Manchin is Bad At Math

[slavablueberryjam]

yes, it does.

which means you are collecting less revenue, because......................math

What should be discussed is how can the government, decrease spending while increasing efficiency. There's no reason why public spending should be a jobs program when there are too many mouths to feed. Things wouldn't be able to work-out, the way they used to do things.

 

[American]

Larry Summers is pretty good at math and he is the one who proved to Manchin this was not inflationary. Pretty sure nobody said this bill would pay off the deficit. Reducing prescription drug prices is definitely anti-inflationary and should have been done years ago.

Milton Friedman says govt spending and printing money is the only thing that causes inflation.

 

[American]

No surprise, the House barely passed the bill with zero bipartisan support, 220-207. And they had to use reconciliation to avoid the Senates 60 vote requirement. Good news is, they just saved the world from climate change. You just have to buy a EV.

You can't prove a single ****ing word of your last sentence.

 

[jonny5]

You can't prove a single ****ing word of your last sentence.

You couldnt tell it was ****ing sarcasm?

 

[JohnfrmClevelan]

Milton Friedman says govt spending and printing money is the only thing that causes inflation.

Milton Friedman also admitted that he was wrong about that.

 

[jonny5]

Bill signed. Good news is I get a more recent example of tax and spend democrats to use. Hopefully only a few months left of this tyranny, and we can get back to obstruction.

Total is now 4 trillion in new spending passed since Biden took office, on top of the 8 trillion regular spending.

 

[mrjurrs]

Right. Normally 2-3%/year. The point being that you will never recoup lost tax revenues by lowering taxes.

Not that I think lower taxes are bad; I'm all for more deficit spending, and believe taxation should be used to redistribute money from the rich to the poor. But I couldn't let a bad mathematical argument stand without saying something.

Your claim is incorrect. Tax rates do not determine how much is collected, economic activity determines that.

 

[JohnfrmClevelan]

Your claim is incorrect. Tax rates do not determine how much is collected, economic activity determines that.

You are taking the conversation out of context. We were discussing the claim that tax cuts themselves, through increased growth, led to higher tax receipts. And my point was, using longview's example numbers, we would need 30% growth for that to happen. My point being that, even with normal-to-good growth, you will not, cannot, recoup those particular income taxes. Not in any apples-to-apples comparison.

Yes, economic activity is more determinative of tax receipts than tax rates, but not all economic activity is equal, either. Clinton collected a ton of tax receipts during the dot com bubble, because people were making a lot of money on paper. But real economic activity, the kind that happens when the economy produces a lot and sells a lot, hadn't increased all that much, certainly not enough to reflect those increased tax receipts. So we were paying a lot more taxes on basically the same real income, and that led us into a recession.

The point being that some tax cuts will boost demand and boost the economy, and some won't. In order for a tax cut to be a positive for growth, most of that money has to be spent, not saved. In an apples-to-apples comparison, the govt. spends 100% of its tax receipts into the domestic economy, while some portion of tax savings would be saved, and some portion of tax savings would be spent on imports. There is no reason to believe that the private sector spends money any more efficiently than the government does, so the case for tax cuts being good for growth is a pretty difficult one to make.

 

[mrjurrs]

You are taking the conversation out of context. We were discussing the claim that tax cuts themselves, through increased growth, led to higher tax receipts. And my point was, using longview's example numbers, we would need 30% growth for that to happen. My point being that, even with normal-to-good growth, you will not, cannot, recoup those particular income taxes. Not in any apples-to-apples comparison.

Yes, economic activity is more determinative of tax receipts than tax rates, but not all economic activity is equal, either. Clinton collected a ton of tax receipts during the dot com bubble, because people were making a lot of money on paper. But real economic activity, the kind that happens when the economy produces a lot and sells a lot, hadn't increased all that much, certainly not enough to reflect those increased tax receipts. So we were paying a lot more taxes on basically the same real income, and that led us into a recession.

