Bush Tax cuts for the rich

[BKOnce]

"Without Pay" Modern Times = Back to the Future Slave Era

Slave For da people, Of da people, and By da people!

[backtoschool]

The hiring that has gone to china is not going to come back if we stop spending. Our manufacturing base is permanently gutted in my opinion.

Businesses are hoarding cash and want more unconditional hand-outs, ie tax cuts that don't require investment in rebuilding the economy. I do not believe this is the best way to spend money at this point.

There are parts of this country that are straddling the line between recession and depression. Homes are worth half of what they were worth in 2007 in the midwest state that I live in, and I am not talking about a blighted urban city, I am talking about the middle class and upper-middle class neighborhoods. Salaries in my area are down 30% from boom times. I often have to travel to California for work, and it is not much better there. There are many other metro areas with similar numbers.

I am not saying that this is another "Great Depression" but there are plenty of food lines, there is plenty of deflation, and the unemployment numbers in many areas of the country (the real unemployment numbers, not the trumped up ones) are as high as they were in the Great Depression.

Banks and businesses are hoarding cash like they did in the Great Depression as well.

I do not believe the rich should be taxed to death. But I do believe that if we are going to do any sort of tax incentive, it has to be done in a way that will incent businesses to stop hoarding cash and to start hiring and investing in capital equipment, etc.... "Blank check" tax cuts as hand outs are not what we need, but tax credits for hiring and growing would be a good idea.

I agree with banca rotta that when prices and assets hit bottom, then we can truly start to rebuild our way out of this downward spiral we are in.

[ForumReader]

BTS has good points regarding the outlook of our economy. I agree with BTS's last comment as well as Banca Rotta. One of the ways that we can do to rebuild our economy is to let everything collapse to be "resetted" and businesses to stop hoarding cash. But that may not be possible because of the government and politics. The nation has to work together to rebuild our economy. Actually globally. We have invested so much towards the two wars, many things outside the USA. Unfortunately there are people out there who are greedy and such. Inflation is there causing prices to go up. We need world class economists to draw up plans what to do to revive our economy and Congress would need to listen to these economists instead of having the "me, me, me attitude". Congress members are paid handsomely do they?

[banca rotta]

We need world class economists to draw up plans what to do to revive our economy and Congress would need to listen to these economists instead of having the "me, me, me attitude". Congress members are paid handsomely do they?

I don't know if any economists would be able to pull this off. Most economist just cheer lead the phony economy so they can make their money. Economists are pretty much like weatherman. They all sell their time and advice to guess what the future holds and the one that guesses right the most times wins and can demand more money.

Most of these economists didn't even see the current problem coming.

The free markets are all we need. Someone needs and wants something, someone else wants to sell something they let the supply and demand factors dictate the price.

All congress should really do is if the trade balances run out of control as they currently have then they MUST impose tariffs on imported goods.

Without that our beloved market economy just won't work when business leaders have a choice of moving $20 an hour jobs to 20 cent a day wages in Asia and Mexico.

None of these countries that are taking the jobs are buying any American goods and services which is why tariffs should kick in when this happens.

[MSbklawyer]

I'm not seeing how cutting spending is going to grow the economy and get us out of this recession/depression.

Can someone please explain?

Because the recession -- the unemployment and its concomitant suffering -- is the symptom. It is not the disease.

The disease is American's penchant for consuming more than they produce -- the budgetary deficit, the trade deficit, the national debt, our personal debt -- and doing it by demanding (through their votes) that our leaders take us further and further into debt to supply the difference between what has been produced and what has been consumed. We want health care, we want social security, we want farm subsidies, we want college grants and student loans, we want unemployment insurance, we want the same standard of living for unproductive people as we have for productive people, we want ... we want ... we want.....

Yes, another dose of heroin (i.e. spending and debt) will put at bay the sweats, the tremors and the delusions (i.e. the recession) -- temporarily. It will help things. But it will only further and exacerbate the disease.

