The Biden Economy

[finnbow]

Originally Posted by whell

Pro tip: Just because you don't know something or are clueless about it doesn't mean that I don't understand it.

1) "Laffer's curve doesn't address overstimulation of the economy." Bullhshit.

Instead of spinning a tale, show me where the Laffer Curve overstimulation when it only has two values - tax rate and revenue, nothing more.

2)As far as your comments on "stimulation", Keynesian theory holds that government spending is stimulative, and more effective than tax cuts in stimulating the economy. Laffer argued that tax cuts are more efficient as a stimulus: lowering tax rates motivates people to earn more money, resulting in greater tax revenue. Conversely, as tax rates increase there becomes a point where economic activity is curtailed and the disincentive to work increases.

The only problem with Laffer's supposed theory is that it has never been borne out in the real world. In the real world, the only thing that tax cuts reliably do is reduce revenue. Indeed, the half of his curve that the GOP ignores shows exactly that. If you were willing to accept economic reality, you'd realize that the supply-side model adopted as the fundamental economic tenet of the GOP is all about providing a rationale for cutting taxes for the wealthy regardless of its impacts on the overall economy and deficit. Trump's tax cuts proved that once and for all (not only did he say so, but a Congressional Research Service study confirmed it).

Advocates of the tax cuts insisted it wasn’t about letting the makers keep their hard-earned money rather than handing it over to the takers. It was about incentivizing business to repatriate funds and ramp up its investments, thereby increasing growth and wages.

The Congressional Research Service, a kind of in-house think tank for Congress, has a new paper analyzing the effects of the Trump tax cuts. It finds that none of those secondary effects have materialized. Growth has not increased above the pre-tax-cut trend. Neither have wages. After a brief and much smaller than expected bump, repatriated corporate cash from abroad has leveled off.

https://nymag.com/intelligencer/2019...nvestment.html

Listen, I fully understand supply-side theory and wish it were true. The trouble is that it isn't. I guess you still buy into Steve Mnuchin's sophistry when he said of Trump's tax cuts, “Not only will this tax plan pay for itself but it will pay down debt.” How'd that work out?