John Kerry's Economy!!!

[AlbqOwl]

All I know is after Reaganomics kicked in, I and my employees had more take home pay than we had before. And we didn't have to kick in more at tax filing time either.

I think you have to separate medicare and social security from the income tax rates because they are a different thing. Social security and medicare are trust funds that pay the worker back in cash or health care at retirement time. In other words, at present many if not most retirees will draw more in social security and health benefits than they ever paid in. The taxes do hit hard when you're paying them, but it isn't the same thing as income tax. (Is there a thread for social security reform here somewhere? I'm still not navigating with full confidence here.)

Income tax goes to fund the government and you generally don't get any of that back other than in what government services benefit you happen to benefit from. So when we're talking tax rates, I don't mentally include social security or medicare in the mix. I am open to being convinced that I should.

 

[AlbqOwl]

Having said that, I will concede Hoot's point that there were some increases in various taxes in the Reagan administration, but overall I do believe there to have been significant reductions in the tax rates and, correspondingly, in the taxes paid by individuals.

(You would think an Owl and a Hoot should be be able to get along.:lol: )

 

[Iriemon]

All I know is after Reaganomics kicked in, I and my employees had more take home pay than we had before. And we didn't have to kick in more at tax filing time either.

Could be. I know my portfolio went up a lot more in value in the 90s. But our individual experiences mean little in the context of what is happening to the economy as a whole.

I think you have to separate medicare and social security from the income tax rates because they are a different thing. Social security and medicare are trust funds that pay the worker back in cash or health care at retirement time. In other words, at present many if not most retirees will draw more in social security and health benefits than they ever paid in. The taxes do hit hard when you're paying them, but it isn't the same thing as income tax. (Is there a thread for social security reform here somewhere? I'm still not navigating with full confidence here.)

They are supposed to be for different things, but the Govt doesn't treat them that way. SS tax receipts have exceeded SS expenditures by $150 billion a year for that last several years. See for yourself at the CBO.gov website, historical data, table 1. The money is supposed to be growing in a trust fund, but it has been taken by the Govt (and exchanged with fairly meaningless IOUs) to partially fund its deficits. The Govt treats them all as general revenues.

Income tax goes to fund the government and you generally don't get any of that back other than in what government services benefit you happen to benefit from. So when we're talking tax rates, I don't mentally include social security or medicare in the mix. I am open to being convinced that I should.

Most folks don't because people think of SS as a pension, but it is not. It is social insurance. If you become disabled, SS will pay you benefits. If you die, SS will pay your survivor benefits. So its not an investment fund or pension type of fund; though it does have certain characteristics of that type of thing and does provide retirement benefits.

SS has always been a pay-go system. The money you pay in the SS tax isn't saved for your or even your generation's benefit, it is spent on current retirees. Which is fine, except for population demographics. When the boomers retire, there will be a lot less workers per SS beneficiary.

That was why, in 1983, Congress and Reagan passed the SS reform Act. The SS tax rate was increased to a level more than necessary to pay benefits. The excess was to be put into a trust fund to help pay the boomers' retirement.

Unfortunately, because of the huge deficits the govt has run over the last 25 years (except the late 90s) the govt has spent the money that was supposed to go into the fund, and putting in IOUs for obligations it was supposed to pay anyway. As a result, President Bush proclaimed how the SS trust fund is nothing but a drawer full of IOUs -- without mentioning that his deficits are exactly why there are IOUs in there in the first place. And because the trust fund established and set up in 1983 has been raided by constant Republican deficits, now in 2005 they say we are in a crisis and will have to cut back benefits.

So enjoy your tax cut. It's nice to have low taxes, isn't it? But the piper will be paid.

 

[scottyz]

How do you know what the economy under John Kerry would have been like? Do you have some sort of powers that let you view alternate realities? Can you read John Kerry's mind? It's like someone claiming America would have been nuked in 30 days if Bush sr. had won a 2nd term so it's a good thing Clinton won.

 

[LaMidRighter]

How do you know what the economy under John Kerry would have been like? Do you have some sort of powers that let you view alternate realities?

Real simple, basic economics and budgetary realities, Kerry's expenditures would not have gone to productive ventures, AND he would have taxed the people creating jobs and investing money, therefore the economy would lose, pure and simple.

