The American Spectator : Obama's Failed and Tired Ideas From the Past

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Obama's Failed and Tired Ideas From the Past

By Peter Ferrara on 2.11.09 @ 6:09AM

This president talks and acts as if Reagan and everything he did never happened.

The entire U.S. GDP is roughly $14 trillion. The government currently spends roughly $3.5 trillion of that. In his stimulus plan, Obama proposes effectively to borrow another $1 trillion from the private economy to add to $1 trillion in still further government spending.

How exactly is that supposed to stimulate economic growth and recovery? Is America's economic growth and prosperity produced by increased government spending, deficits, and debt? I don't think so. The American people don't either.

But Barack Obama thinks it is so obvious it's funny. Speaking before a laughing House Democrat Caucus last week, he said, "So then you get the argument, well, this is not a stimulus bill, this is a spending bill. What do you think a stimulus is? [HaHa]. That's the whole point. [HaHa]. No, seriously. That's the whole point. [HaHaHa]."

As the Wall Street Journal said over the weekend:

In fact, there is no net gain to the economy from this stimulus fraud, which is all the more obvious when you look at what Obama and his hopeless liberals spend the money on. There is funding for federal baby sitting programs, for needles for drug addicts, for federal birth control programs and condoms, for the National Endowment for the Arts, and for increased welfare. In fact, 30% of the stimulus spending is for increased welfare. Is this the foundation for future American prosperity?"

As the Journal further explained:

Moreover, as I have emphasized in this column, what drives economic growth is incentives to save, invest, start or expand businesses, create jobs, take risks, and work. Incentives are increased through reductions in tax rates and unnecessary regulatory costs, which allows people to keep a higher percentage of what they produce. But for the government to borrow a trillion dollars from the private economy to increase government spending by a trillion dollars does nothing to increase such incentives.

Keynesian Economics

Keynesian economics was born in the 1930s, was always a failure in life, even though it was heavily favored because it justified expanded government power, and died at the end of the 1970s, when it was slayed by Ronald Reagan in self-defense.

Keynesian theory argued that the way to stimulate the economy was precisely to increase government spending and deficits, because this would increase total aggregate demand in the economy, stimulating producers to produce more to meet this demand. The discussion above shows why this theory is wrong. Keynesians failed to consider where the government would get the money for its increased spending, and the offsetting economic impact of that. Moreover, they failed to appreciate that it is economic incentives that drive the economy.

That is why it has always failed over and over. FDR embraced Keynesian economics as the cornerstone of his New Deal. As a result, federal spending soared during the 1930s to the equivalent of a trillion dollars a year today. Yet Census Bureau data shows that the unemployment rate for nonfarm sectors never fell below 20% during the decade. By the end of the 1930s, the U.S. economy was still 10% smaller than it was in 1929. The stock market did not return to its 1929 levels until 1954.

Amity Shlaes told this revealing story recently in the Washington Post:

By the end of the 1930s, even FDR's Treasury Secretary and close personal friend Henry Morgenthau told the House Ways and Means Committee, "We have tried spending money. We are spending more than we have ever spent before and it does not work.…I say, after eight years of this administration, we have just as much unemployment as when we started…and an enormous debt to boot."

For a more recent example, Japan suffered an economic crisis in 1991 very similar to what the U.S. is suffering now, with collapsing stock and housing bubbles. They turned to old-fashioned Keynesian economics, increasing government spending by the equivalent of $900 billion in the U.S. today. As a result, Japan fell backwards during the 1990s just as the U.S. fell backwards in the 1930s. Japan's per capita national income fell from 86% of the U.S. level in 1991 to 74% in 2000.

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About the Author

Peter Ferrara is Senior Fellow at the Carleson Center for Public Policy, Director of Entitlement and Budget Policy for the Heartland Institute, and General Counsel of the American Civil Rights Union. He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under the first President Bush. He is the author of America’s Ticking Bankruptcy Bomb, now available from HarperCollins.

Letter to the Editor View all comments (140) | Leave a comment

Terry O'Donnell| 2.11.09 @ 7:13AM

Welcome to life imitating art. I'm about 80% through "Atlas Shrugged" and the long list of coincidental similarities is frightening. "Who is John Galt?" More importantly, will he return?

Deborah| 2.11.09 @ 7:28AM

I take no pleasure in saying that I think our new president wants all of us dependent and useless. He wants us all like Henrietta Hughes of Ft. Myers, FL...homeless and helpless and looking to him as the only one who can help us. What most Americans haven't yet grasped is that it is Democrat policies that left Ms. Hughes homeless. Fannie and Freddie propped up folks like Ms. Hughes and led her to purchase a home she could not afford. This is the true tragedy of liberal policies--they leave people feeling hopeless and needy, which I hate to say is exactly what liberals want. I'm sickened by their policies which the "un-American" -- those who no longer say (ironically) "we can" but who say "we can't, help me!" How sickening is that?

Gingrich's proposals make so much sense that it is obvious that Democrats don't care about the country, only their own power. I keep thinking "bloodless coup" -- because that's what's going on here.

anne t| 2.11.09 @ 7:33AM

Shouldn't we be calling our new president O-scam-a? I didn't vote for this greenhorn, but boy, do I feel like I'm being scammed big time.

Oscar the Grouch| 2.11.09 @ 7:53AM

Where's my free stuff?

Jeremiah| 2.11.09 @ 7:56AM

Actually Reagan used Keynes's insights all the time. Government spending under Reagan climbed enormously and is partially responsible for the economic good times of the mid and late eighties.

Folks, give it up, will you?

Reagan was a great president, no question about it. But your selective mythologizing of his presidency is just wrong, wrong, wrong.

Jeremiah| 2.11.09 @ 8:00AM

ANY reasonable look at the major economic statistics in the 1930s demonstrates Keynes (and Roosevelt) were correct.

As government spending increased after 33 GDP grew and unemployment fell, except for in 37, when Roosevelt slammed on the New Deal's breaks after being bullied by the Republicans to do so.

WW II continued to demonstrate the basically correct principles of Keynes. The war was a MASSIVE social spending program.

The idea that you can stimulate the economy without government spending is a ludicrous and completely debunked fantasy.

Robert Rosencrans| 2.11.09 @ 8:16AM

If government spending sparked an economy then the Soviet Union would be the most successful economy in the world.
http://mises.org/story/3336
And that, as we know, is the one position the establishment is trying to pretend doesn't exist. It's not exactly clear how the Federal Reserve's policy of pushing interest rates well below where the free market would have set them, thereby inflating the biggest asset bubble in the history of the world, could be the fault of the free market, or attributable to "laissez faire." But since hardly anyone discusses the Fed, no one has to answer this inconvenient question. The Fed's very existence is a violation of laissez faire. Yet the destructive effects of what it does are then blamed on the market. This charade has gone on long enough.

http://mises.org/freemarket_detail.aspx?control=515

This realization on the part of macroeconomists comes in the form of an article in the August 2004 Journal of Political Economy entitled "New Deal Policies and the Persistence of the Great Depression: A General Equilibrium Analysis," by UCLA economists Harold L. Cole and Lee E. Ohanian. This is a big deal, since the JPE is arguably the top academic economics journal in the world.

"Real gross domestic product per adult, which was 39 percent below trend at the trough of the Depression in 1933, remained 27 percent below trend in 1939," the authors write. And, "Similarly, private hours worked were 27 percent below trend in 1933 and remained 21 percent below trend in 1939."

This should be no surprise to anyone who has studied the reality of the Great Depression, for US Census Bureau statistics show that the official unemployment rate was still 17.2 percent in 1939 despite seven years of "economic salvation" at the hands of the Roosevelt administration (the normal, pre-Depression unemployment rate was about 3 percent). Per capita GDP was lower in 1939 than in 1929 ($847 vs. $857), as were personal consumption expenditures ($67.6 billion vs. $78.9 billion), according to Census Bureau data. Net private investment was minus $3.1 billion from 1930–1940.

Cole and Ohanian write as though they were surprised—even shocked—to discover these facts, not so much because they were bamboozled by the Myth of the New Deal, but because of their devotion to "neoclassical model building" as opposed to the study of economic reality. They label as "striking" the fact that the recovery from the Great Depression was "very weak" (a dramatic understatement). And why is it so striking? Because "[t]hese data contrast sharply with neoclassical theory."

The neoclassical theory of depressions might well be thought of as a Frankenstein’s Monster theory. As explained by Cole and Ohanian, "The weak recovery is puzzling because the large negative shocks that some economists believe caused the 1929–33 downturn—including monetary shocks, productivity shocks, and banking shocks—become positive after 1933." Thus, according to neoclassical theory, the economy during a depression is somewhat like a prostrate Frankenstein’s Monster, with economists playing the role of mad scientists who "shock" the beast into becoming a living being once again. They do this with various "injections" of government spending or easy credit that will supposedly cause a "roaring" recovery (just as the rejuvenated beast roared as he left the laboratory to terrorize the townsfolk in the movie, Young Frankenstein).

Todd| 2.11.09 @ 8:17AM

Great article Peter. How many times does Keynesian economics need to fail before it is consigned to the trash heap of history? The 30's and the 70's should be all the evidence we need along with Japan in the 90's but it simply does not matter to the leftist ideologues because they only really care about expanding the power of the State under their control. Obama is a true Alinskyite, pretending to be a pragmatist and a centrist when he is anything but. I expect Bob will post shortly to lecture us how Reagan's tax cuts are responsible for deficits like his usual garbage. How about Bob we discuss the merits of Newt's plan as opposed to Obama's failed and tired ideas from the past? Obama has never had a original idea in his life, he has just perfected the art of demagoguery under the tutelage of Alinskyites and enough people are clueless today that it got him elected. Elections have consequences and now it is becoming apparent the consequence of electing Hussein will be very high indeed.

Todd| 2.11.09 @ 8:30AM

Jeremiah is a fool, he would have been a Stalin apologist in the 50's like so many of his fellow progressive's were. What a hopeless existence it must be to really believe only the government can do anything and we should be subservient to our masters of the State. How about those miserable losers begging Obama to do something for them the other night? Truly pathetic but that is the mentality of people like Jeremiah.