The point being that some tax cuts will boost demand and boost the economy, and some won't. In order for a tax cut to be a positive for growth, most of that money has to be spent, not saved. In an apples-to-apples comparison, the govt. spends 100% of its tax receipts into the domestic economy, while some portion of tax savings would be saved, and some portion of tax savings would be spent on imports. There is no reason to believe that the private sector spends money any more efficiently than the government does, so the case for tax cuts being good for growth is a pretty difficult one to make.

What kind of a time frame do you expect to use? All growth over time increases at a higher rate because the growth is added to growth (ala compound interest). Imo the tax cuts not being good for growth are those tax cuts given to the wealthiest and hoping it trickles down. Providing tax cuts to the middle and lower classes imo will drive growth, because those people will spend their tax savings.

 

[JohnfrmClevelan]

What kind of a time frame do you expect to use? All growth over time increases at a higher rate because the growth is added to growth (ala compound interest). Imo the tax cuts not being good for growth are those tax cuts given to the wealthiest and hoping it trickles down. Providing tax cuts to the middle and lower classes imo will drive growth, because those people will spend their tax savings.

Well, what kind of time frame do you think the tax cutters have in mind when they claim that their tax cuts will lead to greater revenues? To me, that suggests a reasonable immediacy, which is mathematically unlikely. Probably why they avoid showing us their math when they propose such justifications.

So for an apples-to-apples comparison, meaning we are only measuring income tax receipts, and everybody gets the same tax rate cut, and they aren't lost in standard deductions, etc., and (most importantly) the government isn't increasing deficit spending to make up for the tax shortfall, here's what I would predict: the govt. collects 5% less revenue in Year One; private sector fails to spend it all domestically- I'll give them 4.5% spending - meaning all else being equal, GDP is that much lower than it would have been. I see no reason to think that there is anything magical about private sector consumption that makes it any more efficient than government spending, as it relates to GDP. So where does the growth come from that leads to higher tax revenues? I'm not seeing it. What I'm guessing is that the government increases deficit spending due to lower tax receipts, and that increased deficit spending is effectively added on to the mostly-spent tax savings, giving the illusion that tax cuts have led to higher growth, when it was actually deficit spending that did the trick.

I agree with you on which tax cuts are more likely to work, but again, if you try to stack that up against the government taxing and spending 100% of the receipts domestically, government spending is going to come out ahead, even if just by a little.

 

[HangLow]

Right. Normally 2-3%/year. The point being that you will never recoup lost tax revenues by lowering taxes.

Not that I think lower taxes are bad; I'm all for more deficit spending, and believe taxation should be used to redistribute money from the rich to the poor. But I couldn't let a bad mathematical argument stand without saying something.

​

 

[mrjurrs]

Well, what kind of time frame do you think the tax cutters have in mind when they claim that their tax cuts will lead to greater revenues? To me, that suggests a reasonable immediacy, which is mathematically unlikely. Probably why they avoid showing us their math when they propose such justifications.

So for an apples-to-apples comparison, meaning we are only measuring income tax receipts, and everybody gets the same tax rate cut, and they aren't lost in standard deductions, etc., and (most importantly) the government isn't increasing deficit spending to make up for the tax shortfall, here's what I would predict: the govt. collects 5% less revenue in Year One; private sector fails to spend it all domestically- I'll give them 4.5% spending - meaning all else being equal, GDP is that much lower than it would have been. I see no reason to think that there is anything magical about private sector consumption that makes it any more efficient than government spending, as it relates to GDP. So where does the growth come from that leads to higher tax revenues? I'm not seeing it. What I'm guessing is that the government increases deficit spending due to lower tax receipts, and that increased deficit spending is effectively added on to the mostly-spent tax savings, giving the illusion that tax cuts have led to higher growth, when it was actually deficit spending that did the trick.

I agree with you on which tax cuts are more likely to work, but again, if you try to stack that up against the government taxing and spending 100% of the receipts domestically, government spending is going to come out ahead, even if just by a little.

I don't think any tax cut has has anything like a reasonably immediate payback claim. My recollection is that a 10 year horizon is the closest.

Consumer spending and govt spending have almost nothing in common. Recent annual consumer spending? Over $14 trillion dollars. Government? Just over $4 trillion.

