No surprises here.

Chafee runs with the spend 'til you drop and tax them 'til they bleed crowd.

This will really begin to resonate with the voters as the Senate race moves into full gear.

SV

Marc, excellent report. Further evidence Chafee walks-like, talks-like, spends-like, votes-like, and is, a Democrat!

Further proof Laffey's pork-busting and corruption fighting agenda is the recipe for prosperity we need in Washington.

I'm stunned, I'm stunned! (no I'm not)

I'd like to point out that three Democrats voted for this tax cut. Of course, people like Chafee, who alread have their slice of the pie, don't care if the rest of us pay less in taxes. How else will they support their pork barrel spending projects?

I guess it must be difficult to comprehend the wonder of Art Laffer and his magical curve when you haven't ever taken a college-level introductory economics course.

PAYGO! PAYGO! PAYGO!

Except it's not a fact that the tax cuts created more revenues. In fact, they did not.

If you won't take my word for it, go to Angry Bear. The guys running it are real economists and can tell the difference between Administration hoo-ha and real evidence. OK, tax revenues went up after the 2003 cut; but they went down after the 2001 cut. So, your cause-and-effect kind of goes out the window.

Also, you need to stop igniring the difference between a nominal increase (actual dollars) and a real increase (adjusted for conditions such as population growth). Tax revenues consistently hit record highs because the economy keeps growing;, inflation, etc the growth isn't linear, but the overall trend is always up. So tax revenues under Clinton were higher than under GHWB, which were higher than under Ronnie Raygun....follow the concept there?

But again, don't take my word for it.

http://angrybear.blogspot.com/2005/12/rest-of-story.html

Remember: these are real economists. They don't just play them on their blog.

klaus,
Get a life. Cutting taxes, does in fact, increase economic activity thereby increasing tax revenues. I'll get 20 economists to tell you that to every 1 you can produce to say otherwise. You're socialist tendencies blur your thinking.

I got a voice mail message from Linc Chafee. Talk about the gang that couldn't shoot straight. Those idiots at the Chafee campaign can't even figure out how to leave a freaking phone message the right way.
Anyway, Chafee goes on rambling for over a minute about Laura Bush coming into town and how he wants me to attend the affair. He says he has a very tough primary on his hands and needs my money to help save his butt. (Its part of his marketing campaign - goes long with the "SAVE CHAFEE" buttons) Now, even if I were so inclined, I couldn't. Because, he rambled for so long that my machine cut him off. My machine allows a message to be left for 1 minute. Many machines allow for only 30 seconds. So even if I wanted to attend the event, I didn't know the number to call - it was cut off. What a crew!

And I'm supposed to trust this guy to fix Social Security?

Klaus my clueless friend -

Ever hear of a tragedy called 9/11 that may have had something to do with the tax collection anomaly that year?

The increase in tax receipts after major tax cuts (Andrew has posted links to this data, and Laffey's presentation also has them) has been significantly higher than baseline economic growth would indicate. Plus, have you ever considered that the tax cuts in themselves result in significantly stronger economic growth?

OK, we're off to a good start. I've been insulted and called a socialist. That sure addresses the issue. Oh, and we've had the invocation of 9/11 as the source of all problems. And I need to get a life?

And, Harvey, my friend? It's nice to say that you can get 20 economists to agree with you, but I don't see you doing so. I cited my evidence. And there's more coming, dude, so buckle up.

Fact is, this it the lamest econ recovery on record since WWII. In virtually all econ categories, this "recovery" is pretty much at the bottom of the list. This includes:

Employment rate--not the UNemployment rate. There is a difference in that the latter only counts people actively looking. The labor participation rate was still dropping Dec 05-Jan 06, as it has been over the last several years.

Job creation. 04-05 showed jobs expanding by 1.5%. The rate for 1977-78(think Carter as pres) was 5.3%. The second weakesr was 1985-86 (Reagan) at 2.1% And don't cite the 4 million jobs in the last year. There was a net LOSS of jobs in W's first term, and that ground had to be made up. And, btw, that was the first net loss of jobs in a pres's term since Hoover, 1928-32.

