Paul Krugman & others says the way out of the down economy is for the Federal government to spend/spend/spend, putting $ in hands that will spend it again, etc., multiplying its power & stimulating the economy. The other point of view is that spending is already way out of control & we need to cut spending & eliminate budget deficits. This latter point of view seems to have the most resonance with voters at the moment. Krugman says picking the Hoover approach vs the FDR approach will make things worse & put us into an economic death spiral. I wish I knew enough about economics to make an informed decision. I'd welcome any insights you might have.
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SoWal Insider
Why? We spent our way out of the great depression. Sure it took a major world war in which a lot of people were killed, but it still in involved major government expenditure and huge deficits. Think how much better off we'd have been then, and now for that matter, if government stimulated the economy in the same manner and there had been no WWII.
I don't know.....I don't think taxation and increased government spending is the cure all. We had a nasty, nasty recession around 1919-1920 (post WWI). There was absolutely no government intervention and we, as a Nation, came out of that one much stronger and rather quickly. The Roaring '20's were here! The Great Depression happened because there was virtually no oversight or regulation over banking and securities - 'brokers' were basically selling worthless paper and worthless stocks.
I guess each economic downturn has its own merits/issues and due to changes in the economies, not every solution works for every recession. However, I believe that most Americans would rather work hard and keep the government out of our recovery.
SoWal Expert
I guess I don't see a nasty recession followed by a Great Depression in less than 10 years as "a strong recovery w/o government intervention." 
SoWal Insider
Different causes.
Beach FanaticAuthor
Tax Hikes Coming?
Tax Hikes Coming?
Interesting article in US News & World Report:
?Most economists feel the solution [to the deficit] is a combination of tax increases and spending cuts, since doing one or the other alone would be too draconian....The first real opportunity to do something arises this fall, since income taxes for most Americans will automatically go up unless Congress and Obama extend some of the Bush tax cuts. Here's what's likely to happen:
...Obama wants to raise the top two income brackets from the Bush-era levels...from 35 to 39.6 percent and the rate in the next bracket will rise from 33 to 36 percent. That effectively means that taxes will rise for individuals with income over $200,000 and couples earning over $250,000 (after accounting for deductions). There will also be new limits (same as the old ones, before the Bush cuts were enacted) on the total amount of allowable deductions, which will bump a few additional people into these higher brackets. To enact these "tax hikes" on the wealthy, Congress doesn't need to do anything--it will happen automatically at the end of 2010, once the Bush tax cuts are over.?
?Those who would fall into the two higher brackets?account for just 3.4 percent of all taxpayers.?
?Republicans...[say it's] important...to start attacking the debt...[but argue] that enacting any tax increase in a weak economy is dangerous, because it could crimp spending just when it's needed most. There's truth to that, but the majority of evidence suggests that tax increases on the wealthy would cut into what they save, not what they spend.?
?The middle class will get a temporary pass, but it will only defer the inevitable pain. Obama has pledged no new taxes on the middle class, and no matter how implausible that is, it's hard to see him breaking that promise in his first term. Besides, raising the?income?tax?rates?on the majority of taxpayers?would?be risky in a lousy economy, so the odds are high that Congress will extend the Bush tax cuts for those who fall below the $200,000/$250,000 thresholds.?
When the Tax Hikes Are Coming - Yahoo! News
Tax Hikes Coming?
Interesting article in US News & World Report:
?Most economists feel the solution [to the deficit] is a combination of tax increases and spending cuts, since doing one or the other alone would be too draconian....The first real opportunity to do something arises this fall, since income taxes for most Americans will automatically go up unless Congress and Obama extend some of the Bush tax cuts. Here's what's likely to happen:
...Obama wants to raise the top two income brackets from the Bush-era levels...from 35 to 39.6 percent and the rate in the next bracket will rise from 33 to 36 percent. That effectively means that taxes will rise for individuals with income over $200,000 and couples earning over $250,000 (after accounting for deductions). There will also be new limits (same as the old ones, before the Bush cuts were enacted) on the total amount of allowable deductions, which will bump a few additional people into these higher brackets. To enact these "tax hikes" on the wealthy, Congress doesn't need to do anything--it will happen automatically at the end of 2010, once the Bush tax cuts are over.?
?Those who would fall into the two higher brackets?account for just 3.4 percent of all taxpayers.?
?Republicans...[say it's] important...to start attacking the debt...[but argue] that enacting any tax increase in a weak economy is dangerous, because it could crimp spending just when it's needed most. There's truth to that, but the majority of evidence suggests that tax increases on the wealthy would cut into what they save, not what they spend.?
?The middle class will get a temporary pass, but it will only defer the inevitable pain. Obama has pledged no new taxes on the middle class, and no matter how implausible that is, it's hard to see him breaking that promise in his first term. Besides, raising the?income?tax?rates?on the majority of taxpayers?would?be risky in a lousy economy, so the odds are high that Congress will extend the Bush tax cuts for those who fall below the $200,000/$250,000 thresholds.?
When the Tax Hikes Are Coming - Yahoo! News
SoWal Insider
Why? We spent our way out of the great depression. Sure it took a major world war in which a lot of people were killed, but it still in involved major government expenditure and huge deficits. Think how much better off we'd have been then, and now for that matter, if government stimulated the economy in the same manner and there had been no WWII.
To get the country out from under that debt, tax rates were pushed to obscene levels and our economy experienced mediocre growth.
Take for example tax rates as recently as 1979. Look at where you fall in this table and ask yourself if you would be willing to pay these rates to cover the debt Obama is currently racking up?
