Cafe Hayek - Latest Comments in Framing the 'Trade Deficit'

Re: Framing the 'Trade Deficit'

JohnJ — Fri, 24 Mar 2006 11:46:18 -0000

"the level that our society requires...hence we collectively decide more needs to be done." This is the tyranny of the majority that Plato warned of democracy. We supposedly conquered this tyranny by breaking our nation into provinces that were autonomously run, so that people could choose to live with the majority of their preference, but the increasing federalization of our country threatens to overrule the individual's right. If I and my ilk decide that we would rather live under a free society, what right does government have to seek to impose its will on us?

"By your insinuation that taxes can be too high (Taxes can't be too high? This is not an insinuation; it's a fact!), you concede that their(sic) is a correct level of spending and taxes...an equilibrium..arrived at by a political consensus...since it is arrived at in that manner, it is not tyranny--as you libertarians like to proclaim." It is tyranny whenever one person forces their will on another, by definition. And I'm not a libertarian, I'm a conservative.

"They are popular and they are effective at what they do. Period." Popular? Yes. Effective? No. This is a proveable claim, so prove it. But you can't, and you won't, so your point is lost. I double-dog dare you to try to prove that government is a more effective charity than private charities.

Re: Framing the 'Trade Deficit'

Scoop — Fri, 24 Mar 2006 08:40:37 -0000

...and, it seems, to provide us with cradle-to-grave social services.

Re: Framing the 'Trade Deficit'

Hit The Bid — Fri, 24 Mar 2006 06:43:19 -0000

Sorry one quick thing:

"Government's job is to protect us from fascism, those who would seek to impose their will on us".

--no it is not..its job is to protect private property rights.

Re: Framing the 'Trade Deficit'

Hit The Bid — Fri, 24 Mar 2006 06:42:04 -0000

Scoop. Good for you! You're Dad must be so proud!

Re: Framing the 'Trade Deficit'

Hit The Bid — Fri, 24 Mar 2006 06:40:18 -0000

"It has been solidly proven that voluntary charities handle welfare more efficiently than government ever has".

Maybe so, but private charity never gives enough to satisfy the level that our society requires...hence we collectively decide more needs to be done.

"It's true that high growth does not necessarily coincide with low taxes, but high taxes always coincide with low growth."

Not true. By your insinuation that taxes can be too high, you concede that their is a correct level of spending and taxes...an equilibrium..arrived at by a political consensus...since it is arrived at in that manner, it is not tyranny--as you libertarians like to proclaim.

Tjose social programs make up 50% of government spending because theya re the most popular and effective manifestations of collective social insurance on the planet. They are popular and they are effective at what they do. Period. the private market cannot always deliver a universal good at realistic price...they are called market failures (note adverse selection and and moral hazard with respect to insurance especially when they are public goods.

Re: Framing the 'Trade Deficit'

SCOOP — Fri, 24 Mar 2006 05:54:39 -0000

If something bad does happen to me, I won't go crying to Uncle Sam for a handout!

Re: Framing the 'Trade Deficit'

JohnJ — Thu, 23 Mar 2006 21:01:43 -0000

First (if you don't mind my breaking in), there's the fact that social security, welfare, medicare, and the like have grown to encompass half the federal budget. The last time something like this happened, it was FDR prolonging the Great Depression. "Social Security works"? To do what? "The free market distributes goods too efficiently"? That sounds very Marxist! What you're suggesting is taxing someone for the "privilege" of being born in America. That's the opposite of freedom. It has been solidly proven that voluntary charities handle welfare more efficiently than government ever has. Government's job is to protect us from fascism, those who would seek to impose their will on us. The deficits are growing faster because our welfare programs are growing faster. Our spending is growing faster than we could ever hope to make up for in tax increases, especially since taxes inhibit growth. Taxes and growth share an inverse relationship. It's true that high growth does not necessarily coincide with low taxes, but high taxes always coincide with low growth.

Incidently, I love the site.

Re: Framing the 'Trade Deficit'

Hit The Bid — Thu, 23 Mar 2006 10:21:46 -0000

PS...nice try AGAIN with the "strawman" crap...

"Welfare without work? Affirmative Action? Cradle to grave big brother handholding?"

How old are you 12??

