CBO: Obama Stimulus Package Added 3.3 Million Jobs

[Badger]

Just curious wonkish and CARL!: Since over a third of the stimulus involved tax cuts, are you both conceding that tax cuts aren't effective at spurring economic growth? Conversely, doesn't that mean that tax increases to the same degree won't inhibit economic growth?

Please advise <grabs popcorn>.

[Badger]

Just curious wonkish and CARL!: Since over a third of the stimulus involved tax cuts, are you both conceding that tax cuts aren't effective at spurring economic growth? Conversely, doesn't that mean that tax increases to the same degree won't inhibit economic growth?

Please advise <grabs popcorn>.

Well first a lot of those "tax cuts" weren't real tax cuts(more like subsidies within the tax code like tax credits big difference). Second, it wasn't actually a 1/3rd(even though I'm sure you'll be able to produce a false link repeating that fallacious statement). Third, debt has a negative impact on growth so when tax cuts are a fraction of the new debt taken on then the debt will way overpower the "tax cuts". Fourth, temporary tax changes don't have much affect on long term investment(like hiring someone or expanding operations for example).

The package had no rate changes. Not to income, corporate, capital gains, dividends, gas, payroll, etc. Those long term changes have a real and large affect on behavior.

As requested, "fake" link from your Bible, that right wing shill for labor, the Wall Street Journal.

http://online.wsj.com/public/resources/documents/STIMULUS_FINAL_0217.html

The $288 Billion in tax breaks, compared to $144 Billion in aid to states (almost all for Medicaid and education funding) and $357 Billion in federal spending, tax cuts constituted about 37% of the stimulus. So you're right, it really wasn't actually a third---it was higher. Thanks Wonky!

And as far as the tax cuts being not "real tax cuts (more like subsidies within the tax code like tax credits" that only is correct at all for about $19.1 Billion in such credits. Less than a 10th of the overall cuts--and what lesser portion of that sliver actually constituted "subsidies" as opposed to actual cuts isn't clear---but it's apparently even less.

Tax cuts that don't contribute to hiring? look at the largest ($117 Billion) tax cut of all. A payroll tax credit for new workers. And.....ugh, why do I even try?

Your point about increased debt ameliorating the effect of tax cuts, you realize, repudiates conservative economics, both gospel and practice, from the last 3 decades?

[Badger]

I think you misunderstand two points. First, you referred to "subsidies" in the tax code, such as expansion of the EITC and Child Care Credit. You clearly (to me at least) implicated such cases where the Treasury sends someone a "tax refund" when they were too poor to pay income taxes in the first place---i.e. a subsidy. The Payroll Tax Credit was an actual tax cut on taxes that would've actually been otherwise paid--i.e. a genuine tax cut rather than a subsidy disguised as a "tax credit".  Whether it was facilitated by reducing the amount initially paid like the proposed continued payroll tax cut currently before Congress, or by a credit towards payroll taxes already paid, is meaningless. The end result was working taxpayers paid less to the federal government than they would have otherwise, not a camouflaged transfer payment like (part of) the expanded EITC and Child Care Credit were. Your fixation on the term "credit" for the payroll tax "cut" is simply your being misled by semantics.

Secondly, I understood your argument about increased debt mitigating the effect of combined tax cuts and spending increases the first time you posted it. My point here is the fallicy in your blind ironclad assumption that for stimulus purposes "$100 tax cut is worth $100 debt because it creates economic stimulus" but conversely "$100 of increased government spending isn't worth ANYWHERE near $100, or any non-negligible amount, of additional debt because all such spending is wasteful and carries no tangible economic stimulus effect" yadda-yadda-yadda.

What this argument has utterly ignored for 30 years is $100 of tax cuts creates just as much debt as $100 of federal spending (even <gasp> defense spending). Due to conservatives inability to appreciate increased debt ameliorates the benefits of tax cuts just as much as additional spending, we've acquired massive debt from across the board tax cuts with little tangible economic growth to show for it, particularly for the middle class.

