Supply-Side Economics

[finnbow]

Originally Posted by Rajoo

The reason being there is no compulsion on the beneficiaries of these mega tax cuts to reinvest in the economy to create jobs. This is why it has failed every time.

The moneyed interests who support the GOP would not stand for anything other than the financial windfall (with no strings attached) that supply-side economics affords them. That's the whole point of it after all, as Trump told his rich buddies in the days following his huge tax cuts, "You all just got a lot richer."

[Rajoo]

Originally Posted by finnbow

The moneyed interests who support the GOP would not stand for anything other than the financial windfall (with no strings attached) that supply-side economics affords them. That's the whole point of it after all, as Trump told his rich buddies in the days following his huge tax cuts, "You all just got a lot richer."

While the rich get richer on the backs of tax payers, the average tax payer is not aware of our government's debt service payments, which is currently 9% of our budget. This is the burden on the future tax payers that GOP do not want to talk about but deflect this by saying we need to cut expenses.

Imagine 9% going to debt servicing, yet when mortgage rates hit 7%, blaming Biden for causing inflation is a cheap shot.

[finnbow]

Originally Posted by Rajoo

While the rich get richer on the backs of tax payers, the average tax payer is not aware of our government's debt service payments, which is currently 9% of our budget. This is the burden on the future tax payers that GOP do not want to talk about but deflect this by saying we need to cut expenses.

Imagine 9% going to debt servicing, yet when mortgage rates hit 7%, blaming Biden for causing inflation is a cheap shot.

Using the realized compensation measure, compensation of the top CEOs increased 1,322.2% from 1978 to 2020 (adjusting for inflation). Top CEO compensation grew roughly 60% faster than stock market growth during this period and far eclipsed the slow 18.0% growth in a typical worker’s annual compensation.

https://www.epi.org/publication/ceo-pay-in-2020/

The average CEO now makes 351 times what the workers in his company make, yet the GOP still persists in supply-side sophistry to get even more tax breaks for these folks.

[whell]

Originally Posted by finnbow

Since the 1980's, deficits have climbed sharply under Republicans and fell under Democrats. The sharp increases in deficits were almost universally associated with supply-side inspired tax cuts by Reagan, Dubya and Trump.

Except that's not quite true.

Deficit spending was actually trending down in the last few years of the Reagan presidency. It went up again under Bush 1, but that accompanied the Gulf War and the resulting shock to the oil industry/prices. There was also a brief recession during that period. Mr "Ready My Lips" then worked with Dems to roll out a tax increase in 1990, which was followed by two more years of deficit spending during his administration.

Clinton benefitted from an economic recovery which was already under way when he took office in 1993, as well as the "dot.com" boom. He still raised taxes in anticipation of a government takeover of health care, but that never happened. By the time budget surplusses resulted in the 2nd half of his presidency, liberal Dems were calling for more spending, and calling the suprluss dollars they wanted to spend the "peace dividend".

The Bush 2 was hit by the dot.com bust as well as 9/11, and then the 2nd Gulf War. Deficit spending was aleady trending down by the end of his presidency. During that same period of time, while the Bush administration was warning against the increasing risks of Fannie Mae and Freddie Mac obligations, the Dems - including Barney Frank and Thomas Carper - were claiming that such concerns were "an attempt to create an issue that's not there", and "if it ain't broke, don't fix it". Which leads us to:

Obama, whose deficit spending rose every year. Granted, Obama deficits don't come close to Trump's 2020 overspending on COVID-related items. Biden is intent on continuing that spending, and was thwarted early on in attempts to increase current deficit spending.

Originally Posted by finnbow

You need to come to terms with fact that supply-side economics is a sham ....

I think it's you who needs to come to terms with your interesting take on history.

[finnbow]

Originally Posted by whell

Deficit spending was actually trending down in the last few years of the Reagan presidency...

Because he raised taxes in 1982, 1984, 1985, 1986 and 1987 after his supply-side "Economic Recovery Act of 1981" blew a massive hole in the federal deficit.

The Economic Recovery Act of 1981, also known as the Reagan tax cuts, was the biggest reduction in U.S. taxes of the past 70 years, possibly even the biggest ever. That much is reasonably well-known.

