How, exactly, is the Bush tax plan working?

I wish I knew, I really do.

Unemployment is at its lowest in 4 years.

The economy is growing at a good clip without inflation.

Tax revenues are up over projections.

What the hell do you want?

Cheers,
Daiwa

The tax cut isn't a gift. It is a decrease in the amount of money the federal government is confiscating from the citizenry. 

So it's not about "proving" it worked, it's about proving it did harm. And I can tell you that the Bush tax cut did some good - if allowed us to hire one additional person who in turn was assigned to help create this website.

Unemployment is at its lowest in 4 years. The economy is growing at a good clip without inflation. Tax revenues are up over projections.

The tax cut isn't a gift. It is a decrease in the amount of money the federal government is confiscating from the citizenry. So it's not about "proving" it worked, it's about proving it did harm. And I can tell you that the Bush tax cut did some good - if allowed us to hire one additional person who in turn was assigned to help create this website.

Thank you for these responses, I wasn't trying to criticize the administration, I was really curious. I guess the plan is doing some good.

As I said, I don't see how this plan is working. Though I am grateful for the tax cut, our spending hasn't really increased since Bush took office. Therefore, we're aren't "stimulating the economy" or anything. If we are an example, then this plan really isn't helping anything. Perhaps my family is strange. But perhaps not.

Let me ask you a question. I assume that you got money back from these "tax cuts"?
Now did you save the money or did you spend it? If you spent it, that's considered stimulating the economy because that puts the money back into circulation and increased your spending.

Let me ask you a question. I assume that you got money back from these "tax cuts"? Now did you save the money or did you spend it? If you spent it, that's considered stimulating the economy because that puts the money back into circulation and increased your spending.

Pretty sure we saved it.

there are two arguments about stimulating economic activity. One is to increase demand and the other this investment or supply. Economists agree the most powerful tool is the increased demand. If you saved your tax cut it has not stimulated demand and unless you have started a business it has not helped the supply side.

The harm that the tax cut has done as it has hepled driven us into deficits. Of the $420 billion deficit in 04 Congressional Budget Office estimated that 270 billion of that was because of the Bush tax cuts. The tax cuts are not stimulating the economy to the extent necessary to restore the lost revenue from the tax cuts and increase revenue to fund the added spending. In other words, we have created a structueal deficit by both cutting federal revenues with the tax cuts and increasing spending. It is the same process that occurred during 1980s when Ronald Reagan did the exact same thing by cutting taxes and increasing spending.

Economic growth has certainly occurred but in ways that are not providing a long-term economic impact on the American family. Profits and productivity are up no question about that. Problem is that employment has not kept pace with the increasing population. During the past four years we have experienced first a loss in jobs and then a restoration of those jobs and now we are about the same place we were four years ago. Problem is that we have 5 million additional people looking for work with the same number of jobs we had four years ago. Reason these people do not appear in the unemployment statistics is because many people have been out of work or underemployed so long they are no longer being counted in the statistics. The statistics can not alter the fact that the 5 million new workers are not being provided 5 million jobs. In addition some of the jobs that have been created in the last two years pay less with fewer benefits than the jobs that were lost during the first two years. Bottom-line we have gone from a $125 billion surplus in fiscal year 2000 2001 to a $420 billion deficit in 04. The projected deficit for 05 is even worse and as far out as the eye can see the current economic policies we are following does not balance the budget.

Heres how I see it working, MY wifes biz received a tax break.. she in turn used that extra money to hire another worker,the productivity was increased due to the new worker, whick made more money, which allowed her to hire another worker.

COL Gene's obssession with the deficit is a bit a deja vu. We've been here before, with folks predicting national bankruptcy because the deficit was huge & growing "as far out as the eye can see." Where did we end up? With a surplus, having nothing to do with Clinton's policies, in the late 1990's. We've now cycled back, for a long list of reasons having nothing to do with Bush's policies (in fact, mitigated by them), and we are not going to be sucked into the economic black hole COL Gene is so certain we are approaching. The economic prediction business is pretty shaky and I have no reason to believe COL Gene is any better at it than anyone else. Our economy will continue it's slow oscillations over time, on its own schedule, nudged here & there by policy. There are basically only two ways to raise tax revenues - 1) increase confiscation of money from productive earners by raising tax rates, and 2) watch them go up from economic growth. I'll take pro-growth policies over pro-tax-increase policies, thank you.