 

[LaMidRighter]

They are supposed to be for different things, but the Govt doesn't treat them that way. SS tax receipts have exceeded SS expenditures by $150 billion a year for that last several years. See for yourself at the CBO.gov website, historical data, table 1. The money is supposed to be growing in a trust fund, but it has been taken by the Govt (and exchanged with fairly meaningless IOUs) to partially fund its deficits. The Govt treats them all as general revenues.

You're right, absolutely. I think the only idea I agreed with from Al Gore was the "lockbox" that the SS trust fund would be transferred to.

Most folks don't because people think of SS as a pension, but it is not. It is social insurance. If you become disabled, SS will pay you benefits. If you die, SS will pay your survivor benefits. So its not an investment fund or pension type of fund; though it does have certain characteristics of that type of thing and does provide retirement benefits.

Again, no argument, but to maybe give a point to ponder, let's say we treat it more like a trustfund pension system, it could, possibly end up being a solid program with serious returns.

SS has always been a pay-go system. The money you pay in the SS tax isn't saved for your or even your generation's benefit, it is spent on current retirees. Which is fine, except for population demographics. When the boomers retire, there will be a lot less workers per SS beneficiary.

I think a new dynamic would give the system a shot in the arm, instead of pay as you go, let's make it more profitable towards those who paid in the past, treat it like a financial planner would a client, if the client is better off or comfortable in retirement on their investment, everyone wins.

That was why, in 1983, Congress and Reagan passed the SS reform Act. The SS tax rate was increased to a level more than necessary to pay benefits. The excess was to be put into a trust fund to help pay the boomers' retirement.

I am a huge Reagan fan, and at the time it was a great idea, but as you say later(with a few amendments on point) past problems have made it obsolete.

Unfortunately, because of the huge deficits the govt has run over the last 25 years (except the late 90s) the govt has spent the money that was supposed to go into the fund, and putting in IOUs for obligations it was supposed to pay anyway. As a result, President Bush proclaimed how the SS trust fund is nothing but a drawer full of IOUs -- without mentioning that his deficits are exactly why there are IOUs in there in the first place. And because the trust fund established and set up in 1983 has been raided by constant Republican deficits, now in 2005 they say we are in a crisis and will have to cut back benefits.

It's more than 25 years actually, since the 60's the SS trustfund has been raided like so many children at the cookie jar.

So enjoy your tax cut. It's nice to have low taxes, isn't it? But the piper will be paid.

That's debateable, if the tax cuts translate into more jobs and said jobs go to either dedicated SS funds or a privatized account everyone wins IMO.

 

[scottyz]

Real simple, basic economics and budgetary realities, Kerry's expenditures would not have gone to productive ventures, AND he would have taxed the people creating jobs and investing money, therefore the economy would lose, pure and simple.

Please tell me how you know exactly how Kerry would have handled the economy on a day to day basis. You can't make judgements about something that never happened. I could claim the world would have ended if Bush Sr. won a second term. Even though I have nothing to base that on as I can't see what wasn't.

The economy is losing right now so under your assumption as to how Kerry woudl run things he wouldn't have done any worse.

 

[cnredd]

Please tell me how you know exactly how Kerry would have handled the economy on a day to day basis. You can't make judgements about something that never happened. I could claim the world would have ended if Bush Sr. won a second term. Even though I have nothing to base that on as I can't see what wasn't...

Skeptical readers may prefer an estimate from the Kerry campaign itself, or form other liberal-leaning sources. They’re in luck. The Kerry campaign’s website concedes $1.1 trillion in proposed new spending and targeted tax credits over the next decade (based on gimmicks that would make an Enron executive blush). The Urban Institute estimates that Kerry’s tax-cut alteration would increase the budget deficit by $364 billion. Add in the above-mentioned $340 billion to fix the alternative minimum tax and the new debt interest payment of $448 billion. Even this benefit-of-every-doubt calculation shows that Sen. Kerry would add $2.3 trillion to the budget deficit over the next decade. That 2008 budget deficit would reach $443 billion.

Again, he’s increasing the deficit, not halving it.