Great article I came across on the Drudge Report yesterday pointing out the miserable failures of the New Deal and how government stimulus's have always failed. Basically, it proves everything that Jeremiah says is bullcrap.
http://www.commentarymagazine.com/viewarticle.cfm/special-preview-stimulus--a-history-of-folly-14953

frost| 2.11.09 @ 8:54AM

Jeremiah, you silly fool -- you'd really be well advised to check the actual history before lipping-off about a subject you apparently know nothing about.
That adjustment under Reagan cut taxes in '81-2; congress had agreed to cut spending. Got that? Congress said, no, it would not increase spending -- but they lied! Blame Speaker Tip O'Neal. And when Reagan's tax-cut actually generated far more revenue than forecast, congress saw-it-coming and increased spending. Lots! Thus, for EVERY TWO DOLLARS RAISED FROM TAXES, the Democrat-controlled CONGRESS INCREASED SPENDING THREE DOLLARS -- hence the large deficit they call Reaganomics.
Reagan made some lousy choices too, but the tax-cutting more than doubled income to the stupid government bureaucracy, okay?
Incidentally, at the same time, Reagan caused the Soviets to bankrupt themselves, causing the end to the Cold War. Think how much we've saved as result - - - -

Rick Josey| 2.11.09 @ 8:58AM

We really are being scammed by this president. This week he stood before the cameras and told this country there were no earmarks in this "stimulus" bill. He actually said that.

Less than a month into his presidency and he's already lying to the public.

Socialism kills incentives. Why work harder if your wealth is going to be "spread around" to all the others, including the goof-offs. The workers in the Soviet Union realized this, as have those in all socialistic societies. Their productivity went down, and their systems failed. Failed.

Yet the liberal geniuses in Washington think we can keep on trying this dis-incentivizing (sp) approach and somehow we'll get different results. Glorious results. Their persistent type of grandiose thinking, in the face of contrary evidence, is the very definition of insanity. Delusional people never learn life’s lessons. They can't, because they are delusional.

When a so-called “stimulus package” is bloated with big-government spending projects and the commander-in-chief denies that on camera, our country is in trouble. And when he moves the census-takers from the commerce department over into the White House…under HIS CONTROL… our country is in serious trouble.

We need a revolution.

www.PatriotHangout.com

Teleprompter Messiah| 2.11.09 @ 10:04AM

We need an Obama every so often to remind the fence sitters of this country (i.e., low information voters) why we don't need an Obama. We forget that a large number of new voters never lived under malaise and have known only prosperity. They have no life lessons in Big Government failure. This administration will create more conservatives than Carter because people are not stupid (except maybe true believers in Lightworker).

Rally round the flag boys, shouting the battle cry of freedom.

Teleprompter Messiah| 2.11.09 @ 10:08AM

jharp:

Lickspittle apologist for serfdom that you are, is the old Confederacy more racist than when Democrats were in control? The South ain't George Wallace territory you ignoramus. Go back to you latte.

Todd| 2.11.09 @ 10:15AM

Tell me jharp, what lies is it that you are referring to? Obama is the one clearly lying to the public with this stimulus and people like you are willing accomplices to his multitude falsehoods. Let me remind you he promised numerous times to cut taxes for 95% of people in his campaign, how do you think that is going to work out? It was a lie to begin with because about 40% of people pay no federal taxes to begin with. You are the dumb one if you actually believe Obama but I suspect you could care less about the truth as long as it helps the far-left agenda to completely socialize the country like a true Alinskyite.

Claire Solt PhD| 2.11.09 @ 10:19AM

Beware of the statistians in the green eyeshades who peddle myths like the economic recovery of the New Deal or WWII. The reality was much hardship for ordinary people. I was born in 1942 when everything was rationed and n oone could buy a car, gas, or tires.. My mother told how she and a friend managed to buy one pair of panties and used it as a pattern to make more for their daughters. We didn't much care that some government agency concluded that the economy was good when we had to get paper towels on the black market.
The solution to the overleveraged economy is not
to dribble money into the economy. It is the opposite. Capital formation will lead to the creation of new ventures and jobs. Most of what I hear is backwards. People know intuitively that they should save and pay off their debts. So do the banks. Only Democrats do the opposite and take a huge sum and waste it.

TennesseeVolunteer| 2.11.09 @ 10:19AM

A historian/economist mentioned on TV last night that in late 1930's roosevelt put a 100% tax on anyone making over $25,000. Hmmmmm.

Dustoff| 2.11.09 @ 10:25AM

Jeremiah:

Both Reagan & JFK cut taxes....

Dude you need to read some more. LOL

Marc Jeric| 2.11.09 @ 10:53AM

Our Jeremiah says that Reagan busted budgets with big deficits. He forgets how The Democrat leader of majority Tip O'Neill stood every year on the Capitol steps with the Reagan balanced budget books and declared them "dead on arrival". How easy it is to forget these unconfortable facts!

Bob| 2.11.09 @ 11:01AM

Well, I see Peter you are up to your old lawyer fraud (since you are not an economist). If you actually look at the data (and I've posted it several times), you see that tax cuts did not stimulate economic growth. You can choose selected data, but you can't show ALL of the data and prove your point. Secondly, unemployment in the 30's was not calculated the same way it is today. Today we use the U-3 rate and the calculation back then was using the U-6 methodology. I'm sure you know what that is, right? If we calculate unemployment today the way it was calculated back in 1933 we come up with about 18%. But who needs to use facts when you can fool people who believe and don't reason. Furthermore, if you show a graph of the unemployment rate during the Great Depression you'll see then when the spending occurred, the unemployment rate dropped.

http://encarta.msn.com/media_461546193/unemployment_during_the_depression.html

The fact is that neither tax cuts or spending is tremendously stimulative from an efficiency point of view.

And please don't spread the fairy tales about Reagan. It was Volcker who held the line on inflation, against Reagan's wishes, which led to recovery. In essence, it was monetary policy, not tax policy, that made the big difference. If you had any economics background, you'd know that -- or at least be able to figure it out.

Furthermore, you saw no more increase in federal receipts during Reagan, than most other presidents. The greatest increase in federal receipts came with Clinton and tax increases. But then again, you aren't dealing with reality and failed to mention that.

The problem is this, Peter, if we all dealt with charts and graphical data, then you couldn't pull the wool over people's eyes here with selected data. But I guess you are like most lawyers -- you know when they're lying because that's when they move their lips.

Dustoff| 2.11.09 @ 11:11AM

BOB
Furthermore, you saw no more increase in federal receipts
_____________________________

Say what? The IRS may disagree with you.

Todd| 2.11.09 @ 11:16AM

I knew it was only a matter of time before Bob showed up on the scene to badmouth Reagan. Reagan appointed Volker to get inflation under control and let him do whatever needed to be done even if it caused a very bad recession because there would be no recovery until inflation was under control. Obama on the other hand is just using Volker as a prop with no power whatsoever and let the Keynesian worshiping Summers control monetary policy which will destroy the value of the dollar in the coming years. What is with your pathalogical need to distort Reagan's record Bob?

Abarnes| 2.11.09 @ 11:24AM

Just a few observations. First, the results from poor fiscal/financial policy cannot be fixed by more irresponsible financial policy. In the private sector that is known to be the road to bankruptcy. Translation; putting our country further in debt and growing our government ever bigger simply won't work. Read all of the history available to you, not just the parts that conveniently support your position (that's the politician's job). Second, Jharp made an accurate statement in his comments yesterday about tax revenues paying for the huge debt we're being saddled with. He just didn't get the details right. You see, what will actually happen is that two years from now, we will receive the totally sincere speech about how the numbers just didn't live up to our expectations (delivered in a charismatic manner). And, because of this, the middle class, once again, must help our country out of the morass with the biggest tax increase in history. Why the middle class? Simple, it's the largest single pot of taxable money in our economy. It certainly won't be the low income bracket. And, it won't be the luxury class either. No matter the rhetoric, there simply isn't enough money in that pot and never will be! So, once again I, and my fellow middle classmates will have to carry the country on our backs! Third, judging from some of the comments I've read here, some of the posters have gone beyond just drinking the kool-aid and gone on to mainlining. These few observations are based on 35 years of observing and participating in our political process. I've seen what works and what doesn't. And, this spendulus package ain't all that!

frost| 2.11.09 @ 11:27AM

Hmmmm, curious...
Do you sometimes get the feeling that goofballs like "jharp" are simply "funnin'" us -- that they're pulling our collective chains with a bazaar sense of "humor?"
Sadly, I refuse to believe that all that many folk can be that warped, stupid, misleaded -- but, there again, I could be wrong...

Bob| 2.11.09 @ 11:32AM

Dustoff -- here is the chart. Please show me the huge increase in federal receipts more than any other president:

http://www.heritage.org/research/features/budgetchartbook/fed-rev-spend-2008-boc-R2-Federal-Government-Tax-Revenue.html

Todd -- As I've continued to say, I voted for Reagan, thought he was one of the better presidents and would not change my mind today. What he did with the Soviet Union and the psyche of the general public was transformational and great. But using him to validate the efficacy of tax cuts is for the mindless lemmings. YOU are the one distorting Reagan's record. Please look at the charts of tax cuts and GDP and try to justify your position. Do the same with Clinton.

So, Todd, here is where I'm going. The economy is more a function of private enterprise than tax cuts or spending. We don't want to go back to the failed policy of tax cuts or the failed policy of spending. We want to control government spending, make sure there is a fair playing field for private enterprise, and get out of the way. Spending will never be cut if people don't feel the pain of paying the taxes for the amount spent. Tax cuts should be a RESULT of spending decreases and not a precursor. No politician will cut spending because it is spending that gets them elected as we saw during the past 8 years.

Teleprompter Messiah| 2.11.09 @ 11:35AM

The conceit of Keynesian stimulus is that the government with withdraw once the economy returns to its "correct" level. It does not. Once bureaucrats and Keynesian politicians get control, they never let go. Government is larger, its demands on wealth creation greater and its effects punitive. A viscious cycle is going to be unleashed by Lightworker and Pelosi. It is 68er revanchism.

frost| 2.11.09 @ 11:38AM

One more time -- Reagan cut taxes in '81-2; congress had agreed to cut spending. Got that? Congress said, no, it would not increase spending -- but they lied! Blame Speaker Tip O'Neill. And when Reagan's tax-cut actually generated far more revenue than forecast, congress saw-it-coming and increased spending. Lots! Thus, for EVERY TWO DOLLARS RAISED FROM TAXES, the Democrat-controlled CONGRESS INCREASED SPENDING THREE DOLLARS -- hence the large deficit they call Reaganomics.
He doubled government revenue by cutting taxes. Period

Teleprompter Messiah| 2.11.09 @ 11:39AM

jharp:

You really need to get out more. Its a bigger and more diverse country than your coffeehouse imaginings, especially the South.

Joe Y| 2.11.09 @ 11:41AM

Well, I do congratulate JHarp for his rare admission that the Dixiecrats were part of his “we” until 1964, though that would be shame enough for a decent person to shut up. However, JHarp doesn’t actually say anything, he just spews out fantastic insults, so I don’t know what else to say about him. You can’t argue with a disease, etc.
As far as Jeremiah goes, no one here has said anything about no government spending at all; rather the futility of riding excessive and reactionary overspending to economic prosperity. Furthermore, to say that under FDR’s policies improved the economy improved somewhat hardly says that they were good policies, just that they were not the worst policies. Hard experience has shown since that there were much better economic choices to have pursued.
Incidentally, to both JHarp and Jeremiah: The level of venom and insults an opinion is laced with is a good inverse indicator of its strength.

