Wednesday, July 20, 2011

Why Cut Taxes? And When?

Let's hear it from someone familiar, at least historically.

Update: These are interesting days, when iconic figures run contrary to their parties' descendents. Huffington Post reports Democrats' gleefully using Ronald Reagan quotes about raising the debt ceiling, in the same way I used JFK above.

"I find myself these days quoting Ronald Reagan," said Sen. Barbara Boxer (D-Calif.) at a news conference Wednesday. "'The full consequences of a default,' he said, 'or even the serious prospect of a default by the United States are impossible to predict and awesome to contemplate. Denigration of the full faith and credit of the United States would have substantial effects on the domestic financial markets and the value of the dollar in exchange markets. The nation can ill afford to allow such a result.'

"That's Ronald Reagan," Boxer emphasized, suggesting that Republicans recall that model. "All they have to do is look at their icon, Ronald Reagan, and understand you don't play with fire when it comes to the full faith and credit of the United States of America."

Some days, politics actually is fun.

Changes in Federal Debt, Annually, By President

To follow up the previous post, here's a nice list that I've reduced from a wikipedia table with figures about the rates of increased federal debt. But ha! There is one exception! The federal debt went down one (ONE!) time since 1993. This time, I'll add the growth in GDP right next to the growth of the debt, and put an asterisk * after the years spending increase percentages outstrip growth of GDP.

1994 Clinton 4.6% GDP: 3.8%
1995 Clinton 3.4% GDP: 2.7%
1996 Clinton 3.0% GDP: 2.7%
1997 Clinton 1.7% GDP: 4.3%
1998 Clinton 1.0% GDP: 4.4%
1999 Clinton 0.8% GDP: 4.2%
2000 Clinton -2.1% GDP: 3.7%
2001 Clinton 0.2% GDP: 1.2% *
2002 Bush 5.5% GDP: 1.3% *
2003 Bush 6.2% GDP: 1.4% *
2004 Bush 5.7% GDP: 3.4%
2005 Bush 3.7% GDP: 2.6% *
2006 Bush 3.4% GDP: 2.9% *
2007 Bush 3.6% GDP: 2.8%
2008 Bush 5.0% GDP: 0% *
2009 Bush 5.5% GDP: 2.6% *
2010 Obama 12.5% GDP: -2.0% *

Can't say that the magic formula is Democratic President, Republican Congress anymore!

After isolating, it's interesting to go back and lay these two side by side, as the original table does. What can be observed?

1. Government consistently grows in cost.
2. The debt consistently grows.
3. Only in one of the Clinton years, his last, did the spending increases outstrip growth of GDP. In 6 of the 8 Bush years it did. Also, in Obama's first year. Were the smart years the Clinton years, or the Bush years? Looks like we can learn something from this.

I see a lot of criticism tying the lack of revenues to the Bush tax cuts. Ok, but is the lack of GDP growth no factor? After all, tax revenues are relative to the growth of GDP. If a person enjoys a tax cut to 20% and makes $100,000/year, he pays $20,000, while the person suffering a higher tax rate of 25% while making $50,000/year pays $12,500.

Maybe we should worry far less about tax rates, and worry a whole lot more about seeing to it that people can make more income. Taxing millionaires might yield satisfying rhetoric, but will cause your income to rise? Will it put 20 people into jobs? I mean jobs that expand GDP by creating wealth.

If we're really interested first and foremost about raising revenues, shouldn't we be trying to do everything we can to get fuller employment, and for people to earn more? We have 2.8 million millionaires. Meanwhile, we have 14.1 million unemployed. Nevermind the underemployed, like me. I'd rather see us get the unemployed into jobs, and the underemployed more work.

So, if the smart days were the Clinton years, we should observe that there is no GDP growth, so we should accordingly spend less. I mean, if that was smart then.

Changes in Federal Spending, Annually, By President

I've been watching the partisans battle it out over the debt ceiling, and marveling at the way numbers are thrown around without particular regard for things like accuracy. I've had so many different articles and posts come up that caused immediate cognitive dissonance. When I get that sensation, I go for references.

So, here's a nice list that I've reduced from a wikipedia table with figures about the rates of increased spending. Yes, only increases. Since 1994, federal spending has only increased. The last time it actually decreased was 1993, under George HW Bush.

1994 Clinton 1.7%
1995 Clinton 1.2%
1996 Clinton 0.7%
1997 Clinton 0.7%
1998 Clinton 2.2%
1999 Clinton 1.9%
2000 Clinton 2.5%
2001 Clinton 1.8%
2002 Bush 6.0%
2003 Bush 4.6%
2004 Bush 3.2%
2005 Bush 4.0%
2006 Bush 3.9%
2007 Bush 0.6%
2008 Bush 4.6%
2009 Bush 3.6%
2010 Obama 1.4%

Seems like the magic formula is Democratic President, Republican Congress- not that any of them reduced the size of government in this time. They all grew it. But nothing grew it like Republican President, Republican Congress.

So, the rhetoric about the size of government not growing is bullshit. Likewise, the rhetoric about spending not growing is bullshit. And the rhetoric about Republicans being the party of smaller government is the biggest steaming pile of the purest, pungent, unmitigated bullshit ever foisted upon a gullible public.

A Phone Book?

I came home yesterday to find a phone book in my driveway. A phone book? I can't think of anything more useless. A pledge pin? I laughed hard when I read the text on the bag.
"Please recycle your outdated phone books."
No shit. That's redundant. The phone book itself is outdated! I'm recycling this one straight away.

I can't remember the last time I used a phone book. Oh wait, I think it was two years ago. I needed to prop a door open. The goddamn thing is an environmental nightmare. All that paper for something that I will never use. I wonder how many people picked up their book and took it straight to the trash can. Thing is, I get several different editions. They rarely make it into the house beyond the staging location for trash & recyclables.

I can't believe businesses spend good money to advertise in the phone book still. I heard an ad on the radio for Ace Rent-A-Car. It's the same ad copy from 2002, when I came to Indy. It doesn't direct the listener to their website. It directs the listener to the Yellow Pages. That alone makes me never want to rent a car from Ace. If they can't update their ad copy in nine years, do they update their cars? Do they rent out 1962 A8/Marathons? (Think: Checker cabs)

Well, there was one truly useful line of text on the bag. It read:
"To opt out from future deliveries, visit"
So, I went there, and it turns out I was eligible for SEVEN different phone book editions! So, I opted out of all of the stupid things.

I hope I never get another door prop, er, phone book again.