I was told that tax cuts DON'T create jobs

[TheBachelor 4]

From: http://www.cnn.com/2011/12/08/politics/congress-payroll-tax-cut/index.html?eref=rss_topstories&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fcnn_topstories+%28RSS%3A+Top+Stories%29

The excerpt:

Referring specifically to the Keystone project, Obama said that "however many jobs might be generated by a Keystone pipeline, there are going to be a lot fewer than the jobs that are created by extending the payroll tax cut and extending unemployment insurance."

The democrats have been saying that tax cuts don't create jobs, but the messiah says they do. Which is it?

There are battered women? I've been eating 'em plain all of these years...

[chuckakers 370]

The libs rely on most Americans to have short attention spans. You're blowing it for them.

Chuck Akers
D-10855
Houston, TX

[Bertt 0]

That depends on which side of the Laffer curve you're on (serious answer), or which side of any particular political issue you're on ( equally serious but extremely cynical answer).
If I was debating Obama about this, I guess I'd ask if it's a good idea to create "some" jobs even if something else might create more.

You don't have to outrun the bear.

[GeorgiaDon 340]

Quote

The democrats have been saying that tax cuts don't create jobs, but the messiah says they do. Which is it?

Putting $1,000 in the hands of the "99%" will likely result in them buying goods or services, which will generate demand and provide businesses with an incentive to hire employees to meet that demand. Taking $1,000 from those people will cause them to spend less, reducing demand for goods and services; with reduced demand businesses will not hire new staff, or may even lay people off. Even threatening to take that money will cause many people to spend less, at a time when business is counting on their peak (indeed, make-or-break) sales for the year.

On the other hand, if you give that money to the "1%", but by so doing reduce demand for the products of their businesses, they will have no reason to do anything except to pocket the money and not use it to create jobs. What business will create new jobs when demand is flat or falling?

So, not all tax cuts can be expected to have the same effect. The only logical avenue leading to increased employment is increased consumer demand, and consumers cannot increase demand if they have less to spend, or if they are uncertain if their paychecks will be smaller come January. The Republican position is 180 degrees in the wrong direction, and will only lead to higher unemployment.

It seems some will go to any length to screw the economy so they can use it against Obama in the campaign. Some who put their own quest for personal power above the welfare of the country as a whole.

But of course you know that, don't you.

Don

_____________________________________
Tolerance is the cost we must pay for our adventure in liberty. (Dworkin, 1996)
“Education is not filling a bucket, but lighting a fire.” (Yeats)

[mnealtx 0]

Just like an Obama speech, when you see the phrase "it seems some will" you know the strawman is coming.

Mike
I love you, Shannon and Jim.
POPS 9708 , SCR 14706

[DougH 270]

I like the extra money in my pocket. I spend it since most of my savings is in the form of pre and post tax payroll contributions to my 401K & roth 401K.

I think you will find that many will argue that it isn't doing enough. They would rather substitute the program that gave government checks to people that don't pay taxes at all. Those dollars will be spent in a flash, but it leaves a sour taste in my mouth.

I think the payroll tax cut runs a huge risk of undermining the social security trust fund.

I also don't think I give a shit about that, since the baby boomers were going to suck social security dry long before I am eligible to claim it.

Screw em, give me more payroll tax cuts.

"The restraining order says you're only allowed to touch me in freefall"
=P

[GeorgiaDon 340]

Quote

Just like an Obama speech, when you see the phrase "it seems some will" you know the strawman is coming.

Let's say Jane Smallbusinesswoman owns a business that manufactures sprockets. The business employs 10 people. Orders for sprockets increase, and now she can't make sprockets fast enough to meet the demand. What will Jane do?
A) Hire more workers and increase production so sprockets can be delivered to customers. Or:
B) Pocket the money from the orders, but not hire any workers and so not meet deadlines to deliver the product, thus ensuring there won't be orders in the future.

Now lets say demand for sprockets stays flat, or even decreases, but the government cuts her taxes so net revenues increase. What will Jane do?
A) Hire more workers and increase production, and then incur the expense of warehousing unsold sprockets. Or:
B) Pocket the money.

How is this not Economics 101? Who can really believe Jane will spend the money to hire more workers to make product that will sit in the warehouse?