Real (not nominal) hourly wages for people in the bottom 20% dropped -0.8% 2003-05. The wage dropped 0.6%. Man, that is one heckuva recovery.

Interestingly, the real wage of the top 5%--i.e., those who actually benefitted from the tax cut--did go up. In other words, the rich got richer and most of us got shafted.

cite:
http://moneycentral.msn.com/content/invest/extra/P143548.asp?GT1=7824

Debt levels have risen. Mortgage & consumer debt is now 115% of after-tax income.

Growth in both GDP and GDIncome is pretty much the weakest for any post-war recovery.

Total payroll is way, way below any of the other post-war recoveries. Private sector payroll is even further behind, meaning that gov't spending and hiring account for a significant chunk of any improvement.

Growth in wages, salaries, and personal income is off the scale (as in, below the bottom) the averages for post-war recoveries.

The same is true for non-residential investment. Weren't the cuts supposed to investment?

OK, do we get the picture? Bottom line is we got a lousy ROI for $860 B in tax cuts.

source for above data:

http://www.epi.org/briefingpapers/168/bp168.pdf

You might want to check it out. There are lots of pretty graphs that really show how bad this 'recovery' has been FOR MOST PEOPLE.

Because, let's get things straight: if you're in the top 5%, or better, the top 1%, or better, the top 1/10 of 1%, things are GRAND. Those folks are raking it in hand over fist, and paying a lower real tax rate than most of us.

Oh, but it will 'trickle down,' right?

PS, Economic Policy Institute (EPI) is a non-partisan, non-profit organization. It stinks that facts have a liberal bias, doesn't it?

klaus,
As the saying goes, "liars figure and figures lie", and you, pal, are doing a lot of figuring. Most of all, you are figuring we are ignorant.

klaus, you fail to realize that as a business owner, I know exactly what the cause and effect of these policies are. I live them on a daily basis. I buy or sell things based on these policies. I hire or don't hire based on these policies, and I expand or I don't expand based on these policies. Don't even try to tell me what I should read - I don't have to read about it, I live it. And I am telling you that you are dead wrong!

Excellent response, Harvey. You sure told me. And why bother with all that silly evidence, proof, or numbers as a basis for my conclusions. Why waste my time with actual numbers when I can accept anecdotal evidence that may or may not reflect the larger reality?

And then there's the whole post hoc, ergo propter hoc thing, too. What's a few thousand years of logic have to do with anything?

I mean, since you say it's so, it must be so. And I'm sure you'll convince anyone else who reads the thread with half an open mind. All my numbers won't stand a chance.

Klaus,
Your contention that tax cuts do not stimulate economic activity is fallacious. While agreeing that they are not the only economic policy that can have positive stimulative effects, there is enough evidence that shows tax cuts, while not sounding good to liberals, do in fact result in increased economic activity. Now, because employment isn't at a specific level, does not mean that the tax cuts haven't worked. Because wages are not at a certain level doesn't mean the tax cuts haven't achieved their objective.

Yours is a sophomoric argument. I'll liken it to a car, out of gas and with four flat tires. If you fill it with gas, you are halfway towards fixing the problem. That doesn't mean that you are going anywhere, but you are certainly closer to achieving your goal than when you had no gas. Your argument is that since you still can't drive the car, the gas did no good. I would argue the gas was good, but we still have work to do on the car.

You need to expand your thinking and not look so narrowly at these issues.

"The tax on capital gains directly affects investment decisions, the mobility and flow of risk capital . . . the ease or difficulty experienced by new ventures in obtaining capital, and thereby the strength and potential for growth in the economy." That was John F. Kennedy, and he's still right today.

That was taken from this article from the Wall Street Journal: http://www.opinionjournal.com/editorial/feature.html?id=110008374

Jim: interesting. Tell me I'm wrong, call my arguments "sophomoric" and "fallacious," and yet, never manage to explain exactly where I've gone astray.