Todd| 2.11.09 @ 11:53AM

I am calling you out on your comment Bob about Volker going against Reagan's wishes, that is simply not true and I think you know that so quit the lying. Frost is right, Reagan's tax cuts have nothing to do with the deficits due to the lies from Tip O'Neil and the Democratic controlled Congress. Tax revenue went up under Reagan more than inflation Bob, look up the chart. Your reasoning would be like me blaming my employer for being in debt because my pay raises were not have enough for my irresponsible spending. If you want to be truthful with blaming someone for increased deficits in the 1980's, blame the Democrat controlled Congress and not Reagan.

Think First| 2.11.09 @ 12:01PM

Bob, Bob, Bob.

Give it up would you? You know you have absolutely nothing to support your guesses and conjectures so why not admit you're wrong and move on? As Einstein said, "Insanity is doing the same thing over and over and expecting different results."

EVERY country who has and who is now trying the tax cuts, reduced government interference and reduced meddling has turned things around when nothing else has worked. Socialism and large government spending has ALWAYS failed.

The pimples on the worlds face has always been the glaring belief against all evidence that government spending helps anything except to get in the way of people getting the job done in spite of their best efforts to interfere. And please refrain from using encarta and MSN distorted data and figures as they have been well proven on far too many occasions to contain exactly the data they want to attempt to prove an agenda of their own.

Russia was facing a complete collapse when Reagan moved in and applied the heat that finally burst the puss for all to see. Ireland is one example of one countries experiment that is working. There are others if you are willing to look.

One of the problems with current schools and teaching is the complete lack of equipping students with the essential skills needed to dig, investigate and find answers beyond those taught in the class.

I watched my economics teacher use 8 chalkboards covered with formula from many economic theories of the time that all showed Reagans ideas were exactly right. Then he used them all to show how O'Neill's and the Democratic controlled congress were slowing the actual recovery of the economy. Deals he hated and his economic advisers began to finally work through the voters heads how much they were interfering finally got the bums voted out. Unfortunately a lot of the Republicans elected were not much better.

Reagan was not and never claimed to be perfect. He just had the guts to go against theory and do what common sense said. He chose to listen to an economic advisory panel that chose to go against failed theories and policies. The results are as has been stated in this article and PROVEN by people far more capable than you, no matter how many degrees or what type you have.

If you choose not to see and admit that's fine. The fact people disagree is one of things that make for interesting conversations and education for all involved. Why with your intelligence and skills you choose to ignore the data, ignore the facts and continue to choose questionable data to prove failed practices I don't get.

I have a copy of the pdf from mises.org called America's Great Depression so I can study it in detail and understand more. I do not take lightly the words from any side. I did have the great fortune to have mostly teachers who believed it more important to find out for myself instead of spouting the propaganda of one side over the other. Who delighted in how many different ways the same data could be interpreted in so many ways and used to "prove" their view.

The bottom line is big government fails. It only means people like Soros control it at their whim as they manipulate their puppets by pulling their personal purse strings. Liberals cry fowl of business elite only when those elite are not in their control. Or thrown under the bus when it suits their purpose. An inconvenient truth is Geithner was in charge of the Fed overseeing Wall Street at the time of their worst crimes. Yet instead of being fired for incompetence, he is promoted and hailed as a savior?

Put some medicine on your pimples Bob.

Todd| 2.11.09 @ 12:02PM

So how come you don't have anything negative to say about Obama Bob when you claim to be a fiscal conservative and wanting to control government spending. You are talking out of both sides of your mouth and that is why no one takes you seriously and we think you are a fraud.

Todd| 2.11.09 @ 12:03PM

Rob| 2.11.09 @ 12:12PM

Why argue with losers like Bob and jharp? They are Marxist trolls. Believe me, in 2 years they will scurry back into their holes as Jimmeh Obama's stimulus fails miserably - as it is guaranteed to do.

Dustoff| 2.11.09 @ 12:16PM

BOB..?
++++++++++++
Many critics of reducing taxes claim that the Reagan tax cuts drained the U.S. Treasury. The reality is that federal revenues increased significantly between 1980 and 1990:

Total federal revenues doubled from just over $517 billion in 1980 to more than $1 trillion in 1990. In constant inflation-adjusted dollars, this was a 28 percent increase in revenue.

History confirms the soundness of the Reagan, and now Bush, approach to economic policy. Under President Reagan, federal revenues increased even with tax cuts, federal spending did not decrease, the country experienced the longest period of sustained growth during peacetime in its history, and the rich paid more taxes proportionately than they had before the tax cuts were implemented.

(This is the website you sent me to fool)
Jezzzzzzzzzzzzzzz

Bob| 2.11.09 @ 12:25PM

Todd, I posted the chart. LOOK AT IT!!! Stop with the revisionist history and look at the facts. Here, I'll post it again:

http://www.heritage.org/research/features/budgetchartbook/fed-rev-spend-2008-boc-R2-Federal-Government-Tax-Revenue.html

You are so wrong about federal revenues. Where do you get your information from? Please post a chart showing me something different. Hint: you can't.

Here's an article from Time that actually talked with Laffer:

http://www.time.com/time/magazine/article/0,9171,1692027,00.html

Most people, like you, who don't understand economics, make the mistake of looking at federal revenues without adjusting for inflation. Inflation is not a real increase in revenues, and even you should understand that. During Reagan's early term, inflation was higher than virtually any other President. That's why the chart I show is inflation adjusted.

Regarding Volcker, who was appointed by Carter, we know that after being rolled by Carter, he came on much stronger with Reagan. We've learned from Don Regan, Reagan's treasury secretary, that Ronnie didn't know or understand much about economics. Furthermore, we know from Martin Feldstein that Reagan never asked many questions when he was briefed on the economy. Reagan did appoint Volcker to another term even though he was pushed by others in his administration to get someone who would loosen the purse strings a bit more. Those are the facts as written by the principals. Again, it was Volcker and monetary policy that helped the economy -- not Reagan and tax cuts.

Dustoff| 2.11.09 @ 12:27PM

Bob.
Do youself a huge favor. Next time you post "anything" make damn sure you know what in the heck your talking about!
This shows everyone here your lack of knowlege on the subject.

Bob| 2.11.09 @ 12:29PM

Dustoff -- read the charts and try to understand that you need to adjust for inflation. Can you read a chart? Do you understand why inflation growth is not real growth?

Todd, I've spoken out against the TARP and the automotive bailouts. I do believe some of the spending recommended will be stimulative like infrastructure spending. I wish there were payroll tax deductions in the package as well. As for criticizing Obama here, there is no need as all of you do that on a second by second basis.

Teleprompter Messiah| 2.11.09 @ 12:31PM

Joe Y:

Even the admission is an elision. The Dixiecrats stayed Democrat well past 1964. If you don't believe me, may I introduce one Senator Byrd.
Because the Hippies took over the Democrat Party in 1972 they believe that everything forward absolves them of their racial sins. They still have much for which to atone.

Of course, how convenient is the argument that these hateful bigots just abandoned their party and kept their hateful ways under the GOP banner. It gives them cover for never having to acknowledge their real sins and a scapegoat. It is beyond the comprehension of the alleged broad-minded realists that all these folks voting GOP in the South are fiscal and social conservatives and not bigots. Many of them are refugees from the North and California.

Bob| 2.11.09 @ 12:32PM

Dustoff, be specific and show me the GRAPHICAL data. Show that you have at least a little comprehension, please. Don't do a two point analysis without reference (if you know what that is).

daboss| 2.11.09 @ 12:47PM

Guys – tax cuts are a LOOSING issue. In this media, with this administration, and with all the class envy going around it would be impossible to get tax cuts passed.

We need something broader and bigger. Either a flat tax – or better yet a consumption tax.

Imagine the bad guy – the evil IRS and the tax code. Use BHO’s own tax cheaters against the current system. Total rallying point!

Could be one of the biggest issues of our time.

Dustoff| 2.11.09 @ 12:48PM

Bob
In constant inflation-adjusted dollars, this was a 28 percent increase in revenue.
++++++++++++++++++++++++

Your getting dummer by the second.

Listen fool. YOU gave me a website to see. Well, I saw,posted and made you look stupid.
Change your story all you want.

Dustoff| 2.11.09 @ 12:52PM

jharp
O-brother... people here have proven you wrong So many times. I see no need to waste time on you too.

The only thing your right about Bush. He along with some in the rep party spent to much... Now Obama wants to spend even more. yeah that make sense?

Obama Rules| 2.11.09 @ 12:54PM

The antecedents of this sub-prime mortgage crisis, the root of the chaos in the financial sector, clearly lay within the Reagan administration, beginning with an appearance by Donald T. Reagan, Reagan's first treasury secretary, before the Senate banking committee in early 1981, when he laid out a detailed vision for near-complete deregulation of the financial industry.

On Regan's behalf, Richard Pratt, Reagan's first chairman of the Federal Home Loan Bank Board, drafted the Garn-St. Germain Depository Institutions Act of 1982, which included a provision, Title VIII, that enabled lenders for the first time to issue adjustable-rate mortgages and other exotic loans, such as those requiring interest-only payments.

The provision was aimed at helping rescue the savings and loan industry by allowing thrifts to respond to the volatility in interest rates that prevailed in the early 1980s, but it would be precisely these types of loans that brought about foreclosures on hundreds of thousands of home mortgages in 2007 and 2008.

Even more significant for the future of the American economy was the decision by Reagan's appointees at the Federal Reserve in 1987 to allow large bank holding companies to handle the underwriting of mortgage-backed securities.

This measure was one of several aspects of financial deregulation in the 1980s and afterward that promoted banks' headlong rush into the securitization of mortgages, with the dire results that now engulf our nation.

But it wasn't just Reagan's championing of deregulation that weakened the American dream. While Reaganism has often been portrayed as the antithesis of the New Deal, it was more profoundly a repudiation of a long epoch of reform that, with some brief but notable interruptions, extended from the Populist era through the early 1970s.

At the turn of the century, Progressivism brought about a political and cultural awakening whose reform impulses reached into every sector of American life: law, philosophy, economics, art, literature, education, the social sciences.

The period brought about the creation of the Federal Trade Commission to protect the public from the most avaricious tendencies of big business, the enactment of important laws like the Pure Food and Drug Act of 1906, and the establishment of new rights like woman suffrage. Through an explosion of good government groups, the average citizen began playing a greater role in public policy.

Progressivism also spawned the concepts of business ethics and labor relations, the recognition that tending to the morale and working conditions of employees was smart management.

daboss| 2.11.09 @ 1:03PM

Jharp –

I would imagine that Buffett PURCHASES far more then the 16k person working at Mc D’s … so yes Buffett would pay much, much more in taxes.

