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Tax Cuts Might Accomplish What Spending Hasnít
nytimes.com ^ | December 12, 2009 | N. GREGORY MANKIW

Posted on 12/12/2009 2:08:48 PM PST by TaxPayer2000

~SNIP~

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.

~SNIP~

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 ...


TOPICS: Business/Economy; Government; News/Current Events
KEYWORDS: economics; laffercurve; mankiw; schifflist; stimulus; supplyside; taxcuts; taxes

1 posted on 12/12/2009 2:08:48 PM PST by TaxPayer2000
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To: TaxPayer2000

2 posted on 12/12/2009 2:14:38 PM PST by Past Your Eyes (You don't have to be ignorant to be a Democrat...but if you are...so what?)
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To: TaxPayer2000
The unemployment rate is now 10 percent

Prove that it is at this Utopian low less political promotion.

3 posted on 12/12/2009 2:15:33 PM PST by EGPWS (Trust in God, question everyone else)
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To: TaxPayer2000

Naw, the insane spending carries out the Cloward-Piven strategy better than anything.

Zer0 is getting exactly the results he wants.


4 posted on 12/12/2009 2:16:54 PM PST by Scanian
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To: All

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


5 posted on 12/12/2009 2:17:36 PM PST by 4rcane
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To: TaxPayer2000

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.”


6 posted on 12/12/2009 2:18:47 PM PST by Jack Hammer
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To: TaxPayer2000
Tax Cuts Might Accomplish What Spending Hasn’t

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.

7 posted on 12/12/2009 2:32:58 PM PST by Willie Green (Go Pat Go!!!)
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To: TaxPayer2000

Surprised the slimes published this.


8 posted on 12/12/2009 2:35:08 PM PST by Tzimisce (No thanks. We have enough government already. - The Tick)
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To: TaxPayer2000

“might”?

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?


9 posted on 12/12/2009 2:39:57 PM PST by A_Former_Democrat
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To: TaxPayer2000
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.

Well, duh.

And here's how to "fix" the housing market and, through that, the real economy: here.

10 posted on 12/12/2009 2:41:29 PM PST by fightinJAG (Mr. President: Why did you appoint a bunch of Communists to your Administration?)
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To: TaxPayer2000
This was in the New York Times?!?! The end times are here!
11 posted on 12/12/2009 2:47:41 PM PST by nickcarraway
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To: TaxPayer2000

“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.


12 posted on 12/12/2009 2:47:43 PM PST by wac3rd (Felipe Calderon supports the public option.)
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To: Past Your Eyes

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


13 posted on 12/12/2009 2:55:52 PM PST by jroneil (2010 is all that matter now!)
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To: TaxPayer2000

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.


14 posted on 12/12/2009 3:01:11 PM PST by MrEdd (Heck? Geewhiz Cripes, thats the place where people who don't believe in Gosh think they aint going.)
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To: Scanian
"Naw, the insane spending carries out the Cloward-Piven strategy better than anything.

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.

15 posted on 12/12/2009 3:01:27 PM PST by manic4organic (Obama shot hoops, America lost troops.)
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To: TaxPayer2000
Only if the government wakes up, smarten’s up and realizes it is the problem and not the solution. Starts by downsizing by at least 10% for the next 3 or 4 years, stops interfering in the private sector and begins to conduct it's business in line with the Constitution. In addition, politicians must start putting the health and welfare of the Nation ahead of self-serving re-election promises.
16 posted on 12/12/2009 3:12:33 PM PST by mulligan
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To: TaxPayer2000

17 posted on 12/12/2009 4:00:34 PM PST by VRWC For Truth (Throw the bums out who vote yes on the bail out)
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To: TaxPayer2000

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!


18 posted on 12/12/2009 4:15:57 PM PST by RocketMan1 (U.S.A. R.I.P. 1776-2009)
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To: TaxPayer2000

Holy crap! NY Times ???


19 posted on 12/12/2009 5:59:58 PM PST by sickoflibs ( "It's not the taxes, the redistribution is the government spending you demand stupid")
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To: TaxPayer2000
"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."

This is a HUGE statement for the NY Times to make. I cannot believe that it was published there.

