New Fed Chief Denounces Supply-Side BS

[Kidlicious]

Well the new guy isn't a complete moron like the Treasury Secretary.

Tax cuts don't pay for themselves: Bernanke

Fed Chair's comments come in letter to California lawmaker.
April 19, 2006: 4:18 PM EDT


WASHINGTON (Reuters) - Federal Reserve Chairman Ben Bernanke said tax cuts can spur greater economic activity and boost economic efficiency, but generally do not wholly pay for themselves.

"Tax cuts that reduce marginal tax rates will likely improve the efficiency of the economy and boost overall economic activity," Bernanke said in an April 18 letter to Rep. Brad Sherman.

"Because they increase economic activity, cuts in marginal tax rates typically lead to revenue losses that are smaller than implied by so-called static analyses, which hold economic activity constant," he said. "However, under normal conditions, tax cuts do not wholly pay for themselves."

The letter, released by Sherman's office on Wednesday, was in response to written questions the California Democrat submitted in connection with a Feb. 15 hearing on monetary policy at which Bernanke testified.

[Dinner]

I don't think anyone ever actually believed the BS about tax cuts paying for themselves and instead it was just a smoke screen Republican politicians used to try and explain why voters shouldn't be worried about their ever larger deficits.

[Lawrence of Arabia]

even the cato institute says that supply side doesnt pay for itself.

[Lawrence of Arabia]

but you know, things like these cannot be put back in the box once they are out, no matter how many times they are proved wrong. just look at communism, or the idea of the 'big push' in development economics. its always in someones interest to bring them back.

[Zkribbler]

Originally posted by Oerdin
I don't think anyone ever actually believed the BS about tax cuts paying for themselves ...

I think there are some Republicans who truly believe it.

Sad, isn't it? Demand-side economics pulled the U.S. out of the Great Depression and made us the richest nation in the history of humanity. And yet the concept was jettisonned for a fairytale theory that has been repeated disproven. Now, pensions are disappearing, education is collapsing, the middle-class is declining, and our national debt is the highest in history.

Voodoo economics just plain doesn't work.

[Whoha]

Originally posted by Zkribbler
I think there are some Republicans who truly believe it.

Sad, isn't it? Demand-side economics pulled the U.S. out of the Great Depression and made us the richest nation in the history of humanity.

Winning a world war pulled us out of that Depression, and even during it we were the richest nation in history.

And yet the concept was jettisonned for a fairytale theory that has been repeated disproven. Now, pensions are disappearing, education is collapsing, the middle-class is declining, and our national debt is the highest in history.
Voodoo economics just plain doesn't work.

borrowing,printing, and lowering taxes without cutting spending, are all just means of pumping short term stimulus into the economy. They all suck except in certain circumstances, the aforementioned war being one, and certainly carried out over a long period of time they suck hard. Stagflation should have made that quite clear.

[OzzyKP]

Originally posted by Zkribbler


I think there are some Republicans who truly believe it.

Sad, isn't it? Demand-side economics pulled the U.S. out of the Great Depression and made us the richest nation in the history of humanity. And yet the concept was jettisonned for a fairytale theory that has been repeated disproven. Now, pensions are disappearing, education is collapsing, the middle-class is declining, and our national debt is the highest in history.

Voodoo economics just plain doesn't work.

Uh.. if you read the article he isn't quite saying that its voodoo economics or total bull****. Cutting taxes still boosts the economy and other positive benefits the 'witch doctors' claim it does. But as LoA stated, no one with a brain truly believed it was a 100% payback to federal coffers by cutting taxes. That is just silly.

If its an 80% return or a 50% return, that's still pretty damn good I think and worth looking at.

[Dinner]

I doubt it is even that high. There is probably a curve of economic efficency as on progresses from a zero tax rate up to a 100% tax rate. The X-axis is tax revenue and the Y-axis is the tax rate. So some where on that curve is the max income for taxs. It would also be interesting to put on a Z-axis for economic efficency though I admit it would be hard to objectively measure total economic efficency.

[Imran Siddiqui]

Demand-side economics pulled the U.S. out of the Great Depression

World War II was demand side economics?!

Yes, Yes, I know it was already said, but I had to .

Though I'm not sure how pensions declining has anything to do with whether government does demand side or supply side stimulus. It also appears to me that we haven't really seen supply side stimulus by itself to properly weight it. The two times it has happened (well, too be fair, Bush's tax cuts were a combination of supply side and demand side), MASSIVE increases in military spending have also occured, which is the main reason for the debt.

I would like to see supply side cuts without increases in military spending, just to see how it actually deals with government revenues.

[Lawrence of Arabia]

for an example of bad economics, just look at the millenium development goals. (MDG)

[Lawrence of Arabia]

or the iraq war situation - economists know that countries rich in natural resources always have worse forms of government. the worlds richest countries in natural resources (Oil) are some of the most repressive in the world. and rummy and co thought that democracy would be easy to implement.

[Darius871]

Originally posted by Lawrence of Arabia
for an example of bad economics, just look at the millenium development goals. (MDG)

What about them in particular? I thought they were simply ideal ends as opposed to means.

[Kontiki]

Originally posted by Lawrence of Arabia
or the iraq war situation - economists know that countries rich in natural resources always have worse forms of government. the worlds richest countries in natural resources (Oil) are some of the most repressive in the world. and rummy and co thought that democracy would be easy to implement.

Perhaps you mean countries heavily reliant on single natural resources, since the the world's richest countries in terms of resources are the United States, Canada and Russia.

[Lawrence of Arabia]

What about them in particular? I thought they were simply ideal ends as opposed to means.

for example, the idea that poor countries have bad government because they are poor. mobutu was given $20 billion over 25 yrs from the imf and world bank. haiti recieved the most standby loans from the imf (22) between 1957 - 1986. the aid was a succes for everyone except the people, who's standard of living was lower at the end.

obviously, its not poverty that causes bad governance, since these two countries, some of the poorest i nthe world, were swimming in cash and it didnt improve their economies.

however, the MDG project will allow grants to countries with bad governments. it is well known that countries with good governance grow quicker than countries with bad governance. by still giving aid to bad governance countries, we are giving those governments disincentives to become good and good governments incentives to be bad. and in the end, we help no one.

furthermore, the MDG lists out 63 'well governed poor countries' that are eligible for 'fast track 'big push' loans' (never mind that the idea of a 'big push' has been roundly discredited) out of these, 5 are among the most corrupt nations in the world. (azerbaijan, chad, bangladesh, paraguay, nigeria.)

it also includes nations classified as 'not free' by freedom house such as cameroon (dictator), and azerbaijan (dictator). in fact, azerbaijan scored highest (or lowest) in both the most corrupt and most autocratic rankings. yet somehow it qualifies as a 'well governed' poor country.

[Darius871]

Agreed on all points; I'd just rather distinguish between the MDGs themselves and the fools behind the ongoing Millenium Project.