It's not like I cited a single indicator and built an argument on that. There are a half-dozen indicators that show this expansion is the weakest on record. What is "sophomoric" about citing evidence? What is "fallacious" about expecting a given cause (tax cuts) to produce measurable effects--like job growth, GDP growth, etc? Since I'm such a dolt, can you please explain that to me?

Fact is, by a lot of measures, this econ expansion is the weakest on record for the post-war period. And this despite a huge amount of gov't stimulus pumped into the system in the form of unheard-of interest rates (1%!) throughout much of the period in question, and the tax cuts. This lack of results would seem to indicate that the tax cuts have not done what they were advertised to do.

Don't want to take my word? How about Paul Craig Roberts, ass't sec of Treasury under St Ronald Reagan, and an assoc editor of the WS Journal. He wrote an article called "Nuking the Economy."

cite: http://www.counterpunch.org/roberts02112006.html

In it, Mr Roberts said that economy fell 7 million jobs short of keeping up with population growth. He called the job growth a "horrible record."

But, he disagrees with you, so he must be some kind of pinko, right?

So, Jim, want to go into a bit more detail about the "fallacious" nature of my argument? I realize folks around here may not be used to dealing with unwelcome facts and figures, but, hey, that's what reality is all about.

Cheers!

Klaus-

Are you aware that we have had only two quarters of recession over the last 24 years? That's it. Two quarters. One has to go back to England's experience during the early stages of the industrial revolution to find a like period of virtually uninterrupted economic growth.

Our economy normally has a 4:1 ratio of growth years to recession years. This ratio has mushroomed to 48:1 over the aforementioned period. The Reagan tax cuts ushered this period in. The Bush tax cuts sustained it during its twilight.

It is unrealistic to assume that after 20 years of strong growth and the 9/11 shock that an economy will grow at a record pace. The decent growth exhibited over the last few years is an accomplishment in itself. Just because growth has not been to your liking does not mean that tax policy has failed. The evidence shows just the opposite.

Klaus,
By fallacious I mean that your argument relies on half truths and innuendo as opposed to solid corollary data. As an example, you say tax cuts don't work at all and, as proof, you cite Roberts assertion that job growth fell 7 million jobs short of population growth. (I won't even get into the productivity factor that would challenge Roberts' argument)

Now, if job growth without the tax cuts would had fallen 15 million short of Roberts' benchmark, I would say that the tax cuts did work. You would say they don't work at all, and that would be wrong and fallacious. In other words by leaving out half of the story, you rely on deception to support an illogical argument.

I have not heard anyone suggest that tax cuts alone are the answer to all that ails our economy. But, your close-minded thinking is saying just that - since they don't fix everything, they are useless. (Refer back to my car example)

In sum, tax cuts work. They just don't solve all of our problems. Then again, nobody said they would.

Jim, read all of my posts, and read the realated articles, or at least this one.

http://www.epi.org/briefingpapers/168/bp168.pdf

My comment about Roberts was just a follow up and not the whole of my case. Roberts was just the cherry on top because he was a Reagan (all genuflect) man.

And I understand "fallacious." It's like the original post saying that it's a "fact" that tax revenues have increased since the Great Redistribution of Wealth Upward. The fallacy came in when he failed to distinguish between a nominal increase and a real increase. Tax revenues always go up; the economy grows, the population is bigger, etc. This chart from Angry Bear shows that real revenues were much higher under Clinton, but also that the trend is up for the reasons cited. Here's the URL:

http://angrybear.blogspot.com/uploaded_images/k1-768713.JPG

Well guys, it's been fun, but I have a life. Once again, here is the article you need.

http://www.epi.org/briefingpapers/168/bp168.pdf

It pretty much demonstrates that the tax cuts were a bust. This is the worst recovery since WWII, despite $860 B in tax cuts and really low interest rates.

