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View Diary: Obama Deal Averts "Massive Tax Hike" on Middle Class! (43 comments)

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  •  And interest rates will go up! n/t (1+ / 0-)
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    mightymouse

    Practice tolerance, kindness and charity.

    by LWelsch on Tue Dec 14, 2010 at 11:18:50 AM PST

    •  When the economy improves (1+ / 0-)
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      mightymouse

      interest rates will go up.  The very low interest rates of today is more a sign of sickness than of health.

      The most important way to protect the environment is not to have more than one child.

      by nextstep on Tue Dec 14, 2010 at 11:27:19 AM PST

      [ Parent ]

      •  Not quite true (0+ / 0-)

        Interest rates are sometimes set based on the size of the deficit. Thus when Clinton raised taxes to reduce the deficit, the Fed reduced interest rates. An economic boom followed.

        The same may very well happen with respect to the tax cut bill.

        Practice tolerance, kindness and charity.

        by LWelsch on Tue Dec 14, 2010 at 11:31:22 AM PST

        [ Parent ]

        •  The boom in the 1990s (1+ / 0-)
          Recommended by:
          Levity

          and budget surpluses happened after the 1996 tax cut on capital gains.  Capital gains taxes dropped from 28% to 20% - and this is the most important tax rate for the very wealthy.  Capital gains tax collections went up after this rate cut.

          The reduction of the deficit was mainly due to the reduced growth of government spending as a share of GDP - largely funded by a lower share of military spending.

          Here is Federal Spending as Share of GDP from 1950 to Today.  Note how Federal Spending in 2000 was 17.98% of GDP much lower than the 21.9% in 1992 and much lower than today's 25.44% of GDP.

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          The most important way to protect the environment is not to have more than one child.

          by nextstep on Tue Dec 14, 2010 at 11:58:42 AM PST

          [ Parent ]

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