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Economics question RE: tax cuts...(19 posts)

Economics question RE: tax cuts...rwbadley
May 16, 2003 9:42 AM
A tax cut here and a tax cut there. Many folks favor these cuts 'cuz it allows US to keep more of OUR money' and reduces govt. The States are screaming deficits and raising taxes. Allowing for the fact there is mass waste in govt, isn't federal spending essentially what drives our economy?

If we cut taxes, and continue spending we have a problem... If we cut taxes and reduce spending we also have a problem, as that spending allows folks to earn wages and saleries.

It seems to me, all this tax cutting will come back and bite us in the @ss.

Am I wrong? Please tell me how tax cuts will bode well beyond short term gains...
You're wrong...TJeanloz
May 16, 2003 9:48 AM
Economic output, typically measured by GDP, is commonly considered = Government spending + private sector spending + net exports. Government spending is thus a part of the economy, but is not "driving" it. A tax cut just shifts that money from being spent by the government to being spent by the private sector. Since we generally assume that the private sector spends and invests its money more efficiently than the Government, it is a net benefit to the economy to have less government spending and more private sector spending. This is obviously a gross oversimplification, but federal spending is not the main driver of the US economy.
Current federal taxes represents just above 30% of GDPjs5280
May 16, 2003 10:06 AM
Source: http://www.oecdobserver.org
GDPCaptain Morgan
May 16, 2003 10:07 AM
You bring up a couple of different factors in your post. First, you asked if "federal spending essentially (is) what drives our economy?" Actually, no; consumer spending drives the economy (about 60%).

I am looking at a chart right now which shows federal expenditures and receipts. Federal expenditures as a percentage of GDP topped out at 23% in 1982, and dropped to below 21% in 1991. After rising in the early 1990's, it dropped to a low of about 18.5% in 2000, and right now is sitting at about 20%.

Regarding government receipts as a percentage of GDP, the trend has been more stable long term... upwards. From about 17% in the mid 1980's, it rose to a peak of nearly 21% in 2001, and now stands at 17.5%.

The basic premise behind the tax cut (other than possibly helping Bush to get re-elected, I admit) is to increase consumer spending. A growing economy theoretically results in a growing tax base in the long run. Classical economics states that during times of weakness, government should add fiscal stimulus and/or lower taxes, which is what is happening.
Soo, if Guvment stopped spending completely...rwbadley
May 16, 2003 2:13 PM
(for whatever reason) Our economy would 'only' tank 20%?!
No, the private sectormoneyman
May 16, 2003 2:57 PM
would have 20% more to spend and/or invest. Remember, the government doesn't make any money - they collect it from those who create wealth.

$$
No, the private sectorrwbadley
May 16, 2003 8:39 PM
The private sector has little interest in looking out for the safety and welfare of the people. Can you imagine if the guvment were backed out of social programs? Would the Fortune 500 step up to oversee running the country in a way we could live with?

I dislike taxes as much as the next guy. But then again, you get what you pay for.

I think we are being sold off down the road with these tax cuts. I believe the current administration may be looking out more for re-election than the overall health of our future economy. Just my 2c
Assuming it would "only" tank 20%...Captain Morgan
May 16, 2003 5:47 PM
that would mean about 40 million jobs or so. No big deal, eh?
Interesting slippery slope...Brooks
May 16, 2003 2:28 PM
The Pres and other Repubs say we need tax cuts to stimulate the economy and wanted $550 billion but would settle for $350 billion (or whatever the numbers were). More tax cuts= greater consumer spending. So reduce taxes to zero and have wild consumer spending? I don't think so.

In theory, the Repubs are using tax cuts as a way to reign in spending (less income = less spending = less "Big Govt")except with the House and Senate marginally controlled by the Elephants, spending is still going up. I wish these guys (and they are mostly guys on both sides of the aisle) would learn to balance a checkbook and look down the road past their own re-election to figure out what is best for the country. That is, afterall, what they are supposed to be doing (at least in my humble opinion....
How little can I spend to buy a decent cigar? Being cyclists128
May 16, 2003 11:06 AM
I thought someone here might know.

I'm playing poker tonight with a bunch of guys in a garage (I wonder if it will seem like a sitcom??) Anyway, I have never figured out the cigar thing too good but want to seem authentic in the environment. Thanks.

(i will wonder the whole time: is this a republican cigar? am i free to smoke it, anywhere? is this a liberal cigar? am i harming that man while i take his money...? damn that non-cycling forum!)
Anything from Drew Estates is a good smoke,sn69
May 16, 2003 11:12 AM
and none of their selections should cost more than $5-$8. I recommend the Dirt torpedo. Nice, balanced and smooth without any of the spiceyness of a Macanudo (also a nice smoke) or the excessive sweetness of a flavored heater.
Thanks. I'll look into it. It's going with beer 'cause the rum128
May 16, 2003 11:18 AM
from last night is still infused in my thoughts. No spirits tonight. Dirt torpedo. Great name. Makes me want to smoke!
Its been about 5 years, butCaptain Morgan
May 16, 2003 11:36 AM
is it easy to buy good product now? My favorite used to be Romeo & Julietas (Dominican), but I could NEVER get them! I smoked maybe a couple of times a month, but gave it up at the wife's suggestion.
RJs are still kinda pricey.sn69
May 16, 2003 11:41 AM
There aren't a great many tobacconists in NOLA, so I'm sure they can charge an extra premium. Personally, I've always been a Cohiba fan (not saying I've "brought" Cubanos into the country on the carrier or anything...).

Still, a friend in Birmingham suggested I try some of the Drew Estates heaters and, along with Lars Tetins, I think they are my favorite.

I'd call myself a "once a quarter" smoker.
$5Captain Morgan
May 16, 2003 11:17 AM
Just go to a stogie shop and ask for something mild; Macanudo would be a good choice.

Be prepared to have some chronic halitosis the next morning/day.
A simple Macanudo would do ...Live Steam
May 16, 2003 11:57 AM
there are plenty of good inexpensive smokes out there. Prices have returned to normal since the cigar craze days of a few years ago. $2.50 - $5.00 should get you a nice cigar. Check your local smoke shop for special selections they may have on sale because of overstock.
What you really want is some good snuff...rwbadley
May 16, 2003 1:19 PM
A lifetime ago I seem to remember one called Count Muary (sp?) Great stuff, much better than that ceegar, it keeps the smoke in your nose.... where it belongs.

RW
What you really want is some good snuff...Live Steam
May 16, 2003 1:25 PM
Now that is truly a disgusting habit! They should outlaw "chew" and snuff. All that black/brown spit sitting around in cups - ew! Never did the stuff myself ;o)
?rwbadley
May 16, 2003 1:43 PM
I don't remember snuff causing much spit.. it seemed a fairly 'clean' little vice. ;-)