Polls Show Americans' Confused View of Stimulus, Taxes, Deficit

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steve and only steve gets it . He does have an MA after all , he must be right .One day I hope to be a smart a-- steve .

Hunter of WI 10:30PM July 27, 2010

Bill, How you blame Clinton is beyond absurd. The recession began in March 2001, two months after he left office. Bush had the slowest GDP growth rate on record as well as the slowest labor market recovery which took four years for unemployment rates to return to their pre-recession levels. This should tell you something about his policies. The 18 year long bull market you're talking about experienced the vast majority of its growth between 1993 and 2000. During this time the value of the DOW quadrupled in value. The amazing thing is that this was immediately after Clinton raised taxes on the wealthy by a significant amount. The stock market wasn't responding to tax cuts. There were none. They were responding to GDP growth, income growth and job growth like it always does. Companies make money when the economy grows, not just when they are given more money to invest whether there are profitable places to invest that money or not. That is why the market responds to unemployment by going down and rising output and income growth and employment by rising.
True, Bush's tax cuts gave the rich more money to put in the stock market; this could account for why the market took off after 2004. But the market bubble burst in the fourth quarter of 2007. Corporate profitability was largely connected to profits and earnings made overseas and in global markets, not necessarily in the US. It was in 2007, when the world economy began to contract that the stock market declined. The US economy was slow growing on average since 2001 and has remained so. The modest domestic surge in GDP growth beginning in late 2003 was insufficient to send the DOW over 14,000; it was global markets in which US corporations were increasingly active through trade and investment. In retrospect, Bush's tax cuts did nothing for the US economy. They probably even caused significant harm.
This also returns to the argument regarding JFK's tax cuts. The US economy didn't begin to see growth until about 1965. The growth spurt continued until 1969 when a mild recession began. The four high growth years, averaging over 4.5% GDP growth annually, were due to the fact that LBJ increased BOTH Vietnam War spending and social spending for the War on Poverty at the same time. Deficits grew and the US economy was at near full capacity. The tax cut came at a time when growth due to deficit spending was occurring anyway. Sure, the tax cuts added to growth but only because there was already long standing growth momentum when the tax cuts took effect. Tax cuts only help an already fast growing economy; they will never kick start an economy in the midst of a deep recession. For this, fiscal stimulus in the form of deficit spending is needed. This is the real lesson of JFK's tax cuts. You also neglected to explain how such high growth took place in the 1960s when top margin was still 70% compared to much lower growth in the 1980s and after when top margin averaged well below 40%. I'll wait for your reply.

steve of IL 5:46PM July 27, 2010

Not very knowlegeable on Longest Bull Market I see.
I invested in that market. Lost nothing from Tech bubble which had little to do with the long Bull market. 1982-2000. Yes early 2000 Clinton recession began the beginning of closing down the Bull market.
.........
As much as we have discussed the far outs in obama’s administration and in Congress. You boil down their actions, especially to personal level, are they CONSERVATIVE at home, in the pocket book ? Or willing payers of these high taxes they pass for us to pay.
Focus on John Kerry for a moment. Maybe never saw a bad tax in his political life. So what does he do but park his costly yacht outside of MA. Just to save $400,000 !!!
http://www.ihatethemedia......ode-island
Rest assured John has a perfectly good logical reason for his actions. Don’t we all have perfectly good reasons ? But for his high principles he should not deny MA the tax. Plus RI has similar immigration law as Arizona for years. Should he not be boycotting RI for years ?
My mistake it is not a yacht as clearly corrected by a liberal on the Hannity show last night. Is a “76-foot New Zealand-built Friendship sloop with an Edwardian-style, glossy varnished teak interior, two VIP main cabins and a pilothouse fitted with a wet bar and cold wine storage.”. Least I should exaggerate or mislead.
“Words may show a man’s wit but actions his meaning“.
Benjamin Franklin
If I remember right, was 19 week wait to find job under Bush, 35 weeks under OUR SAVIOR obama.
“Harmful Spending & Complexity”
“Lower tax rates are important, but they are not the only critical issue. Both the level of government spending and where that money goes are very important. And even when looking only at tax policy, tax rates are just one piece of the puzzle. If certain types of income are subject to multiple layers of tax, as occurs in the current system, that problem cannot be solved by low rates. Similarly, a tax system with needless levels of complexity will impose heavy costs on the productive sector of the economy.”
http://www.heritage.org/R.....-Tax-Rates
“Heritage Budget Expert Debunks Bush Tax Cuts-Deficit Myth”
This is a short article and well worth the read. Liberal I have seen live by certain assertions and this short article gives the ammunition to shut their months.
http://www.libertycentral.....th-2010-07

