What is Keynesian Economics and why is it so destructive to America’s recovery?

No, but I like the points he makes and the way he makes them. Not belligerent or confrontational but very clear and forceful.

I have heard of Milton Friedman but am not familiar with his work.
Am currently reading Hayek, will look into Friedman next.

Thanks for the vid.

Quick Question - from you tag I take it you lean to the right, are you neocon or traditional liberal?

 

Nope, but over all it grew in 2001, which you don't deny.

The point is clear. The economy grew in the supposed "recession" year in 2001 and 2002 - 2005.

Yet income tax revenues were below their 2000 level every year.

Proving false the claim that revenues will necessarily grow with the economy.

 

You are welcome, my friend.

 

Never have but note you have to use 4 quarters to try and show that there was some growth. Quite lame.

The fact remains he inherited a recession.

Yes thanks to his tax rate cuts but there is no "recession year", we had a slowdown that began in one year, went into recession the next year.

and in 2006 and 2007 seven record revenues and 44% higher than the bottom of the recession and 35% higher than before the tax rate cuts.

 

Friedman saw it all coming, “Having a widely accepted medium of exchange is of critical importance for any functioning complex society. No money can serve that function unless its nominal quantity is limited.”

 

Let's look at some actual numbers to see how effectively tax cuts increase tax revenues. Here are the CBO numbers for US tax revenue over the last few decades. These numbers are all in billions of dollars, so 192.8 is $192.8 billion. OK, here's total government revenue for the last few decades. In the fifties and sixties tax revenue almost exactly doubled every ten years, just the CBO link doesn't have the numbers handy :

1970
192.8

1980
517.1

In the 1970s revenues almost tripled due to massive inflation caused by two massive oil price spikes. The 1980s saw revenue double again with the help of inflation and the Reagan Tax Increases though as a counterweight the Reagan Tax Cuts caused revenue to fall.

The 1990s saw things on trend too, with tax revenues doubling even though inflation was now under control :





1990
1,032.1

1991
1055.1

1992
1,091.3

1993
1154.5

1994
1,258.7

1995
1,351.9

1996
1,453.2

1997
1579.4

1998
1,722.0

1999
1,827.6

2000
2,025.5



Bush took office in 2001 and enacted tax cuts which were backdated to the start of that financial year. If supply side/the Laffer curve is correct then tax revenues should be on target to roughly double plus we see some of that Laffer increase on top of the doubling, right? After all, in 2000 a prez who inherited a budget surplus put in place the most far-reaching and radical supply-side deregulationist policies ever seen in America, at least since 1929. If supply-side theory is right and tax cuts/deregulation produce massive economic growth/increased revenues then we should expect revenues to really surge, right?

2000: 2025.5

*Bush tax cut*

2001 : 1991.4

2002 : 1853.4

*Bush tax cut*

2003 : 1782.5

2004 : 1880.3

2005 : 2153.9

2006 : 2407.3

2007 : 2568.2

The 2008 number isn't on the document but it'll obviously be below the 2007 number due to the recession, financial meltdown etc.


http://docs.google.com/viewer?a=v&q=...jUPYst59xaCIgw


Here are just the income tax numbers :


1970 $90.4 billion

1980 $244.1

1990 $466.9

2000 $1004.5

2007 $1163.5


Yeah. And average yearly economic growth (GDP) by prez :

Carter : 3.4%

Reagan : 3.5%

Bush 41 : 2.1%

Clinton : 3.6%

Bush 43 : 1.9%

 

Things are getting serious, people!

"Europe is hostage to financial markets because maturing loans and ongoing deficits mean many countries must regularly borrow huge amounts. Already, Greece, Ireland and Portugal have been excluded from private markets; lenders demanded crushing interest rates. That fate could await others. Some countries face staggering 2012 borrowing needs. The IMF estimates that Italy requires new loans equal to one-fourth of its GDP; for Spain and France, the amounts are about one-fifth of GDP.

Europe is caught in an economic pincer: slow-growth assaults from one side; fickle financial markets from the other. One obvious way out -- the China option -- seems barred by geopolitics. There is precedent. Historians blame the Great Depression's severity in part on poor international cooperation. Economist Charles Kindleberger found a vacuum of power: Great Britain, the old economic leader, could no longer lead alone; and the United States -- a replacement -- wasn't ready to help. Is there a parallel today between the United States and China? Are we repeating the mistakes of the 1930s? Unsettling questions."

