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View Diary: Stimulus spending: Paul Krugman was right (210 comments)

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  •  Obama should have pushed to (11+ / 0-)

    increases taxes the first day he took office. Democrats should been pushing to do the same when they took over the House in 06.

    Trickle down economics doesn't work, it's at the core of all of the problems we've got.

    Reaganomics never ended. 'Wealth Creation' for the rich is still more important than a sustainable middle class

    by shpilk on Mon Jun 14, 2010 at 09:02:19 AM PDT

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    •  Increasing taxes a bad idea (1+ / 0-)
      Recommended by:
      FiredUpInCA

      in a recession.

      The idea when up against the zero-interest-rate bound is deficit spending.

      In theory, there is no difference between theory and practice; but in practice, there always is a difference. - Yogi Berra

      by blue aardvark on Mon Jun 14, 2010 at 09:03:19 AM PDT

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      •  Yeah (3+ / 0-)
        Recommended by:
        ssgbryan, greenearth, bear83

        Reagan raised taxes during the 1982 recession and...
        Oops, that actually didn't cause problems. It raised taxes during a recession, the worst prior to this one since the Depression and it didn't hurt. Don't you hate it when Reagan did something right?

        Republican ideas are like sacks of manure but without the sacks.

        by ontheleftcoast on Mon Jun 14, 2010 at 09:06:37 AM PDT

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        •  The critical difference (0+ / 0-)

          is that we are against the zero interest rate bound.

          Monetary policy (the Fed) is crippled. Fiscal policy is our only tool. We desperately, desperately need massive fiscal stimulus, and that means deficit spending. Which tax increases aren't.

          In theory, there is no difference between theory and practice; but in practice, there always is a difference. - Yogi Berra

          by blue aardvark on Mon Jun 14, 2010 at 09:23:57 AM PDT

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          •  We need spending from the government on (4+ / 0-)

            things that put people to work to get capital moving thru the system. We can deficit spend, sure. But there is no reason to not tax the high earners. They won't suddenly stop earning money or spending it. They will change their habits somewhat, true. But were are we going to borrow the money to pay for the spending? China? Europe? Simply print it? We're tapped out except for the billionaires. Maybe a straight-up wealth tax, a one-time assessment for the good of the country. See how many "patriots" would go for that idea.

            Republican ideas are like sacks of manure but without the sacks.

            by ontheleftcoast on Mon Jun 14, 2010 at 09:32:03 AM PDT

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            •  See how many billionaires (2+ / 0-)
              Recommended by:
              Betty Pinson, APA Guy

              Move their money, and themselves, out of the country.

              One of the things conservatives have been facilitating for decades, little noticed by most, is the free movement of capital between nations. Seriously threaten the billionaires, and they will be gone, and so will their billions.

              In theory, there is no difference between theory and practice; but in practice, there always is a difference. - Yogi Berra

              by blue aardvark on Mon Jun 14, 2010 at 09:37:58 AM PDT

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              •  Where are they going to go? (4+ / 0-)

                Seriously. I can't believe you went Galt on that one. I expected better from you in a debate.

                Republican ideas are like sacks of manure but without the sacks.

                by ontheleftcoast on Mon Jun 14, 2010 at 09:43:11 AM PDT

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                •  Tax havens (0+ / 0-)

                  Become a legal resident of Luxembourg. Or Nassau.

                  Physically, you can still live in NYC. Legally, you don't. And your money is invested elsewhere - or invested in the United States, but through enough shell companies that no one can prove you own anything here.

                  When you can hire a dozen full-time tax lawyers and still come out ahead - you will.

                  In theory, there is no difference between theory and practice; but in practice, there always is a difference. - Yogi Berra

                  by blue aardvark on Mon Jun 14, 2010 at 10:02:01 AM PDT

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              •  That's much of what has happened to CA... (1+ / 0-)
                Recommended by:
                blue aardvark

                The affluent have grown weary of the taxes there and moved elsewhere. I know...I handled their telecom business accounts (T1, etc.) for years and did the account and services moves myself.

                It really is a catch-22...

                •  And? In CA you can choose from 49 other states. (3+ / 0-)
                  Recommended by:
                  3goldens, cybrestrike, Betty Pinson

                  If we're talking about an increase in federal taxes, where are you going to move to that's LIKE the United States, but won't tax you as much?

