.....The problem is, the benefit of one extra billion dollars spent to "boltster the economy" is not automatically bigger than the cost associated with with obtaining that billion, either by paying interest on borrowed money or by the negative effect that taxes have on those who pay them. You have to consider very carefully what the benefits of a specific application of that billion are going to be, instead of just distributing tax money or borrowed money with the garden hose á la Bush.
Well duh! I figured the rest of the falling dominoes in the equation would be rather obvious.
Borrow billions and spend it. You look rich. You feel rich. But soon, (after Bush is gone, of course, (maybe they're even clever enough to plan the ax falling when the Democrats are in power), all that interest and the capital have to be paid back.
And just as some insightful person already noted above, a tax cut without spending cut is a fake tax cut. It's like borrowing money to give someone but then you give them the debt plus interest along with the money.
Chaos said:
...the beggar in the street is going to be much happier about you giving him ten dollars, than Bill Gates would be if you gave the ten dollars to him; you´d probably have to give Bill a couple millions or so until he´s as happy as the beggar about ten dollars.
Due to the nature of this Marginal Benefit, it becomes clear that the highest benefit-per-dollar ratio can be achieved by making people with lower incomes - the poor - the recipients of tax cuts and similar measures.
If you are looking at direct benefit, perhaps. But these guys don't care about direct benefit, they care about marketing, themselves that is.
"It's your money". Remember that talking point? Bush is giving you back "your money". It doesn't matter if you personally get any back. It doesn't matter if the tax cuts really only go to the "rich". What matters is how many votes can they get with this scam.
My religious Republican brother, (the anti-skeptic), thinks Bush is better for my brother's economic benefit than a Democratic President. My brother, as many people in all the political parties, only sees the image. It isn't until things get as bad as they are now, until it's so obvious the war was a very bad decision and isn't helping decrease terrorism risks, until a Katrina event, that people like my brother look beyond the image.
Is this tax cut or isn't this tax cut bringing in more revenue? It's the borrowing that is being pumped into the economy which is bringing in more tax dollars and those dollars are costing way more than the revenue they are bringing in. Unless we can take that out of the equation, there really is no way to tell what impact this tax cut is having.
As far as giving money to investors or product purchasers, you have to know which side of that equation needs more money. Are the masses fat with cash and buying everything in sight? Then you need more money in capital investment. Are the masses barely getting by and spending all they have already? Then what the hell are you investing in? How much more capital can the luxury yacht and billion dollar mansion industry absorb?
Just looking at the economic balance in my neighborhood should give you a good idea what putting more money in the hands of the rich is doing to the economy. This is Microsoft land. There are huge houses everywhere. There are vast neighborhoods of new 3-4,000 sq. ft homes with 3 car garages being the norm. There are neighborhoods like mine with a little smaller, but still very nice older homes, and there are some poorer neighborhoods and lots of apartment complexes, the ugly ones that all look the same. For the rich there are million dollar apartments in big new downtown high rises as well.
There has been a recent influx of immigrant labor. Every single fast food place in town has all Spanish or bilingual speaking employees, literally. They mostly live in the apartment complexes. They drive beat up used cars. They could never hope to buy a home in this neighborhood and my son probably couldn't either except if he inherits it. Why? Because the amount of money some people have and their desire to live where they work is driving the housing prices through the roof.
There is a house down the street just went up for sale at $615,000. It is 1,300 sq. ft. A new house built on a vacant lot 2 doors down from that house sold for $900,000 over 5 years ago. It would be about 1.5 million now. They're building 4 new houses on some vacant land around the corner with asking prices of 1.4 million each. It's like silicon valley around here. This is a middle class area. Not an area of million dollar homes.
So if Bellevue, WA is any indication of the economy, the middle income and lower income people need more money to buy the things those investors are investing in. That's the side of the equation that needs the tax cut money today, in my opinion. That is if you buy the idea it brings in more tax dollars than is given out. You never hear Bush talk about the curve of taxes vs revenue so who knows where on that curve we really are. I doubt they know or if they do, I doubt they care. It's purely the image, marketing, and the fact Daddy Bush's re-election died with the, "read my lips", promise that wasn't kept.
No way do I believe Bush and company are actually consulting economists about this.