 

Not lame at all. The economy grew for the year in 2001 as it did in 2002-2005.

Yet income tax revenues were below 2000 levels every year.

Thanks to his tax cuts we squandered a surplus and ran up trillions more debt.

You can cherry pick your dates to try to put Bush in the best light by excluding the fact revenues tanked hundreds of millions of dollars during a growing recovery.

You mentioned lame? The Bush cherry picked 44% increase is lame compared to the 85% increase under Clinton after the 1993 tax increase. Without cherry picking the numbers.

 

Love this video
http://www.youtube.com/embed/GTQnarzmTOc

 

Iriemon,

Here is a grerat video that clearly discusses why Bush and his economic policies failed.

It is very good.



[ame="http://www.youtube.com/watch?v=VoxDyC7y7PM"]Keynesian Economics Is Wrong: Bigger Gov't Is Not Stimulus - YouTube[/ame]

 

Do you have anything from an objective, credible source?

 

OK, as everyone has noted the 90's were strong until the end. They started off strong for Clinton as he came into office on strong growth yet his tax increase slowed that growth. After he was forced to sign onto the Gingrich/Kasich tax cuts things really took off.

At the start of a slowdown which turned into a recession within weeks of his taking office.

A surplus that was going away, had already been cut in half before his first budget. You seem oblivious to the recession that started in March of 2001 and the proceeding negative growth.

Note the revenues in 2007 were 44% higher than the bottom of the recession?

What is more interesting is that after the Bush "tax cuts for the rich" the rich paid more in actual dollars and a higher percentage of all taxes while those at the bottom had their tax burden completely lifted.

Which tells you very little

 

Are you denying there was a recession?

During the recession and the recovery, DUH, but exceeded in 2005, 2006 and 2007.

Surplus was gone anyway and he and the Republicans had deficits down to $161 Billion and falling for 3 years straight. What are they now?

Cherry picking and misrepresentation on your side not mine, like your crediting the Democrat budgets of 2008 and 2009 to Bush and trying to ignore the slowdown and recession that started before he took office.

I have also cited 35% from when he took office but again note you fail to mention he inherited a recession. Also that Clinton came in on strong growth and yet SLOWED that growth with his tax increase and then you fail to acknowledge that revenues REALLY took off after the Republican tax rate cuts.

So yes you expose the fallacies of your position with every post.

Why don't you post those numbers again that show how Clinton's tax increased slowed the recovery from 9%+ heading to double digit down to a 7% growth?

 

What Gingrich tax cuts?

The 2001 recession lasted for six months. Then, despite the biggest asset/credit bubble in history, bush had the worst economic performance of any modern president and the same thing with tax revenue growth. The rich pay a higher percentage of the tax burden because they make a higher share of national income. only their taxes don't go up as fast as their share of national income.

 

I deny there was a recession as it is traditionally measured. I agree the NBER called it a recession in 2001.

Are you denying the economy grew each and every year 2001-2005?

Are you claiming there was a recession in 2002, 2003, and 2004? If so why did you exclude those years?

Surplus was gone thanks to Bush's tax cut.

You're the one excluding 4 years of the Bush administration. I excluded nothing.

It was 25%. But 35% is pathetic. Clinton was 85%.

What are you blabbing about? You didn't expose one fallacy.

Irrelevant to the issue. But no numbers say that.

 

As I said a recession, with the slowdown beginning BEFORE he was even elected.

Are you denying that?

Yes his tax cuts worked, are you admitting they grew?

Do you know what a recovery is?

Are you denying revenue growth was already slowing before he took office and that there was a recession?

Nope the two years of Democrat control of the Congress where his budgets and polices were DOA.

44% from the bottom of the recession, quite strong and Clinton slowed his revenue growth Gingrich and Kasich policies resulted in the numbers you are posting.

Several such as your claim the Clinton tax increase caused the surplus when in fact it delayed it if it would have happened at all had he not been forced to sign the Republican tax cuts.

ROFL you just claimed the numbers you reference above are not relevant.
I think you just topped yourself on that one.

 

Repetitive, addressed, and irrelevant. See prior response.

I admit his tax cuts squandered the surplus and helped ran up trillions in debt. See prior response.

Yes

Repetitive.

Not the tax cuts.

Even your cherry picked figures are lame compared to Clinton's 85% growth.

False.