 

[JohnfrmClevelan]

I don't think any tax cut has has anything like a reasonably immediate payback claim. My recollection is that a 10 year horizon is the closest.

The 10-year time frame just makes it that much harder to reasonably trace increased revenues back to the tax cut. I think we can all agree that the math used to justify tax cuts is shaky at best, and wrong at worst.

Consumer spending and govt spending have almost nothing in common. Recent annual consumer spending? Over $14 trillion dollars. Government? Just over $4 trillion.

It's not hard to see how the two differ. What is more important is deciding which is better for the economy, or if they are the same.

The government spends 100% of those taxes, and spends it domestically. If we assume that this particular pile of tax receipts to be 100% discretionary, we can say that this money would pay for more govt. jobs, more spending programs, and just more stuff in general. Some of those spending programs would likely include infrastructure money and/or other investments.

Taxpayers, on the other hand, would spend somewhat less than 100% of their tax savings (some would be saved), and what was spent would be close to 100% consumption.

As I said before, because taxpayers would save some portion of their tax savings, GDP would be that much lower. Investment spending should lead to greater growth vs. the same amount of consumer spending. And there are likely more jobs when the government spends, because of both direct employment by the government and the extra investment spending. It seems clear to me that government spending is more efficient and should lead to greater growth and greater employment.

 

[mrjurrs]

The 10-year time frame just makes it that much harder to reasonably trace increased revenues back to the tax cut. I think we can all agree that the math used to justify tax cuts is shaky at best, and wrong at worst.


It's not hard to see how the two differ. What is more important is deciding which is better for the economy, or if they are the same.

The government spends 100% of those taxes, and spends it domestically. If we assume that this particular pile of tax receipts to be 100% discretionary, we can say that this money would pay for more govt. jobs, more spending programs, and just more stuff in general. Some of those spending programs would likely include infrastructure money and/or other investments.

Taxpayers, on the other hand, would spend somewhat less than 100% of their tax savings (some would be saved), and what was spent would be close to 100% consumption.

As I said before, because taxpayers would save some portion of their tax savings, GDP would be that much lower. Investment spending should lead to greater growth vs. the same amount of consumer spending. And there are likely more jobs when the government spends, because of both direct employment by the government and the extra investment spending. It seems clear to me that government spending is more efficient and should lead to greater growth and greater employment.

Please remember that substantial portions of American govt are spent abroad. Payrolls, foreign aid, foreign investment.

I would submit to you that imo 100% of $4 trillion is less than some percent of $14 trillion. Some taxpayers save a portion of their income. However...

"Many people still have no savings, or very little: Nearly 1 in 5 Americans didn't save any money in 2021, according to recent data from the latest MagnifyMoney Savings Index. And 18% of respondents admittedly contributed zero dollars to their savings last year and another 48% contributed fewer than $5,000."

Here’s exactly how much money is in the average savings account in America (and psst: it's a lot more than you might guess)

Plus how to boost your savings, and where to put it.

www.marketwatch.com

 

[JohnfrmClevelan]

Please remember that substantial portions of American govt are spent abroad. Payrolls, foreign aid, foreign investment.

It is overwhelmingly domestic, though. And foreign aid in dollars comes back to American businesses.

I would submit to you that imo 100% of $4 trillion is less than some percent of $14 trillion. Some taxpayers save a portion of their income. However...

Yes, but we are only talking about a difference in who spends the same amount of money here. Were taxpayers to get a 5% reduction, tax receipts would be down 5%. That's the money we're talking about here; 5% of income tax receipts. Everything else stays the same.

"Many people still have no savings, or very little: Nearly 1 in 5 Americans didn't save any money in 2021, according to recent data from the latest MagnifyMoney Savings Index. And 18% of respondents admittedly contributed zero dollars to their savings last year and another 48% contributed fewer than $5,000."

