Le Sabot Post-Moderne

It's nice when you can pick your starting points. No surprise that there is that kind of economic growth since the second tax cut because the economy was still in questionable shape at that time. It is still below recoveries from past recessions, as is 2004 against the same figures and against the Bush administration's own predictions. Further, the job figure is well over a million short of what Bush said his tax cuts would do. Unfortunately, Econ 101 teaches us that the effects of tax cuts are short lived so the current growth cannot be attributed to the tax cuts. More likely than not, some of the growth in that figure is government spending out of control and spending on unnecessary wars.

The effects of tax cuts are short lived?

Surely you jest.

Perhaps the GROWTH is short lived - but the result of that expansion sticks around. You know, derivitives, slope, area under a curve and all that?

Damn I wish they taught some economics and math in school these days.

deriv - A - tives...

(wish they taught spelling, too)

The direct expansionary effects related to the tax cuts are short lived before equilibrium returns in spending habits.

Yes, the slope may move up but the curve flattens.

riiiiight...

so if you make a curve of private sector spending and investment versus time, there is an equilibrium line, an upward slope ("direct expansionary effect"), and a higher equilibrium line. There is a lasting HIGHER level of private sector spending and investment.

It's equivalent to saying that the effects of my $100,000 raise (I wish!) are short-lived because by next week, my pay will have reached equilibrium.

Riiiight, so the tax cuts will not contribute to continued growth.

Well, that's discounting the effects of additional private sector investment, but ok. That's still NOT what you said originally.

What you said was "the effects of tax cuts are short lived", which is clearly NOT the case.

You have to distinguish between tax "cuts" as a discreet reduction, and the effect of lower tax rates over time. Of course, if I get $1,000 more "back" from the government this year because of a cut, that $1,000 gets spent and the effect is temporary. But taking $1,000 less out of my paycheck every year in the future has cumulative effects on my spending, investments and behavior. That's why the tax "cuts" need to be made permanently lower rates, which is what W is trying to get approved by Congress.

BTW, back to Discoshaman's original post, regardless of however much better we can wish things were, he is right that it was exhausting this last year to hear the Democrats insult our intelligence by telling us that we were living through an economy worse than the Great Depression. That was such a stupid thing to say that they could barely do it with a straight face, and the rest of us were laughing heartily.

And, before anyone impugns my experience of the economy over the last few years, both my wife and I lost jobs during the last year. We did find new ones, but had our worst financial year in the last 5 years. Still, we own a home, two cars, two cell phones, three computers, need to lose weight because we have so much to eat, etc. America has lived through a recession, but we're still prosperous and things have been really improving over the last year.

Too many variables to include regarding extra "investment" and the valuation of labor. No one has said it here but I will comment on it anyway because I am sure at some point someone will spout off about it: the spin that taxes take away "my" money. Very simply: You put a valuation on your labor and hopefully budget accordingly based on the tax rate, i.e., if you think you're worth $60,000 take home and the taxes you pay in full are 40%, you will seek a job paying $100,000 and expect the job market to meet you. Expectations, people. On the investment side, extra spending by consumers does not necessarily translate into higher investment. This is firm specific and depends on things like variable costs, optimal growth, a firm's ability to absorb investment, efficient allocation, dividend policy, etc. To paraphrase a comment above, damn I wish they taught financial management and accounting in schools.

I'm letting it go... not because I concede, but rather I sense we are entering into the downward spiral of defining semantics until we inevitably agree.

Logical people always agree in the end because logic itself is usually an absolute. We may disagree on how to reach that consensus but the consensus comes eventually. Agree that we'll agree eventually. Hell of a lot better than the old cop out, agree to disagree. Agree?

uh... agreed. i think...

;)