Yet, Republicans continue to insist that that is exactly what Jane will do. They can't possibly believe it, so why is that their entire strategy for economic recovery? I submit that they do not want the economy to recover, at least not yet, as they can then use the crappy employment situation to bludgeon Obama and hope that the voting public will overlook their role in prolonging the situation and instead blame the current administration for not doing enough.

Of course, if it works and they do get elected, then the economy is still a mess, and there is no reason to hope the Democrats won't play the same games.

So no, I don't think it's a strawman. I think the Republican candidates know exactly what they are doing, and they are willing to impose any amount of misery on others if they think they can use it to their advantage.

Don

_____________________________________
Tolerance is the cost we must pay for our adventure in liberty. (Dworkin, 1996)
“Education is not filling a bucket, but lighting a fire.” (Yeats)

[billvon 2,400]

>They can't possibly believe it, so why is that their entire strategy for economic recovery?

Because they want any such economic recovery to fail. It's the only way they can win - by sabotaging any hope the economy has of recovering. Then they can say "see? It's all Obama's fault. Elect us and we'll give you lots of jobs and tax cuts."

[DougH 270]

Quote

Now lets say demand for sprockets stays flat, or even decreases, but the government cuts her taxes so net revenues increase. What will Jane do?
A) Hire more workers and increase production, and then incur the expense of warehousing unsold sprockets. Or:
B) Pocket the money.

Lets say demand stays flat and you jack Jane's income tax rate up to 50%. Do you think she will hire more workers and increase production?

"The restraining order says you're only allowed to touch me in freefall"
=P

[GeorgiaDon 340]

Quote

Lets say demand stays flat and you jack Jane's income tax rate up to 50%. Do you think she will hire more workers and increase production?

I'm not aware of any proposals to jack her interest rate to 50%. Could you provide a link to specific White House proposed legislation that increases her tax to 50%? Thanks.

The proposed temporary reduction in the social security tax potentially increases demand for Jane's sprockets by providing more money in consumers pockets. Should demand increase, Jane may net just as much money as before, or even more, by selling more product.

I'm not aware of anyone proposing to jack Jane's tax and burn the money, in which case she of course would not hire more workers. I am aware of proposals to cut her taxes and increase taxes on her potential customers, which seems remarkably stupid to me.

Don

_____________________________________
Tolerance is the cost we must pay for our adventure in liberty. (Dworkin, 1996)
“Education is not filling a bucket, but lighting a fire.” (Yeats)

[DougH 270]

I think it is remarkably stupid to take the position that the temporary extension of the payroll tax must be linked to a long term change to the income tax rates.

If you like the payroll tax holiday then figure out a way to pay for it. I would point out that people are going to get used to the tax holiday, and then what do you plan on doing with social security. We really shouldn't be screwing around with social security!

If you like the idea of taxing Jane more get the votes and raise her taxes.

Linking the payroll tax to a income tax on high earners is nothing more than political cock swinging. We need much less of people swinging their cocks in congress and much more problem solving.

And yes I know that there are no proposals to raise Jane's taxes to 50%, I was being facetious.

"The restraining order says you're only allowed to touch me in freefall"
=P

[rehmwa 2]

Quote

If you like the payroll tax holiday then figure out a way to pay for it.

That's a very lefty way of phrasing that.

If you like the payroll tax holiday, then figure out a way to BUDGET for it.

either - collect equivalent revenue from somewhere else to make up for the lost expected income (i.e., pay for it if the original budget was overspent in the first place) or;

reduce your spending to account for the reduction in revenue (i.e., be responsible with the budget)



I'm always amazed how only in politics, can a reduction in income be considered or announced as "spending"

...
Driving is a one dimensional activity - a monkey can do it - being proud of your driving abilities is like being proud of being able to put on pants

[DougH 270]

First time in my life I was ever called a lefty.

I was getting at the same point you are. You can't blame the failure of the payroll tax on the republicans because they refuse to pay for it with a income tax rate/bracket change.

I think they should both be tackled separately.