Here’s exactly how much money is in the average savings account in America (and psst: it's a lot more than you might guess)

Plus how to boost your savings, and where to put it.

www.marketwatch.com

That is true. But in our example, where everybody is getting a 5% income tax reduction, we can accurately apportion those tax savings by looking at who pays income taxes. The more income tax one normally pays, the more they would be saving, so the rich and the middle class would be the big beneficiaries, and they both save a lot of their income.

 

[mrjurrs]

It is overwhelmingly domestic, though. And foreign aid in dollars comes back to American businesses.


Yes, but we are only talking about a difference in who spends the same amount of money here. Were taxpayers to get a 5% reduction, tax receipts would be down 5%. That's the money we're talking about here; 5% of income tax receipts. Everything else stays the same.


That is true. But in our example, where everybody is getting a 5% income tax reduction, we can accurately apportion those tax savings by looking at who pays income taxes. The more income tax one normally pays, the more they would be saving, so the rich and the middle class would be the big beneficiaries, and they both save a lot of their income.

And that would be why we need to create tax cuts differently.

 

[bomberfox]

Milton Friedman also admitted that he was wrong about that.

Among a whole host of other things.

 

[Stinger]

I wasn't using the actual figure. I'm using an example to try and help you to understand basic math. We know for a mathematical certainty, that when we cut the rate at which we collect something, we will always collect less of that something. It's not remotely debatable. It's established mathematical fact.

It's not a mathematical question it is an ECONOMIC question, I see you still have not learned the difference, and as I have shown you over and over cutting tax rates increases economic activity and increase revenues at the new level of economic activity.

Year Rev. Inc/Dec
1990 1,032.0 4.1% <- Democrats tax increase agreed to by Bush for spending cuts the Dems never passed
1991 1,055.0 2.2%
1992 1,091.2 3.4%
1993 1,154.3 5.8% <- Clinton tax increase signed AUGUST 1993 however
"Taxpayers who owed additional 1993 taxes due to the
OBRA93 tax rate increases were given the option of
deferring payment of two-thirds of the tax that was in
excess of the tax that would have been owed at the 31
percent rate. Half of the deferral taxes were to be paid in
1995 and the remaining half in 1996 [2].

http://www.irs.gov/pub/irs-soi/93inintrts.pdf

1994 1,258.6 9.0%
1995 1,351.8 7.4% <- Even with the differed tax revenues revenue growth slow
1996 1,453.1 7.5%
1997 1,579.2 8.7% -> Gingrich/Kasich tax rate cuts
1998 1,721.7 9.0%
1999 1,827.5 6.1%
2000 2,025.2 10.8%
2001 1,991.1 -2%
2002 1,853.1 -7%
2003 1,782.3 -4% Bush tax rate cuts begin implimentation
2004 1,880.1 5% Bush tax rate cuts fully implimented
2005 2,153.6 15%
2006 2,406.9 12%
2007 2,568.0 7% <- Dems take back the Congress
2008 2,524.0 -2%
2009 2,105.0 -17% <- Dems take back WH
2010 2,162.7 3%
2011 2,303.5 7% <- Republicans take back the house
2012 2,445.0 6%
2013 2,775.1 13%
2014 3,021.5 9% Obama Capital Gains tax increase and surcharge
2015 3,249.9 8%
OMB Historical Tables

But then you claimed former Presidents can still veto budgets...................what can I say

 

[rahl]

It's not a mathematical question it is an ECONOMIC question.......................

and you've been schooled on the topic going on 8 years now.

 

[Stinger]

and you've been schooled on the topic going on 8 years now.

Empty claims never refuted a thing. I see you are still unable to debate the facts, oh well.

 

[rahl]

Empty claims never refuted a thing.

Correct. Actual data did.

I see you are still unable to debate the facts, oh well.

As you know, I routinely pound your arguments into the ground with the facts.

 

[jonny5]

Latest CBO analysis shows basically no deficit reduction. 58bn over 10 years. More proof Manchin is bad at math.

CBO estimates that Public Law 117-169 will result in a net decrease in the unified deficit totaling $58.1 billion over the 2022-2031 period. That decrease in the deficit is estimated to result from an increase in direct spending of $50.6 billion and an increase in revenues of $108.7 billion.