Obama's Speech in Berlin

[rapunzel]

Hey, X, join in!

I'm wondering, since we share a similar frame of cultural reference, if you know what the picture above represents....

 

[elgordoboy]

Jesus cloud. I used to think he climbed in and out of heaven on a ladder from a cloud that looked like that. These were in the Illustrated Bible days.

 

[rapunzel]

Jesus cloud. I used to think he climbed in and out of heaven on a ladder from a cloud that looked like that. These were in the Illustrated Bible days.

That's right! Only I always imagine a soft "ahhhhh, ahhh, ahhhhh...Hallelujah....." sound rather than a ladder.... VBS, c. 1979.

 

[6thGen]

Oh my god. We agree on something.

I understand your position. I should have said at what point can you not cut taxes further? What is the floor of government services? And when you reach it, how do we continue to grow?

It seems to me that that it would be almost impossible to cut government services beyond the point where we break even. The amount of cut backs just to get rid of the deficit would probably send the economy into a tailspin. Am I wrong on that? That's a legitimate question, not a smarmy one.

I'm afraid you are. Economic growth has an inverse relationship with government services.

At what point can you not cut taxes further? Light years. I'd at least say to the point where you give capital no incentive to exit (edited to clarify - I really shouldn't post before coffee). It's not the point you are looking for, that's still a good ways down the curve, but that's a start. If Alabama is charging a 5% corporate tax rate, and Georgia is at 2%, do you put your widget factory in Columbus or Phenix City? It's that simple. You don't look at the number of state wildflower roadside projects or the better state run homeless shelters when making a decision. And yes, I'm oversimplifying to make a point.

 

[Miss Kitty]

I think I am going to start crying happy tears. Thanks for the excellent education punz and 6thGen...I appreciate you dumbing it down for me. Taxes and the stock market have always bullied my brain. My patient husband has tried in vain to help me see the light.

 

[traderx]

Hey, X, join in!

I'm wondering, since we share a similar frame of cultural reference, if you know what the picture above represents....

Hmm....not sure but it does seem familiar. Could it be Kiralfys?

 

[LuciferSam]

I'm afraid you are. Economic growth has an inverse relationship with government services.

At what point can you not cut taxes further? Light years. I'd at least say to the point where you give capital no incentive to exit (edited to clarify - I really shouldn't post before coffee). It's not the point you are looking for, that's still a good ways down the curve, but that's a start. If Alabama is charging a 5% corporate tax rate, and Georgia is at 2%, do you put your widget factory in Columbus or Phenix City? It's that simple. You don't look at the number of state wildflower roadside projects or the better state run homeless shelters when making a decision. And yes, I'm oversimplifying to make a point.

You also look at what kind of talent the area has to offer.

 

[traderx]

So you don't believe a wee bit of regulation might have prevented the 20% May over May housing price drop that was just reported? And if cutting taxes is the way to spur growth, how do you grow and still provide the services of government and a strong defense? Further, do you not believe that some of the devaluation of the dollar can be blamed on the fact that taxes were cut and spending was increased and we now have a record deficit?

The tax rate was cut not taxes. Whenever tax rates are lowered, tax revenues incease. This was most dramatic under Reagan after he lowered the top marginal rate from 70% to 28%. Spending was increased at a faster rate than tax receipts, therefore proving that the budget can never be balanced by tax increases; we must have spending cuts. As to your question about if we cut government spending won't it put the economy into a tailspin? No. If government cuts spending we can keep more of our money and as the saying goes, private money is smarter than public money. The multiplier effect in our economy is much greater on the private side than the public.

As for the fall of the dollar, it was due to the US Current Account deficit the largest component of which is our trade deficit. The trade deficit began in the seventies but increased hugely under both Clinton and Bush. This, however, is not due to an economic failing of either President. It was due to the fact that manufacturing moved offshore because of our high costs. The US is a wealthy nation and we could afford goods and services from other countries hence imports exceeded exports and that constitutes a trade deficit. The situation is self-correcting however. The cheaper dollar has increased demand for American goods abroad so if that continues it will decrease our trade deficit and make the dollar stronger. PIMCO's Bill Gross recently said that the Euro premium over the dollar is not justified. The dollar remains the currency of record despite all the bad news.

ETA: forgot to mention that yes, our budget deficit contributes to the current account deficit. Our national debt is currently 9.5 trillion dollars and will easily exceed $10 trillion by the end of FY2009. Another factor are immigrants who send money home to their families in Mexico, India, etc. In fact, India receives the largest net payments in this area.

I am so sick of reading AP stories in which they interweave truth with fiction about the dollar. A typical story may read: the dollar continued its free fall amid a glorious(I know...) Euro economy while the US economy appears stalled. The implication is that the dollar fell because the US economy was weak and the perfect and all-knowing Euro economy was so strong. Such stories are written by AP business writers who know better.

 

[Matt J]

I'm afraid you are. Economic growth has an inverse relationship with government services.

At what point can you not cut taxes further? Light years. I'd at least say to the point where you give capital no incentive to exit (edited to clarify - I really shouldn't post before coffee). It's not the point you are looking for, that's still a good ways down the curve, but that's a start. If Alabama is charging a 5% corporate tax rate, and Georgia is at 2%, do you put your widget factory in Columbus or Phenix City? It's that simple. You don't look at the number of state wildflower roadside projects or the better state run homeless shelters when making a decision. And yes, I'm oversimplifying to make a point.

You also look at what kind of talent the area has to offer.

Lucifersam makes a very good point, what if Georgia has a state mandated minimum wage that makes labor higher? Maybe you ship via airline so Atlanta is a better option. I realize you were simplifying things, but tax rate isn't the only issue to look at.

 

[LuciferSam]

Lucifersam makes a very good point, what if Georgia has a state mandated minimum wage that makes labor higher? Maybe you ship via airline so Atlanta is a better option. I realize you were simplifying things, but tax rate isn't the only issue to look at.

Yes, talent, infrastructure, available resources.