"The restraining order says you're only allowed to touch me in freefall"
=P

[lawrocket 3]

Quote

Putting $1,000 in the hands of the "99%" will likely result in them buying goods or services, which will generate demand and provide businesses with an incentive to hire employees to meet that demand. Taking $1,000 from those people will cause them to spend less, reducing demand for goods and services; with reduced demand businesses will not hire new staff, or may even lay people off. Even threatening to take that money will cause many people to spend less, at a time when business is counting on their peak (indeed, make-or-break) sales for the year.

On the other hand, if you give that money to the "1%", but by so doing reduce demand for the products of their businesses, they will have no reason to do anything except to pocket the money and not use it to create jobs. What business will create new jobs when demand is flat or falling?

Of course, jobs cannot be efficiently created or destroyed when some person or entity decides where money will come from and where it will go. For example, putting millions in the hands of some company to create jobs may be a good thing. It may run swimmingly well and be cited as an example of how great we are. Just like Solyndra.

When policymakers decide where money should go and not go, and from whom it goes and should not go, it DOES create problems. I’ll put it this way, as I’ve put it before. There are four ways to spend money:
(1) Spend your own money on yourself. In doing so you’ll get what you need or want for the best price.
(2) Spend someone else’s money on yourself. In doing so, you’ll get what you need and want, to hell with the price.
(3) Spend your money on someone else. In doing so you’ll get them what you think they need or want at the best possible price.
(4) Spend someone else’s money on someone else. In doing so you’ll get them what you think they want or need and to hell with the price.

Whether the government is spending other peoples’ money on the “1%” or on the “99%” the government is still spending other peoples’ money on other people.

My wife is hotter than your wife.

[Bluhdow 31]

Quote

Quote

I'm always amazed how only in politics, can a reduction in income be considered or announced as "spending"

Winner.

It's like me not stealing $20 out of your wallet and then claiming that my failure to steal costs $20.

Apex BASE
#1816

• Quote

[billvon 2,400]

Three years ago I predicted that, during Obama's presidency, republicans would define themselves by being against anything Obama stood for. If he killed terrorists he'd be labeled a murderer. If he didn't republicans would call him a coward with no balls. If he raised taxes they'd scream bloody murder and oppose him, claiming it will hurt the economy. If he cut taxes they'd scream bloody murder and oppose them, claiming it will cause a bigger deficit.

It would be nice to have a political party that didn't define itself as simply "anti."

[GeorgiaDon 340]

Quote

It would be nice to have a political party that didn't define itself as simply "anti."

But then they'd be expected to have intelligent ideas of their own. It's much much easier to just say "I object".

Don

_____________________________________
Tolerance is the cost we must pay for our adventure in liberty. (Dworkin, 1996)
“Education is not filling a bucket, but lighting a fire.” (Yeats)

[GeorgiaDon 340]

Quote

Whether the government is spending other peoples’ money on the “1%” or on the “99%” the government is still spending other peoples’ money on other people.

Any money the government spends is by definition spending other people's money, as it has no money of it's own (unless it just printed it, which is generally not a good idea). Your argument is in essence that there should be no government of any sort, as any activity will take some money and that must be raised by taxes. Yet you yourself make your living in an area that is taxpayer supported, as we are taxed to pay for the courts, judges, clerks, bailiffs, jails, the whole law enforcement/judicial system infrastructure. I might well argue that I do not plan to commit crimes, or divorce my wife, and so why should the government steal from me to pay for those who choose to engage in those activities? Of course, any reasonable person would recognize that circumstances could arise where we would need those government services, such as if we were the victim of a crime. Although the system is not perfect, it serves as a deterrent to those who would rob or defraud or physically harm us, and we enjoy a greater degree of freedom than we would if such people could operate at will. Reasonable people do not object to paying something to obtain the benefit of such a government service. Reasonable people also enjoy having access to an educated workforce, clean water and air, safe food and drugs, and a wide range of other services. Some expect to have these services and not pay for them, but these are parasites on the rest of us.

We can certainly debate about what is and what is not within the proper sphere of government services. Social security and medicare were created in response to a situation in which a very high proportion of retired people lived in poverty, and/or were without access to medical insurance and often services. This situation was judged to be an affront to civilized people. Today we seem to have moved towards an attitude of "I got mine, fuck everybody else". Ron Paul advocates a position of no oversight of pollution, food safety, or drug safety, and says if you think you have been harmed you can try to prove it and seek redress in the courts. People whose vision of government services is that narrow can vote for Dr Paul, and if enough do so we will go ahead and build a bridge to the 19th century.

