Re: NASA moon trip video

On Fri, 3 Feb 2006 07:40:10 +0000 (UTC), "Vorlonagent"
<jt@xxxxxxxxxxxx> wrote:


"Josh Hill" <usereplyto@xxxxxxxxx> wrote in message
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"Josh Hill" <usereplyto@xxxxxxxxx> wrote in message
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Nipping Bush's tax cut will raise revenue in the short trem (over next
18
mos or so), but it also slams the brakes on an economy already beginning
to
falter under high oil prices.

The real answer is to get serious about cutting spending.

It seems to me that there were, from a macroeconomic perspective,
several serious problems with Bush's tax cuts, chief among them the
fact that they were targeted largely at the wealthy, who unlike the
poor and middle class tend to invest rather than spend. Since
investment isn't what we need in an economic downturn when cheap
capital is plentiful, for a given reduction in revenue, Bush's tax
cuts provided significantly less of an economic stimulus than they
would have had they been targeted towards consumption.

The counter point is, "if the rich aren't making money, nobody's making
money."

Otherwise, I refer you to the US GDP growth figures.

But that isn't the dichotomy! Check out this site --

http://www.faireconomy.org/press/archive/1999/Divided_Decade/divided_decade.html

There's a lot of class-warfare noise. Would you care to point out the
signal?

Sorry, I should have mentioned that I was referring to the big bar
graphs -- Rising Together: Changes in Family Income, 1947-79 and
Drifting Apart: Change in Family Income, 1979-98, as well as the bar
graph below, Change in After-Tax Family Income 1977-99.

It's de-centralized vs. centralized spending. The government has a
different spending pattern. You want to transfer money uselessly to
corporations and organizations, let the government spend it. If you want
the whole economy to do better, let people spend it. Cutting taxes puts
money in the hands of people who would spend it simulating the economy
buying durable goods, what-have-you.

It seems to me that one has first of all to distinguish between
government spending that is actually spent by individuals and money
spent directly by the government. Social Security is a good example of
the former -- just about every penny we send to Social Security is
disbursed to Social Security recipients, or put in a trust fund where
it earns interest and will be disbursed when we retire; the overhead
of the program is virtually nil.

Much of government spending -- the entitlement programs -- is of this
sort. Not only is it more efficient than other government spending, it
is unique in that it's frequently more efficient than comparable
efforts managed by private enterprise, which is one of the reason's
Bush's Social Security privatization scheme failed.

Then there's a second class of government expenditure, what one might
call necessary but inefficient. Such expenditures are necessary -- we
can't do without highways or the military -- but they're wasteful,
because the funds are disbursed in a corrupt or political manner.

Finally, there's a third class, what one might call the pork category
-- the infamous $100 million bridge to an uninhabited island in
Alaska, midnight basketball programs we could do without, and various
endeavors that might be accomplished more efficiently by individuals,
non-profit organizations, or private enterprise. Such spending is IMO
wasteful, but I see no evidence that the government is going to reduce
it, since We The People don't seem to want to eliminate our cut of it
(as Reagan found out when he tried to eliminate the
reviled-by-economists home mortgage exemption), or to take the time to
determine which of our representatives are dispersing pork to special
interests.

Well, we don't want it bad enough to throw the rascals out. Finding a set
of non-rascals to install has proven difficult when both parties are
spendthrifts.

On the spending front, the Republicans were supposed to be the non-rascals,
but that hasn't held up under the temptations that come with control of the
pursestrings.

It's a lot easier to claim virtue when your party is out of power.

If it were up to me, we'd retain and expand categories A and B, while
eliminating category C.

First we need a common or at least workably common definition of each
category.

If I work with you to streamline the military and cut back on corporate
welfare, will you work with me and do the same with social programs?

Absolutely! I believe that if we did so with both, we could
accommodate pressing and unaddressed needs like medical care, defense
against terrorism, poverty, education, and energy independence without
raising taxes. But I don't think it will happen -- Congress is
becoming more rather than less corrupt, and unlike his Republican and
Democratic predecessors President Bush has made no effort to curb
pork, which is running rampant.

We'd all be richer if we did. But that's not
what conservative politicians (as opposed perhaps to the conservative
rank and file) have been pushing for. They want to dismantle
effective, efficient programs like Social Security that benefit the
poor and middle class while creating programs or making tax cuts that
favor big business and the wealthy. They want to spend less on social
programs and more on the military -- a valid tradeoff, perhaps, but
one that increases rather than diminishes pork -- and to provide
"corporate welfare" and tax cuts to those who are least likely to
spend it.

We've gone round concerning social security before. Suffice it to say I
don't always agree with your definitions.


Which is a long way of saying that it seems to me that your dichotomy,
while valid in principle, isn't applicable in practice, because the
cleavage doesn't really occur along that face. Rather, in practice,
Dems tend to push up demand and shift income from rich to poor, both
of which are good for the economy except when we're in an inflationary
period, which, historically, has been the exception rather than the
rule.

