Why Bush will win

[Nym90]

Thanks for the endorsement MiamiU! Although I generally tend to favor free speech and wouldn't do too much moderating probably.

[Nym90]

The poor saw their taxes cut by 33% and the rich only by 9%? Ah, but you forget about payroll taxes, the taxes for Social Security and Medicare that come out of your paycheck before you even see it. Most Americans pay a majority of their taxes in payroll taxes, and payroll taxes only apply to the first $60,000 of income! And Bush has not cut payroll taxes at all, of course. These are a much bigger burden on the poor than on the rich.
On the one hand, you say tax cuts for the wealthy are a good thing, then on the other, you say that's not really what Bush is doing! Which is it?

[Nym90]

Actually, a lot of people are poor and their families remain poor for many generations, and likewise, many people are rich and their familes remain rich for many generations. But you are right that there is a great deal of economic movement among classes for people in this country.

But, I fail to see your point. If people frequently move from one class to another, wouldn't that be a big argument in favor of the progressive tax structure? It's benefiting different people at different times, it's not just a giveaway to a certain group of people at the expense of others. And, also, maybe the progressive tax structure is what is helping those poor people to move up the economic ladder. Since poor and middle class people receive much more benefit from government than they pay in, this helps them to have a better quality of life and move up the economic ladder.

Our society does have a vested interest in helping the poor and middle class with government programs, even if it comes at some expense to the wealthy. Almost all problems in society can be linked in some way or another to poverty (well, that and poor parenting, but that's another thread). The elmination of poverty and the lifting up of the bottom classes helps everybody, even the rich! Republicans are the ones playing class warfare, not Democrats. Democratic economic policies would benefit everybody, although they do benefit the poor and middle class a lot more than the wealthy, but overall the wealthy will still see benefit. Republican economic policies help the wealthy at the great expense of the poor and middle class. Even if the poor and the middle class get a tax cut, the cuts in government spending that will inevitably result from the tax cuts for the wealthy will mean that the poor and middle class will overall be hurt much more than they will be helped by tax cuts.

I fail to see what you mean by saying that the only reason for a divide between rich and poor is because of immigrants, even if it were true. For one thing, if the divide is increasing, it doesn't really matter what the reason is, it's still true; also, you state that immigrants eventually get pulled up by our economic prosperity, but, since the divide between rich and poor is widening, obviously they and others are not being pulled up fast enough to make up for the rate of immigration. People will see benefits in a few decades, you say...well, 30-40 years is a long time for people to have to wait for economic prosperity to pull them up.

Also, you fail to understand the irony in your staunch defense of our economic system and how it helps everbody, but then your proposal for a drastic change in that very same system. A 13% flat tax would result in the devastation and elmination of almost all government programs other than defense. I realize you probably have no problem with this; however, that would devastate the economy and also the societal well-being of 95% of Americans. The progressive tax structure is what is responsible for making America such an economic power.

[Nym90]

Well, as for the taxes that the rich mostly pay, Bush has or is trying to cut all of them, unlike payroll taxes which disproportionately affect the poor. That was my point.

Dean will not raise taxes on the poor or middle class more than he will the rich. If you believe this, then you are simply uninformed about his positions. I absolutely agree that the economy will only do better if the poor and middle class do better; however, Republican economic philosophy dictates that only amount of money held by the rich really matters, as they'll be generous and charitable enough to give their money back to the poor and middle class and thus government doesn't have to do it for them. Yes, wealthy people will spend money and make money no matter what, which is why for the rich, a bad economy can actually be a GOOD thing since higher unemployment gives them more choices of whom to hire for job openings and thus also more power over employees who have more fear of losing their jobs and not being able to move to a different company if they don't like their current one. When the economy is bad, companies can treat their employees badly and they have no choice but to take it. Yes, their are far fewer wealthy people than there are poor and middle class, but overall the amount of tax money that they pay is greater and thus raising taxes on the rich helps raise far more money than raising taxes on the poor and middle class. You are completely wrong iin stating that taxes have always been raised on the middle class the hardest percentage wise; Clinton raised taxes only on the rich, and not the middle class. And, oh, by the way, the economy boomed in the 1990's under this policy, and we went from record deficits to record surpluses. Now, Bush has cut taxes for the wealthy, and we are back to record deficits again, far larger even than we had before Clinton came into office. So the size of the deficits and surpluses under different administrations should clearly put to shame any argument that raising or cutting taxes for the wealthy has little effect on government revenues.

Rather, I think Republicans deliberatly want to cut off the source of revenue for government programs, thus creating a massive deficit, which then will force spending to be cut. Now that we have a deficit, spending cuts can be justified, the Republicans can say "Gee, we really don't want to cut spending, but we just have to due to the deficit, we have to be fiscally responsible" completely ignoring the fact that the fiscally irresponsible tax cuts are what caused the mess in the first place! Rather than being honest about their agenda and supporting spending cuts even when they aren't absolutely necessary, the GOP would rather promote the more popular part of their agenda first, and then, once they have created a fiscal crisis, use the unpopular part of their agenda as an excuse to "fix" it.

[Nym90]

Dazzleman, I can perfectly understand having a moral objection to redistrubution of wealth. That's at least a consistent position, and I commend you for that, even though I disagree with it. As I've said all along, the economic debate is basically a struggle between two competing moral principles, and different people have different ideas about which is more important. Do the wealthy have a moral obligation to society to give back some of their wealth for others' benefit, or does society have a moral obligation to the wealthy to let them keep their money? Most of us would agree that both are true to at least a certain extent, but then which is more important?