Instead of Buffett paying a measly 6% (because of all the tax shelters) – he will pay much, much more because he SPENDS more. The underground economy would also pay taxes when they purchase items. Setup right it could be revenue neutral. Imagine eliminating the regressive SS tax – which hits those making under 90k harder than those above.

This is not a difficult idea. Plus, you can easily make all consumption taxes under 40k refundable (or some other amount).

Todd| 2.11.09 @ 1:03PM

Bob,
There you go playing into the liberal stereotype that Reagan didn't know anything about economics, evidence shows otherwise and that he along with the help of Jack Kemp and others implemented supply side economic which rescued us from the chains of Keynesian economics of stagnation and inflation under Carter. Reagan had long studied Milton Friedman and the Austrian School of Economics and had correctly concluded Keynesian economics as a fraud of liberal big government Statist to control the economy.

Dustoff correctly shown you to be wrong with a 28% inflation adjusted increase in revenue from 1980-1990 Bob so choke on that. He said so right in his first comment but there you are telling him he doesn't understand inflation growth is real growth so you look pretty damn stupid I must say.

Todd| 2.11.09 @ 1:13PM

You really are a jacksass jharp. Dustoff showed that revenue increased by 28% from 1980-1990 after inflation so he clearly is correct and Bob is wrong as usual. You wouldn't know the truth if it kicked you in the balls because you are a liberal drone.

Obama Rules, you are so full of crap you make an outhouse seem pleasant by comparison. You copy and paste some garbage from some liberal website and present it as your own idea. I have no doubt that if you went to College that you plagiarized papers much like Joe Biden did in Law School.

Dustoff| 2.11.09 @ 1:21PM

jhard.

LOL... ok Mr.Smart guy.
the McDonald's worker pays on his $16 thousand. An utterly idiotic proposal.
++++++++++++++++++++++++

Please SHOW all, what tax does this person pay in federal tax?

I'll wait why you Google this info. (this should be funny)

Dustoff| 2.11.09 @ 1:24PM

Todd...

What Bob & Jharp fail to see. The numbers I gave them, came from a website that BOB gave me.
Neither fool took anytime to check out what they posted. And these fools call me dumb?

Bob| 2.11.09 @ 1:25PM

Todd, please learn something about analysis. Federal revenues grew at a inflation adjusted rate of 3.4% per year during Reagan's term which was actually slightly lower than the previous 12 years. Furthermore, over Clinton's term, revenue grew a total of 59% (inflation adjusted) between 1992 and 2000 WITH TAX INCREASES. So tell me genius, how this makes Reagan look good? You and Dustoff just don't have a clue. Please do your homework.

Michele San Pietro| 2.11.09 @ 1:29PM

This Obama is really out of touch with reality. America needs everything except more State. If the continues this way, at the mid-term elections in 2010 he will lose even more soundly than Clinton did in 1994.

Dustoff| 2.11.09 @ 1:33PM

So what are the numbers for Carter? What are the numbers for Clinton? Why are they greater on a per year basis than Reagan? Please learn how to read charts and COMPREHEND the data.

Bob| 2.11.09 @ 1:34PM

Dustoff, in case you couldn't figure it out, the last post was from me. An no, you weren't talking to yourself.

Dustoff| 2.11.09 @ 1:38PM

Real cute Bob... But YOUR smarts are NOT showing. Like it or not. I went to the WEBsite YOU gave me. Looked up the numbers like you asked and proved you wrong... Sorry it bothers you.

Todd| 2.11.09 @ 1:40PM

Really Bob, increasing the size of government revenue is not what conservatives are looking to accomplish because we believe in LIMITED GOVERNMENT! Productive people being able to keep more of what they had earned and spend or invest it as they please is what is important, not increasing the size of a bloated and wasteful government. The fact that Reagan cut taxes and revenue increased anyways shows that supply side economics does indeed work. Like you said, private enterprise will use the money more efficiently so why give more money to the government to use inefficiently? The fact that the Congress frittered away trillions of dollars on useless and wasteful programs is the real problem, not by what % govt revenues increased.

Do yourself a favor Bob and read something good like Atlas Shrugged and maybe you might learn something of real worth and then comeback and tell us if you learned anything.

jcrue| 2.11.09 @ 1:40PM

Is dissent still patriotic?

Todd| 2.11.09 @ 1:44PM

Looks like Bob is getting himself confused once again. Take your pills and take a nap Bob.

Bob| 2.11.09 @ 2:00PM

jharp -- just to give you a clue, I'm also a Republican. I just believe in looking at history objectively and letting knowledge and intelligence lead the way. That's where BOTH parties have failed. Republicans have become slaves to the social conservatives who utilize belief over reason and Democrats have become slaves to the nanny state left who also utilizes belief over reason.

There are many functions of federal government that I would like to get rid of including the departments of education and commerce. I favor a much less interventionalist agenda than even Obama (which is the tradition conservative viewpoint). I do favor a flat tax with a low income exclusion that includes payroll taxes since the government is not competent in the redistribution of income. If you've done the calculation, a flat tax as I'm proposing will not hurt the lower and middle classes. The bottom like is that I am not an ideologue. I want to find analyze the data and come to a logical conclusion. I do have libertarian views on social issues which are consistent with my view that government should be taken out of our business as much as possible. Dems would like me on that, but dislike me on entitlements, environmental policy, and spending priorities.

Todd and Dustoff are ideologues who just don't want, or perhaps can't, intelligently analyze and evaluate data.

Todd| 2.11.09 @ 2:04PM

And Bob, the fact that a fanatical liberal like jharp is congratulating you should not make you feel good. I have never heard him make a coherent argument for anything and resorts to name calling when he is clearly exposed for his ignorance. He is the type of guy that anxiously awaits the next propaganda movie from the fat fraud Michael Moore and take everything in that movie as a proven fact.

Teleprompter Messiah| 2.11.09 @ 2:11PM

Obama Rules, there is a difference between reform and statism. Conservatives are not against reform ,where necessary, but they are against society being directed by Big Brother. Progressivism today is statism, you fascisti. What size is your hobnail boot?

Todd| 2.11.09 @ 2:16PM

And Bob, don't give me the crap about being an ideologue who can't intelligently analyze and evaluate data. I worked as a Research Analyst so I can read a graph but you choose to interpret it differently. I was not making an argument on which President increased government revenue which is what you are hung up on. My argument is that Keynesian economics is a proven failure and that the 30's and the 70's provide a great deal of evidence for that. Obama wants to take us down that same road and increase government spending (nevermind the crap that it is being spent on) that is unsustainable and will ruin the value of the dollar. You think Obama will give Volker the time of day or throw him in the back corner like Carter did? We will get a repeat of the failed monetary and fiscal policies of the New Deal and the 70's under Nixon, Ford, and especially Carter. That is my argument Bob, I don't care about your graphs about who raised more government revenue.

Bob| 2.11.09 @ 2:17PM

Todd, that's why I corrected him about my positions. I want Republicans to morph to a modern form of conservatism and not be reactionary by putting Reagan on a pedestal. I firmly believe there is a place for a conservative ideal that is not ideological, but based in fact. One that is based on limited government, fiscal responsiblity, and a libertarian belief on social issues. The main point would be to limit the effect of government on our lives. That's why I point out the fallacies of both tax cuts and spending on our economy. I want a conservative Republican ideal that believes in intelligence, success in school, and achievement -- factors in supporting individual responsibility.

Michael Moore is very entertaining -- but wrong. I feel the same way about Rush. I don't even find Hannity entertaining. Any one who eschews fact for ideology is someone that should be diminished. I am impressed, by the way, with Jindal. He won't run in 2012 but he has a chance in 2016.

Bob| 2.11.09 @ 2:20PM

"That is my argument Bob, I don't care about your graphs about who raised more government revenue. "

Todd, that is your problem because the facts disprove your thesis. If you were a research analyst, then you know that I'm right. Clinton raised taxes and had higher revenue growth. Period.

Again, if you were really a research analyst, you'd be ashamed of the statement you just made.

daboss| 2.11.09 @ 2:26PM

Jharp –

Please READ and understand:

daboss| 2.11.09 @ 12:47PM had this:

“We need something broader and bigger. Either a flat tax – or better yet a consumption tax. “

EITHER a flat tax (like bob suggests) or a consumption tax would be fine with me.

Although I like the idea of consumption tax myself.

My point is larger though – a tax cut will not be considered in this political environment. That’s why shifting the argument to something less regressive to something more free market based where most Americans could get behind.

And yes, it would be an additional sales tax – but then corporations and individuals taxes would not pay any Federal taxes out of their checks.

But in order for this to work, income tax rates would have to be set to zero until the 16th amendment is repealed and replaced with a consumption tax, the IRS would have t be scaled back or abolished. Otherwise, we would have what Europe has … a VAT tax included on an income tax.

Plus its ACTUAL CHANGE … not the same ol same ol we hear from both sides.

Jack| 2.11.09 @ 2:38PM

Silly liberals. Be happy. Obama is president and the liberal Dems control Congress. It's the Carter years all over again.

Todd| 2.11.09 @ 2:41PM

See Bob, I don't believe in raising taxes to raise government spending where it will be used irresponsibly and further increase entitlement programs that are unsustainable in the long-run. Did I ever say Clinton's higher taxes did not increase government revenue? No I didn't. My point is that those higher taxes took money away from the productive private sector to be wated by the government. If you are honest, I don't think you can disagree with that assertion.

Did you hear those losers Obama was talking with yesterday? That is the mentality we have to fight against if we want to keep this a great prosperous country. The mentality we find in trolls like Jeremiah and jharp on this site who worship big liberal government and idolize an empty suit like Obama. I am not equating you with them, I just think you can't see the forest for the trees. The argument is not about how we can raise the most government revenue but how we can increase prosperity and freedom. Higher taxes is not the answer Bob. Clinton was not the golden age you make it to be despite the good work done by the Republican controlled Congress before they lost their way. He gutted the military and set the stage for 9/11 by ignoring the threat posed by the likes of Osama Bin Laden.

frost| 2.11.09 @ 2:46PM

Charge and countercharge from Bob, jharp and fellow-travelers notwithstanding, perhaps the Real Answer might be found by the atark stock market changes following Obama's primetime exposure, compounded by the tax-cheating Treasury Secretary (and, paradoxally, head of IRS). You lefties can protest about the legitimacy of your arguments all you like, but those stock market results yesterday said bunches! Lotsa bunches even! And I might've purchased a few shares today after that sickening debacle...

Dustoff| 2.11.09 @ 2:48PM

Jharp.