These estimates aren’t surprising. Kerry’s proposal to shave $211 billion off the budget deficit while also spending nearly $2 trillion more — on everything from health care to business subsidies to endangered-species protection to high-speed rail to free college tuition for volunteers — doesn’t pass the smell test. No tax increase restricted to those earning more than $200,000 can bridge this large of a gap.

So how would Sen. Kerry deal with this mathematical reality? When former President Bill Clinton’s campaign promises proved incompatible with his deficit-reduction pledge, he bridged the gap with large, broad-based tax increases. Should Kerry choose the same route, he would have to raise taxes by $2,090 to $2,829 per household (depending on which budget estimate is used) in addition to his current proposed tax increases.

http://www.nationalreview.com/nrof_comment/riedl200409290826.asp

The economy is losing right now so under your assumption as to how Kerry woudl run things he wouldn't have done any worse.

Yeah...and I'm a 285-pound anorexic...

http://www.bls.gov/

CPI:Consumer Price Index
+0.5% in Jul 2005

Unemployment Rate:
5.0% in Jul 2005

Payroll Employment:
+207,000(p) in Jul 2005

Average Hourly Earnings:
+$0.06(p) in Jul 2005

PPIroducer Price Index
+1.0%(p) in Jul 2005

ECI:Employment Cost Index
+0.7% in 2nd Qtr of 2005

Productivity:
+2.2% in 2nd Qtr of 2005

U.S. Import Price Index:
+1.1% in Jul 2005

Well lookie here!...Every indicator is up!...Boy we're really "tankin'" now!

 

[AlbqOwl]

To Iriemon, thank you for a good post, but I don't think you quite made a case that Social Security and Medicare taxes are the same thing as the Income Taxes we report on our 1040's. The two are different and must be rationally discussed in different ways. The slight of hand budgeting Congress has employed to incorporate social security funds since its inception does not change the criteria.

For everybody, if you are really interested in the cause and effects of "Reaganomics" compared with the Carter years and the Bush/Clinton years, check out this detailed analysis from the Cato Institute. It might be a real eye opener to many:

http://www.cato.org/pubs/pas/pa-261.html

 

[gordontravels]

Please tell me how you know exactly how Kerry would have handled the economy on a day to day basis. You can't make judgements about something that never happened. I could claim the world would have ended if Bush Sr. won a second term. Even though I have nothing to base that on as I can't see what wasn't.

The economy is losing right now so under your assumption as to how Kerry woudl run things he wouldn't have done any worse.

I think you could take Senator Kerry at his word (I would assume). Before the last election, his meeting with the President of France was followed by speeches where he leaned heavily on the wonderful economic decisions that the French Government made from their socialist view and how we needed to shinny up to the U.N. which President Bush was mishandling absolutely terribly opposite of how John Kerry would do it.

Why not rely on Senator Kerry's own words about what he would have done different? Isn't that a campaign promise? Can't we trust that he would have done what he said?

Now our economy is growing better than 5 times what France is doing. The U.N. is putting reforms in place and they are going to be held accountable for them because we have a "mean" man to insure something will be said if they don't. The French economy is really tanking and that is their own figures not mine. The EU Constitution was soundly defeated by the French people when they voted. The last approval rating I heard on Chirac from the French people was 24%. A conservative government should be an easy prediction next time around especially since the current President says he will run again. His party may rethink that for him.

John Kerry said over and over that he would release his military records. He said it a year before the elections. He said it at least 3 more times during the campaign. He said he would within the week and that was over 2 months after he lost. He finally did over 4 months after his "within a week" promise. I just think that shows that he would have lived up to his campaign promises about his economic plans for us. At least he would have..... eventually. :duel

 

[Iriemon]

I think a new dynamic would give the system a shot in the arm, instead of pay as you go, let's make it more profitable towards those who paid in the past, treat it like a financial planner would a client, if the client is better off or comfortable in retirement on their investment, everyone wins.

I'm not sure what new dynamic you are talking about, but if you mean personal accounts, IMO there are some serious problems with that idea. If the govt wants forced savings, if should just pass a law forcing people to put x% in an IRA.

I am a huge Reagan fan, and at the time it was a great idea, but as you say later(with a few amendments on point) past problems have made it obsolete.

