Current Events — HabitableZone

Current Events » in reply to re: Glass houses.

re: Glass houses.

My point of view in all this is just based on what the experts say. The economists I read in blogs are virtually unanomous in saying the tax cuts were badly structured and this prolonged the recession. Consequently I look for opposing views from economists and don't find any.

These are some good blogs on the subject:

The Center on Budget and Policy Priorities turns out to be a very good prophet of what is in the Bush administration's proposed budget: DEFICIT PICTURE GRIMMER By Richard Kogan, David Kamin, and Joel Friedman: Enactment of the 2001, 2002, and 2003 tax cuts has filled the tax code with tax reduction measures that are scheduled to expire between 2004 and 2010. If Congress makes all expiring tax cuts permanent -- and there will be strong pressure to do so -- ...the projected ten-year deficits will increase by $2.2 trillion (including the added interest payments on the debt).

also

The falling savings rate (which is now lower than it was back in 2000, at the peak of the stock market boom) means that there’s very little scope for consumers to spend more unless their income starts rising. And unfortunately, consumer income is not growing very fast – over the last quarter of 2003, it grew at a 2.9% annual rate. In real terms, growth was even lower. That’s not fast enough to sustain more than a rather tepid expansion.

also Maxspeak was in the Reagan administration:

I'm staring at a block of paper, roughly 9 x 12 x 4 inches thick that is the Budget of the U.S. Government for Fiscal Year 2005. I do not claim to have mastered its deceptions, which culminate in the claim to cut the deficit in half by 2009, but some of the egregious crimes of accounting are visible on the surface. This is not a serious or honest budget. In fact, it is not a budget at all. It's a political infomercial dedicated to George Bush's reelection.

Also Argmax:

For example, the figure below shows the baseline deficit over the 1004-2014 period as well as the deficit adjusted to include the effect of making various tax cuts permanent. (Data is from Table 1-3 of the CBO report). If the tax cuts are extended, the deficit will remain near $400 billion for the rest of the next decade.

http://www.ombwatch.org/budget/images/Watcher012604/image002.gif


Kleiman:

Oh, and one other thing: While neither Mr. Soros nor Mr. Rubin has either the capacity or the inclination to wreck the U.S. economy, the Chinese government, holding something like a quarter of a trillion dollars in dollar-denominated debt (about half of it from the Treasury) certainly does have the capacity to do so. At the moment, China lacks the inclination, but in a crisis over, say, a confrontation between the mainland and Taiwan, it might find good use for such a terrible threat. So credit-card conservatism, in addition to all its other faults, is really truly awful national-security policy.

The comments sections are usually populated by economists, many of the email addresses are from various universities. So to me there is a good chance these are reasonable discussions on economic issues by relative experts. The virtually anomous opinions I see over and over is that the Bush tax cuts were badly structured because they put money into parts of the economy that are known not to stimulate it very well in a recession.

Now the consensus seems to be that the tax cuts just created a deficit of a similar size to them and prolonged the economic problems such as unemployment. So Bush might not do nuance but the economy does, and what was widely regarded amongst economists as the wrong medicine was given and the patient stayed sick.

I don't know, I look to see rebuttals from experts and I don't see any. Even the right wing conservatives in Congress are revolting over all of this, and as I pointed out earlier a lot of the polticial right wing blogs like Drezner, Sullivan, and Tacitus are as well.

I don't accept that this is really just Bush hating. It seems more like people with expertise in these matters saying that what Bush has done was wrong according to the textbooks and consequently it damaged the economy.

For comments on the structure of the tax cuts the easiest way is to post in some of the comments in articles like these, and they can explain their argument.

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