Re: Framing the 'Trade Deficit'

Hit The Bid — Thu, 23 Mar 2006 10:20:21 -0000

You are hopeless. Thank God no one agrees with you so there is no danger of you ruining our economy or democracy. That last paragraph is the truest sentence there is.

Tell me why the largest presidential Pr campaign in American history to change social security was also the biggest failure in American history?

Social security works, so does "welfare" (even though you probably don't even know what it actually is) so does medicare and medicaid...what doesn't properly work is the free market...wanna know why? because it distributes goods too efficiently and a collective society called a country cannot maintain its cohesion in that system.

Your ungratefulness to your country is as astounding as it is selfish...I hope nothing bad ever happens to you.

Re: Framing the 'Trade Deficit'

SCCOP — Thu, 23 Mar 2006 08:16:38 -0000

HIT THE BID: Your post reinforces my point that your grasp of macroeconomics is indeed helplessly naive!!! You beleive in "smart public policies"? Such as? Welfare without work? Affirmative Action? Cradle to grave big brother handholding? No thanks, not for me. I prefer freedom myself. If people need some assistance in life (and there are many needs), private charities perform these duties with much more efficiency and effectiveness than Uncle Sam. Your last paragraph is simply ridiculous.

Re: Framing the 'Trade Deficit'

Hit The Bid — Thu, 23 Mar 2006 06:38:59 -0000

Already read the WSJ Scoop and Happy Juggerlo and others...thanks. I am as pleased to see it as you. Revenue is indeed climbing back into the treasury. Thanks for the Snark though. As a former bond trader, I read the WSJ alot, and understand capital markets and numbers etc, unlike you all.

Increasing revenue to the treasury is what happens when the economy grows. Are you asserting that the tax cuts, and only the tax cuts created this growth? If so please prove it. Otherwise admit you cannot.

I think that the tax cuts very slightly contributed to the growth. I like your usual straw man approach though "Liberal doesn't think tax cuts create incentives to take risks and invest"...not true so don't even try it.

If you recall, this debate is about whether or not tax cuts themselves cause enough growth in the economy as to increase tax revenues enough so that they pay for themselves...and therefore deficits just go away.

I assert, correctly, that they do not. There CAN be a stimulative effect, but any economist will tell you ( and no Kudlow doesn't count--he's not even an economist)that the size of the effect is not big enough to replace the revenue that otherwise would have been there if they were not cut--beside this whole stimulative effect argument only works if taxes are too high and impeding growth.

I think you all need to revisit some statistics as well. The growth in revenue reported is not adjusted--it is gross...that is to say it is not controlled for inflation or the growth of the economy in general OR EVEN PLACED AGAINST ESTIMATES AS TO WHAT IT WOULD HAVE BEEN IF TAX RATES WERE AT THEIR 2001 level.

In most cases, except for semi-intelligent Conservatives, gross numbers like the ones in the WSJ are meaningless IN THE CONTEXT OF OUR CURRENT DEBATE. They are also meaningless because the argument that you would make that "see! if we could keep spening down then we would balance the budget"...but of course, you fail there as well. These tax cuts and other that followed were made with knowledge of spending increases like the war on terror and AMT encroachment and demographic based increases in certain social programs.

Now, as to your claim that raising taxes can curb economic incentives, you are right...they do! But, I believe, along with thousands of other economist, that there are benefits to a growth in the national savings rate that comes about by decreasing deficits, and decreasing crowding out effects from too much treasury debt on the mkt.

As for that old chestnut about a cut never being a cut in DC, you need to understand something called "baseline budgeting". Each year, budgets are put together for each agency to attempt to do in 2006 exactly what it did in 2007...the reason they go up each year is because the cost of doing the exact same things go up...increases in population and inflation account for that. SO if you kept the military budget the same so that they could only do what they did the previous year it would go up by what I just mentioned. So if you do cut the baseline, you are cutting the budge for the coming year. SO you can make the political/rhetorical argument about a cut not being a cut( and I'm sure all osrts of pundits would applaud you), but don't sell that bullshit to me, because sometimes an increase is still a cut.

Jeez...I should be charging to teach you guys this stuff. I mean scoop, come on "my understanding of this is hopelessly naive"?