It's not just the past deficits, but the current Republican deficits, stealing $150+ billion from *our* SS trust fund every year, that are causing the problem.

It's more than 25 years actually, since the 60's the SS trustfund has been raided like so many children at the cookie jar.

In the 60s and 70s (and before that), the SS system was on a paygo basis. The surpluses or deficits were never more than a few billion. It wasn't until 1983 that the idea of building up a trust fund was enacted (to offset the boomer's retirements), and the excess payments really started growing. See for youself at http://cbo.gov/showdoc.cfm?index=1821&sequence=0 Table 1, which shows excess/deficit SS collections since 1962.

That's debateable, if the tax cuts translate into more jobs and said jobs go to either dedicated SS funds or a privatized account everyone wins IMO

They have had these huge tax cuts and huge deficits for four straight years. They've added $2.2 to our debt burden, and are adding $5-600 billion more every year. Bush doesn't even pretend he is going to be able to balance the budget, or even come close. They have robbed every dime from our SS trust fund to pay boomers' retirment and are doing so every year now, when it is the prime savings time. And still employment is now better than it was in the late 90s when we had higher taxes and they weren't stealing from our future.

What is debatable is whether these tax cuts are doing anything more than passing the buck onto our kids.

 

[Iriemon]

B]Even this benefit-of-every-doubt calculation shows that Sen. Kerry would add $2.3 trillion to the budget deficit over the next decade.[/B]

Even accepting this partisan spin as the truth, adding 2.3 trillion over a decade is a hell of a lot better than we have. Bush will added that amount in 4 years in is on course to do it again.

Again, he’s increasing the deficit, not halving it.

You think Bush is halving it? LOL! Halving what? The surplus he inherited from Clinton? The worst year of his own deficits? My, that is impressive.

http://www.bls.gov/

CPI:Consumer Price Index
+0.5% in Jul 2005

Unemployment Rate:
5.0% in Jul 2005

Payroll Employment:
+207,000(p) in Jul 2005

Average Hourly Earnings:
+$0.06(p) in Jul 2005

PPIroducer Price Index
+1.0%(p) in Jul 2005

ECI:Employment Cost Index
+0.7% in 2nd Qtr of 2005

Productivity:
+2.2% in 2nd Qtr of 2005

U.S. Import Price Index:
+1.1% in Jul 2005

Well lookie here!...Every indicator is up!...Boy we're really "tankin'" now

More impressive statistics. Any organization borrowing 33% of its total income every year can look like it's doing well. That is no trick. What takes talent is doing that without borrowing massive amounts.

If the economy is doing so great, why are we borrowing over $500 billion again this year?

 

[Iriemon]

To Iriemon, thank you for a good post, but I don't think you quite made a case that Social Security and Medicare taxes are the same thing as the Income Taxes we report on our 1040's. The two are different and must be rationally discussed in different ways. The slight of hand budgeting Congress has employed to incorporate social security funds since its inception does not change the criteria.

For everybody, if you are really interested in the cause and effects of "Reaganomics" compared with the Carter years and the Bush/Clinton years, check out this detailed analysis from the Cato Institute. It might be a real eye opener to many:

http://www.cato.org/pubs/pas/pa-261.html

Everyone is entitled to their own opinion, but if you are arguing that the SS/Medicare tax isn't really a tax and therefore shouldn't count in tax calculations, I have to disagree.

 

[Iriemon]

John Kerry said over and over that he would release his military records. He said it a year before the elections. He said it at least 3 more times during the campaign. He said he would within the week and that was over 2 months after he lost. He finally did over 4 months after his "within a week" promise. I just think that shows that he would have lived up to his campaign promises about his economic plans for us. At least he would have..... eventually. :duel

And did you apply that same test to Bush's promises?

We can meet our priorities, and we can fund them. And we can also pay down debt. I know a lot of folks around America are worried about national debt, as am I. We pay down $2 trillion of debt over the next 10 years. That's all the debt that's available to be retired without having to pay a premium for prepaying debt. That's a lot of debt retirement. It will be the biggest repayment of debt in the history of the world. And so we pay down debt. Mar 9 2001

http://www.whitehouse.gov/news/releases/2001/03/20010309.html

The really sad thing is, with a competent person president, we could have really done this.