My point was to challenge this delusion you, like many right wingers, hold so dearly. So I admit upon your further explanation, you don't repudiate 30 years of trickle down economics, but rather just neatly apply an imaginary and indefensible double standard for the stimulus value of tax cuts vs. an identical amount in government spending. A double standard which holds not merely the free market is generally more efficient than public efforts (as 99% of liberals also believe), but that public spending is always and entirely useless in stimulating the economy compared to an equivalent amount of tax cuts.

[Badger]

I think you misunderstand two points. First, you referred to "subsidies" in the tax code, such as expansion of the EITC and Child Care Credit. You clearly (to me at least) implicated such cases where the Treasury sends someone a "tax refund" when they were too poor to pay income taxes in the first place---i.e. a subsidy. The Payroll Tax Credit was an actual tax cut on taxes that would've actually been otherwise paid--i.e. a genuine tax cut rather than a subsidy disguised as a "tax credit".  Whether it was facilitated by reducing the amount initially paid like the proposed continued payroll tax cut currently before Congress, or by a credit towards payroll taxes already paid, is meaningless. The end result was working taxpayers paid less to the federal government than they would have otherwise, not a camouflaged transfer payment like (part of) the expanded EITC and Child Care Credit were. Your fixation on the term "credit" for the payroll tax "cut" is simply your being misled by semantics.

Secondly, I understood your argument about increased debt mitigating the effect of combined tax cuts and spending increases the first time you posted it. My point here is the fallicy in your blind ironclad assumption that for stimulus purposes "$100 tax cut is worth $100 debt because it creates economic stimulus" but conversely "$100 of increased government spending isn't worth ANYWHERE near $100, or any non-negligible amount, of additional debt because all such spending is wasteful and carries no tangible economic stimulus effect" yadda-yadda-yadda.

What this argument has utterly ignored for 30 years is $100 of tax cuts creates just as much debt as $100 of federal spending (even <gasp> defense spending). Due to conservatives inability to appreciate increased debt ameliorates the benefits of tax cuts just as much as additional spending, we've acquired massive debt from across the board tax cuts with little tangible economic growth to show for it, particularly for the middle class.

My point was to challenge this delusion you, like many right wingers, hold so dearly. So I admit upon your further explanation, you don't repudiate 30 years of trickle down economics, but rather just neatly apply an imaginary and indefensible double standard for the stimulus value of tax cuts vs. an identical amount in government spending. A double standard which holds not merely the free market is generally more efficient than public efforts (as 99% of liberals also believe), but that public spending is always and entirely useless in stimulating the economy compared to an equivalent amount of tax cuts.

All tax credits are subsidies in the tax code because they are direct cash for the full amount of the credit(since most are netted is beside the point).

Tax deductions are different horse altogether. But I explicitly said tax credits so as to not be any ambiguity. As are marginal tax rate reductions.


Well I don't believe the government is an efficient vehicle that's why. Now your welcome to disagree with that, but that is why I can see the debt out mitigate government spending and not out mitigate tax reductions. But the argument we're going to end up in with the course of your argument is whether or not government spending or taxes are more efficient and which ones are being mitigated completely by new debt vs. only partially.


Actually since the CBO has consistently overestimated the 'cost' of tax reductions and underestimated the cost of government spending than I'm quite content saying that tax reductions don't cost the same debt outcomes according to the CBO mistakes that spending increases do. You want to dispute this?


It is you that is holding onto a delusion here my friend. Government spending has never produced the jobs that the CBO(let alone liberal think tanks) have claimed it would. And government spending doesn't equal tax cuts.

Once again, you miss the point. The relative GENERAL efficiency of the private sector vs. the public is not at issue outside the feverish imaginations of the far right. The issue whether there is a somewhat/nothing or never/occasional black and white dichotomy.

Right wingers have consistently underestimated the cost of tax cuts--to a degree the CBO couldn't manage in decades if they consciously tried. You don't want to dispute this.