A country -- a society, if you will, is only a collection of persons. If those persons, as a whole, consume more than they produce, the end is just the same as an individual who does so: unmanagable debt and, ultimately, bankruptcy.

But bankruptcy for countries, is not nearly as easy as it is for individuals. There is no "fresh start".

Cuts in spending, cuts in consumption, is us, as a country, as a society, beginning to head down the road toward recognition that we can't, perpetually, consume more than we produce. We will, at some point, get to the place where we can only consume what we produce.

That, is how cuts in spending will get us out of this recession/depression. That state of things -- a positive difference between consumption and production -- is the very definition of wealth. If wealth and prosperity is the goal, then spending and consumption in excess of production cannot be the means to it.

[backtoschool]

Because the recession -- the unemployment and its concomitant suffering -- is the symptom. It is not the disease.

The disease is American's penchant for consuming more than they produce -- the budgetary deficit, the trade deficit, the national debt, our personal debt -- and doing it by demanding (through their votes) that our leaders take us further and further into debt to supply the difference between what has been produced and what has been consumed. We want health care, we want social security, we want farm subsidies, we want college grants and student loans, we want unemployment insurance, we want the same standard of living for unproductive people as we have for productive people, we want ... we want ... we want.....

Yes, another dose of heroin (i.e. spending and debt) will put at bay the sweats, the tremors and the delusions (i.e. the recession) -- temporarily. It will help things. But it will only further and exacerbate the disease.

A country -- a society, if you will, is only a collection of persons. If those persons, as a whole, consume more than they produce, the end is just the same as an individual who does so: unmanagable debt and, ultimately, bankruptcy.

But bankruptcy for countries, is not nearly as easy as it is for individuals. There is no "fresh start".

Cuts in spending, cuts in consumption, is us, as a country, as a society, beginning to head down the road toward recognition that we can't, perpetually, consume more than we produce. We will, at some point, get to the place where we can only consume what we produce.

That, is how cuts in spending will get us out of this recession/depression. That state of things -- a positive difference between consumption and production -- is the very definition of wealth. If wealth and prosperity is the goal, then spending and consumption in excess of production cannot be the means to it.

I don't disagree with any of this, in theory.

But in reality the results of trying to cut spending "cold-turkey" will result in too much suffering. To continue with your metaphor, there is a reason that there are methadone clinics for heroin addicts. Going cold-turkey and kicking the habit results in too much physical, emotional, and psychological suffering, so the symptoms of the addiction are treated in hopes that over time, the root causes can also be treated.

Now, to take the metaphor back to spending and fiscal policies, imagine if we cut social security, medicare, make-work projects, war spending (which employs tens of millions in this country), gov't spending on computers, infrastructure, healthcare for govt employeess, etc. (which accounts for millions of jobs in this country). Suddenly we have tens of millions of people out of work and the unemployment rate is 30% or more. That is a Great Depression.

Now let's suppose we continue to give businesses tax cuts with no strings attached to the cuts. What happens? They are for profit businesses. They will distribute the resulting cash to their board and their shareholders and continue to hoard cash. Will they hire people if no one is buying anything? No. Will they invest in shrinking markets? No. Net positive effect on the ecomomy= zero.

Metaphors can be pretty to hear, but the reality is if we cut spending we will escalate to a serious depression in my opinion.

[banca rotta]

This is true backtoschool that there will be a lot of suffering, but there must be suffering today or more suffering tomorrow.

That's just how it works. There were those from the American Revolution up to WW2 that suffered so that we today may enjoy.

So many people love their children and now look at how hard their children's future will be.

Does anyone think it's an accident why so many young are graduating from college and can't find work? This is because their parents didn't want to "suffer".

Also if the dollar collapses from the money printing going on worldwide unemployment will spike up to 50% very quickly.

You should all research a movie online called Generation Zero explaining all this much better then I can.

[MSbklawyer]

I don't disagree with any of this, in theory.