 

[scottyz]

Skeptical readers may prefer an estimate from the Kerry campaign itself, or form other liberal-leaning sources. They’re in luck. The Kerry campaign’s website concedes $1.1 trillion in proposed new spending and targeted tax credits over the next decade (based on gimmicks that would make an Enron executive blush). The Urban Institute estimates that Kerry’s tax-cut alteration would increase the budget deficit by $364 billion. Add in the above-mentioned $340 billion to fix the alternative minimum tax and the new debt interest payment of $448 billion. Even this benefit-of-every-doubt calculation shows that Sen. Kerry would add $2.3 trillion to the budget deficit over the next decade. That 2008 budget deficit would reach $443 billion.

Again, he’s increasing the deficit, not halving it.

These estimates aren’t surprising. Kerry’s proposal to shave $211 billion off the budget deficit while also spending nearly $2 trillion more — on everything from health care to business subsidies to endangered-species protection to high-speed rail to free college tuition for volunteers — doesn’t pass the smell test. No tax increase restricted to those earning more than $200,000 can bridge this large of a gap.

So how would Sen. Kerry deal with this mathematical reality? When former President Bill Clinton’s campaign promises proved incompatible with his deficit-reduction pledge, he bridged the gap with large, broad-based tax increases. Should Kerry choose the same route, he would have to raise taxes by $2,090 to $2,829 per household (depending on which budget estimate is used) in addition to his current proposed tax increases.

http://www.nationalreview.com/nrof_comment/riedl200409290826.asp



Yeah...and I'm a 285-pound anorexic...

http://www.bls.gov/

CPI:Consumer Price Index
+0.5% in Jul 2005

Unemployment Rate:
5.0% in Jul 2005

Payroll Employment:
+207,000(p) in Jul 2005

Average Hourly Earnings:
+$0.06(p) in Jul 2005

PPIroducer Price Index
+1.0%(p) in Jul 2005

ECI:Employment Cost Index
+0.7% in 2nd Qtr of 2005

Productivity:
+2.2% in 2nd Qtr of 2005

U.S. Import Price Index:
+1.1% in Jul 2005

Well lookie here!...Every indicator is up!...Boy we're really "tankin'" now!

You're still really reaching trying to claim you know how Kerry's economy would have been.

Bush's turning of a surplus into record deficit, record job losses, record number of companies moving overseas, record high gas prices, etc. aren't doing much good for economy either. Probably about as bad as you could do without causing riots.

 

[AlbqOwl]

Not only is there valid analysis of Kerry's economy rhetoric, and quite a bit of it has been posted here, but I think there must be one further consideration: How would a Kerry economy look if 9/11 happened eight months into his first term of office?

Bush had to contend with a deepening recession that started at the end of Clinton's second term coupled with 9/11 that devastated the economy on a par with the stock market crash of the 30's. All presidents inherit their predecessor's economic policies in the first year and don't get to put their own into effect until the second year. Most economists think there is little noticable effect for at least another year after that.

Once Bush policies did kick into effect, however, and we had some distance from 9/11, the jobs started coming back and the economy has taken off like a rocket. All indicators now are that a booming economy is in progress.

Would Kerry have done as well? History says his ideas simply wouldn't have produced the same results.

 

[scottyz]

Would Kerry have done as well? History says his ideas simply wouldn't have produced the same results.

History that you've made up. There are way too many variables involved to make such claims.

 

[scottyz]

How would a Kerry economy look if 9/11 happened eight months into his first term of office?

I'll use your same faulty logic and say it wouldn't have because Kerry would have stopped it.

 

[AlbqOwl]

I'll use your same faulty logic and say it wouldn't have because Kerry would have stopped it.

How would he have done that? Take your time in answering.

I have posted links to a couple of credible research pieces giving the history and outlining the results of various tax policies. Refute them if you can. Show how Kerry's proposed policies would have produced different results if you can.

 

[Iriemon]

Bush had to contend with a deepening recession that started at the end of Clinton's second term coupled with 9/11 that devastated the economy on a par with the stock market crash of the 30's.