I'm still waiting for that fed tax money you pay again? (flat-tax)
I figured you would give some child like answer or a cuss word. If you check on the flat tax... if you make this little money you pay zip.

frost| 2.11.09 @ 2:49PM

Yes, I do know how to spell "stark" and "paraadocically" -- but when you rely on just y'r two index fingers, sometimes you hit the cracks -- kinda like Thelonious Monk...

frost| 2.11.09 @ 2:50PM

Uh, paradoxically ??

Rodney| 2.11.09 @ 2:53PM

C-c-ca-ca-cain't we all jus' get along?

Todd| 2.11.09 @ 2:53PM

And don't equate Moore and Limbaugh Bob, you might disagree with Limbaugh but he is not a liar and propagandist like Moore. Remember Harry Dirty Reid's whole phony soldier accusation? The only lie there was coming from Reid and the Democratic propaganda machine. Did you actually find 9/11 very entertaining? I saw a few minutes of it and I was not entertained in the least and I believe that film poisoned many minds inside and outside the country. I find him about as entertaining as Jews found Goebbels in Nazi Germany.

Dustoff| 2.11.09 @ 2:53PM

Bob.
Todd and Dustoff are ideologues who just don't want, or perhaps can't, intelligently analyze and evaluate data.
+++++++++++++++++++++++++

Wow, nice retort. One problem. The statements I posted was taken right from the website you gave me. (cut & paste) If you don't like the numbers, don't blame me fool. It's the website you sent me too.
Again try reading what I typed here. ( YOUR WEB SITE)

Todd| 2.11.09 @ 2:56PM

I should say Fahrenheit 9/11

Bob| 2.11.09 @ 3:00PM

"My point is that those higher taxes took money away from the productive private sector to be wated by the government. If you are honest, I don't think you can disagree with that assertion."

Actually, Todd, the data does not support that conclusion. Economics is far more complex than that simple minded view. In the long run, debt hurts our economy far more than increased taxes. Debt is real as we have to pay interest on it. In the past, since no legislator will decrease spending (without a Constitutional amendment as I would like to see), tax cuts only increase debt. You can't argue with that fact. It is a wet dream to believe that people who get elected by spending money will reduce what their constituents get. That is where we disagree.

I found as many losers listening to Sarah Palin as with Obama. You know I don't think Sarah has the knowledge to be President. What about the McCain people that were shown in his town halls?

We increase prosperity by holding firm on fiscal discipline, limited government, and personal responsibility. We cannot hold people fiscally responsible and give tax cuts unless spending is cut FIRST. If we do not cut spending, then we must raise taxes so people will feel the pain and want tax cuts.

Clinton was not the golden age, but the economic results during that time were much better than Reagan's. He had the benefit of the dotcom bubble which had nothing to do with him. He was not in the same league as Reagan as a leader. Both Democrats and Republicans were responsible for gutting the military since it took a Republican Congress to agree. FYI, Bush ignored Osama bin Laden as well at the beginning -- they all did.

Todd| 2.11.09 @ 3:37PM

Bob,
Once again you use the old canard that tax cuts cause deficits when it is overspending that causes deficits. Like me and Dustoff proved, revenues increased well above inflation in the 80's despite tax cuts so it makes no sense to say tax cuts cause deficits. If Congress spent money with some discretion instead of expanding one wasteful program after another, deficits would not be a problem. This paragraph by you displays your circular logic Bob regarding this.

Democrats will never support tax cuts, at least not since JFK and those days are long past. Now according to your logic, if spending is not cut than taxes must be increased. And only once taxes are increased and people are fed up will we get a tax cut. Of course, liberals will say we cannot cut taxes than because it would be irresponsible to do so and we always end up with more spending and high taxes. That is what you call a circular argument Bob to justify high taxes that liberals love to use. I nailed you on that Bob however to attempt to justify it.

Obama rules, why don't you get Gay Liberal Who Loves ABBA's number and the two of you can have a good time together. I am sure he wouldn't mind if you wanted to copy and paste his ass if that is what you are calling it these days.

Think First| 2.11.09 @ 3:43PM

Bob,
I agree and I think anyone could agree with the simple idea spending has to decrease. To deny however that tax cuts work is simply denying reality. Yes I look at all the charts you point to and as dustoff said, they don't say what you think they do. I wish this was a better place where we could trust ANY politician to do what is right by cutting the federal budget so taxes could be lowered. Yes both sides are responsible for this and while Bushes tax cuts helped spur growth after 9/11, he did NOT follow that up with spending cuts in programs to keep up the momentum.

Monetary policy alone is not an answer in and of itself either. There are many facets that drive an economy the most important of which is govt. staying out of the way as much as possible. We do not need Commerce, Education, Arts, or the IRS if a form of flat tax can be made to work.

In some ways I would say I was libertarian except I believe in a strong defense in a world of those few who believe anything less than brute force is a cause to do what they want to you. You can't hide behind your borders if you can't defend it.

As to your statement revenue and business increased under Clinton even with tax cuts is false. While it temporarily increased revenue, it also slowed growth until even the OMB admitted it falsified data to show continued growth when in fact a recession had already begun several years before Bush took office. If you are trying use this as an example increased taxes don't affect the economy you are not paying attention.

I hold Bush and his cronies far too guilty of failing this country in many ways. Including invading Iraq when even the 9/11 commission admitted it was Iran who was behind it and preparing to be the next target as the evidence was overwhelming they were the real orchestrators of, and backers who used Bin Laden as a tool to get back at the evil US. Many of us believed Bush was deflecting attention away from the real target of Iran when he was weighing his options because the evidence was so overwhelming. When he did invade Iraq, it was obvious it was a political choice and not a military one.

Reagan was not the brightest but understood enough to get us on the road. The only reason it didn't go further was because all the spending cuts he wanted did not happen. He was told in no uncertain terms that welfare, education and many other departments was off limits. He got some of his economic plans by dealing with a congress that threatened to overrule any veto of their spending bills and refusing to agree to the tax cuts that were limited only by what he could get through each time.

More than once he felt like govt should have to balance it's checkbook just like working Americans did at the kitchen table. Somehow that all gets lost in the attempts from many sides to either deify him or degrade him.

Todd| 2.11.09 @ 3:58PM

Think First,
I agree with most of what you said though I think the Iraq/Iran portion is a bit confused but that is not the issue here. Not sure why you felt the need to say Reagan was not the brightest, maybe he wasn't some Ivy League Intellectual but that is a good thing as he could actually apply common sense solutions. Like Reagan said, that is so stupid only an intellectual could believe it like Bob claiming tax cuts cause deficits. Reagan was a very learned well-read man, especially now that his personal writings have been made public. Instead of learning some false economic theories from an Ivy League Institution, he learned from great conservative thinkers like Goldwater, Buckley, Friedman, etc. In my opinion, him and Buckley were intellectual equals and Buckley certainly treated him like an intellectual equal.

Dr. No| 2.11.09 @ 3:59PM

You guys sure have a lot of time on your hands to be posting here every damn day. Does anyone work for a living anymore?

And you call yourselves Republicans!

Dustoff| 2.11.09 @ 4:06PM

Dr. NO

As a fire/medic-Flight nurse. you only work 24 on and then 2 to 3 days off. (-:

Nick| 2.11.09 @ 4:56PM

Bob,

I don't really care if tax cuts raise revenues or not. I'm for lower taxes based on principle, something you mushy moderates wouldn't understand, because you're so pragmatic. So enough with economics slight-of-hand, mumbo jumbo.

This country got along just fine without any income tax for 137 years. And when it was enacted, the top rate was 7% on incomes above $500k, in 1913! Less than 1% paid any income tax whatsoever.

Instead of supporting a balanced budget amendment, why not support the repeal of the 16th amendment? If you really "favor a much less interventionalist agenda" like you wrote.

Not that either has a chance of passing at the moment. That's why all income taxes should be cut to where they were in 1913. Adjusted for inflation of course. Especially the per child deduction.

"Michael Moore[ON] is very entertaining"???
This explains alot about you Bob. You're probably one of those twits who think Woody Allen is hilarious.

Dustoff| 2.11.09 @ 5:08PM

Jharp
They said that any accusations that this bill will allow the government to dictate anything to your doctor, they say those accusations are “wildly inaccurate and preposterous.”"
+++++++++++++++++++++++++

They also said S/S would be partial retirement too. So much for truth.

Todd| 2.11.09 @ 5:08PM

jharp,
Will you deny that it is not the agenda of the left to socialize medicine like Canada? See, the libs have learned from their failure in 93 under Hillary to socialize medicine so they are taking it steps at a time now like continually trying to expand SCHIP where it covers 30-year olds now and trying to reduce the age for medicare to 55. They don't want to spell it out specifically to make it obvious what they are doing, just the mantra that everyone should be insured. Of course like Canada, this will lead to the government to monitoring treatments in order to guide doctors decisions just like what happens today in Canada and England. The health information technology provisions will make it easier for them to do so by having everyone's personal medical info at their fingertips. Once again Rush exposes the truth of the lefts agenda to a large audience and people like you hate him for it. I will never apologize to a jackass like you for calling you out on the lies and propaganda of Obamaniacs like yourself.

Todd| 2.11.09 @ 5:14PM

And jharp, using a commie website like thinkprogress.org as your source to deny there is any attempt to socialize medicine in the stimulus is beyond laughable. There is nothing more those pinko commies want than socialized medicine but don't want to let the cat out of the bag until it is too late to stop. We know your dirty tricks, like Lenin preached, the ends always justify the means.

Think First| 2.11.09 @ 5:14PM

Todd,

Let's get this clear. All I intended to say and did not do a very good job of was while by some peoples measuring sticks, he might not have had the titles behind his name or the degrees that mean intelligence to them, on the practical matter of finding a way to make it work and turn around the disaster left to him was nothing short of amazing.

That is why when I see the attempts here to cite having a degree as somehow qualifying what they say as more informed than someone who does not, means absolutely nothing to me. We are suffering far too much from ivory tower rhetoric bred in schools that make no attempt to recognize that if what they study in theory does not work in the real world, it is not the world with the problem, it is their theory.

What Paul Zane Pilzer illustrated in his books is how Reagan wanted a small tightly controlled government, taxes only as much as needed to balance that small budget, and stop the regulations where possible that inhibited growth instead of encouraging it.

Welfare, education and many others he wanted to hand back to the states to deal with and stay out of it.

Reagan was a leader we needed then and someone like him now. Someone who is not afraid to tell people govt. is not here to give you anything except an even chance to make of your life what you can without the fed getting in your way.

The depression proved all of this long ago yet when we the people begin to believe govt. must rescue us, feed us, clothe us, and cure our sniffles, then we all lose.

Our founders left many countries to get free of taxes, regulation and too many laws to be free to make their own lives. Sink or swim at least it was THEIR choices that determined their failures or successes. They had the courage to take up the challenge of taking personal responsibility for their lives.