Bill Hedges of MO 10:01PM July 26, 2010

The Dow doubled in market capitalization over the course of the 1990s. This was a bubble that couldn't last. The entire stock market was over valued but it was enough to create a "wealth effect" that sustained spending and growth. Also, understand that Clinton raised taxes in 1993 as soon as he took office by raising top margin from 33% to 39.6%, quite a substantial increase. What followed is what everyone agrees was the best run of GDP growth and job creation since the 1960s. All this occurred after a tax increase. Supply side economics is a fraud.
You say Clinton failed but in what sense? Of course, the right wing blogosphere that you so adore blames him for everything.
With regard to the Clinton surplus, it wasn't the panacea that people think. According to some economists it even led to the recession in the 1990s.
"The most recent period of federal government surpluses was the (highly extolled) Clinton surpluses from the first quarter of 1998 through the second quarter of 2001. For reasons that should now be clear, these surpluses destroyed nongovernment sector income and wealth, forcing households to borrow in order to maintain living standards. Since the United States ran current account deficits over that period, it was necessary for the (domestic) nongovernment sector to run even larger deficits to match the government’s
surplus, plus the foreign sector current account deficits...Based on the work of Distinguished Scholar Wynne Godley, it is useful to divide the macroeconomy according to its three main sectors: domestic government, domestic nongovernment (or private), and the foreign sector. According to his aggregate
accounting identity, the deficits and surpluses across these three sectors must sum to zero; that is, one sector can run a deficit so long as at least one other sector runs a surplus...When there is a government sector surplus as well as a current account deficit (the “twin leakages” during the Clinton boom), the private sector is left with two possibilities to counteract the destruction of
income: it can stop importing (leading to a balanced current account) or it can spend more (running a private sector deficit). For most households, borrowing substituted for the income squeezed by tight fiscal policies. This is why the federal budget surpluses under Clinton did not (immediately) lead to an economic downturn, since private sector deficits maintained aggregate demand but increased indebtedness...private sector borrowing on the scale seen after 1997 is not sustainable. The Clinton surpluses would inevitably result in a downturn, just like every sustained budget surplus in U.S. history."
http://www.levyinstitute.org/pubs/ppb_111.pdf
The Bush economy would never really recover completely because of the tax cuts and wrongly targeted spending. Bush lost jobs and crashed the economy. He wasted $6 trillion on spending that didn't stimulate the US economy. He also left a $1.4 trillion deficit in 2009 when he left office.

steve of IL 9:21PM July 26, 2010

Why does the current progressive leaders in Washington continue to follow a plan of stimulation - ie spending - that has failed every time the liberals have employed it in history?
H'mmm. Maybe the goal is to destroy instead of build up? Then they can create their utopia from the ashes?
Oh! Thats right! That is what the communists have written what they want to do. Follow that plan, destroy the family, destroy the economy, devalue all positives in the country and replace the religions with state collection salvation plan and make every one a slave to the state. All for the state and for the benefit of those who control the state.
Wow! That is so obvious! Surely, that will not come to pass?
More inhumanity to man, since 1919, has been done in the name of socialisim than any other cause. At first, Hitler destroyed democracy to save it. Lenin then Stalin created order over the ashes of the Russian Czar to bring forth their utopia. Both became the worst abusers of human rights in the world. All in the name of socialisim.
And those who believe in socialisim lite - progressive socialists will be as corrupt as any other socialist group dictators. If is not a question of if, but when.
Vote wisely this November 2010 and 2012.

John R. Carpenter of CA 9:05PM July 26, 2010

We're told 867 billion dollars in spending will solve the problems , problems are the same , we're told more spending will solve the problems the first spending did nothing to solve , they haven't spent the first spending , but we must spend more . We expand and spend more on a failing goverment but nothing goes to help our employers . Our taxes go up for a healthcare system the majority didn't want and won't go into effect until 2014 , then we're told it will cost more . The unions , Wall Street , banks , car companies and other get bailouts while our taxes go up and unemployment stays the same or gets higher . People losing thier houses in the mean time .
Wonder why people are confused , of course they are .

