for the California campaign.

Conan the Republican is building up quite a strong team so far.

Dr. Mordrid

[Gurm]

As do many people.

We want tax cuts, just not poorly planned ones that put us into further debt.

Gpar_

[Dr Mordrid]

Has anyone noticed that almost as soon as the Bush tax cuts took place the retail sales picked up bigtime and the economy started growing at near 3% and that this growth is accelerating?

Note: with economic growth comes increased tax reciepts.

Bad planning my arse.

Dr. Mordrid

[Umfriend]

Uhm, did the tax cut (first round) take place during or after the 3rd gulf war? When was it?

[Umfriend]

So, uhm, Bush is spending _more_ than Clinton did on these things?

I am not into US education system/expenses or economy as a whole, but my guess would be:
Nah, I'll save it till I know more on timing as asked for in prvious post.

[Gurm]

Hey, what's the statute of limitations on murder?

I say we get a non-corrupt DA to indict Teddy K. for ... at LEAST manslaughter in the death of Mary Jane, whaddya say?

Gpar_

[Umfriend]

I guess I know to little about the US.....

cking4, from your reply, am I to understand that _even_ Bush and the republican majorities in Congress and Senate fall for the liberal media thing there?

I think it is high time the US got coalition governements. It seems to me (but he, what do I know) that the two parties are simply not functioning anymore and that they can;t be replaced with the current setup....

Tax cuts typically do not do a lot for economic growth. The sole reason being that everybody knows that if they pay less in tax but government spending is more, they'll have to pay down the road. They'll save the benefit of this year to be able to pay next year. (But this theory is still under debate).

Back-to-topic: Warren Buffet seems to be a very decent fellow. When the US made new laws obliging CEO's and CFO's to vow for the reports, WB said something to the extent of: "No new laws or rules are needed to tell people what to do. They shoudl just do". I like the ethics of this, and think WB would agree if I said that these laws will not make a lot of sense (although they kept Porsche from applying for listing at the NYSE). He also made a great comment in the annual report of Bekrashire Hathaway for 1998 (1999?) on ducks.

Don't know about Schwarzinator, but WB seems to be a decent guy.

[Dr Mordrid]

Tax cuts typically do not do a lot for economic growth.

Not so.

Every time they've been tried here they have caused a drastic increase in economic growth and thereby tax revenues, even with reduced marginal rates. This was the case when John Kennedy proposed them in the 60's, Reagan in the 80's and will be the case for Bush in the 00's.

Basically: when people (not governments) have more money in their pockets they spend it, usually on durable goods and consumables that cause the economy to grow because someone has to make, pack, ship, unpack and sell the new goods. All of these people then pay taxes, spend money etc. etc. etc..

All government does with a similar amount of money is buy $300 toilet seats and $500 monkey wrenches, which they usually throw into the economic gears with increased numbers of redundent regulations and regulators

In the 80's tax revenues went up massively, nearly by double digit percentages every year, but Congress at the time violated a spending restriction they had agreed to with Reagan and this is what caused the deficit to grow.

This lack of spending discipline is why, eventually, the Graham-Ruddman spending rules were passed. The result of these limits were the federal surpluses of the 90's.

While not losing their senses quite as much as the Congresses of the 80's this Congress is still spending 3-4% more than they had agreed to, which is why Bush called for tighter fiscal discipline from here out.

Dr. Mordrid

[Umfriend]

It's been awhile, I'll have to look it up. I think with respect to the 80s a few observation need to be made:
1. All recessions are recoverd from at some stage. Indications are that reagon was simpyl there at the right time.
2. One of the most important things that caused economies to grow again at that time was that producers found cheaper alternatives to, or were becoming more efficient in the use of, oil. Industrial economies have take years as of 73 to research and invest in less oil demanding production. In the 80's, this started to pay off (and as off then, OPEC found demand for oli to have become far more elastic, hence their decline in price setting power).
3. Under the reagan adminstration, tax revenues fell.
4. Typically, government introduce tax cuts to late (if they help at all): by the time the economy is starting to recover....

What Bush is doing now IMHO is simply Keynesian economics (but then not the way Keynes meant it....): spend, spend and spend some more while you lend, lend etc.

A nice graph of US Gov deficits:

http://www.clev.frb.org/Research/Et2002/0102/briefhist.pdf

A paper showing that the tax elasticity of income is not large enough (by a long shot) to compensate for tax cuts

http://gsbwww.uchicago.edu/fac/austan.goolsbee/research/laf.pdf

Kennedy was different in the sense that marginal tax rates were extremely high then. They were not in the 80's, they are not now.

What I could not find this fast anymore are actual figures showing:
1. GDP (real, corrected for inflation)
2. tax revenue (real, correct for inflation). But they will show the laffe curve theory not to have worked with Reagan.

[Dr Mordrid]

Revenues during Reagans term in real dollars (adjusted) only fell in the first term, which is during the deep recession brought on by Carters stag-flation. This was what Reagans tax cut was intended to bring a halt to. It did.

In real dollars (adjusted) from 1981 to 1989 revenues went up from $312 billion to $355 billion, a double digit increase. The problem was that Congress upped federal spending by an even greater percentage.

The marginal tax rates were down in the 80's BECAUSE of Reagans tax cuts. Otherwise they still would have been where they were during the 70's.

Dr. Mordrid

[Umfriend]

Dr. M,

I dont think á lot of economists would agree with your reading of that era.
1. Carters'stag-flation? Sounds nice, but it was Volcker that upped interest rates to fight inflation end 70's and BTW, the oil crisis explains the recession very well (for all economies in the world, not only the US). As said, the economy did not need a tax cut to recover, it was working towards recovery in 1981 already.
2. 14% increase in 8 years? *wow* I'll see if I can dig up some old material, but this is _not_ a huge number, it's less than 2% per annum....
3. I realise very well Reagan lowered (top) marginal tax rates, but they were far lower before he did that already compared to the time of JFK, which was the point: tax cuts may work as Laffe thought they would if marginal tax rates are very high. What is "very high"? We don't know, but they were not high enough when Reagan became president.

Umf