[Nym90]

No, Democrats can logically oppose both tax cuts and deficit spending. The tax cuts are what is causing the deficit, so the Democrats say get rid of the tax cuts to balance the budget, which will help the economy in the long run. Massive amounts of debt will eventually have to be repaid back with interest, so in the long run this will hurt both the economy and the availability of government programs. Of course, as I've stated before, I think that's exactly what the GOP is hoping for. The Republicans think that when forced to choose, people would rather have lower taxes than more spending, so they are deliberately trying to force the issue with a game of political chicken in the hopes that the Dems will blink first and agree to cut spending in order to balance the budget.

You used a fairly circular logic in your argument. The Democrats aren't supporting Keynesian economics, true, but you fail to see that Keynesianism and supply-side aren't the only economic alternatives. Democrats instead believe in increasing government spending on social programs to boost the economy and the standard of living of the poor and middle class, and raising taxes on the wealthy in order to balance the budget and pay for the social programs. Yes, Bush is practicing pseudo-Keynesian economics by cutting taxes and increasing spending (although I think his real intent is to starve the government of money in an attempt to try to force spending cuts which otherwise would not be politically feasible), but one must remember that the main focus of Keynesianism was on the demand side of the ecomomic equation; increasing spending to get the economy going, decreasing it if the economy grows too fast so as to curb inflation. This makes more sense than supply-side because demand tends to create supply in a capitalistic economy much more than supply will create demand.

Also, while the arguments that state taxes will have to be raised to make up for federal revenue shortfalls and that future tax rates will have to be higher due to massive deficits may indeed be too esoteric for the general populace to grasp, it doesn't make them any less true.

Yes, one can argue whether or not government should attempt to force morality on rich people in the form of taking some of their money away, just as one can argue any other attempt by government to enforce morality. However, in this case there is a vested societal interest in redistributing a certain degree of income from the wealthy while still leaving them with a lot of money left over, and most rich people won't voluntarily donate large sums of money to charity or other worthy causes if they are allowed to keep the money from lower tax rates.

It's simply ridiculous to suggest that Democrats have no limit whatsoever on how high they want to raise taxes, or anything like that. That would be as silly as me suggesting that Republicans have no limit as to how much to cut taxes for the rich, and they won't be satisfied until the rich pay no taxes at all. None of the Democratic candidates have proposed raising taxes to any higher level than they were under Clinton. Even the most ardent conservative would still have to admit that the economy boomed in the 1990's despite the tax increases. I think it was because of them, but even if you don't think so, they certainly at least didn't stop the economy from booming. It's kind of funny to go back to the budget debates of 1993 in which not a single Republican voted for Clinton's economic plan, and read some of the statements from Republicans about how Clinton's policies were going to throw the nation into a depression and do nothing at all to help with the deficits. But anyways, clearly the Clinton tax rates were at a bare minimum not an impediment to strong economic growth, and thus I don't see how going back to those rates now could be expected to hurt the economy.

[Nym90]

Yes, I agree that cutting spending is probably more politically unpopular than raising taxes, although tax cuts are hard to reverse as well.

True, the deficits are caused by a number of factors, one of which is clearly the lagging economy. I agree with all of the factors you listed as being reasons, but I still think the tax cuts are the biggest reason. Of course it's impossible to prove either way since there are so many variables.

Yes, the Democrats mostly opposed the tax cuts, but quite a few did support them, many more than the number of Republicans who supported Clinton's economic program (which was literally ZERO, in both the Senate and House). At least some of the Dems were willing to give Bush a chance.

Yes, states require a balanced budget, which is negating some of the effects of the tax cuts as state governments are being forced to either increase taxes or drastically cut spending to get their budgets to balance. So overall, taxes aren't going down nearly as much for people as they appear to be. And likewise, social programs are being cut, just not at the federal level. Also, many states are drastically increasing other revenue sources such as user fees, which are really just hidden taxes.

That's the main reason why I would oppose a balanced budget amendment to the constitution, I trust legislators to make the right decisions regarding budgeting and then trust the people to throw them out of office if they don't want deficits. It's better to allow the flexibility to deal with problems as they arise. Deficits aren't always bad, they are necessary in some situations. However, they are always bad in the long term, so any short term benefit must be weighed against long term consequences.

As for demand side vs. supply side economics, the reason that I feel that demand is more important than supply is because if sufficient demand exists for a product, businesses will produce more of it to increase their profits, and new businesses will sprout up to sell more of the product, as well. That's the nature of capitalism, supply will follow demand. Creating supply when little demand exists, however, will not lead to an increase in demand for the product if one did not already exist. If people don't want something, they won't start buying it just because it gets cheap enough. But, if people want to buy a product, in capitalism there will always be businesses racing to produce more of it since the potential for profit is clear. Supply can create demand to a certain extent if low prices causes people to buy, but if they don't want to buy, it's not going to have much of an effect. So supply can create demand, if prices are exorbinant and that is substantially driving demand which would otherwise exist, but prices would have to get to be quite high before cutting prices would result in greater profits, so overall the ability for demand to create supply is much greater than the ability of supply to create demand.

You can think of government fiscal policy the same way you can think of running a business to a certain extent, in terms of that a business will make more profit in the long run by producing a high quality expensive product than by producing a low quality cheap product.