Cheers,
Daiwa

Col Gene: I don't like deficits either.  But I don't like them as a matter of principle.

Can you name a single negative real world side effect of the deficit? Because the theory of deficits is that they will raise interest rates because the government is competing with private investors to get loans. But the interest rate is also at a near all time low as well.

Daiwa

The issue of the interest we will be required to pay on the massive debt is not an obssession it is a fact that you want to ignore. We have added $7 Trillion to the debt since 1980 and 2.5 Trillion under Gerore W? The taxpayers will be required to pay the interest and the money will come off the top before any other obligations. It will continue to drain the budget until it is repaid. What we are doing is just like the ads for debt counseling which states you can not increase your debt and must repay what you owe. That is not part of our policy and if you believe spending $500 billion every year on interest, 40% of which goes to foreigners, is good for America you are mistaken.

I worry more about the spending on welfare than the interest on the debt:

What welfare? There is no welfare of any amount in the federal budget except for medicade(health care for the POOR)? Interest is the ONLY item that does not provide ANY SERVICE to Americans. Defense protects us, nondefense provides services to millions, Social Security etc helps millions live Medicare pays for health care for seniors. Interest pays for 20 plus years when we spent more than we taxed and provides no services or help to anyone? You have a strange sense of values? Also watch how much bigger the band on the graph for interest becomes because of the Bush tax and spend policies! The negative effect of the growing interest in the budget is that it takes the tax dollars from the needs of our country like defense, education, Social Security, Medicare etc. The interest provides no help or services it is just an expense for past years when we have not been willing to pay for what we have spent!

Personally, anytime the government is getting less of my money, its a good thing. Also, remember that a good deal of the interest on the debt is paid into the Social Security "fund" from which the money was borrowed. There is no "fund" or pile of money waiting to pay retirees, it is simply full of IOUs from Uncle Sam. The US government is Social Securities only investment, if the deficit were truly reduced to zero and the debt paid off, SS would have no other source of income except taxes.

If SS were a private retirement fund, the people who run it would be in jail already.

Personally, anytime the government is getting less of my money, its a good thing. Also, remember that a good deal of the interest on the debt is paid into the Social Security "fund" from which the money was borrowed. There is no "fund" or pile of money waiting to pay retirees, it is simply full of IOUs from Uncle Sam. The US government is Social Securities only investment, if the deficit were truly reduced to zero and the debt paid off, SS would have no other source of income except taxes. If SS were a private retirement fund, the people who run it would be in jail already.

I don't understand your statement. Social security runs a surplus all the time, which is then stolen to pay for other government programs. To say that social security has no income is ridiculous. Its the only program around that not only pays for itself, runs a surplus. If the deficit were reduced to zero and the fund was not made into a pork farm for Congress, there would be a national surplus and no worries about how it will be paid for 30 years hence. If we had all the money that went into social security going to social security then there would be no talk of fixing social security. The fund should have been made off limits and separate from the budget a long time ago. Without the money that is robbed annually from social security the debt would be enormous.

Tell me there was no backlash from the huge deficits. The fact that we pay so much into the interest on the deficit is the thing that tanked the economy under Bush Sr. I also like your revisionist history. Clinton did nothing to reduce the deficit, but the deficit under Dubyah is Clinton's fault. Whatever.

JCG

You contention that if the debt were repaid Social Security would have no interest income is incorrect. If there were no Federal Government bonds, the trust Fund could purchase high grade corporate bonds and equities the same as state pension plans. The truth is that when the social security system needs to begin using the money in the Trust Fund (Govt. Bonds) the Fed will have to turn arround and borrow money to repay the bonds held by Social Security and Medicare.

If we did not have the national debt, the federal budget would be 330 Billion less (interest on the debt) and we might have a shot at having a balanced budget. The increase in the Debt under Bush will drive the interest up to $ 500 billion per year in the near future.