14% $6,708
16% $9,917
18% $12,834
19% $18,959
21% $24,793
24% $29,169
26% $36,461
30% $43,753
34% $58,338
39% $72,923
44% $87,507
50% $102,092
55% $123,969
63% $167,723
70% $320,861
These rates are low compared to what FDR had set up after WWII.
If you make 40K a year, would you be willing to write a check to Uncle Sam for 12K of it? 70K a year, a check for 22K? or 100K a year, 45K?
Beach FanaticAuthor
To get the country out from under that debt, tax rates were pushed to obscene levels and our economy experienced mediocre growth.
Take for example tax rates as recently as 1979. Look at where you fall in this table and ask yourself if you would be willing to pay these rates to cover the debt Obama is currently racking up?
14% $6,708
16% $9,917
18% $12,834
19% $18,959
21% $24,793
24% $29,169
26% $36,461
30% $43,753
34% $58,338
39% $72,923
44% $87,507
50% $102,092
55% $123,969
63% $167,723
70% $320,861
These rates are low compared to what FDR had set up after WWII.
If you make 40K a year, would you be willing to write a check to Uncle Sam for 12K of it? 70K a year, a check for 22K? or 100K a year, 45K?
Shopper,
Are these 1979 dollars or 2010 dollars in your table?--It makes a BIG difference.
96.6% of Americans are in the current 25% bracket or lower. Effective tax rates are the lowest they've been in 60 years (see initial posting in the thread: Are Americans Overtaxed?)
SoWal Insider
Shopper,
Are these 1979 dollars or 2010 dollars in your table?--It makes a BIG difference.
Inflation adjusted 2009 income w/the rates in 1979.
96.6% of Americans are in the current 25% bracket or lower. Effective tax rates are the lowest they've been in 60 years (see initial posting in the thread: Are Americans Overtaxed?)
Yes but Luce was saying running up the debt we had in WWII would be ok. I just want to make sure everyone understood what kind of personal sacrifices we'd have to make in order to pay something like that off.
Edited
Beach FanaticAuthor
Inflation adjusted 2009 income w/the rates in 1979.
Good. Thx. That's the only way the table would have any real relevance to our discussion--& you're right, those are steep rates compared to today when fed marginal rates are the lowest they've been in 60 yrs.
SoWal Insider
This is the site I used to get the inflated dollar values, if you're curious. Seems to be pretty accurate -
The Inflation Calculator
Here are the historical tax rates -
Howstuffworks
Take a look at 1951.
The entry level rate for 2009 income up to 16K a year was almost 23%. Those folks today get a pay check back from the U.S. Government at tax time.
The Inflation Calculator
Here are the historical tax rates -
Howstuffworks
Take a look at 1951.
The entry level rate for 2009 income up to 16K a year was almost 23%. Those folks today get a pay check back from the U.S. Government at tax time.Beach FanaticAuthor
Gov't Aid to Small Business: Good or Evil?
Gov't Aid to Small Business: Good or Evil?
Senate Republicans on Thursday rejected a bill to aid small businesses with expanded loan programs and tax breaks.
The Dems said the bill would stimulate the economy.
The Repubs said it would hurt the economy by adding to the deficit.
The bill was supported by the US Chamber of Commerce.
60 votes were needed to advance the bill; final tally was 58-42
All Dems voted yes.
All Repubs voted no.
Which is more important, whatever stimulus the bill might provide, or the added deficit $?
http://www.nytimes.com/2010/07/30/us/politics/30cong.html?ref=politics
Gov't Aid to Small Business: Good or Evil?
Senate Republicans on Thursday rejected a bill to aid small businesses with expanded loan programs and tax breaks.
The Dems said the bill would stimulate the economy.
The Repubs said it would hurt the economy by adding to the deficit.
The bill was supported by the US Chamber of Commerce.
60 votes were needed to advance the bill; final tally was 58-42
All Dems voted yes.
All Repubs voted no.
Which is more important, whatever stimulus the bill might provide, or the added deficit $?
http://www.nytimes.com/2010/07/30/us/politics/30cong.html?ref=politics
Beach FanaticAuthor
In the various political threads in the SoWal forums, there is precious little consensus. The is one point, however, which has garnered support from liberals & conservatives, to wit, that, of all the bad choices we have to reduce the deficit, reducing defense spending is maybe the least unpalatable.
Defense spending ? $690 billion in 2010, or 4.7 percent of G.D.P. ? accounts for 20 percent of the budget. The article below suggests these $ as candidates for reducing the deficit (along with raising taxes).
http://www.nytimes.com/2010/08/01/opinion/01sun1.html?pagewanted=2&ref=opinion
Defense spending ? $690 billion in 2010, or 4.7 percent of G.D.P. ? accounts for 20 percent of the budget. The article below suggests these $ as candidates for reducing the deficit (along with raising taxes).
http://www.nytimes.com/2010/08/01/opinion/01sun1.html?pagewanted=2&ref=opinion
SoWal Insider
In the various political threads in the SoWal forums, there is precious little consensus. The is one point, however, which has garnered support from liberals & conservatives, to wit, that, of all the bad choices we have to reduce the deficit, reducing defense spending is maybe the least unpalatable.
Defense spending ? $690 billion in 2010, or 4.7 percent of G.D.P. ? accounts for 20 percent of the budget. The article below suggests these $ as candidates for reducing the deficit (along with raising taxes).
http://www.nytimes.com/2010/08/01/opinion/01sun1.html?pagewanted=2&ref=opinion
How much of that can be trimmed? In other words, how much is actual combat?
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