What you fail to remember Scoop is that this nation collectively allowed you to work hard and meet your potential and earn what sound like tons and tons of money...as a Pinko/commie/Liberal I actually think people making lots of money is a GOOD thing!!! Thats right...so do all other liberals!!! What liberals tend to think, though, is that it is important to pay taxes back to the sytem...ie the united States...our government that we formed for us all..to pay for things like infrastructure, military, courts, police and all the social insurance programs that allow us to pursue a market based economy. Unlike conservatives thoug, I believe in smart public policies that are mindful of the public dollar.

Do you all realize that we could not have a market based capitalistic economy if it were not for collective social insurance programs like Social Security, Medicare, Medicaid, Welfare and unemployment insurance??? Please think about that. It is my free lesson of the day...and it has the added benefit of being true. WIthout them, stifling socialism would have won the day in the 1930s.

Boo Ya!

Re: Framing the 'Trade Deficit'

SCOOP — Thu, 23 Mar 2006 03:42:55 -0000

HIT THE BID: Do you honestly beleive that higher marginal tax rates will have NO impact on the incentive to work and take risk? You "hardly know where to start" because your understanding of the issue is hopelessly naive. If you try to tax me back into the stone-age in an attempt to raise more revenue, working harder so I give give even more of the fruits of my labor to the federal beaucracy becomes a lot less attractive to me. Wake up! You might learn something by checking out this op-ed in today's WSJ (not that you will!)

http://online.wsj.com/artic...

Re: Framing the 'Trade Deficit'

happyjuggler0 — Wed, 22 Mar 2006 18:29:32 -0000

Hitthebid,

Has government spending ever been cut? In the loony term sof inside the beltway any budget that does not spend as much as it would have otherwise is a spending cut, even though the rest of us call it a spending increase since spending is up on the previous year.

When government spending ever goes down then we can talk about tax rate increases. However, if spending ever does go down, we won't need to talk about tax rate increases.

Hence, there is no such thing as a responsible tax increase, since it merely enables more government spending than otherwise would have taken place.

Re: Framing the 'Trade Deficit'

johngaltline — Wed, 22 Mar 2006 14:37:23 -0000

I don't see how it's any more "sensible" to raise taxes and lower spending than it is to simply lower spending more.

It is not the responsibility of "the rich" to solve this problem.

Re: Framing the 'Trade Deficit'

Hit The Bid — Wed, 22 Mar 2006 13:25:44 -0000

No JGL...but I think using these things called "benchmarks" and "averages" are great ways to judge, hostorically, where we are.

For instance, revenues are at their lowest point as a percentage of GDP since about Eisenhower. Now, that is neither a good nor a bad thing unless there is context. Conservatives would probably argue that that is always a good thing.

What I think I am saying is that perhaps this evidence suggests that rather than spending being too high, historical averages are pointing to the fact that maybe revenues--and thus tax rates--are too low. And despite the recent very robust economic growth, deficits are growing.

Do not get me wrong though...I think we should cut spending AND raise taxes a bit...like any sensible person would suggest.

Re: Framing the 'Trade Deficit'

johngaltline — Wed, 22 Mar 2006 11:50:52 -0000

"Economy wide then, the drop in revenue accounts for 76% of the deficits and spending only accounts for 25%."

Assumes a ridiculous premise that the "correct" size of the federal budget is a function of GDP. That makes no sense, because as an economy grows and society gets wealthier it should in fact have *less* need for a welfare state, not more.

Unless, of course, you think equality is more important than wealth.

Re: Framing the 'Trade Deficit'

Hit The Bid — Wed, 22 Mar 2006 11:10:34 -0000

John Galt Line.

"The economy grew such that, even at the lower percentage of GDP, revenues now exceed prior levels"

All those numbers show me is that the economy was most likely growing during the time period you display.

To wit: Between 2000 and 2004 , as a percentage of GDP, expenditures went from 18.4% to 20.1%. BUT, revenue declined from 20.9 to 15.8%.

Economy wide then, the drop in revenue accounts for 76% of the deficits and spending only accounts for 25%.

No one doubts that tax cuts have a stimulative effect..they certainly do! I am just suggesting that you are way over emphasizing that effect, and thanks to that conservative over-assumption, we have added Hundreds of billions to the debt (which will require future tax increases to cover)

I am all for bringing back dynamic scoring, if thats what you want (and I think that is what you are alluding too when you stress that the the fiscal boost to the economy and thus tax revenue more than pays for itself).