Daiwa

You asked what do we want? Very basic - JOBS for the 5 Million new workers and a balanced budget. Sounds good to me!

Daiwa You asked what do we want? Very basic - JOBS for the 5 Million new workers and a balanced budget. Sounds good to me!

You make it sound like the government can just snap it's fingers and make jobs appear.

Federal policies on taxes, federal spending and interest rates do have a big impact on jobs . The tax and spending policies is responsible for the deficit. Thus policies that would be more effective in stimulating jobs, not just corporate profits and productivity, would add jobs. This is one of the first economic recoveries that has not produced enough new jobs to keep up with population growth. The fiscal policy of cutting tax revenue while increasing spending has created the deficit. It is the same policy we followed in the 1980's with the very same result! In 1980 it was Reaganomics or "voodoo economics" as Bush 41 called it and today it is Reaganomics II and it is still not working.

stimulating jobs, not just corporate profits and productivi

I hate to tell you this....But these 2 Must go hand in hand. You want jobs then you have to encourage corp profits. No profits, no new jobs. And personally I can't see what your refering to. Here are the figure from the dept of labor.

Seasonally Adjusted Unemployment Rate: 5.2% in Jan 2005 Change in Unemployment Level: -310,000 in Jan 2005 Change in Employment Level: +85,000 in Jan 2005 Change in Civilian Labor Force Level: -224,000 in Jan 2005 Civilian Labor Force Participation Rate: 65.8% in Jan 2005 Employment-Population Ratio: 62.4% in Jan 2005 Annual Averages Unemployment Rate: 5.5% for 2004 Unemployment Level: 8,149,000 for 2004

I just know your going to say that these are not correct.

drmiler

There needs to be increased demand and a company must believe they can only meet that added demand by increasing their labor force. What we have sceen is that increases in productivity have occurred which has enabled companins to increase production without adding jobs. Without jobs the ability of the new workers to purchase goods and services does not take place.

The unemployment data is not reportring the fact that job growth has NOT kept up with population growth. The reason is that workers have been unemployed so long that they are not being included in the unemployment numbers. The proof of that is that by the most inclusive measure of the number of jobs we have only slightly more than in 2001. However, there are 5 million new workers looking for work. The only way the unemployment rate could be the same is if we had created the 5 million new jobs over and above the number that existed in 2001. That is NOT THE CASE> Estimates have been made that include ALL unemployed workers, not just those that fit the definition of the Bureau of labor Statistics, that show a unemployment rate of about 7%

If you're going to change the yardstick for unemployment, you have to do it on both ends, Gene, which means the unemployment rate is still lower than it was 4 years ago. The administration isn't fudging the numbers, because the numbers aren't theirs to fudge. What you are ignoring is that many have gone into small business for themselves and are falling outside the labor statistics - there are not 3 or 4 million more people just sitting around looking for work.

Cheers,
Daiwa

You make it sound like the government can just snap it's fingers and make jobs appear.

The Bush administration does a good job of making it seem like they can appear.

Is this another in a line of people saying the President can't really effect the economy. Tell me how control over $3 trillion annually cannot effect the economy. When the economy goes badly for Republicans then the President can't effect the economy. But when there appears to be growth, its all because of the tax cuts.

Daiwa

I believe there are jobs that have been created that escape the BLS data. Many have been created because the existing companies have not expanded their employees. The household survey is a more comprehensive measure of the total jobs but there is no evidence that the creation of small business jobs has added anything close to 5 million new full time jobs. In addition, small business, especially new small businesses hire part time people and generally have lower total compensation including benefits than established companies. The quality of the jobs that have been created during the past two years are very often not equal to the jobs that were lost. The policy of Bush of tax cuts to the wealthy rely on supply side and not the more powerful demand side. If more good paying jobs were created, that middle income workers would stimulate the demand side and better GDP growth. Higher productivity and corporate profits without jobs is not effective to improve the overall economic growth. This is part of the reason the deficit is growing. The economy must add $4 dollars in new taxable income for every cut of $1 in Federal Income Taxes to just break even. That is not happening!