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This Year's US Economics Nobel Winner: Bush Tax Cuts Too Small

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  • #46
    Oh, I think he would have agreed with the spending and a larger tax cut.

    It's called Keyesian economics. You spend a ton of money and cut taxes in a depression, then you pay off the debt when the economy is going strong again by reducing the special spending you did to increase jobs/etc and raising taxes.

    So, while he may have agreed with part of Bush's plan and wanted an even larger cut, I think he'd have a major issue with Bush wanting to make that cut permanent.

    -Drachasor
    "If there's a child on the south side of Chicago who can't read, that matters to me, even if it's not my child. If there's a senior citizen somewhere who can't pay for her prescription and has to choose between medicine and the rent, that makes my life poorer, even if it's not my grandmother. If there's an Arab American family being rounded up without benefit of an attorney or due process, that threatens my civil liberties. It's that fundamental belief -- I am my brother's keeper, I am my sister's keeper -- that makes this country work." - Barack Obama

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    • #47
      Oerdin: I didn't mean critiques such as yours, I meant people who bashed the entire field of Economics over Dr.Prescott's comments.
      "I'm moving to the Left" - Lancer

      "I imagine the neighbors on your right are estatic." - Slowwhand

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      • #48
        Originally posted by Drachasor
        Oh, I think he would have agreed with the spending and a larger tax cut.

        It's called Keyesian economics. You spend a ton of money and cut taxes in a depression, then you pay off the debt when the economy is going strong again by reducing the special spending you did to increase jobs/etc and raising taxes.

        So, while he may have agreed with part of Bush's plan and wanted an even larger cut, I think he'd have a major issue with Bush wanting to make that cut permanent.

        -Drachasor
        No. He's a supply-sider. He says something about tax cuts encouraging people to work.
        I drank beer. I like beer. I still like beer. ... Do you like beer Senator?
        - Justice Brett Kavanaugh

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        • #49
          Originally posted by Imran Siddiqui
          Actually some studies show that Wall Street goes up immediately after Republicans win. That would help pump up consumer confidence.
          I guess those studies don't go by recent history.
          I drank beer. I like beer. I still like beer. ... Do you like beer Senator?
          - Justice Brett Kavanaugh

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          • #50
            Originally posted by Kidicious


            No. He's a supply-sider. He says something about tax cuts encouraging people to work.
            Tax cuts do encourage people to work. A tax cut is the same as a wage raise for workers.
            "You're the biggest user of hindsight that I've ever known. Your favorite team, in any sport, is the one that just won. If you were a woman, you'd likely be a slut." - Slowwhand, to Imran

            Eschewing silly games since December 4, 2005

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            • #51
              Originally posted by Jaguar
              Tax cuts do encourage people to work. A tax cut is the same as a wage raise for workers.
              Assuming the tax cuts go to the wage earner. Bush's plan is to give the tax cuts to the ultra wealthy with the hope that some of it trickles down to the middle class.

              Meanwhile, government programs such as public education, trauma centers and road construction are dying due to lack of funding.

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              • #52
                The wealthiest one percent don't earn wages? They just somehow pull money out of the air?
                "You're the biggest user of hindsight that I've ever known. Your favorite team, in any sport, is the one that just won. If you were a woman, you'd likely be a slut." - Slowwhand, to Imran

                Eschewing silly games since December 4, 2005

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                • #53
                  Sure...capital gains, inheritance, stock dividends. It's called "unearned income" and surprisingly enough, it's taxed at a lower rather than "earned income."

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                  • #54
                    Originally posted by Zkribbler


                    Assuming the tax cuts go to the wage earner. Bush's plan is to give the tax cuts to the ultra wealthy with the hope that some of it trickles down to the middle class.

                    Meanwhile, government programs such as public education, trauma centers and road construction are dying due to lack of funding.
                    Meanwhile, a tiny violin is playing. If you haven't noticed, it's the people who are Ultra wealthy who invest the most in companies, especially the ones who who tend to make huge breakthroughs in technology. And, it's the almost wealthy who own the S Corporations that employ a vast amount of people. The profits from the corporation flow directly to them, on their individual tax return. Oddly enough, they tend to make over $200k a year.

                    It's the tax code people! Learn it!

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                    • #55
                      It's called Keyesian economics.
                      Prescott isn't a Keynsian economist, as far as I know.

                      One of Prescott's theses is that high taxes discourage people from working as many hours as they would under normal circumstances. I guess this impact seems obvious, but I don't know how much of an impact it would have. Prescott suggests that most of the difference between how much Americans work and how much Europeans work is due to higher taxes paid by Europeans.

                      So he would likely encourage Bush to make the cuts permanent in addition to encouraging larger cuts.
                      Last edited by DanS; October 12, 2004, 21:53.
                      I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891

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                      • #56
                        Originally posted by Harry Tuttle
                        And, it's the almost wealthy who own the S Corporations that employ a vast amount of people. The profits from the corporation flow directly to them, on their individual tax return. Oddly enough, they tend to make over $200k a year.
                        Only 17% of the small business owners are above the $200,000 income level.

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                        • #57
                          Originally posted by Zkribbler


                          Only 17% of the small business owners are above the $200,000 income level.
                          and how many people do they employ? How much have they invested in their companies? How much risk have they undertaken?

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                          • #58
                            Originally posted by Zkribbler
                            Sure...capital gains, inheritance, stock dividends. It's called "unearned income" and surprisingly enough, it's taxed at a lower rather than "earned income."
                            But the Bush tax cut reduces taxes on earned income. So what you're doing is just ranting about how you're jealous of rich people, and directing some of that at Bush irrationally.
                            "You're the biggest user of hindsight that I've ever known. Your favorite team, in any sport, is the one that just won. If you were a woman, you'd likely be a slut." - Slowwhand, to Imran

                            Eschewing silly games since December 4, 2005

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                            • #59
                              Yes, but ....

                              Prescott's work is part of the continuing effort to integrate microeconomics (behavior of individual consumers and firms) with macroeconomics (study of the economy as a whole). Part of Prescott's contribution is the observation that just as lower taxes on capital result in more savings and less consumption, boosting the longrun growth of the economy, lower taxes on labor result in more labor and less leisure, again boosting the longrun growth of the economy. http://research.mpls.frb.fed.us/research/qr/qr1042.pdf , p. 1

                              This labor substitution effect is larger than the capital substitution effect because labor's share of income in the US economy is about twice the size of capital's share.
                              http://research.mpls.frb.fed.us/research/qr/qr1421.pdf , p. 10

                              Moreover, Prescott also observes that "hours of less skilled workers are much more variable" than those of higher skilled workers. (same link, p. 11)

                              In other words, tax cuts for lower income workers have a greater long-run effect on the growth of the economy through increased labor supply than those for higher income workers through increased savings. Prescott's work therefore appears to indicate that the "too small" comments as applying to the lower and middle class, exactly the opposite of what most people in this thread seem to have their knickers in a twist about.

                              Now that this lynch mob has given Professor Prescott a "fair" trial, you may procede with the hanging.

                              Thanks to DanS for the great links from the other Nobel thread. http://apolyton.net/forums/showthrea...9&pagenumber=2
                              Old posters never die.
                              They j.u.s.t..f..a..d..e...a...w...a...y....

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                              • #60
                                Taxes are really really low historically. What is the guy saying that taxes aren't low enough to accomplish?

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