The failure of Obama's economics

[Lvl 64 Klutz]

Note*McCain is one dead beat away of dying. I'm scared of Sarah Palin.

I'm not a McCain supporter, but if Cheney can survive a term...

 

[Alex_P]

I'm not a McCain supporter, but if Cheney can survive a term...

Yeah, but Cheney has the luxury of being able to rest up at his undisclosed location [http://starwars.wikia.com/wiki/Image:Chamber2.jpg].

-- Alex

 

[Archon]

Obama's tax plan can't reduce taxes on the poor and working class because the poor and working class do not pay taxes. 40% of American households pay no federal income tax and many actually get money from the government in the form of "tax credits".

 

[Death Magnetic]

I support neither candidates because I'm a Brit but in my opinion Obama appears to be better. The guy's voice is annoying, I couldn't watch any longer than 4 minutes. I believe if Obama becomes president he'll be assassinated for being black, McCain will probably win but it'll probably be fixed again.

-Ricky

 

[Grampy_bone]

Obama's tax plan can't reduce taxes on the poor and working class because the poor and working class do not pay taxes. 40% of American households pay no federal income tax and many actually get money from the government in the form of "tax credits".

Sources please?

 

[Rolling Thunder]

Obama's tax plan can't reduce taxes on the poor and working class because the poor and working class do not pay taxes. 40% of American households pay no federal income tax and many actually get money from the government in the form of "tax credits".

?

 

[Archon]

Obama's tax plan can't reduce taxes on the poor and working class because the poor and working class do not pay taxes. 40% of American households pay no federal income tax and many actually get money from the government in the form of "tax credits".

Sources please?

Sources abound. Check out the detailed analysis [http://www.taxfoundation.org/research/show/1410.html] at the Tax Foundation.

"During 2006, Tax Foundation economists estimate that roughly 43.4 million tax returns, representing 91 million individuals, will face a zero or negative tax liability. That's out of a total of 136 million federal tax returns that will be filed. Adding to this figure the 15 million households and individuals who file no tax return at all, roughly 121 million Americans?or 41 percent of the U.S. population?will be completely outside the federal income tax system in 2006.1 This total includes those who pay no tax, and those who pay some tax upfront and are later refunded the full amount of the tax paid or more."

Or see the Washington Post [http://www.washingtontimes.com/news/2008/oct/13/obama-tax-cut-refunds-those-who-dont-pay/print/] which cites both the IRS and the non-partisan Tax Foundation as noting one-third of tax filers have zero liability.

Or see this article [http://www.cnsnews.com/public/content/article.aspx?RsrcID=37519], where it's indicated that "only 62 percent of households pay any income taxes at all," citing the non-partisan Tax Policy Center.

 

[JMeganSnow]

Any economist would say: Allow the banks to fail.

Any economist with 3/4s of their brain removed, that is. The last time America had a large-scale bank failure was the Great Deppression. Ask your grandparents -unless they were millionaires, they probably didn't have such a good time...

In short: Bank Failure screws everyone, because

a) The Government has to far more money in preserving savings than bailing out banks.

b) If the government chooses not to, then a lot of hardworking people lose their money through no fault of their own. And if that's capitalism, then you can hand me that hammer and sickle if you please.

c) It precipitates a massive withdrawal of money from said economy, thus strengthening the tendancy towards protectionsim and speeding up the collapse of economies globally.

If we tax the top too much, they will tighten up there liquidity and slow economic growth in America

So,if we tax the rich less, then demand will shift to the right, but if we tax the poor less, demand will not shift to the right.

Spectacular load of shit. S.P.E.C.T.A.C.U.L.A.R. The facts are

A) The poor and lower middle classes constitute the largest consumer base. By reducing there taxes, Obama is in essence creating a dramatic increase in the demand curve of the entire American economy towards the right. By increasing demand, he will stimulate growth in the sectors that matter-consumer goods, basic neccesities and, in essence, 'real investements' (Factories, farms-actual production.)