Reagan did not want deficits and debt. He wanted to starve govt. and make it wean itself off the feeding binge it was on. I remember his speech on that to this day because it stood out in such stark contrast to what was being said at the time. He believed the people would be so outraged by the debt if spending was not cut, they would vote them out in droves. That's one of the reasons he kept pointing out a families budget and comparing it to govt. If belts need to be tightened, shouldn't govt. LEAD the way? Shouldn't they be pointing out how they are cutting spending? How they are trimming payrolls? How they are interfering less in your life? In business?

Todd| 2.11.09 @ 5:35PM

Think First,
I thought we were on the same page regarding Reagan, an Ivy League degree does not make someone an intellectual. Case in point would be Caroline Kennedy among many others. I could give one example from today for myself on how government is interfering in our business as OSHA showed up here unannounced because a disgruntled employee that recently lost his job here went complaining to the government so we have to deal with them all day looking for any excuse to fine us. Rather unpleasant people these OSHA employees are, no doubt Obama supporters that dislike private enterprise. Just another day of running a business in the Socialist state of New York.

jharp, all those innovations you listed were a result of capitalism and not big government liberalism. The only reason we have done well is due to capitalism and the free market, not regulation and taxation. Get a clue

Todd| 2.11.09 @ 5:45PM

So you are an expert on Health Care in Canada jharp? Are not doctors employees of the State in Canada and have to follow the guidelines of what treatments can be offered and to who? The lie is coming from you moron, do you understand what socialized medicine is? I live across from the border and know for fact many people come from Canada for medical treatment because they can't get it in Canada or will have too wait much too long for it.

Let me explain how it works though I am not sure your tiny brain can comprehend it. All medical information is centralized into a database where government bureaucrats can access and use it to decide on how treatments will be rationed and to who. I would rather make that decision myself with my doctor but maybe you are comfortable having some faceless bureaucrat in DC deciding for you. In your case, I hope they deny it to you since you are judged to be a drain on society and it will be better used on someone else.

Todd| 2.11.09 @ 5:55PM

You really are an idiot jharp to tell me that there is no socialized medicine in Canada, that is an acknowledged fact that only a fool like you would deny. And to say no one is advocating socialized medicine here is just too foolish to comprehend. A single payer system is socialized medicine and that is constantly advocated for by liberals and by socialist organizations like ThinkProgress. Anyways, I am done with you. Even Bob thinks you are a fool and didn't care for your support.

tony| 2.11.09 @ 6:03PM

jharp:

Why not have a 0 tax on all income over a certain amount, say $75,000. Then we can all sit back and watch the magic of government at work. While we're at it, we can change our name to the USSA. Just a thought.

Nick| 2.11.09 @ 6:06PM

jackass harp,

Your ignorance is surpassed only by your foolishness.

People struggled and died without those inventions. Luddite, commie, bleeding heart.

Exactly what is your asinine point? You think that taxes are comparable to inventions? Talk about apples and oranges! And you call others morons?

Todd| 2.11.09 @ 6:08PM

One last thing before I never bother with a loser like you again. You mean all those regulations that Barney Frank and Chris Dodd didn't want imposed on Fannie Mae's lending standards ? Are those the lack of proper regulations you are referring to because we would agree on that. I think otherwise about you being pro-capitalist because you belong to a group like ThinkProgress that advocates socialism and a welfare state. Enough said

Nick| 2.11.09 @ 6:23PM

jackass harp: "Wrong again. Single payer is not socialized medicine"

Yeah, right!
And the sky is not blue. And the Earth doesn't orbit the sun, right Jeremiah? And Eleanor Roosevelt was pretty. And B.O. is really, really smart too.

Nick| 2.11.09 @ 6:37PM

jackass harp,

Can't you read, brainiac? I'm not Todd.

I'm talking about your asinine point of 2.11.09 @ 5:18PM.

And your point to Todd is asinine also. Taxes had nothing to do with cars, airplanes, refrigeration, etc.

Todd| 2.11.09 @ 6:45PM

One more time and that is it. I never said tax dollars never were used for innovations jerk, just all the ones that you listed were free-market innovations. I am quite okay with tax dollars going to the military since national defense is actually listed in the Constitution as a legitimate function of the government and not funding abortion clinics.

You mean the bill that was passed under Bill Clinton by a vote of something like 97-1? Why I am not surprised your source is another capitalist-hating socialist-loving site like Mother Jones? If an actual legitimate site that understands financial matters like Forbes, Financial Times, WSJ makes that claim, I might actually think it was worth reading. Motherfing Jones, not so much. I doubt very much they teach in business school to use Mother Jones and Think Progress as legitimate sources for financial matters. If they had such a thing as business school in Cuba, I am sure they would though.

Nick| 2.11.09 @ 6:54PM

Mother Jones???

Why not quote democracy now, or the daily worker?

jackass harp: "This is my commie arguement..."

normal person: "Your point is a lie. Here's the truth..." Uses facts and data.

jackass harp: "No, this is the truth..." Quotes commie agitprop.

Todd| 2.11.09 @ 8:45PM

I guess I am a bit too entertained by showing you to be the moron that you are but I just can't help it. You are much more fun than Bob, who gave up after I showed him how stupid his circular argument was. Nick summed you up rather well, I laughed hard because it was very true.

I was wrong about the Senate count, it was actually only 90-8. Straight off wiki, On November 4, the final bill resolving the differences was passed by the Senate 90-8 [7] and by the House 362-57.[8] This legislation was signed into law by Democratic President Bill Clinton on November 12, 1999.[9]

I read the WSJ everyday jackass and have an MBA and I don't consider motherfingjones a legitimate source on financial news. Rather funny to hear a moron like you refer to me as uneducated when you refer to motherjones on financial stories. Only leftist crackpots who hate capitalism actually believe that bill is responsible and that is why you find that kind of story on liberal propaganda sites and not legitimate business news sites.

Let me remind you what happened the last time Dems controlled everything, that would be the Carter administration and I guess people unfortunately have to be reminded how crappy things get when liberals run things. Republicans will get the middle back after people see what happens to the economy under the likes of incompetents like Pelosi, Reid, and Hussein.

Lets see what nasty reply of gibberish you comeback with now.

Nick| 2.11.09 @ 8:47PM

Hey Bob,

It's Sarah Palin's birthday. Did you know that?

I'm sure you want to wish her well, don't ya there?

Todd| 2.11.09 @ 8:48PM

I overlooked 1992 of course but that only took two years before Republicans took back Congress in a landslide.

Nick| 2.11.09 @ 8:52PM

Todd,

Glad I could amuse you. Excellent posts, as always.

Todd| 2.11.09 @ 9:09PM

Not sure where Bob went but typical of him to leave all the sudden when he realizes he is losing the argument. Jharp thought he was doing good though, haha. Here is Bob's argument (it would work better if I could draw a circle):
- Taxes cannot be cut unless spending is cut first
-Taxes must be raised to reduce deficits from increased spending
-People will demand tax cuts after having them raised
-But that would be irresponsible to do because no spending cuts were made
-So taxes must never be reduced or we will get bigger deficits from higher spending because we all know spending will never go down.

That is basically exactly what he is saying in his 3:00 post and what he preaches ad nauseam. Damn those rotten tax cuts and returning money to taxpayers instead of the all-knowing government! That is an Ivy League education for you right there. Thanks for illuminating us with your brilliance Bob. Make sure you leave with a parting shot on Sara Palin to further illustrate your great intellect.

Todd| 2.11.09 @ 9:21PM

I was expecting more from you jharp, very lame. Now I really didn't blame Clinton because I don't think there is anything to blame, it is just a fact that he signed the bill. Please inform me with more details on exactly how this bill is responsible for all of our financial problems while Fannie Mae was just doing us all a great service by providing mortgages to illegals and the unemployed while political hacks like Franklin Raines take home $90 million for making loans to anyone and everyone with no regard for risk. Funny how I don't see the liberals outraged by this greedy executive demanding his money to be returned. Maybe because he is a well-connected liberal political insider and being black doesn't hurt either. Keep blaming Gram though, I am sure you and motherjones can tell us exactly how Republicans are too blame for everything.

Jeremiah| 2.11.09 @ 9:47PM

You people are the economic version of the Flat Earth Society.

1st: Reagan could have vetoed Congress's massive spending in the 80s, and Bush could've vetoed spending in the past 8 years. They didn't because they didn't WANT to.

2nd. The revisionist history on the New Deal is pathetic and fallacious. Did you people not attend U.S. History in school? Go to the library; get ANY book on the Depression written by an acknowledged historian, and you will see the truth that Rush Limbaugh and his clownish cohort is now denying.

Howard| 2.11.09 @ 10:05PM

I loved The Gipper as much as anyone does. But he ran enormous deficits during the 1980's. But low taxes and fewer regulation unleashed the power of capitalism. However, in today's rancid economy, we do need deficit spending to stimulate demand. There is plenty of supply. i would have preferred more infrastructure work and less feel good junk. But I think it may work.

Nick| 2.11.09 @ 10:14PM

Jeremiah,

"You people"? Who you calling "you people"? That's racist! You should know better.

Aren't you the one who doesn't know the Earth orbits the sun?

If the Raw Deal helped so much genius, why did it take 24 years for the Dow Jones to get back to where it was in '29 ?

Nick| 2.11.09 @ 10:22PM

jackass harp,

I dispensed with how you make your "arguments" @ 6:54PM. You wouldn't know logic if it smacked you upside your commie head.

Nick| 2.11.09 @ 10:53PM

jackass harp,

"...why did the the Dow Jones go down 30%. "

Because of the financial meltdown, dope.

rtk| 2.11.09 @ 11:24PM

If socialism and communism are so powerful and beneficial, why are all the liberal states in debt again and why do communist countries fail over and over again? Obama wants us all to be dependent drones who cannot think for ourselves. I am not ready to accept his awful quality of life. Green air heads, go enjoy it.

Jeremiah| 2.11.09 @ 11:27PM

Nick --

Your question:

Why did the Dow Jones take 24 years to return to where it was in 1929?

Nick, I'm going to assume your statistic is true. But Jeez, Louise. Think, man. It took that long because the entire world market collapsed!

Do you know what the Depression was? It was a total, complete, global breakdown of capitalist markets.

Now, the GDP of the U.S. did bounce back pretty readily as it responded to government spending in the 30s and 40s, and employment rates climbed.

But there was a price. Tax rates on the wealthiest Americans climbed to 90% -- but back then, people, especially including the wealthy, just cared more about their country and their communities than many do today. You could say they were more patriotic.

Anyway, saying "you people" to a bunch of white blog-fiends is hardly racist.

But thank you, just the same: your posts are hilarious.

Jeremiah| 2.11.09 @ 11:32PM

And by the way, Nick, I have no idea why you accuse me of not believing the earth revolves around the sun every time you respond to one of my posts.