Push up demand how?

Government spending, tax cuts, grants -- it doesn't really matter how
you do it, as long as the money gets spent rather than ending up in
the stock market (which if you think about it is like the La Brea Tar
Pits in that most of the money just disappears).

And "shifting income" defines out as taking money the rich earn and giving
it to the poor who don't (earn it). This discourages innovation by both
groups. When your needs are taken care of and you aren't doing something to
earn it, it's easy to get comfortable. At the same time, why burn the
midnight oil when the government's going to take an disproportioonate chunk
out of your success?

Let's be realistic, though -- do you know any rich people who have
stopped working or investing because of taxes? That /can/ happen -- it
did forex in pre-Thatcher England -- but only with confiscatory tax
rates, and we aren't anywhere near that: the rich in the US pay little
more, perhaps less in taxes than the middle class.

Some anti-poverty programs, OTOH, have created perverse incentives and
welfare dependency. That was, to some extent, addressed by the welfare
reform of the Clinton years. I'd go it one further, and replace
welfare entirely, along with a wide array of inefficient, demeaning
programs like public housing and food stamps, with a program of
guaranteed jobs, preferably through private enterprise (via tax
credits) but as a last resort through public works. The jobs would pay
enough to lift recipients out of poverty, and as such set a de facto
minimum wage.

Does that constitute wealth transfer? Sure, but we already have wealth
transfer, and in this case the poor would be producing wealth as well
as consuming it. And philosophically, I believe on a number of counts
that a certain degree of income reapportionment is justified:

1. Decency -- Let's face it, not everyone grows up with the advantages
we had. If my neighbor is willing to do his best, I'm willing to help
him out.

2. Practicality -- The guy who pumps gas is unlikely to hold up the
gas station: our country is strongest when we have an educated,
responsible citizenry, and I believe that gainful employment, and the
self-respect that come with it, is the key to that, to working a
transformation on the self-destructive, defeatist subculture that
arises among welfare recipients and ghettoized groups.

Nor do I think it's in our national interest to allow the middle class
to disappear in the face of low-wage foreign competition. America
became rich and powerful not just through size and an abundance of
resources -- a country like Brazil has that as well -- but because her
citizens were able to create their own wealth. It was in America that
the working man first left the poor and joined the middle class. The
alternative, seen in places like the aforementioned Brazil, is to have
islands of wealth above a sea of poverty. Do we really want a society
like that?

3. Equity -- While many wealthy individuals became so through
perspicacity and hard work, if we're honest, we'll also recognize that
many attained some or all of their wealth through unscrupulousness and
advantage. Forex, the CEO of a large company can set his own benefits
and compensation (who ever hired a compensation consultant known for
being stingy with salaries?), and CEO's have in recent years used that
power to push up their wages and benefits far beyond what the market
would pay: it's not unusual these days to read that even the failed
CEO's of money-losing companies, people whom no one in his right mind
would hire, are earning millions and getting paid millions even for
being fired!

Or a child may be born a wealthy aristocrat, like George W. Bush. You
spoke of perverse incentives -- how is a vast inheritance different n
effect than welfare dependency? It has much the same effect on
motivation (some extremely wealthy people are actually writing their
kids out of their wills after seeing some of the effects of inherited
wealth) and it carries with it a far greater cost to society, since
the scion of a wealthy family taxes us to the tune of millions while
the welfare recipient takes mere thousands.

4. It's everybody's sky -- Property rights are something that we have
imposed on the order of things: a few personal possessions aside, they
aren't natural to human affairs; tribal societies tend to be fairly
egalitarian.

I happen to favor capitalism because observation tells me that large,
advanced societies like ours are better off with a market economy than
a command one. But I don't believe we were created to live by greed
alone.

The moral justification of a system lies in what it does for society
and the people in it, not the other way around. Insofar as it provides
incentive and rewards hard work, I'm all in favor of the market. But
when we let the tail wag the dog -- when we confound Adam Smith's
invisible hand, self-interest working for the benefit of all, with
mere greed -- we lose sight of the only possible moral justification
for an economic system, the betterment of a nation and the people in
it.

Moreover the money is the people's to begin with. Government must leny a
share of it to provide for the common good. I think there is an attitude
of
entitlement, as if its Government's decision to make how much money it
*allows* its people to spend.

I don't think this last is applicable in a democracy. It's our money
whether we have the government spend it or spend it ourselves, and
there are times when it makes sense for the government to spend it on
our behalf, since some activities -- building highways or outfitting
the military, say -- are by their nature group endeavors.

My tax money doesn't belong to me, it belongs to everyone. Therefore it
also belongs to noone, including me.