False.

 

Yes what he posted.

 

So you admit it he came in on a slowdown/recession. And explain how a slowdown in the economy is irrelevant to the economy.

Do you admit revenues were already falling before he took office and that we went into a recession shortly after he took office.

Then put one and one together.

Facts don't change except in your world.

The tax cuts WERE on the table with threats even now to repeal them, stop being dishonest about it.

Not considering the economic conditions he came in on and where the Democrats took it. And why do you keep saying it was Clinton's 85% when it was Gingrich and Kasich budgets which produced it? More dishonesty, have already proven with YOUR numbers Clinton cost us revenues we otherwise would have had.

True.
Several such as your claim the Clinton tax increase caused the surplus when in fact it delayed it if it would have happened at all had he not been forced to sign the Republican tax cuts.

True, go back and read your own post.

 

Great responses, Bluesguy.

 

Repetitive. The US wasn't in a slowdown from 2001-2005.

No, that is false.

2

Baseless BS. Feel free to state on fact I've "changed"

Do you have a relevant point?

You've proven no such thing. Utter BS.

False.

False.

 

This review was very good.

Keynesian Economics Is Wrong: Bigger Gov't Is Not Stimulus

[ame="http://www.youtube.com/watch?v=VoxDyC7y7PM"]Keynesian Economics Is Wrong: Bigger Gov't Is Not Stimulus - YouTube[/ame]

 

Other than the fact it relies on a strawman argument (the goal of Keyensian is to get more cash in the system) and relies on false facts (spending under Hoover increased 47%) and fails to consider the difference in effect between someone putting money in the bank versus spending it.

How many times do you figure you're going to repost the same clip?

This is about the 4th time tonight already. At least twice in the last couple pages in this thread.

You figure it gets more accurate if you post it more times?

 

Pure BS, but even if true, whether Clinton's tax hikes resulted in a surplus immediately or later, the fact is, the deficit was under control under Clinton, after Reagan's runaway spending years left the government's finances in a shambles.

Further the fact is, deficit or no deficit, under Clinton the economy grew enormously, and produced 20M jobs. Bush, for all his tax cuts for the rich, produced an economy that created only 2M in 8 years.

So, Clinton = tax increases on the rich = 20M jobs and deficits under control.

Bush = tax cuts for the rich = hardly any job production and huge unprecedented deficits.

See a pattern forming?

 

That review was biased tripe of the type you should expect from a biased source like Cato whose only objective is to lower taxes for the richest.

The review relies primarily on a straw man argument -- That the premise of Keyensian theory is to get more "cash" into the economy. That is not the idea at all. The ideal is to get more demand in the economy.

It ignores the difference between having money in a bank account and the money being spent. Having money in a bank account doesn't mean its getting spent and creating demand in the economy, particularly if bank lending is down, like it is in a bad recession like this one. To imply there is no difference between money sitting in a bank or being spent in the economy is simply dishonest.

The video also falsifies facts. The video argues that Hoover was a big Keyensian spender and increased spending 47%.



source: http://www.usgovernmentspending.com/

Hoover was in office 1929-1932. See that 47% increase in spending the video claims?

Me neither.

It's bull(*)(*)(*)(*). If spending had increase almost 50% it would have been up from about $4 billion to about $6 billion. As everyone can see, it wasn't even close to $5 billion in 1932.

The video also claims Hoover raised taxes. Which is not a Keyensian idea at all, but taxes were increased from a 26% top rate when the economy tanked to 63% in 1932 -- three years after the GD raged while the economy tanked. In 1933, with those higher taxes, the economy turned around, and grew on an average of 8.5% (real) for the next 7 years.

As you can see, it wasn't until FDR's New Deal programs that spending took off and the economy stopped tanking and growing again.

The video also claims spending didn't work for FDR any better than Hoover.

I'll let others decide if the fact support that claim:

Year - % chng real GDP
1930 -8.6%
1931 -6.5%
1932 -13.1%
1933 -1.3% <-FDR takes office, spending increases
1934 10.9%
1935 8.9%
1936 13.1%
1937 5.1% <- Spending cut
1938 -3.4%
1939 8.1% <- Spending increase
1940 8.8%

Source data: BEA.gov

Based on the evidence of the GD, it looks like Keyensian spending worked great.

Completely contrary to the video.

It's a very good review. For those invested in a political agenda who don't care about or understand facts or economics.