B) By decreasing taxes on the rich, who historically have a much higher propesnity to save, we will not stimulate a great increase in demand (as the rich generally represent a saturated and minimal market for most products-there are only so many TVs you can use, and only so many kilos of food you can eat.). What will admittedly increase is the demand for stocks, shares and 'paper investments', as more moneygoes into the finacial sector. This in turn could produce a slight increase on the supply side of the curve, as credit becomes cheaper, but without the increasing demand it will simply result in lower prices, driving smaller businesses out of business and, in the longer-term, once again reducing supply.




I must say this: This gentlemen with the nasal problem really needs to pick up an economics textbook sometime.


Also: During reccesion, you do not reduce government spending. A balanced budget is not an neccesity during times of economic crisis-in fact, by increasing government spending, one can increase demand and help roll back the effects of reccesion much faster.

Good lord, what a staggering load of economic ignorance.

1. The Great Depression was caused by, in large part, government meddling with the money supply. What started out as a stock-market bubble (very similar to the 1990's .com bubble if you can remember that far back) was hideously exacerbated by *further* government interference. The bank failures were a *consequence*, not a *cause*. The government *should* allow the banks to fail, because that money is *gone anyway*. Where do you think that bailout money is going to *come* from?

Either they won't raise taxes (likely, since a tax hike is politically unpalatable) in which case prices will skyrocket due to inflation, or they will raise taxes, in which case everyone in the country will be forced to pay for the stupid decisions of a few people who will go ON making stupid decisions. It's like throwing a bunch of money into a pit and setting fire to it.

"Allowing" the banks to fail (as they would normally) allows better, more efficient people to buy out the assets that still have value and put them to good use. The hemorrhage is stopped, the economy recovers. Sure, some people may lose their houses or their savings--but they're the ones who invested in the risky schemes to begin with. How is it right to punish *everyone* for the bad decisions of a *few* stupid people and KEEP THE STUPID PEOPLE IN CHARGE?! When one of your employees bankrupts your company by investing in a Nigerian Email Scam, you don't give him a stack of money and tell him not to do it again! You fire the idiot!

2. Consumers are *irrelevant* in economic terms. Saying we have to encourage spending and consumption is like saying that you get rich by spending all your money on Twinkies. You *don't*. People, and hence the country, get rich by *saving* money (you know, like RICH PEOPLE do) and investing it in productive enterprises. Draining the savings of the rich just means that jobs evaporate, new ventures aren't ventured, and capital-intensive improvements dry up. By the time the "rich" have to stop buying the nice cars and houses you envious jerks so obviously object to, the "poor" have long since finished starving to death. You don't get a good job that can support your family by choking to death the only people who can provide it.

Even worse, such measures do terrible things to the middle class, who are the real productive force in any economy. Small entrepreneurs now find it impossible to obtain loans, new competitors are prevented from accumulating capital and bringing new products to market, which leaves your beloved "consumers" with no choice but to pay higher prices for existing products. Upward mobility vanishes, freezing the "rich" into a permanent elite caste who put their worthless offspring into public office. (Like our current president.)

You should put *down* your Keynesian economics textbook and pick *up* an Austrian one. All of Keynes theories are crap, based on fallacies that have been exploded many times--heck, the progress of the last 80 years should more than demonstrate that *spending* all your money is no way to get rich.

 

[Archon]

Obama's tax plan can't reduce taxes on the poor and working class because the poor and working class do not pay taxes. 40% of American households pay no federal income tax and many actually get money from the government in the form of "tax credits".

Can you elaborate on how to get these tax credits? I don't feel like being the only sucker paying taxes.

Check out http://www.irs.gov/individuals/article/0,,id=96406,00.html for information on how to qualify for the Earned Income Tax Credit.

 

[Random Argument Man]

Note*McCain is one dead beat away of dying. I'm scared of Sarah Palin.

I'm not a McCain supporter, but if Cheney can survive a term...

Do you realize how Sarah Palin is not qualified for the job?