You just disagree with it because you like disagreeing with me. ;)

But in reality the results of trying to cut spending "cold-turkey" will result in too much suffering. To continue with your metaphor, there is a reason that there are methadone clinics for heroin addicts. Going cold-turkey and kicking the habit results in too much physical, emotional, and psychological suffering, so the symptoms of the addiction are treated in hopes that over time, the root causes can also be treated.

Now, to take the metaphor back to spending and fiscal policies, imagine if we cut social security, medicare, make-work projects, war spending (which employs tens of millions in this country), gov't spending on computers, infrastructure, healthcare for govt employeess, etc. (which accounts for millions of jobs in this country). Suddenly we have tens of millions of people out of work and the unemployment rate is 30% or more. That is a Great Depression.

Now let's suppose we continue to give businesses tax cuts with no strings attached to the cuts. What happens? They are for profit businesses. They will distribute the resulting cash to their board and their shareholders and continue to hoard cash. Will they hire people if no one is buying anything? No. Will they invest in shrinking markets? No. Net positive effect on the ecomomy= zero.

Metaphors can be pretty to hear, but the reality is if we cut spending we will escalate to a serious depression in my opinion.

What do you see as the 'root causes'?

To give you another metaphor, you're cautioning against the right ditch. I'm cautioning against the left ditch. We, going down this road-- driving this car that is our economy -- don't have to hit either ditch. Right now, we are in danger of getting stuck in the left ditch. The one that is massive overspending, oppressive debt, oppressive taxation, lack of credit because the government has already consumed all of the available capital. What you are cautioning against is an over correction. Yeah, an over correction can be as bad or worse than the error that is the object of the correction.

But the average person out there doesn't even realize that he is consuming more than he is producing. He just sees these 20 digit numbers on TV that say we're in this incomprehensible level of debt -- and politicians arguing over whose fault it is -- and thinks it has nothing to do with him.

We're in that left ditch. We are seriously all up in that left ditch. We're not stuck -- not yet -- and we certainly don't want to yank the wheel so hard that we run across the road and crash into the right ditch. But we've got to at least recognize that we've gone off the road and start correcting -- cautiously -- toward consuming less than we're producing.

BTW, how you been?

[SLOTGIRL]

very good path of logic!

[backtoschool]

You just disagree with it because you like disagreeing with me. ;)



What do you see as the 'root causes'?

To give you another metaphor, you're cautioning against the right ditch. I'm cautioning against the left ditch. We, going down this road-- driving this car that is our economy -- don't have to hit either ditch. Right now, we are in danger of getting stuck in the left ditch. The one that is massive overspending, oppressive debt, oppressive taxation, lack of credit because the government has already consumed all of the available capital. What you are cautioning against is an over correction. Yeah, an over correction can be as bad or worse than the error that is the object of the correction.

But the average person out there doesn't even realize that he is consuming more than he is producing. He just sees these 20 digit numbers on TV that say we're in this incomprehensible level of debt -- and politicians arguing over whose fault it is -- and thinks it has nothing to do with him.

We're in that left ditch. We are seriously all up in that left ditch. We're not stuck -- not yet -- and we certainly don't want to yank the wheel so hard that we run across the road and crash into the right ditch. But we've got to at least recognize that we've gone off the road and start correcting -- cautiously -- toward consuming less than we're producing.

BTW, how you been?

I am doing well thanks for asking.

I think that any correction towards the "right ditch" even a small one, when the economy is still so shaky will have the effect of being an over correction right now. I also think that only drastic measures like stopping the wars we are in, drastically cutting domestic spending, letting banks and mortgages fail and fall, and letting our currency find it's natural bottom will truly start solving the problems, and those are the measures that will cause too much suffering.

It's easy to say that we can handle the suffering and that we need correction now no matter what suffering results, but I don't think most people are truly willing to endure the types of sacrifices that would be necessary to truly balance our budget and pay off our debt.