However, this Admin already tried to jump on that train, but the initial reports only proved embarrasing and it was halted.

Tax cuts do not pay for themselves. repeat after me.

Re: Framing the 'Trade Deficit'

Hit The Bid — Wed, 22 Mar 2006 10:47:01 -0000

Scoop, that is all just patently false drivel I don't even know where to begin.

Those marginal tax rate decreases had about as much to do to the economic growth as CLinton's tax increase did to economic growth.

reagan and BushI at least had the sense to know when to raise taxes as well(1982 and 1986 for reagan and 1990 for Bush) to address fiscal realities. please tie up your dogma horse to the hitching post outside, and no I will not read your post based on your assertion here. I can make assertions of correlation too want me to do that as well? You seem to be having so much fun doing it!

Re: Framing the 'Trade Deficit'

Scoop — Wed, 22 Mar 2006 10:40:35 -0000

Thanks DEB...

HIT THE BID: And why has the economy been growing so rapidly? Check out my prior post...one reason is that incentives for risk-taking and entrepreneurship were boosted by the Bush tax cuts!!!

Kennedy, Reagan, GW Bush...all three demonstrated the power of marginal tax rate reductions and/or lower rates of taxation on capital formation.

Re: Framing the 'Trade Deficit'

malcolm — Wed, 22 Mar 2006 10:27:25 -0000

re drtaxscto:

I haven't read Stiglitz's book. I am pretty sure,however, that he was at The World Bank and not at the IMF after he left the Clinton White House.

Hence, his criticisms of the IMF don't imply "laughable" criticisms of himself.

He does criticize Clinton and his role in economic policy in his book on the 1990s.

Re: Framing the 'Trade Deficit'

joe — Wed, 22 Mar 2006 09:03:16 -0000

I'm still waiting to wake up one day and read the headline "US Capital Account Surplus Hits All-Time High". I think the media prefers "US Current Account Deficit Hits All-Time High", but the first headline is no less true than the second.

Re: Framing the 'Trade Deficit'

johngaltline — Wed, 22 Mar 2006 08:53:56 -0000

Hit the Bid

http://www.cbo.gov/budget/h..., (page 2 of 14)

year revenues outlays

1998 1722.0 1652.7

1999 1827.6 1702.0

2000 2025.5 1789.2

2001 1991.4 1863.2

2002 1853.4 2011.2

2003 1782.5 2160.1

2004 1880.3 2293.0

2005 2153.9 2472.2

From 2000-2005, revenue is up over $125B.

Outlays, over the same time, are up $686B. There's your deficit.

Yes, revenues are up when taxes are set to a lower percentage of GDP. That's precisely why the taxes were lowered. The economy grew such that, even at the lower percentage of GDP, revenues now exceed prior levels. Now if only spending hadn't grown even faster.

Re: Framing the 'Trade Deficit'

deb — Wed, 22 Mar 2006 08:16:25 -0000

But the $2 billion question is why there is such a strong demand for "US ass-ets."

Re: Framing the 'Trade Deficit'

Hit The Bid — Wed, 22 Mar 2006 05:49:27 -0000

My apologies for the double post to all of you.

To Scoop I say of course revenues have increased during this period...the economy has been growing. I look forward to your citation of a study that concludes that revenue to the treasury would have been significantly smaller if EGTRRA were not enacted.

Thanks.

Re: Framing the 'Trade Deficit'

Hit The Bid — Wed, 22 Mar 2006 05:45:46 -0000

Sorry John Galt Line...that was a typo. Expenditures stayed about the same for the fiscal year of 2002 after the majority of the tax cuts took affect.

I apologize, but I only use accurate data, so you will not be very satisfied with me.

EGTRRA of 2001 decreased revenue while spending stayed about the same...thus we have what are called structural deficits...that is to say, essentially, that no matter what is done on the spending side, we will run deficits every year.

Taking into account what we policy analysts call "political feasibility", where are you going to come up with $400 billion a year?

Would common sense not suggest we find a mix of cuts and tax increases to strike a balance internally and externally?