Do you own any stocks? Have money in a mutual fund? Would you say that
part of the company or the fund and the companies it owns doesn't
belong to you because others own shares as well?

The
balance between government and private spending should, I think, be
based upon an analysis of our needs and the most efficient way of
meeting them, rather than an ideological obsession with small (or
large) government. Except in unusual circumstances such as a world
war, when our needs increase as they have because of the Iraqi war,
the flood in New Orleans, and the Medicare drug benefit, taxes should
be increased to cover them, with the decision to run a deficit or
surplus based on purely economic considerations.

A logical exreme of this point of view is the government sticking its nose
into every buying decision I make (with lobbyists lining up behind to try
to
prejudice the government's decisions for someone's profit).

An alternative method from raising taxes to cover spending is to reduce
spending in some areas to free up money for new needs. Ideally, Congress
uses both, raising taxes if there isn't resources to transfer. The
problem
with just about any tax is that the government can never get around to
ending the tax once it has been put into effect.

Well, I'm not sure that that's true -- IIRC the Federal tax bite has
gotten smaller as a percentage of income -- but even if it is, there's
probably a good reason for it, in that we're getting richer and can
afford to spend a higher percentage of our income on government
endeavors while still being ahead at the end of the day. Real per
capita income, forex, has increased IIRC five times since the 30's. We
spend more on taxes, but we still take home more, and in return for
our expenditures, we receive benefits the people of that era didn't
get or expect -- everything from medical care when we grow old (do we
really want to do without that quadruple bypass?) to superhighways to
a vast military establishment.

Just because the government *can* tax us more doesn't mean it is entitled
to.

Why would government not be entitled to tax us? The Constitution
allows it, and I don't think it can be argued that a country can
survive without taxes. I do think it can be argued that some taxes and
levels are counterproductive while others are beneficial, but that's a
different matter.

Also, I think it's dangerous to speak without qualification about
reigning in government spending. That isn't going to happen because we
don't want to eliminate the valid things that government spending
provides -- things like education, R&D, a strong military, Social
Security, and Medicare. The problem as I see it is that legislators
are reluctant to cut the spending that /should/ be cut -- pork like
farm subsidies, bridges to uninhabited islands in Alaskaand,
anti-terrorism money for cornfields, the huge and largely unnecessary
cold war nuclear arsenal, and the like. Since the President and
Congress haven't been willing to cut out pork, the conservative
"starve the beast" reductions in government financing have had the
unfortunate effect of depriving government of the funds it needs for
productive and necessary investments such as energy independence,
reconstruction in Louisiana and Iraq, and comprehensive health care
reform, as well as shifting a burden to states and local communities,
which has the effect of magnifying economic inequality, since poorer
localities and large states (which are underrepresented in Congress)
end up with higher taxes and inferior services, driving business
elsewhere.

The tax cut was not intended to "starve the beast". It was intended as
economic stimulus, right in line with your thinking of how tax decisions
ought to be made.

Are you sure about that? Reagan spoke of trickle-down economics, but
IIRC conservative journals were at the time discussing using tax cuts
as a weapon to force the dismantling of social programs. It seems to
me possible that Reagan fell for his own group's guff, as I think Bush
does sometimes as well. That's the disadvantage of having a president
who is (in Bush's words) a "retail politician."

I'm sure.

Evidence?

My complaint from the start of this thread was about the disconnect
between
receipts and spending and the fact that Congressional Republicans have
shown
no appetite for restraint.

My definition of fiscal restraint is something Republicans and
Democrats use to condemn the other party when they're out of power . .

Both are correct. It's been interesting to see "tax and spend" democrats
playing at being budget hawks.

Truth is, I haven't seen any evidence that Republicans, when in power,
acted differently. And I think it's worth pondering the reasons for
that. My hypothesis:

1. Republicans like pork -- gifts that they can take back to their
constituents, contributors, and deluxe all-expenses-paid vacation
providers -- at least as much as Democrats. In fact, last I checked,
the average red state received $2000 more per capita in Federal
spending than the average blue state.

2. Much of what government spends is necessary or beneficial or
politically popular, and Republican legislators know that. Which is to
say that while "tax and spend Democrats" makes a good campaign phrase,
Republican congressmen aren't about to eliminate Social Security or
Medicare and Medicaid or the military -- the big items in the Federal
budget -- because their constituents would tar and feather them and
run them out of town on a rail.

Here's the government's official breakdown:

Interest on debt 8%

Military, domestic security 19%
Social Security 21%
Medicare 13%
Medicaid 8%

Nonmilitary discretionary pending 18%
Other 13%

So miscellaneous and discretionary spending make up less than a third
of the budget, including things that we wouldn't want to live without,
like highways and airports.

--
Josh

"Reade him, therefore; and againe, and againe: And if then you doe not like him,
surely you are in some manifest danger, not to understand him." - Heminge and Condell

.