Maybe you do not mean such an extreme view of things, but your comment seemed to imply that to me.

I also disagree that the government by definition always spends other people's money on other people. With a few exceptions, the government spends my money on me, as well as on everybody else in this country. I appreciate not having to test my drinking water for E coli, or having to risk an unpleasant death if I eat a ham sandwich, and I appreciate the economic activity that follows from having a workforce that is educated (though that could be better), and so on. These things are done more efficiently when they are done for the whole of society, instead of piecemeal one paying client at a time. I do not expect to get these services for free. Others may disagree.

Don

_____________________________________
Tolerance is the cost we must pay for our adventure in liberty. (Dworkin, 1996)
“Education is not filling a bucket, but lighting a fire.” (Yeats)

[dks13827 2]

Economics 101


Slow down !!! You're going too fast.

[mnealtx 0]

Quote

How is this not Economics 101? Who can really believe Jane will spend the money to hire more workers to make product that will sit in the warehouse?

If they had the warehouse space, a smart businessman would do exactly that - instant order fulfillment.

Quote

So no, I don't think it's a strawman.

Nice change of subject with your example. Care to tie that back to how she's doing it to hurt Obama?

Quote

I think the Republican candidates know exactly what they are doing, and they are willing to impose any amount of misery on others if they think they can use it to their advantage.

Don

And the Dems are willing to impose any amount of misery on others to use to their advantage - I refer you back to the recent debt ceiling issue, where the Dems could have passed it when they controlled both Houses of Congress.

For that matter, they could have passed a budget at the same time.

Mike
I love you, Shannon and Jim.
POPS 9708 , SCR 14706

[ShcShc11 0]

Quote

From: http://www.cnn.com/2011/12/08/politics/congress-payroll-tax-cut/index.html?eref=rss_topstories&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fcnn_topstories+%28RSS%3A+Top+Stories%29

The excerpt:

Referring specifically to the Keystone project, Obama said that "however many jobs might be generated by a Keystone pipeline, there are going to be a lot fewer than the jobs that are created by extending the payroll tax cut and extending unemployment insurance."

The democrats have been saying that tax cuts don't create jobs, but the messiah says they do. Which is it?

They don't create as many jobs.
Money has to circulate in order to create jobs and if there is a demand problem (akin tot he 1930 and 2008 problem), then it won't create many jobs.

It will help, but you're not getting your money's worth.

This is zombie economics that has been debunked many times over, but it is still used because politics skewed the reality. Repeat a lie a thousand times and it becomes true.

Liberals have no choice to have tax cuts because it is politically more viable.

Fact is (will go slightly off-topic):

Obama screwed up by making the 2008 stimulus too small. America had a 3 trillion$ gap and the stimulus (counting Federal boost with State cuts) were approximately lower than 400 billion $.

2008 stimulus needed approx 1.5 - 2 Trillion.
This is unfortunately 1930s mistake all over again.

[ShcShc11 0]

Quote

Quote

Putting $1,000 in the hands of the "99%" will likely result in them buying goods or services, which will generate demand and provide businesses with an incentive to hire employees to meet that demand. Taking $1,000 from those people will cause them to spend less, reducing demand for goods and services; with reduced demand businesses will not hire new staff, or may even lay people off. Even threatening to take that money will cause many people to spend less, at a time when business is counting on their peak (indeed, make-or-break) sales for the year.

On the other hand, if you give that money to the "1%", but by so doing reduce demand for the products of their businesses, they will have no reason to do anything except to pocket the money and not use it to create jobs. What business will create new jobs when demand is flat or falling?

Of course, jobs cannot be efficiently created or destroyed when some person or entity decides where money will come from and where it will go. For example, putting millions in the hands of some company to create jobs may be a good thing. It may run swimmingly well and be cited as an example of how great we are. Just like Solyndra.