20 posted on 12/12/2009 6:03:33 PM PST by Windflier (To anger a conservative, tell him a lie. To anger a liberal, tell him the truth.)
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To: Windflier

Wow coming from a failed newspaper, I am surprised. Maybe just maybe someone realizes how bad off the country is.


21 posted on 12/12/2009 6:09:26 PM PST by rolling_stone (no more bailouts, the taxpayers are out of money!)
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To: rolling_stone
Maybe just maybe someone realizes how bad off the country is.

It's no mystery to anyone, including moonbats, that the country is bad off.

What's astounding, is that someone at the NY Times read this report that lays out the exact reasons why - and actually published the results!

I feel like I've been stuned with a beeber!

22 posted on 12/12/2009 6:42:37 PM PST by Windflier (To anger a conservative, tell him a lie. To anger a liberal, tell him the truth.)
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To: TaxPayer2000

Tax cuts are a lot like spending except with ACTUAL “stimulation” brought about by the freeing up of ACTUAL capital.


23 posted on 12/12/2009 7:00:33 PM PST by TalBlack
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To: jroneil

I really hate to pose this “what if” question.....but.....

what happens if China:

a) finally and fully realizes that they are about to lose their “”investment”” in America which will also tank their economy,

b) correctly deduces that the USA economy tanking is all deliberate on the part of Zero and his string-handlers and interprets that as an act of war,

c) decides what the hell, what ELSE is there to lose now and really gets pissed....

and NUKES America. Or if not nukes, attacks.

I mean, what’s to stop them? Zero? Hell, he’s not even going to stop the Muslime terrorists if/when they attack. What does China have to lose by attacking America if China has already LOST everything it invested here?


24 posted on 12/12/2009 7:22:35 PM PST by XenaLee
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To: XenaLee

I do not think they would nuke us because consumer wise we are still good customers. But I think goods would be more expensive and they would not loan money to our county again.

I think the hardest hit will be the poor because they will no longer be able to suck off the system.

I am preparing myself so I can go anywhere in the country where there are jobs I am cutting my debt.

I am also making sure I have a good road bike because gasoline may become prohibitively expensive.


25 posted on 12/12/2009 7:32:24 PM PST by jroneil (2010 is all that matter now!)
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To: jroneil

Yeah, I’m thinking of my mom and others like her who worked their whole lives and paid into the system, played by the rules and got bent over and screwed royally for it by the crooks in congress and elsewhere in DC. She is dependent upon social security now for her existence, since her savings is almost gone now.

When the government stops giving out all the freebies on welfare it will probably be only AFTER they’ve stopped giving out all the ‘ponzi scheme, already paid for’ social security funds. We can’t have all the welfare-teat blacks actually starving before the elderly middle class do, now can we? Especially under THIS administration, who has no problem with ending lives that he deems aren’t worth saving (ie Terri Shiavo).

Speaking of road bikes, have you noticed how regular bikes (like Huffy) have risen in cost lately? Used to be you could get a nice men’s or women’s one at Academy on sale for about $60-80. Now they’re all around $200 and up. I guess the word got around that Zero and his thugs would cut off drilling in America and would cause gas to skyrocket (much as electricity bills will after Cap & Trade). We’ll be like the Chinese soon all riding bikes to work, I’m betting.

One thing I know...it’s going to be an extremely bumpy ride, bike or no bike.


26 posted on 12/13/2009 8:14:29 PM PST by XenaLee
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To: TaxPayer2000

Let me add something to this -— TAX CUTS MUST BE MADE PERMANENT.

The one thing business CANNOT ABIDE BY is UNCERTAINTY. Take the stupid Death Tax for instance. It is supposed to be reset for ONLY ONE FREAKING YEAR and then goes back to what it was before. HOW THE HECK CAN ONE PLAN WITH THIS UNCERTAINTY HANGING OVER OUR HEADS ?

DO you think that business and individuals aren’t aware of the EXPIRING Bush tax cuts next year ?

So a mere tax cut won’t work if a few years later, congress or Washington gets taken over by some tax happy legislator REPEALS whatever tax cuts were put in place.

MAKE TAXES SIMPLE, FLAT AND PERMANENT. Banish UNCERTAINTY for businesses and tax payers. *THAT* will be the only one that works.

That’s my 2 cents worth.


27 posted on 12/14/2009 7:18:56 AM PST by SeekAndFind
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