It's insane and hilarious, but a little weird too.

Let me just refresh your memory. My claim was simply that the KIND of certainty we have that the earth revolves around the sun is of a different nature than the kind of certainty we have that 2+2=4. They are epistemologically different kinds of "facts." One is based on mathematical logic, the other is ultimately based upon observation -- it is, in other words, empirical.

Empirical science can be very reliable of course. But the kind of certainty that it leads to is not quite as stable as that ascertained by mathematical reasoning.

That was my only point.

Any questions?

Lloyd| 2.11.09 @ 11:38PM

A couple of points:

1. Peter Ferrara's argument is virtually identical to the one that Henry Hazlitt made in his 1946 classic, "Economics In One Lesson". The lesson is:
"The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups".

Hazlitt's argument was aimed largely at Keynesian policies for their emphasis on the immediate, visible, and obvious benefits at the expense of the long-term, the hidden, and the dispersed costs of public works stimulus endeavours. If you can get hold of a copy, it's possibly the shortest and most devastating rebuttal to a lot of the thinking behind the rush towards statist "solutions" to the current predicament. Thomas Sowell's " Applied Economics: Thinking Beyond Stage One" offers the same argument at greater length but is less relevant to the current stimulus plan.

2. The charges that Peter Ferrara isn't a real economist but merely a lawyer don't quite jibe with the bio given in his 1980 book, "Social Security: The Inherent Contradiction". He is described as an"economist-lawyer" who "studied both law and economics" and who "worked with Arthur Laffer and other economists on the development of an econometric model to measure the empirical impact of various supply-side tax cuts.

Todd| 2.11.09 @ 11:47PM

That would be Bob claiming Peter Ferrara doesn't know what he is talking about. Last I saw Bob, Peter was getting articles published in the WSJ while you peddle your circular arguments on taxes to no one in particular because no one would ever publish your crackpot theories.

Lloyd| 2.11.09 @ 11:47PM

Jeremiah, you say that the Great Depression was so catastrophic that it was virtually impossible for ANY policies to return the economy to pre-Depression levels for decades. It's interesting then to read Gene Smiley's essay on the subject where he writes: " In most countries, such as Britain, France, Canada, the Netherlands, and the Nordic countries, the depression was less severe and shorter, often ending by 1931. " (http://www.econlib.org/library/Enc/GreatDepression.html). Smiley's essay as a whole is worth reading as well.

Nick| 2.11.09 @ 11:59PM

Jeremiah,

Your the one who doesn't know what the Depression was. After the Crash, Hoover stupidly raised taxes and signed the Smoot-Hawley act, which put us into trade war and a recession.

Then the commie sympathizer, FDR, put us into a depression by declaring war on the free market. Unemployment went down with make work jobs, but then went back up in '37. Wage and price controls crushed industry. The New Deal was an utter failure.

It was finally stopped during the war and in '46, but unfortunately it wasn't completely rolled back. Which is why the DJIA didn't reach it's previous high until '54.

Who are you, Joe Biden? It's not patriotic to pay alot of taxes.

Todd| 2.12.09 @ 12:00AM

jharp,
Your so-called evidence came from Mother Jones and I would not waste one second reading commie bullcrap from that site. I assert you are a moron for presenting as evidence some crap article from a socialist website. If you used such a source as evidence for a paper about the financial meltdown in an MBA class, you would get laughed out of the class. Why should I waste my time presenting evidence to an idiot like you though I can find very credible evidence from many credible financial sources on Fannie Mae's culpability. If someone really wants to learn something, than I would take the time but for people like you, I will just show you to be the ignoramus you are. Later hoser

Robot| 2.12.09 @ 12:09AM

Todd said:

"Please inform me with more details on exactly how this bill is responsible for all of our financial problems while Fannie Mae was just doing us all a great service by providing mortgages to illegals and the unemployed while political hacks like Franklin Raines take home $90 million for making loans to anyone and everyone with no regard for risk. "

Fanny and Freddy don't and never have originated loans. The fiasco we're in right now is the inclusion of bogus RE contracts into securities that Helen Keller had oversight of.

Fanny and Freddie's problems are a speck on the arse of the fly on the elephant that is the "mystery secuities market" that was allowed to go unchecked under Bush (if you don't believe me ask Alan Greenspan).

Unfortunately, the right is trying to focus the attention of the current crises on these entities because they can slough off responsibility for the current mess were in on someone else. That's not to say there isn't blame to go around but the fact is the last administration looted the country at every turn:

California "Electricity Crises" (see Enron et al).

TARP One (need I say more?).

07-08 "Oil Bubble" ( go look how fast demand miraculously went down when the speculators were done).

Just pay your taxes.

Nick| 2.12.09 @ 12:24AM

Jeremiah,

I keep mentioning the orbit thing for the obvious, to needle you. I never said you don't believe it. I asked if you know it yet, seeing as you had doubts earlier.

And let me remind you, you claimed mathematics wasn't a science. And since you've brought it up, I was only refuting your statement that PROBABLY was as good as it gets in science, by giving 2 simple examples of the exactness of science.

Finally, the FACT that the Earth orbits the sun is not empirical. It takes precise measurements and lots of math to prove it. This is what got Galileo into hot water. He claimed to have finally proved it but his math was off.

Todd| 2.12.09 @ 12:32AM

Robot,
I am not saying Fannie Mae is too blame for the whole mess but it is certainly a big part of it by providing a huge market for subprime loans. Sure they did not originate loans per say but they provided a huge secondary market for them and everyone knew that the government would have to back them up being the private/public monster they were. Too big too fail indeed. You can go on down the line to point fingers but Fannie Mae is huge and it is a joke for you to compare it to a fly on a elephant.

I would certainly not absolve Greenspan of any blame, the Fed constant tinkering of rates and keeping them so low for so long had a big hand in the bubble. And the govt credit rating agencies certainly dropped the ball that is for damn sure. I think my point is the more the government gets involved, the more things get messed up. Not much of a free market if you ask me.

Jeremiah| 2.12.09 @ 12:48AM

Nick,

Actually, you're wrong about this. Mathematics deals not in probabilities but in certainties. 2+2=4 is an absolute mathematical certainty.

Science requires and depends upon mathematical reasoning, but it in the modern sense of the word science is empirical, that is, ascertained through the senses, through perception of the world. You cannot have science without observation of nature, and observation -- obviously -- is always liable to mistakes. Mathematics helps us explain and prove the heliocentric theory, but that's as good as it gets with science.

Jeremiah| 2.12.09 @ 12:53AM

Nick --

On the business with the Depression, frankly, I've had it.

Sean Hannity can say 15 times a day that the war of 1812 was fought against Sweden, but it won't make it so.

You can repeat, over and over, that the New Deal caused the Depression, or whatever, but it just IS NOT true.

If you can point me to a legitimate, peer-reviewed historical argument that supports your case, I'll read it. But until then, you'll have to forgive me: I'm going with widely acknowledged historical surmise on this one.

Hint: just because it doesn't match the ideology, doesn't mean it's not true.

Lloyd| 2.12.09 @ 1:21AM

Some more comments:

1. Quite a bit of the discussion misses Peter Ferrara's main point, which is the fallacy of only counting the BENEFITS arising out of any "stimulus" spending and completely ignoring the opportunity COSTS of this spending - namely the giving up of the alternative benefits which would have occurred in the absence of this government "stimulus" (quotation marks EXTREMELY pointed). The assumption that governments necessarily spend the money more productively than private citizens do is a contentious one. And it needs to be repeated incessantly that government spending doesn't just come ex nihilo but actively CANCELS private spending with all its own "stimulus" effects.

You can of course argue that private spending isn't sufficient at the moment to counter any positive feedback that is likely to ensue from current circumstances - in other words, that cutbacks in one sector will cause a lack of demand in other sectors leading to cutbacks in those sectors which in turn will cause a lack of demand for the products of still more sectors, etc - and that government spending OF ANY KIND is necessary to prevent this happening. But simply to assume that this is the case and to further assume that the particular channels through which this spending passes won't have long-term effects on the economy is even more dubious.

2. The Laffer Curve doesn't state that ALL tax cuts will result in tax receipt increases but only under certain conditions - as is necessarily the case with a curve. There IS a tax rate at which tax receipts are at their zenith - and it sure ain't zero! The novelty of the Laffer Curve was that it drew attention to the myth that tax rates were in direct correlation to tax receipts - in other words, that a cut in tax rates necessarily resulted in a loss of revenue. The political benefit was that it enabled proponents of tax cuts to argue that it could end up also benefiting proponents of government spending, a perfect Win-Win situation! Of course, many supporters of tax cuts would argue that cuts should go further than this ideal point because they WANT government spending to be reduced. It's two different arguments.

3. I'd be extremely careful in looking to History for lessons unless you're ruthlessly rigorous and yet still skeptical about the absoluteness of any conclusions you come up with. As I once wrote, History is commodious enough to accomodate all sorts of conflicting theories. You can always find support for your conclusions SOMEWHERE.

Nick| 2.12.09 @ 1:48AM

Jeremiah,

You must have went to public schools.

You didn't know that mathematics is a science, and now you don't know the definiton of empirical. It means proving by observation or experiment alone.

It was Copernicus' theory that made heliocentrism plausible. It was Kepler's theory, Newtonian physics, and better telescopes that proved heliocentrism. You can't prove heliocentrism by observation or in the lab.

I never said you can't have science without observation, that is a straw man. And ridiculous. Why can't you admit your statement that PROBABLY is as good as it gets in science, is just wrong?

Nick| 2.12.09 @ 2:08AM

Jeremiah,

Hope UCLA is legitimate enough for you.

http://www.universityofcalifornia.edu/news/article/6550

Jeremiah| 2.12.09 @ 2:12AM

Nick, my friend

Copernicus did not make heliocentrism possible anymore than Newton created gravity.

All science is empirical in nature: it is about observation of nature.

Observation is interpreted using mathematics, of course, but ultimately we study nature by observing it. Observation relies on the SENSES, which are faulty.

Science is always about probabilities, and it always has been.

And you're right, I did go to public school, and they did teach me well -- at least so far as this topic goes.

Did you go to public school? Or are you a private school boy? Something tells me you probably went to public school as well. So -- I guess I don't understand that comment in your post.

Nick| 2.12.09 @ 2:17AM

jackass harp,

You nutroots guys should try getting your news from someone other than Olbermann-child, Matth-spews, or Wesley Crusher - I mean Rachel Madcow.

Nick| 2.12.09 @ 2:26AM

Jeremiah,

Actually I attended both. 3 years total of Catholic education, the rest public. I got taught (indoctrinated) by ex-hippies in the 70's & 80's, and have spent the last 20+ years undoing their damage. You should do the same, if that's what they taught you about science.

