Skip to comments.Tax Cuts Might Accomplish What Spending Hasnít
Posted on 12/12/2009 2:08:48 PM PST by TaxPayer2000
Congress passed a sizable fiscal stimulus. Yet things turned out worse than the White House expected. The unemployment rate is now 10 percent a full percentage point above what the administration economists said would occur without any stimulus.
To be sure, there are some positive signs, like reduced credit spreads, gross domestic product growth and diminishing job losses. But the recovery is not yet as robust as the president and his economic team had originally hoped.
So what to do now? The administration seems most intent on staying the course, although in a speech Tuesday, the president showed interest in upping the dosage. The better path, however, might be to rethink the remedy.
My Harvard colleagues Alberto Alesina and Silvia Ardagna have recently conducted a comprehensive analysis of the issue. In an October study, they looked at large changes in fiscal policy in 21 nations in the Organization for Economic Cooperation and Development. They identified 91 episodes since 1970 in which policy moved to stimulate the economy. They then compared the policy interventions that succeeded that is, those that were actually followed by robust growth with those that failed.
The results are striking. Successful stimulus relies almost entirely on cuts in business and income taxes. Failed stimulus relies mostly on increases in government spending.
All these findings suggest that conventional models leave something out. A clue as to what that might be can be found in a 2002 study by Olivier Blanchard and Roberto Perotti. (Mr. Perotti is a professor at Boccini University in Milano, Italy; Mr. Blanchard is now chief economist at the International Monetary Fund.) They report that both increases in taxes and increases in government spending have a strong negative effect on private investment spending. This effect is difficult to reconcile with Keynesian...
(Excerpt) Read more at nytimes.com ...
Prove that it is at this Utopian low less political promotion.
Naw, the insane spending carries out the Cloward-Piven strategy better than anything.
Zer0 is getting exactly the results he wants.
One thing that annoys me alot from the Republican is that they pay lip service to tax cut BUT NEVER to spending cuts
Tax Cut, and the print money to cover the difference is just as bad because of inflation. Inflation is another tax on society thats hidden. Everything you buy is alot expensive, so you have less money in your pocket. Supply side economy works, as long as the supply does not devalue
In the face of the vast majority of our national difficuties, I like to recall the words of the Great Ronaldus Maximus: “Government is not the solution to our problems; government IS the problem.”
Tax Cuts Might Accomplish What Spending Hasnt
Tax cuts won't accomplish crapola, and that malignant neocon GREGORY MANKIW knows it.
Prosperity will not return until parasititic trade policies that undermine our domestic industries are reversed.
Surprised the slimes published this.
You think maybe a business might want to hire if it had a reduction in rates or a revival of the Investment Tax Credit versus “spending” for such worthwhile projects as a commie “artist” with a bottle of urine?
And here's how to "fix" the housing market and, through that, the real economy: here.
“To be sure, there are some positive signs, like reduced credit spreads, gross domestic product growth and diminishing job losses.”
The odd part is that these are also lies that the Leftist Media continually Goebbels-Pravda=-ize.
Reduced credit spreads are due to a crater being found by speculators that is finally meeting the significantly lowered asking prices of equities and real estate...including offshore foreign weatlh funds buying up our cheap assets.
Two, GDP is not growing but in Government spending, meaning there are more non-revenue producing jobs being filled while the industries that pay for them (real GDP earneres) are being pushed out...all with a giant Chinese Visa card. Bureaucrats borrow via Treasury notes to pay themselves and other people that work for Federal, State and local govenments. We issue debt to pay the salaries, bonuses, retirements and benefits of every toll taker, state college janitor and cop in the US, for life.
Job losses slowing? You mean using a 3-day week (Thanksgiving) to extrapolate job loss data? Rush de-bunked the MSM’s overt try to spin horrific job losses and continued taxation, regulation and litigation threats (plus unionization) towards small and family business.
The Commies are in full attack mode, and even though the NYT shows that it understands Obama’s failures, it even ignores the real failure of EVERY Liberal program ever set forth.
Too late it will just delay the inevitable unless there is a drastic changes and drastic cuts in the government. That is not going to happen to many people beholden to the government now. It is all going to collapse it is just what is going to replace it. I would like to return to our roots as to what made this country great and that is not entitlements! Once China figures out they will probably loose most of their investment everything will come tumbling down. We can have either a slow managed crash or a violent crash I think we are headed for a violent crash
At this point, much of the government imposed expenses upon business are hidden as absurd safety and environmental regulations. To the extent that in manufacturing those items exceed payroll.
I do not believe the economy can recover without roling those back at this point. Expect much political infighting.
Zer0 is getting exactly the results he wants."
You are correct. The plan is working perfectly. Unless there is a major intervention soon, I don't know how we'll stop it.
You don’t say! You mean to tell me that tax CUTS cause economic growth?! Astonishing! I am absolutely flabbergasted.
Funny that the New Yeccccch Slimes is just getting the memo that us Conservatives have known since .. well .. forever (Me back to the early 80’s when Reagan did it).
The stupidity of the Fourth Estate .. or should I say, the Fifth Column .. is breathtaking!
Holy crap! NY Times ???
They then compared the policy interventions that succeeded that is, those that were actually followed by robust growth with those that failed.
The results are striking.
Successful stimulus relies almost entirely on cuts in business and income taxes.
Failed stimulus relies mostly on increases in government spending."
This is a HUGE statement for the NY Times to make. I cannot believe that it was published there.