First of all, no matter how many jobs we create good ol' uncle sam is always going to spend this once great country into a never ending black hole. Do any of you really think we will get out of debt someday? Uncle sam is more communist than he is republic, come on wake up folks. I hate to sound like nothing but a govt. hater (which i am) but people need to open their eyes to the ride we are on and I don't give a damn that it is better than any other place on planet earth either, still doesn't make it right!!!
History always repeats itself, do not forget that fact...
Murf
God , people like this make me wish that potential voters should have to pass a basic economics test to qualify for voting rights.
First, the great conservative shift towards reduced taxes was under Reagan:
"Instead, I discovered that to balance the budget we would need huge spending cuts too - more than a $100 billion per year. The fabled revenue feedback of the Laffer curve had thus slid into the grave of fiscal mythology forty days after the supply side banner had been hoisted up at the GOP convention.
These dramatic changes in both my comprehension of budget estimating and the true fiscal math of the supply-side program occurred almost overnight."
David Stockman
The Triumph of Politics, The Inside Story of the Reagan Revolution, 1987
p. 74
Soon, friction came from both sides - Republicans also - on budget cuts. The resulting deficits where historical and the real GNP growth no where near what they predicted:
Real GNP Growth
Quarter..........Supply side/Monetarist Prediction.........Actual GNP Growth
1981:4......................4.0%.................. .......................-5.3%
1982:1......................9.4%.................. .......................-5.5%
1982:2......................7.8%.................. ........................0.9%
1982:3......................6.8%.................. .......................-1.0%
1983:4......................5.4%.................. .......................-1.3%
Under Reagan, the U.S. National debt went from $997 billion to $2.85 trillion.
“Specifically, when income is equitably distributed, there is little question as to its ultimate disposition. It is spent or it is saved, invested and thus spent. There are no large pools of funds that are held in idleness because no one, or not many, have sufficient income to support such accumulations.
The United States in recent times has had both an unequal and an increasingly unequal distribution of income. Paul Krugman has estimated that in the 1980s “70 percent of the rise in average family income [went] to the top 1 percent of families....The 1 percent of families with the highest incomes received about 12 percent of overall pretax income, while the wealthiest 1 percent of families had some 39 percent of net worth.”
The counterpart of this concentration of income and wealth was a damaging unreliability as to its use. In established and orthodox economics, savings are invested and spent no less reliably than the money that goes to the supermarket. In real life, if money goes to individuals in very large chunks, it may be neither spent nor invested. It may be held in liquid form; some of it, as in the 1980s, may be absorbed by functionless debt creation, such as that which financed the mergers and acquisitions and the leveraged buyouts....
The poor spend what they receive in good times and bad. So, on the whole, do those with middle class incomes. The rich have a choice. When they neither spend nor invest, a new equilibrium is set by the reduced demand....
There is, as I've said, a social case for equitably distributed income, but the latter, to repeat, is also functionally necessary for the effective operation of the modern market economy. That the recession cum depression of the 1990s came first to the United States and spread out to the world from here should surprise no one;
as to widely distributed and therefore reliably expended income – the first essential of modern capitalism – we are far from the best case.”
John Kenneth Galbraith
A Journey Through Economic Time, 1994
p. 234-236
Not that we didn't try this before:
Take the Kennedy tax breaks. In the 1965 annual report of the International Monetary Fund, only one year after the Kennedy tax breaks went into effect, the IMF warned that the large outflow of investment from the U.S., especially into Europe, was becoming a serious problem. Corporate America was taking some of their tax break profits and investing them in higher interest paying banks in Europe to the point that even our small trade surplus (back when we still had tariffs) didn't compensate. By 1971 the investment deficit had accumulated to $58 billion and was creating inflation in Europe. Nations like Germany and France started cashing in their dollars for gold and threatened to drain us of our gold reserves. On August 15, 1971 Nixon had to close the gold window in violation of our Constitution. Not exactly the happy-ever-after ending that the conservative investment fairy tale predicts.
Steve