                  Regards,
                  Corporate Dog

                  -----
                  We didn't elect Obama to be an expedient president. We elected him to be a great one. -- Eugene Robinson

                  by Corporate Dog on Mon Jun 14, 2010 at 09:49:15 AM PDT

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                •  So reform has to come from the federal level (1+ / 0-)
                  Recommended by:
                  Orange County Liberal

                  Instead of state and local governments giving massive tax breaks to businesses to steal an ever-shrinking jobs base from other states, some form of national business and manufacturing policy is needed to stabilize the system.

                  "Private health insurers always manage to stay one step ahead of the sheriff." Sen. Sherrod Brown

                  by Betty Pinson on Mon Jun 14, 2010 at 09:49:58 AM PDT

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                  •  But here's the thing... (0+ / 0-)

                    If deficits don't matter and deficit spending is the way out, what is the reason to increase taxes? Why not just increase spending?

                    •  Deficits DO matter... (4+ / 0-)

                      ... but right now, with the current state of our economy, spending matters much, much more.

                      Eventually, if we ever climb our way out of this downturn, we'll then want to try to climb our way out of the deficit, and it helps if we can limit how deep we have to go.

                      Regards,
                      Corporate Dog

                      -----
                      We didn't elect Obama to be an expedient president. We elected him to be a great one. -- Eugene Robinson

                      by Corporate Dog on Mon Jun 14, 2010 at 10:03:31 AM PDT

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                    •  Certainly not my opinion (1+ / 0-)
                      Recommended by:
                      Virginia mom

                      Increasing taxes on the highest income earners helps channel funds into US stimulus spending and mitigate higher deficits. Long term deficit spending is not good, but short term deficits that are targeted to high quality economic stimulus and job creation are necessary.  Part of the reason we have federal deficits is high unemployment - lower tax revenues from unemployed workers.

                      Finding ways to make the business sector begin investing in economic stimulus is a win/win.  It decreases unemployment while increasing tax revenues, not to mention profits for the businesses.  Incentives don't necessarily have to be all higher taxes, but better tax incentives.  If businesses want low taxes, they need to earn them by creating US jobs.

                      "Private health insurers always manage to stay one step ahead of the sheriff." Sen. Sherrod Brown

                      by Betty Pinson on Mon Jun 14, 2010 at 10:08:29 AM PDT

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              •  But sitting on their billions (1+ / 0-)
                Recommended by:
                Robobagpiper

                doesn't get them anywhere in the long run.  At some point, they have to stop gambling on Wall Street and begin investing in the US economy.  Where else are they going to invest their money?

                As Robert Reich points out, US corporations and investors are sitting on huge piles of cash. If the US economy is to recover, they have to begin investing in job creation and production in order to get consumers spending again. And those jobs have to be in the US, not overseas.

                Where are the tax incentives to get businesses investing in US production and job creation? Where are the reforms that will reduce the incentives for non-productive casino investing on Wall Street?  Federal spending can help stimulate the economy, but its past time for the business sector to start doing their part.

                "Private health insurers always manage to stay one step ahead of the sheriff." Sen. Sherrod Brown

                by Betty Pinson on Mon Jun 14, 2010 at 09:46:53 AM PDT

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        •  Brain...hurts*** (0+ / 0-)

          Let tyrants fear.-Queen Elizabeth I

          by Virginia mom on Mon Jun 14, 2010 at 11:09:39 AM PDT

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      •  The surplus money isn't being (11+ / 0-)

        used for job creation, so there's no suppression of employment that would come from raising taxes on capital gains and other "money for nothing" schemes. No matter what Ronald Reagan would say.

        Until we break the corporate virtual monopoly on what we hear and see, we keep losing, don't matter what we do.

        by Jim P on Mon Jun 14, 2010 at 09:10:55 AM PDT

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        •  Do you know what the money is being used for? (0+ / 0-)

          Tax cuts do stimulate the economy. That's how Reagan achieved the illusion of success in the 80's.

          In theory, there is no difference between theory and practice; but in practice, there always is a difference. - Yogi Berra

          by blue aardvark on Mon Jun 14, 2010 at 09:26:05 AM PDT

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          •  Reagan's tax cuts were followed (3+ / 0-)
            Recommended by:
            3goldens, Virginia mom, Betty Pinson

            by the economy going down. When he raised them, the economy improved. That's just the historical record.

            The current monies saved by the leech-class on tax cuts are not being reinvested in the US economy, no matter what the theory says will happen.

            It's self-evident if you look at what has actually happened since the Bush cuts went into effect.