Hunter of WI 8:02PM July 26, 2010

“Bill, the point is that output growth and employment haven't responded to tax changes at all. The past six decades show no real pattern.”
I guess the longest Bull Market doesn’t mean anything to you. It created jobs and increased worth of retirement accounts and people who invested. There are $ trillions sitting on the side lines because of Clinton’s housing failure. Add obama’s passed legislation, and purposed bills. Add Bush cuts not being extended for $200,000 and over. Punishing those who create jobs. Why take higher risk when government is against you.
Maybe you work for someone making less than $200,000. They usually do the work themselves if they have a business. But go ahead and be envious of rich.
No reason to provide my counter links. You dismiss. But you use your left links and that's ok like Media Matters.
Go figure !!!

Bill Hedges of MO 7:39PM July 26, 2010

Of course we Americans are confused. We know that the country's economy is in bad shape. We know that we are up to our ears in debt. We know that Congress is essentially corrupt. What we don't know is what to do about it as we are bombarded with point and counterpoint by so called pundits. We no longer trust our politicians to represent us so we turn to organizations like the Tea Party. In truth the best thing we can do come November is simply vote for any candidate from any party based on their record of honesty and willingness to stick to principles you agree with. Ron Paul comes to mind. It is the only way in which we can change the political paradigm in Washington is by voting the bums out.

Buster Bunns of OR 6:58PM July 26, 2010

History shows that times of high taxes, such as the 1950s, 60s and even 70s, have had superior average annual real GDP growth rates to times of comparatively low federal income and capital gains tax rates. By all accounts, George W. Bush had the worst economic performance on record despite the deepest tax cuts in the shortest period of time in US history. His average annual real rate of GDP growth was about 2.1%. He lost a net number of private sector jobs. In essence, his tax cuts, most of which went to the top 5% of income earners, didn't create one net new private sector job in eight years.
In a way the argument by the Romers debunks the conservative myth that expectations of tax increases, which are entirely unjustified anyhow, is delaying investment and recovery. If "news about future changes" in tax rates have no effect, fears of tax increases after November can't be blamed for creating a "bad business climate."
In fact there is an excellent reason for the slow recovery; there is a lack of effective consumer demand to spur investment and output. Mike Kimmel, a blogger on the Angry Bear economics blog, explains the problem of the current recovery. He notes that despite deeper recessions in the late 1940s and throughout the 1950s-some with total output declines of 3.8%-recovery was achieved more quickly and with overall higher growth rates. He explains why the current "jobless recoveries" since 1990 have been so "feeble" by comparison.
"Part of this feebleness is no doubt due to the government’s policies. As I’ve noted before, the data shows that when tax rates were cut during or right after a recession, recoveries were slower and shorter. And both GW and Obama were happily cutting taxes of one sort or another during the latest recession. And of course, the government spending they threw on as a stimulus was in large part ill-conceived, going to benefit primarily some of the parties most responsible for the meltdown, buying toxic assets at inflated prices, and trying to prop up housing prices that should have been allowed to fall.
http://www.angrybearblog.com/2010/07/look-at-current-recession-signpost-for.html#more
Government spending has been an essential part of US economic growth since the 1930s. Real drops in aggregate spending or drops in deficits as a share of GDP have always brought recessions. Deficit reduction is not the issue, spending is.
"Every recession since World War II was preceded by a government surplus or a declining deficit-to-GDP ratio, including the recession following the Clinton surpluses. Recovery from that recession resulted from renewed domestic private sector deficits, although growth was also fueled by government budget deficits that grew to 4 percent of GDP. However, as shown below, the Bush recovery caused tax revenues to grow so fast that the budget deficit fell through 2007, setting up the conditions for yet another economic collapse."
http://www.paecon.net/PAEReview/issue53/NersisyanWray53.pdf

steve of IL 6:58PM July 26, 2010

Here may be a surprise to us Conservatives:
“We’ve been here before”
Written by King Banaian Friday, 23 July 2010
…“we find that the output effects of tax changes are much more closely tied to the actual changes in taxes than to news about future changes, and that investment falls sharply in response to exogenous tax increases.”
“The authors of this article are Professors Christina and David Romer, the former of whom is now the head of the Council of Economic Advisers.”
http://www.looktruenorth......efore.html

Bill Hedges of MO 4:32PM July 26, 2010