When policymakers decide where money should go and not go, and from whom it goes and should not go, it DOES create problems. I’ll put it this way, as I’ve put it before. There are four ways to spend money:
(1) Spend your own money on yourself. In doing so you’ll get what you need or want for the best price.
(2) Spend someone else’s money on yourself. In doing so, you’ll get what you need and want, to hell with the price.
(3) Spend your money on someone else. In doing so you’ll get them what you think they need or want at the best possible price.
(4) Spend someone else’s money on someone else. In doing so you’ll get them what you think they want or need and to hell with the price.

Whether the government is spending other peoples’ money on the “1%” or on the “99%” the government is still spending other peoples’ money on other people.

You'l understand how money works much more after reading this simple piece:
http://www.slate.com/articles/business/the_dismal_science/1998/08/babysitting_the_economy.html

You have to see the economy as an engine and money as the oil that helps run it. If there is something in the engine that doesn't work/stopped working (e.g: Credit freeze with the banks in 2008), there needs to be another entity to give it a boost.
The Government is (unfortunately) the only one that can restart it.

It will stumble a few times here and there, but its worth the cost/error as long as the engine runs again. The worst thing to do is to do it half-assed (stimulus too small in 2008).

That's the basic summary 101 of it.

But look in the bright side: Europe, Germany and the ECB are far more of a screw-up than the U.S.

[pirana 0]

The claim is too vague. The result of reducing taxes will depend on many other factors (for whom, by how much, for how long, their current rate, their current financial condition, etc.).

Given the current state of affairs though, it's a band-aid on the aorta at best, smoke and mirrors at worst. They can play these shell games all they want; until spending and revenue are brought into line - this is just delaying the inevitable and making the longer term corrections even more painful.

Fiddling with things in this way is like rearranging the deck chairs on a sinking ship, but worse, because most of the crew will not acknowledge the ship is going to be lost anyway.

The real fixes are pretty obvious, but we will not see them for a while (hopefully before it is too late) because very few people will even admit that the economy has changed to the point that the traditional approaches will not work.

Those commercials in which the drug addict compares his problems to the governments addiction to spending are spot on. Until our leadership acknowledges the significant changes globalization has imparted to our economy, there will be no improvement. It is very much like an addict who thinks they can beat their addiction without putting the crack pipe down. Very silly.

" . . . the lust for power can be just as completely satisfied by suggesting people into loving their servitude as by flogging them and kicking them into obedience." -- Aldous Huxley

[rehmwa 2]

Quote

Three years ago.
.
.
.
.
It would be nice to have a political party that didn't define itself as simply "anti."

funny - so it's only been three years of it? not 11? or 19? or 23?

or are you pointing out how the two parties are absolutely identical in real life

...
Driving is a one dimensional activity - a monkey can do it - being proud of your driving abilities is like being proud of being able to put on pants

[ShcShc11 0]

Quote

Those commercials in which the drug addict compares his problems to the governments addiction to spending are spot on. Until our leadership acknowledges the significant changes globalization has imparted to our economy, there will be no improvement. It is very much like an addict who thinks they can beat their addiction without putting the crack pipe down. Very silly.

NO. This whole concept of "Government is addicted to spending" is the reason why the economy is still in a bad shape.

Summary:
Government printing money (spending more money) generates the demand needed and it is THE solution that was needed back in 2008-2009.

Tax cuts on BOTH the rich and the middle class will not work because they will not spend the money. Middle Class will use the tax cuts to bring down their debt level.


and everybody needs to learn this:
ECONOMICS IS NOT A MORAL CONCEPT

Spending sounds evil and immoral, but in a world where monetary policy is at the zero bound with very low 10 year interest-bonds, it is THE way to get out of this slump. 2008 Great Recession had a 2.5-3 TRILLION hole and we tried to cover it with a few measly hundred billion dollars to fix it.

Learn from Japan 1990
Learn from Great Depression 1930s.
ECONOMIC IS NOT A MORAL GAME!


And this is why Europe has a very good chance of failing. Germany keeps making the European crisis a morality failure thus asking everyone to go for spending cuts in a time when Europe is facing a major and catastrophic deflationary crisis.

If the U.S does not want to fall into the European trap, then they will have to spend. Else this decade will be similar to the 1990 Japanese "lost decade" era.


When popular notions and myths of "Government is addicted to spending//spending is bad" prevails, we all lose.