The concept that Bush inherited a terrible recession is a myth. The economy did slow down, but as a recession (if you can call it that), it was very mild.

This is inflation adjusted, constant 2000 dollar GDP [source Dept Commerce BEA, http://www.bea.gov/bea/dn/home/gdp.htm]

2000 9817.0 3.66%
2001 9890.7 0.75%
2002 10048.8 1.60%
2003 10320.6 2.70%
2004 10755.7 4.22%

There was never actually a fiscal year the GDP went down (GDP did decline a couple quarters).

Unemployment rose from a little over 4% to about 6%, but again, that is very low compared to historic standards. in the 91-92 recession before Clinton came into office, unemployment hit 9%, for example.

In the great depression, the GDP fell by over 10% (I think) and unemployment hit 25%.

 

[AlbqOwl]

I didn't say terrible recession. I said deepening recession--a little precision here please. :smile:

In otherwords the economic indicators were all headed down at the time Bush took office. Yes, it was a mild recession and would probably have remained so had 9/11 not happened. One simply cannot honestly or honorably cite economic statistics of the Bush administration without factoring 9/11 into the equation. No other modern president has had to deal with anything remotely like that.

 

[Iriemon]

I didn't say terrible recession. I said deepening recession--a little precision here please. :smile:

In otherwords the economic indicators were all headed down at the time Bush took office. Yes, it was a mild recession and would probably have remained so had 9/11 not happened. One simply cannot honestly or honorably cite economic statistics of the Bush administration without factoring 9/11 into the equation. No other modern president has had to deal with anything remotely like that.

Fair enough. And if Bush had just announced temporary tax cuts to spur the economy, it wouldn't have been a problem. The economy has been going great for three years now. Why are they still borrowing over 1/2 a trillion a year?

 

[AlbqOwl]

Fair enough. And if Bush had just announced temporary tax cuts to spur the economy, it wouldn't have been a problem. The economy has been going great for three years now. Why are they still borrowing over 1/2 a trillion a year?

I think maybe the 1/2 trillion is something of an exaggeration. But they do borrow way too much because they are spending a lot more than we are taking in. That's a congressional issue and one every responsible American should be taking up with their duly elected congressional representatives. This last highway bill was so pork laden I'm surprised it didn't create a lot of hernias and work comp claims among the staff who lugged it around. This is NOT a policy of the Bush administration though he could be criticized for not threatening more vetoes of this stuff. And it is not a consequence of Bush's economic policies. It is a consequence of opportunistic politicians spending like drunken sailors.

 

[gordontravels]

Fair enough. And if Bush had just announced temporary tax cuts to spur the economy, it wouldn't have been a problem. The economy has been going great for three years now. Why are they still borrowing over 1/2 a trillion a year?

Temporary tax cuts provide temporary funds. No business will build or expand manufacturing or workforce based on temporary funds. This was the major problem with the "cop on every corner" that the Clinton Administration proposed and put into force. Many of those hired on as law enforcement officers are driving trucks today.

Permanent tax cuts allows business and private citizens to plan into the future. A business can open a new location, expand a current one or product line and hire more people. An individual can plan a car payment or a longer term commitment such as buying or remodeling a home. Sometimes $25 to $100 dollars a month can make all the differences for an individual who is ready to make a decision.

If that individual decides to remodel a kitchen or bathroom it then effects the wood products, cabinet makers, bathroom fixture, plumbing fixture, lighting fixture, flooring and paint people.

Tax cuts that are permanent are something one can plan on instead of seeing it as a windfall that will possibly blow away in a few years. That can help when the landlord wants to raise the rent and you want to pay it. :duel

 

[gordontravels]

I think maybe the 1/2 trillion is something of an exaggeration. But they do borrow way too much because they are spending a lot more than we are taking in. That's a congressional issue and one every responsible American should be taking up with their duly elected congressional representatives. This last highway bill was so pork laden I'm surprised it didn't create a lot of hernias and work comp claims among the staff who lugged it around. This is NOT a policy of the Bush administration though he could be criticized for not threatening more vetoes of this stuff. And it is not a consequence of Bush's economic policies. It is a consequence of opportunistic politicians spending like drunken sailors.

So true and they are Republican and Democrat. Good post. :duel