 

[Spinozaad]

You should put *down* your Keynesian economics textbook and pick *up* an Austrian one. All of Keynes theories are crap, based on fallacies that have been exploded many times--heck, the progress of the last 80 years should more than demonstrate that *spending* all your money is no way to get rich.

Keynes was pretty much dead on when it came to solving the crisis of the 1930's and is still pretty much dead on when it comes to the rule that consumption oils the economy. Without consumption (even with high costs of living) there can be no production, and it's still production that fuels the economy. Not financing.

Saying that consumers are irrelevant is rubbish. Consumers are the driving force behind the economy. Without people to buy products or services innovations, investments and production is unnecessary. Why? There's no one to buy it. That's why the great masses should always be able to consume, as they (to speak in Keynesian terms) 'oil the economy'.

Oh, it's true that there should be accumulated wealth to finance innovations and investments. This comes from banks. Banks should be a continueous force in the economy, and therefore not allowed to fall. Letting banks fall will only hurt the fragile economic structure. That's why the Dutch government was spot on in purchasing a national bank. It's a costly investment, but one that will definately pay off in the future while it guarantees financial life in the present.

 

[werepossum]

Obama's tax plan can't reduce taxes on the poor and working class because the poor and working class do not pay taxes. 40% of American households pay no federal income tax and many actually get money from the government in the form of "tax credits".

Sources please?

Sources abound. Check out the detailed analysis [http://www.taxfoundation.org/research/show/1410.html] at the Tax Foundation.

"During 2006, Tax Foundation economists estimate that roughly 43.4 million tax returns, representing 91 million individuals, will face a zero or negative tax liability. That's out of a total of 136 million federal tax returns that will be filed. Adding to this figure the 15 million households and individuals who file no tax return at all, roughly 121 million Americans?or 41 percent of the U.S. population?will be completely outside the federal income tax system in 2006.1 This total includes those who pay no tax, and those who pay some tax upfront and are later refunded the full amount of the tax paid or more."

Or see the Washington Post [http://www.washingtontimes.com/news/2008/oct/13/obama-tax-cut-refunds-those-who-dont-pay/print/] which cites both the IRS and the non-partisan Tax Foundation as noting one-third of tax filers have zero liability.

Or see this article [http://www.cnsnews.com/public/content/article.aspx?RsrcID=37519], where it's indicated that "only 62 percent of households pay any income taxes at all," citing the non-partisan Tax Policy Center.

Everyone should know this already. That most people don't, only shows the degree to which our education and news reporting fail and/or are biased.

There are only three ways Obama can give a tax cut to 98% of all Americans. The first is to cut either Medicare/Medicaid and/or Social Security taxes, removing the polite fiction that these are retirement programs rather than normal tax-and-spend entitlement programs. Since both systems will go broke within a generation at the current structures, both will have to be moved into general funds. This also requires defining 98% of all Americans as 98% of all working Americans, which isn't that big a stretch.

The second would be to cut taxes on most of those still paying taxes whilst simultaneously moving half of working Americans into a government welfare program like the Earned Income Tax credits have become. In effect, a government check becomes a "tax cut."

The third way would be to increase taxes on 2% and define NOT raising taxes as a tax cut.

All of these will require huge increases in corporate tax rates and on very high earners (that evil top 2%.) Since high earners make most of their money in capital gains, this requires moving capital gains taxes into a system where the rate depends on the person's overall income, just as income taxes.

As for corporate income taxes, corporations don't pay taxes; the taxes either come out of the dividends paid to share-holders, or are passed along as higher costs to the end user. The consumer pays everything, in the end, which is as it should be. If corporations can pass along the higher taxes to consumers, they will. Corporations that cannot pass along the higher taxes to consumers, either because of government regulation or because of competition from foreign corporations taxed at lower rates, will be increasingly unable to compete. Their stock prices will plummet because dividends will drop or become non-existent and expenses (which includes corporate taxes) will rise faster than earnings, their profit margins will go down, and eventually they must either move off-shore, go bankrupt, or be snapped up cheaply by foreign corporations. All of this has been going on for decades; look for the pace to step up briskly. Success for start-ups like The Escapist will increasingly be decided not by who has the best idea and implementation, but by who has the best contacts and lobbyists. Venture capital will be out, to be replaced by government grants.

