[spence]

Originally Posted by detbuch

It's funny that after 3 years the economy is worse than the one Obama "inherited," but we must be patient because it takes time to fix these things. But because the Bush tax cuts "immediately led to a DECREASE in tax revenues," that somehow contra-indicates the idea that they led to higher revenues. The fact that revenues rose in 2005 is somehow too late to be connected to tax cuts. And that we "all know" the three year growth rate that followed was due to a credit bubble--not "real organic growth."

If this growth was real why was household income falling at the same time, why was hiring so slow compared to the tax burdened days of the 1990s?

I've yet to read a good analysis that says the economic rise 2005-2008 was driven primarily by private investment spurred through tax cuts.

Actually, it makes sense that revenues would immediately fall after a tax cut which was made to stimulate job growth. It takes time for the growth to occur. It doesn't occur "immediately." And the revenue will fall because the "immediate" taxes are being collected before that growth. Higher taxes will always "immediately" create more government revenue than lower taxes. But if the effect of the higher taxes is to stunt job growth and create job loss, the longer, non-immediate, effect could well be decreased revenue. Higher taxes will always garner more revenue, ALL OTHER THINGS REMAINING THE SAME. But if the the higher taxes create smaller markets at the expense of bigger government, all other things do not remain the same, and the "economy" may shrink, and revenues may dwindle.

I think this view is oversimplified and ignores much larger forces at play that ultimately shape our economic performance. Energy costs, technology evolution, geopolitical change etc... are likely far more influential than the rate of taxation.

Perhaps if the distribution of income was more equal, taxation would be more of a factor. I'm not advocating wealth equality for this reason, but rather just making an observation.

And, no, we don't "all know" the three year growth was due only to a credit bubble. And, by the way, is the government credit bubble of a raised deficit ceiling going to create "real organic growth," especially if there is more "stimulus" spending?

I don't think we're going to see stable economic growth if the government appears to be non-functional. The stability of our Government is perhaps a principal factor making the US a desirable place to do business.

-spence