            Until we break the corporate virtual monopoly on what we hear and see, we keep losing, don't matter what we do.

            by Jim P on Mon Jun 14, 2010 at 09:42:21 AM PDT

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            •  No...that's not accurate... (1+ / 0-)
              Recommended by:
              Orange County Liberal

              He lowered taxes in 1982. The upper-income rates proceeded as follows:

              1983 50%
              1984 50%  
              1985 50%  
              1986 50%  
              1987 38.5%
              1988 28%  
              1989 28%  
              1990 28%  

              Now, Clinton raised upper-income tax rates to 39.6%, but he also increased the taxable-income exemption by 280%.

              •  Why not start with '81 & '82 just like (1+ / 0-)
                Recommended by:
                3goldens

                Ronald Reagan did? And in fact, for most citizens, their taxes went up. I'll take Krugman's word.

                But Ronald Reagan does hold a special place in the annals of tax policy, and not just as the patron saint of tax cuts. ....he followed his huge 1981 tax cut with two large tax increases. In fact, no peacetime president has raised taxes so much on so many people.

                ...The first Reagan tax increase came in 1982. By then it was clear that the budget projections used to justify the 1981 tax cut were wildly optimistic. In response, Mr. Reagan agreed to a sharp rollback of corporate tax cuts, and a smaller rollback of individual income tax cuts. Over all, the 1982 tax increase undid about a third of the 1981 cut; as a share of G.D.P., the increase was substantially larger than Mr. Clinton's 1993 tax increase.

                ...Mr. Reagan's second tax increase was also motivated by a sense of responsibility; or at least that's the way it seemed at the time. I'm referring to the Social Security Reform Act of 1983, which followed the recommendations of a commission led by Alan Greenspan. Its key provision was an increase in the payroll tax that pays for Social Security and Medicare hospital insurance.

                For many middle- and low-income families, this tax increase more than undid any gains from Mr. Reagan's income tax cuts. In 1980, according to Congressional Budget Office estimates, middle-income families with children paid 8.2 percent of their income in income taxes, and 9.5 percent in payroll taxes. By 1988 the income tax share was down to 6.6 percent; but the payroll tax share was up to 11.8 percent, and the combined burden was up, not down.

                Until we break the corporate virtual monopoly on what we hear and see, we keep losing, don't matter what we do.

                by Jim P on Mon Jun 14, 2010 at 10:10:54 AM PDT

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                •  Now wait a sec...you just wrote: (0+ / 0-)

                  When he raised them, the economy improved. That's just the historical record.

                  Now, apropos Krugman's argument, you're saying the aforementioned tax increases were bad for the economic recovery post-1982?

                  Which is it...were the tax increases (combined with the federal tax cuts) good or bad for the recovery of that time span?

                  •  No, the tax increases were good, (0+ / 0-)

                    for the economy, except they came from my ass, and every other working stiff's. So they were bad for ordinary people's budget, though they helped the overall economic picture.

                    In short, ordinary people subsidized the share the rich used to pay.

                    His original tax decreases were bad, which is why he raised them on the rich as well as the workers after the 1981, 1982 failures.

                    You'll also note that his decreases on rich people's taxes in his later years played a part in the recession which got Clinton elected in '92.

                    Until we break the corporate virtual monopoly on what we hear and see, we keep losing, don't matter what we do.

                    by Jim P on Mon Jun 14, 2010 at 10:30:01 AM PDT

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                    •  Hmm...I'm not so sure... (0+ / 0-)

                      Remember, Bush Sr. raised them back to 31% beginning in 1991 - while at the same time only marginally increasing the taxable-income limits.

                      Recession ensued subsequent to that point - and even though Clinton raised taxes, his near-tripling of the taxable-income limits (limits that continued to rise each year until Clinton left office) left a hell of a lot more money in affluent pockets than people are willing to admit.

                      •  However you figure it (0+ / 0-)

                        all I know is that I pay a hell of lot more in taxes, when I'm working, than do financial speculators, big corporations, and the chief people running said corporations. Even after my tax refund.

                        So that has to be made equitable, imo. I'm pretty sure taking more from the aforesaid isn't going to hurt our economy, and will definitely help our deficit, and might well make it easier to engage in some intense job creation.

                        The coddle-the-wealthy approach of Voodoo Economics seems to have failed spectacularly.

                        Until we break the corporate virtual monopoly on what we hear and see, we keep losing, don't matter what we do.

                        by Jim P on Mon Jun 14, 2010 at 11:05:54 AM PDT

                        [ Parent ]

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