What is less well-known is that these cuts were then followed by a series of tax increases that, if you add them all together, were almost as big as or even bigger than the 1981 cuts, depending on the measure you use.

https://www.bloomberg.com/opinion/ar...s-of-1982-1993

These 5 years of tax increases by Reagan would not have been necessary if his voodoo economics had done what its advocates said it would do - increase revenue. I understand that you find comfort in the belief that Reagan discovered the secret sauce that allowed him to increase revenue by cutting taxes, but it's complete and utter bullshit (and both his VP and Budget Director knew it). Too bad you're so far in the tank that you're unable to recognize that you've been conned (this seems to be a common thread connecting most of your political beliefs).

Supply-side has never shown itself to be a viable/valid economic theory. Indeed, it's strictly a political message - "You can have it all pain-free because tax cuts will pay for it." A win-win for stupidity, gullibility, cynicism and wishful thinking.

[Rajoo]

Originally Posted by whell

I think it's you who needs to come to terms with your interesting take on history.

You conveniently neglected to address the 2007-2008 financial crisis and the resulting meltdown of our economy.

[whell]

Originally Posted by finnbow

These 5 years of tax increases by Reagan would not have been necessary if his voodoo economics had done what its advocates said it would do - increase revenue.

Again, your fact and recall of history is in error. Revenues went up every year during the 1980's. Revenue between 1981 and 1989 went up almost 62%. GDP grew at an impressive rate during that time every year except 1982.

FISCAL YEAR REVENUE
FY 1990 $1.03 trillion
FY 1989 $991****billion
FY1988 $909****billion
FY 1987 $854****billion
FY 1986 $769****billion
FY 1985 $734****billion
FY 1984 $666****billion
FY 1983 $601****billion
FY 1982 $618****billion
FY 1981 $599****billion

That's where supply-side considerations end. Supply-side is a tool that can be used for economic stimulus. Spending is the result of a political process and varies with each administration.

But, it does beg the question: what has the political process yielded over the years relative to US Federal Gov't outlays. Well, if revenue went up during the 1980's around 62%, spending went up every year and increased 65% during that period. Not really a huge difference there.

Fiscal Year Outlays (in Billions)
1982 745.7
1983 808.4
1984 851.8
1985 946.3
1986 990.4
1987 1,004.00
1988 1,064.40
1989 1,143.70

During that period, there was a massive increase in deficit spending. Deficit spending was nothing new by the time the 1980's rolled around. The differentiator starting in the 1980's was the MASSIVE increase in deficit spending.

Now, what body of the US gov't is responsible for spending? That would be the US House of Representatives. What party controlled the House each and every year during the 1980's, and which party called the proposed Reagan administration budgets "dead on arrival" during that period. That would be your friends the Dems.

[whell]

Originally Posted by Rajoo

You conveniently neglected to address the 2007-2008 financial crisis and the resulting meltdown of our economy.

Go back and read post #784. You may have conveniently overlooked this:

During that same period of time, while the Bush administration was warning against the increasing risks of Fannie Mae and Freddie Mac obligations, the Dems - including Barney Frank and Thomas Carper - were claiming that such concerns were "an attempt to create an issue that's not there", and "if it ain't broke, don't fix it".

In fact, the Bush admin asked Congress on many occasions - something like 15 times during 2001 - 2008 - to reform Freddie Mac and Fannie May. By the time Congress got around to addressing the issue -mid to late 2007 - it was already too late. More info here if you're interested. https://www.presidency.ucsb.edu/docu...es-article-the

[finnbow]

Originally Posted by whell

I think it's you who needs to come to terms with your interesting take on history.

Sorry to confuse you with the facts, but:

All four Republican presidents since 1980 increased the federal deficit during their time in office: Ronald Reagan had a 94% increase, George H.W. Bush had a 67% increase, George W. Bush had a 1,204% increase, and Trump had a 317% increase.

The two Democratic presidents since 1980 decreased the federal deficit: Bill Clinton had a 150% decrease to end his presidency with a federal surplus of $128 billion, and Barack Obama decreased the deficit by 53%.

https://amarkfoundation.org/us-feder...ts/#Conclusion

And under Biden, the reduction in the deficit in FY 2022 is the greatest in American history, from $2.8 trillion to $1.4 trillion.

Granted there are many factors that impact the deficit. That said, the record is clear and a significant contributor to increased deficit spending under Republicans is tax cuts not accompanied by spending cuts because of their false belief that such tax cuts "pay for themselves" (as Trump's Treasury Secretary and Budget Director falsely claimed about their massive tax cut for the rich).

[donquixote99]

It's fairly pure supply side effect, this deficit behavior. The big swings come with Federal revenue crashing when tax cuts are followed by economic crashes. Conversely, revenues skyrocket during economic recoveries.