As always when costs increase faster than income, look for unemployment to rise sharply. Since unemployment is anathema to whatever party is in power, government employment programs will increase, just as in the New Deal. Again just as in the New Deal, this will put a heavy burden on non-governmental entities. For any large corporation, expect government to be either your partner or your competition.

Whichever way Obama chooses to go, look for an economy where the government plays an ever-increasing role, both in choosing what industries are profitable and what individual companies within each industry succeed. Again, we have been moving toward a Soviet-style command economy for decades, but this will be a sharp increase in pace.

 

[axia777]

Republicans are just pissed because the old man McCain and crazy woman Palin are getting a whipping. They might as well just go on home.

Also, have any of the arm chair economic analysts commenting here graduated from college for economics? No? Then why should we listen you any of it?

 

[werepossum]

Obama's tax plan can't reduce taxes on the poor and working class because the poor and working class do not pay taxes. 40% of American households pay no federal income tax and many actually get money from the government in the form of "tax credits".

Can you elaborate on how to get these tax credits? I don't feel like being the only sucker paying taxes.

Check out http://www.irs.gov/individuals/article/0,,id=96406,00.html for information on how to qualify for the Earned Income Tax Credit.

The EITC was an idea put forth by the Reagan administration to get people off welfare. Simply put, if you leave welfare and take a minimum wage job, your additional expenses may leave you worse off financially than when you were on welfare. Recognizing that many people are unable or unwilling to look past the immediate future, Congress devised a polite fiction to refund some or all of a poor working person's Social Security and Medicare/Medicaid taxes as if they were income taxes.

Expansion of the program in later Congresses led to individuals not only receiving all his or her own Social Security and Medicare/Medicaid taxes, but also receiving part of the taxes paid by others. In effect, what began as a legitimate attempt to ease people off of welfare and into the workforce has turned into another kind of welfare program, where people work but still get a government check.

 

[Imitation Saccharin]

As for corporate income taxes, corporations don't pay taxes; the taxes either come out of the dividends paid to share-holders, or are passed along as higher costs to the end user. The consumer pays everything, in the end, which is as it should be. If corporations can pass along the higher taxes to consumers, they will. Corporations that cannot pass along the higher taxes to consumers, either because of government regulation or because of competition from foreign corporations taxed at lower rates, will be increasingly unable to compete. Their stock prices will plummet because dividends will drop or become non-existent and expenses (which includes corporate taxes) will rise faster than earnings, their profit margins will go down, and eventually they must either move off-shore, go bankrupt, or be snapped up cheaply by foreign corporations. All of this has been going on for decades; look for the pace to step up briskly. Success for start-ups like The Escapist will increasingly be decided not by who has the best idea and implementation, but by who has the best contacts and lobbyists. Venture capital will be out, to be replaced by government grants.

Doesn't this assume all things being equal?

 

[werepossum]

As for corporate income taxes, corporations don't pay taxes; the taxes either come out of the dividends paid to share-holders, or are passed along as higher costs to the end user. The consumer pays everything, in the end, which is as it should be. If corporations can pass along the higher taxes to consumers, they will. Corporations that cannot pass along the higher taxes to consumers, either because of government regulation or because of competition from foreign corporations taxed at lower rates, will be increasingly unable to compete. Their stock prices will plummet because dividends will drop or become non-existent and expenses (which includes corporate taxes) will rise faster than earnings, their profit margins will go down, and eventually they must either move off-shore, go bankrupt, or be snapped up cheaply by foreign corporations. All of this has been going on for decades; look for the pace to step up briskly. Success for start-ups like The Escapist will increasingly be decided not by who has the best idea and implementation, but by who has the best contacts and lobbyists. Venture capital will be out, to be replaced by government grants.