Nick| 2.12.09 @ 2:30AM

Jeremiah,

I wrote Copernicus made Heliocentrism PLAUSIBLE, not possible. Can't you liberals ever quote accurately?

Robot| 2.12.09 @ 2:48AM

Todd wrote:

I think my point is the more the government gets involved, the more things get messed up.

Not in this case. Regulators (using existing regulations - not new ones) asleep at the wheel could have mitigated much of what we're seeing now. Of course there's ditches on both sides of the road, but this is the one on the right hand side, I'm afraid.

I believe the total mortgage portfolio of Fanny Mae is in the neighborhood of $2.8T and (I'm guessing here but think this number is close) 10% of that portfolio is at risk. So be conservative and say 20 and we come up with $500 B to 1 T that could have been solved with the money from Tarp 1.

Instead the solution is to throw that money at Morgan, Citi etc. and the reason is clear why they did that. Although the notional value of the underlying bad loans would top out at 3-5 trillion over the entire portfolio (including the rest of the market) the value of the speculative securities is more like 60-70 Trillion.

Bailing out the bad mortgages would be plenty painful for sure, but doesn't compare to what could happen if we have a collapse in the world economy that dumps all of our mortgage paper into the waste basket taking the spec paper market with it.

My opinion... these people are afraid because they should be. Bush and Obama both.

The government sat idly by while spec markets in electricity, housing and oil created this monster over the course of the Bush admin's tenure where raping the markets was rewarded and no regulatory oversight was invoked to prevent abuse. In a free market there are still laws to prevent people from say, murdering their competitor or stealing from their suppliers.

Oddly enough, and you heard it here first, I actually see another possible outcome that may be better than people think.

After the dotcom bubble burst, money went in different directions for safety, like the real estate market. It was fairly safe and could return a profit at the time. This has been true of all of the bubbles that I'm aware. That is, the money doesn't just dissappear into thin air, it finds a place to go for safety.

In our current mess, there isn't anywhere to go. No safe havens. So people are shoving under their mattresses or in tin cans or T-Bills and are on the sidelines. I think its possible that when that sideline dough starts to move, a recovery could be faster than anyone would have guessed. Investors now making 1 or 2% on their money will actually spread the money through the economy rather than plow it into one or two sectors.

The bullets have to stop flying though and although the idea of this stimulus package makes me want to throw up it may be the only way to get capital moving again.

Robot

Nick| 2.12.09 @ 3:03AM

Jeremiah,

And one more thing on the subject.

Probability IS A SCIENCE, not the other way around.

Bob| 2.12.09 @ 8:29AM

Todd,

I cannot post 24/7. I had a business meeting yesterday. As for yours and Dustoff's "proof", it is not corroborated by the data. You can't use an increase in GDP for Reagan of 28% with a tax cut and ignore a 59% increase for Clinton with a tax increase. You guys lack even minimal comprehension.

You missed the entire point about tax cuts relationship with spending. We now have prima fascia evidence in ALL occasions that tax cuts DO NOT REDUCE SPENDING and that TAX CUTS OF REAGAN AND BUSH RESULT IN INCREASED DEBT.

I find it disingenuous to mention only Reagan when Bush did the same thing WITH A REPUBLICAN CONGRESS.

By the way, Happy Birthday, Sarah! All children deserve a birthday party.

Todd| 2.12.09 @ 1:04PM

Bob,
Let me use the IBD to refute you once again. Like I told you, there is a reason Peter Ferrara gets published in the WSJ and nobody will ever publish your rubbish.

Taxing The Truth

By INVESTOR'S BUSINESS DAILY | Posted Wednesday, February 11, 2009 4:20 PM PT

Stimulus: President Obama, a smart man, says that tax cuts for the wealthy are the main reason we're now in such economic trouble. Someone needs to tell him how utterly — and dangerously — wrong that is.

Read More: Budget & Tax Policy | Economy

"We have tried that strategy time and time again," the president said Monday of "tax cuts for the wealthiest few Americans," and "it's only helped lead us to the crisis we face right now."

Well, he's half-right: We have tried it again and again. But rather than create crises, economic growth has been restored. The evidence is pretty much beyond dispute.

Since World War I — the start of the modern financial era — we've suffered four major downturns. In three of them, the government cut tax rates. And each time an economic boom ensued.

In only one did the government respond by raising taxes, erecting trade barriers and enacting massive new spending programs to get out of the slump. Today, we call that time the Great Depression.

As noted in a recent study by UCLA economists Harold Cole and Lee Ohanian, President Roosevelt's efforts at government direction of the economy likely extended the Depression by seven years.

As history shows, lower taxes, not more government, work best:

• The 1920s: When the income tax was established in 1913, the rate was 7%. But it quickly soared, especially for the rich, and by 1918 the top rate was 77%. Unfortunately, coming out of the war the economy was a mess, with prices falling, unemployment soaring and nominal GDP dropping by more than 15% in just one year.

From 1921 to 1925, under Presidents Harding and Coolidge, tax rates were slashed to 25%, and GDP rose at an annual rate of 3.4% in the four years after the tax cuts vs. 2% before. All told, GDP swelled more than 50% during the 1920s.

All this was undone, however, on a bipartisan basis — first by President Hoover, a Republican, then by the Democrat FDR. Hoover boosted the top income tax rate to 63%. Then, FDR took it to 79%, while also doubling the corporate tax to 24%, imposing a Social Security tax of 2% and raising taxes on stocks and dividends, estates, and "excess" profits. Is it any wonder the economy went nowhere in the 1930s?

• The 1960s: President Kennedy, a Democrat, believed strongly that lower taxes meant higher growth, and he was soon proven right. Before he was assassinated, JFK proposed cutting top tax rates from a punitive 91% to 70%. In 1965, his cuts were enacted under President Johnson by a Democratic Congress.

Once again, growth took off, along with private investment. Real GNP, which averaged just 2.4% from 1952 to 1960, expanded at 4.5% during the '60s. The expansion that began in 1961 and ended in 1970 was, at the time, the longest ever.

• The 1980s: President Reagan took over an economy with a 21% prime interest rate, double-digit unemployment and inflation, slowing productivity and flagging economic growth.

But he too was a big tax cutter. His 25% across-the-board rate cuts snapped the economy out of its funk, creating the longest peacetime expansion ever at the time. During Reagan's two terms real GDP growth averaged 3.2% compared with 2.8% in the preceding eight years.

After stagnating through most of the 1970s, real median family income grew $4,000 under Reagan. Investment boomed, as did the stock market, business creation and innovation. Some 20 million new jobs were created, due to the increased incentives to work, save and invest resulting from lower tax rates.

We all want our new president to succeed. But to do so, he needs to drop the class-warfare rhetoric on taxes and cut them instead. Like Coolidge. Like Kennedy. Like Reagan.

Bob| 2.12.09 @ 4:14PM

Todd, we all know the political position of the WSJ. Your post is a joke and so is your thinking about the efficacy of tax cuts. There is NO trend data that shows tax cuts to be stimulative. Even Laffer agrees with that.

You also made misstatements regarding Fannie and Freddie. I was in the industry and I know first hand. Fannie and Freddie backed the sub-prime market through securitizations in the 90's through about 2002 strongly. In 2002, they owned about 70% of those securitizations. As of 2007, they only owned 30% of the securitizations with the rest going to Wall Street investment banks. Watch the special on CNBC tonight for further details. Furthermore, Fannie and Freddie actually had down payment and income verification requirements while the much more highly leverages Wall Street firms did not. Both Republicans and Democrats supported Fannie and Freddie during that time.

Todd| 2.12.09 @ 6:01PM

Keep sticking your head in the sand and ignore history Bob. Keep reading your beloved New York Times and Paul Krugman since they will never say a bad word about you Keynesian economics. Tax cuts have always been shown to work in recessionary times (Harding and Coolidge in the 20's, Kennedy, Reagan and Bush). On the other hand we have Hoover and FDR in the 30's who decide the way to go was to raise taxes and put the country in a decade long depression. On the other hand Bob, maybe you could get Mother Jones to publish your economic theories and than jharp can use that as evidence that tax cuts are always bad since he enjoys you so much.

I have a good post for you that you will enjoy Bob on the article Wall Street Imbecility and how you fit right in. Funny how all the top politicians who received money from Fannie Mae are Democrats Bob isn't it? Yes Bob, Fannie Mae helped get Wall Street in on the action when easy money was flowing from the Fed and the credit agencies would assign Triple A to securities they had no idea about. I will try to catch the CNBC special.

Nick| 2.12.09 @ 6:43PM

Bob,

I was hoping for a reply to my 2.11.09 @ 4:56PM post.

What do you say to someone like myself who doesn't care if lowering taxes reduces reveues, but wants them lowered on principle?

TAX EVADERS LOCK UM UP| 2.14.09 @ 12:33PM

All thes smart people out there, what would you do, in these economically turbulent times?.

Do what George Bush did leave the country to fall apart, allow areas of America to flood, because it's poor Black people who live there.?. Are they Americans too?.

You people who don't want to pay TAX should leave paying TAX now and the Government just take your property when you die, that way you have a choice spend all you have now, leave nothing, one thing is sure as long as you are alive you are lible for tax, get the hell over it and stop being so dam greedy.

If you have enough money leave America and find a tax exile to live in and stop being a bunch of stupid brats.

You want to call the fire service if your trailer park was burning down, and call the police is someone was raping your whore but don't want to pay tax. How do you think these peoples wages get paid. You want schools to sent the next generation of criminals to, it has to be paid for.

You want roads to drive your gas guzzlers on, so stop moaning and grow up. You want electricity from powerstations to light your homes, what, you think it's free, go and live in a dam cave you idiots, cost of living and wages goes up every year so does every thing else. That includes TAX.

Jack Kenny| 2.16.09 @ 4:58PM

Mr. Ferrara claims Keynesian economics was "slayed by Ronald Reagan in self-defense." He then goes on to describe the Keynesian theory as holding that "the way to stimulate the economy was precisely to increase government spending and deficits..." Hello? Reagan cut taxes, yes, but
spending and deficits dramatically. If I am not mistaken the federal budget doubled and the national debt tripled during in the eight years in the White House. "Tax and spend' was replaced by "Borrow and spend," but the spending spree only increased.

Nick| 2.17.09 @ 7:27AM

Bob I don't think that chart proves your point at all, it actually proves the opposite of your argument. There are only 2 dips in government revenue, and those are not related to tax cuts, they are related to economic downturns caused by outside forces. The S&L;in 82 and attack of 2001. In the 1982 dip taxes stayed the same, and the revenue quickly recovered. in the 2001/2002 dip the taxes dipped too, but again it was a quick recovery. If you had gone on to the next chart, it would have shown you the huge increase in federal revenue cutting the corporate tax had. Of course you left that out.