To answer your other question, I see the "root causes" of our financial shakiness being the following:

1. We are trying for the first time in our country's history to fund two major wars without tax increases or spending cuts elsewhere.

2. A much larger proportion of our population is on social security than ever before and people are living longer than ever before, and we have not increased taxes to keep social security solvent.

3. Businesses are hoarding cash.

4. Our national debt is weakening our currency.

5. We have no real way of growing out of a recession anymore because our currency and also our financial markets are no longer tied to any tangible fundamentals. Because of this, the only way we can grow out of a recession is to ride a bubble, such as the real-estate bubble of the last 15 years, which creates false wealth that spurs spending, which in turn finally increases production.

[backtoschool]

Spending is temporary, but you can't create new programs that are unfunded or underfunded when you're in this situation. I think it's a double edged sword and everyone would agree that you have to spend, but at the same time... overspending is bad.

We are not in a depression. I have never seen more people eating out at restaurants these days. I have seen no gasoline rationing nor have I seen the government handing out cheese and bread.

Unfortunately, all the spending requires borrowing, and the Chinese hold a lot of T-bills. So do the rich people that everyone says should be taxed to death. The rich actually put a lot of their money into Treasuries (and TIPS). That actually "bets" on the country doing well, but we want to chastise the rich for having money.

It's a vicious cycle. (And note, I have no answers... just observations.)

[justbroke]

So, where you in your "top 5%" are not seeing a depression, most middle class people, small business owners, and working class people still very much are seeing a deep recession/depression.

There are a lot of middle class folks in the 5% bracket. If you go down to the top 10%, it will consume more of the middle class.

I agree that there is a shadow economy. I travel and have been from Detroit to Miami, Providence (RI) to Las Vegas. I still see massive consumption. That's my observation. It is not the people who benefited from the $800B stock market increase in value that's out eating. The real upper-middle class isn't dining out. They are the smart ones that saved before the storm, and purchased stocks at bargain basement prices. They'll also get out before it bottoms again, reaping a nice profit.

I am not amongst them.

[backtoschool]

There are a lot of middle class folks in the 5% bracket. If you go down to the top 10%, it will consume more of the middle class.

I agree that there is a shadow economy. I travel and have been from Detroit to Miami, Providence (RI) to Las Vegas. I still see massive consumption. That's my observation. It is not the people who benefited from the $800B stock market increase in value that's out eating. The real upper-middle class isn't dining out. They are the smart ones that saved before the storm, and purchased stocks at bargain basement prices. They'll also get out before it bottoms again, reaping a nice profit.

I am not amongst them.

I am a top 10% earner and used to be a top 5% earner when I lived in nyc and I have never really profited from it as you can see by my need to file bk.

Maybe the eating out is a substitute for taking vacations, or maybe it is fueled by people working long hours, or maybe unfortunately it is still being fueled by maxed out credit cards. I think we are agreeing for the most part. I am for tax cuts only if they are tied to creating growth in some way, so I am for tax credits more than tax cuts. And I do not think that tax cuts should be paid for with borrowed funds and I think you said that earlier, so we are in agreement there too.

[banca rotta]

Sooner or later (I say sooner) the middle class has to be brought back into the growth/recovery picture for any recovery we have temporarily achieved to be sustainable.

I say later rather then sooner (much later), because we have a large retail economy that just doesn't produce enough goods and services to sell to ourselves and the rest of the world.

It seems that the slump actually started 10 years ago but the house and retail bubble gave us an illusion that there was sustainable growth.

Now the US debt and dollar bubble are giving an illusion that there is a recovery and this will end just as bad if not worse.

I'm afraid it won't be sustainable until we create a production based economy and not a consumption based economy and this won't happen with the dem and repub disasters.

[jacko]

What is the source of the waste and how much is it? What would you cut?

Don't get me wrong. I do think everyone is overtaxed, but the government has to cut spending. There is so much waste in government it is ridiculous. BOTH the republicans and democrats are unwilling to spend less, balance the budget and reduce the deficit.