Doesn't this assume all things being equal?

Short answer, yes.
Long answer, yes, but things have been trending in that direction for decades. Corporations give donations to politicians and political parties, and to NFPs like ACORN and the ACLU and the NRA that powerful politicians support, and employ relatives, friends, and lovers of politicians and powerful members of the political parties. In return, politicians write amendments in bills that give tax breaks, government grants, and regulatory relief to those corporations, allowing them to make huge sums of money if their gambles pay off and then bailing them out if their gambles fail. This is true even under Republicans, who at least pay lip service to the twin ideas of free markets and capitalism. It is even more true under Democrats, who are pretty up front about their philosophy that government is the answer. Obama is the Senate's most liberal senator by both liberal and conservative groups' reckoning. Therefore even without his specific proposals, it's reasonable to assume a quickening of the process with the Senate's most liberal senator at the top and Congress, led by very liberal Democrats such as Pelosi and Reid, firmly in the Democrats' hands. There is no filibuster in the House, and the Republicans will be lucky to retain even a theoretical filibuster power in the Senate.

This is a good thing if you believe the government should directly control the economy and re-distribute income to make things fair. This is a bad thing if you believe the government should not directly control the economy and that income is earned, not distributed. The USA has historically been a country with outstanding vertical mobility, where by hard work and good ideas one can rise to a higher class, and conversely with poor decisions and sloth one can plummet from the upper class. This is changing. Americans are now more interested in government providing more of our needs and wants, and protecting us from our own bad decisions.

This is why democracy is so great: we always get the leaders we deserve.

 

[Archon]

Whichever way Obama chooses to go, look for an economy where the government plays an ever-increasing role, both in choosing what industries are profitable and what individual companies within each industry succeed. Again, we have been moving toward a Soviet-style command economy for decades, but this will be a sharp increase in pace.

I find this outcome so dire that I wish I could argue with you, but I sadly agree with your analysis.

 

[Imitation Saccharin]

Corporations give donations to politicians and political parties, and to NFPs like ACORN and the ACLU and the NRA that powerful politicians support, and employ relatives, friends, and lovers of politicians and powerful members of the political parties.

Lobbyists are hated (at least rhetorically) by both parties, so I fail to see how this applies to Obama especially.

In return, politicians write amendments in bills that give tax breaks, government grants, and regulatory relief to those corporations, allowing them to make huge sums of money if their gambles pay off and then bailing them out if their gambles fail.

So if that much control exists, why the vanishing corporate benefits? The massive balloon of executive pay?
Surely the first thing the standard politico would do would be to fix those two?

Therefore even without his specific proposals, it's reasonable to assume a quickening of the process with the Senate's most liberal senator at the top and Congress, led by very liberal Democrats such as Pelosi and Reid, firmly in the Democrats' hands.

This is extremely vague.

This is a good thing if you believe the government should directly control the economy and re-distribute income to make things fair.

Again, if you are not engaging in hyperbole, why has this not already happened?

The USA has historically been a country with outstanding vertical mobility, where by hard work and good ideas one can rise to a higher class, and conversely with poor decisions and sloth one can plummet from the upper class.

If this holds true, EU nations should be locked dead. They are not.

 

[mipegg]

Whichever way Obama chooses to go, look for an economy where the government plays an ever-increasing role, both in choosing what industries are profitable and what individual companies within each industry succeed. Again, we have been moving toward a Soviet-style command economy for decades, but this will be a sharp increase in pace.

I find this outcome so dire that I wish I could argue with you, but I sadly agree with your analysis.

Again, I also agree. I do so hate the socialist/planned market ideal. To me it just seems to take away all need to work hard and do anything. If i can be supported totally by the state why bother training all those years to be a systems analyst when I could just as easily get an equally (if not equal then supported by the state) payed job doing one of my hobbies (rockclimbing) I would far rather climb or instruct for a living than be an analyst but there just isnt a job in it.

Yay for killing all forms of venture eh?