The numbers are there. Read 'em and weep. I'll be back again; in the meantime, try not to miss me.

Lets not lose sight of the fact that Chafee loves big government and pork barrell spending. So despite the benefits of lower taxes (mainly that we get to keep more of the money we earn and save, invest or spend as we are free to choose) Chafee is compelled to tax more so the Government can continue to spend more.

Indeed growth and employment could be doing better, but the problem is that government is too big and intrusive, not that taxes are too low.

And Klaus, this is not a post-war period. This one is a period of war, a war brought on by individuals who hate our freedom and economic prosperity. You sound like one of them.

Klaus,
By sophomoric, I meant the apparent desire on your part to convince others without quite knowing how to do it. Then, as your arguments fall short, a result of your reliance on specious claims, you get defensive and display a childish temperment rather than spending the time necessary to better understand what you are trying to talk about.

Gee, Jim, everything I've ever read about debate, argumentation, logic, says that you convince someone by providing data as evidence. That's why I put all the citations of sources in my posts.

Did you read everything I said? Did you look at the epinet file? Did you look at any of the files? The data seemed pretty clear and fairly conclusive.

Do you have a refutaton of the data? I can understand that you may not be convinced, but it is incumbent on you to provide some sort of rebuttal other than calling me "sophomoric" and claiming I'm wrong.

That's kind of how argumentation works. Each side presents a position, and the side that presents the best evidence, most coherent interpretation, the most convincing case is considered the winner. I said that this has been the weakest econ recovery after WWII, which invalidated the claim that Bush's tax cuts provided a very limited benefit to the economy. To support my case, I provided hard evidence.

Your response was to say that my arguments are fallacious and that I'm sophomoric, my claims are specious, I display a childish temperament, etc, etc.

What you have failed to do is to provide any sort of hard data. You've disparaged me personally (known as the ad hominem fallacy), but you haven't even attempted to refute my evidence.

So, you tell me: who has presented the stronger case? I'll let anyone reading this decide.

Klaus,
Again, I would simply refer back to my car analogy which properly illustrates the paucity of your argument.

Klaus,
Thanks for your input. I can provide other sources supporting the tax cuts=increase in tax revenue argument (in addition to the others in the original post). If you want more, start with Bruce Bartlett, The Heritage Foundation, and Donald Luskin.

In the end, part of the fundamental argument lay in whether or not you believe in static or dynamic economic models. I credit you for attempting to engage in a more philosophical debate. Your basic argument is that we could collect even more tax revenue if the tax cuts hadn't been made. In other words, there was a reduction in the projected revenue as determined by a static economic model. Dynamic modelers would point out that tax cuts affect spending habits, etc. and this leads to more revenue than projected under static models. This debate has been going on for at least 20 years: no one is going to "win" the static/dynamic debate here. That being said, the original intent of the post was to tweak progressives and to show both that real tax revenue (not projected, btw) doesn't decrease with tax cuts and that "the rich" are paying a bigger percentage.

I have to take issue with your reliance on the "non-partisan" economists like those of the Economic Policy Institute. Your definition of non-partisan is different than mine if you consider such EPI founders/leaders as Robert Kuttner, Robert Reich, Ray Marshall (Labor Sec. under President Carter) and Lester Thurow non-partisan. Thurow's track record is especially impressive: how has his prediction--made in the 1980's--that the Soviet Union would dominate the US economically worked out? Most are also contributors to the American Prospect, hardly a middle-of-the-road publication. Just because an organization says it's non-partisan doesn't mean it doesn't operate with a certain ideological bent. Do you consider the American Enterprise Institute non-partisan? They say they are.

You raise interesting points about tax revenues and job growth as they relate to population growth that are worth studying. (However, I have to add that Paul Craig Roberts is a paleocon who voted for John Kerry. I'm not sure if that's a typical Reaganite). Perhaps I'll get a chance to look into that some time soon. Until then, here's an alternative take on job growth.