Forbes article about how economy works

[Eagles_Legendz]

Would you rather have the government take your paycheck and spend the money or leave it with you and let you spend it? Who would spend that money more wisely? Perhaps less government spending will improve the economy in the long run. Lots of economists beieve this, although I know many don't.

The bottom line is that neither party in the last 12 years has paid for their expenditures. If you're going to increase gov't spending, you need to increase taxes. Slashing taxes while keeping gov't spending at the same levels is not a recipe for a successful economic policy. I'm all for some reductions in spending, but I don't trust the right any more than the left to actually cut spending -- it just goes into a different pot. That's why I respect Ron Paul, even if his economic views are a bit extreme for my liking; at least I believe he would cut spending in tandem with taxation instead of simply lowering taxes and essentially doing little in the spending arena.

Also, while I'm aware Obama would like an increase on the top tax bracket, people seem to be ignoring the fact that he's done very little in regards to increasing taxes during his "Marxist" Presidency:

http://ntu.org/tax-basics/history-of-federal-individual-1.html

The thing that frustrates me about the right is I think there is a significant portion of the base that literally had their response to Obama's presidency planned in 08, and whatever he's done or hasn't done hasn't impacted their statements at all. Weak on foreign policy! Well, not really, but we'll continue to say so anyway. Going to take away your guns! Yeah, not so much, but that's only because he's waiting until his second term to secretly attack the 2nd amendment. He's done very little to satisfy his base on social issues, etc.

There have been things he's done, certainly, that I've disagreed with, and some of the critiques levied at him from the right (I'm specifically disappointed in his 'elimination' of special interest groups by simply having them meet across the street + a few economic decisions he's made) have been perfectly legitimate. It's just that it's been surrounded in so much white noise about stuff that he really hasn't done that it's hard to take much of what is said seriously.

 

[ChrisL68]

Per Keynes, you should deficit spend your way out of a recession and build up surpluses during good periods. To me this is pretty reasonable and self-evident. The problem is that we don't have the discipline to enact proper fiscal policy during good times.

 

[ncsportsnut1]

It's not a choice between tax cuts and spending cuts guys. Go ahead and crucify me (per EPA guidelines of course) but yes, if you INCREASE the number of people working, and get the GDP back up (hell if China did it so can we) then you have the growth and prosperity that will increase revenues, and get people off the government programs too. Don't label it just tell me why it won't work.

 

[RJKarl]

It's not a choice between tax cuts and spending cuts guys. Go ahead and crucify me (per EPA guidelines of course) but yes, if you INCREASE the number of people working, and get the GDP back up (hell if China did it so can we) then you have the growth and prosperity that will increase revenues, and get people off the government programs too. Don't label it just tell me why it won't work.

Do you work with David Copperfield or the ghost of Houdini?

You must if you think there's a magic wand that will let you do this.

There will have to be some cuts (they can't be drastic or demand would go down and unemployment would go up), but thee will also have to be tax increases.

To think otherwise is willful naivete'.

 

[TBR]

Would you rather have the government take your paycheck and spend the money or leave it with you and let you spend it? Who would spend that money more wisely? Perhaps less government spending will improve the economy in the long run. Lots of economists beieve this, although I know many don't.

I think you need to read the rest of that post instead of one sentence (and in reading that one sentence you conveniently skipped over the words "short term").

It all comes to AD = C + I + G

If G is slashed then AD falls which, absent a corresponding increase in C or I (as we saw after the world wars, in large part because Europe was destroyed and exports surged), will result in lower production and lower employment.

High G can (and usually will) have negative long term ramifications though, which is why the austerity measures were needed (not because of the economic slow-down as Chris implied).

 

[TBR]

This is right on the money. We were beginning to get things back in pretty good shape, then blew it all with an unnecessary war and unnecessary tax cuts.

Chris is correct, but you are not correct. Clinton ran a deficit by any reasonable definition: http://www.craigsteiner.us/articles/16.

This isn't to say that he didn't do a better fiscal job than Bush, but it's often blown out of proportion, especially when you consider all the technological advances that occurred during the '90s that really fueled the economy.

 

[TBR]

The POTUS tried to get roads built and other jobs bills which would have created demand in many ways. It would have lowered the unemployment.

It's not his fault the GOP cares more about beating him than about the well being of the country.

Had they passed those bills companies would have had more reason to invest and there would have been more demand.

I do think the Democrats have a more appropriate approach to stimulative policy (spending rather than tax cutting), but their other fiscal and financial policies are just as bad.

Someone needs to wake up and let all politicians know that the economy is not a bottomless well with which to buy votes.

 

[84Deac]

W had a much worse economic policy. Since Obama has taken over the DJIA is up over 66%. Or don't those investors count.

U*nder W the DJIA was DOWN over 20%.

Obama has not raised taxes on capital gains and has had multiple tax cuts for business. But don't be bothered by reality.

Too bad the voters haven't participated in it. Much of this gain is a result of Big Ben's quantitative easing and simply being the lesser of all evils when it comes to the world's equity markets. http://www.cnbc.com/id/47326634

 

[Caturday]

Too bad the voters haven't participated in it. Much of this gain is a result of Big Ben's quantitative easing and simply being the lesser of all evils when it comes to the world's equity markets. http://www.cnbc.com/id/47326634

Yea, I've tried explaining it to him, it doesn't really work.