Haha! You should be in politics @MikeJ, that is a bipartisan compromise if ever there was one.
Thesis, antithesis, synthesis? Anyway, I’d hate to have to shake that many hands…
Ya, I suspect that it’s more of a semantic argument at this point.
We both agree that the dogmatic form that supply side economics exists within the modern GOP is certainly nonsensical… cutting taxes on ultra rich people does not automatically result in significant economic growth.
As I said previously, both Keynesian and Supply-Side schools of thought share much in common, as the overall system they are dealing with is the same… it’s more of a difference of opinion in terms of where to focus efforts. And the rational perspective is that you should do both.
Re: supply side stuff - I loved this interview on NPR:
HARB: I honestly didn’t really believe it, so I called my accountant. He said, yeah, you’re not going to pay any taxes next year, so I was like, great.
CHACE: Alex’s first move was exactly what Governor Brownback wanted to happen. He took the money he saved from his taxes and invested in his computer business.
HARB: We added more iPads into our inventory with that money.
CHACE: You got a bunch of iPads?
HARB: Yes.
CHACE: Now he plans to sell iPads at Ribbit Computers. So this is the first step in the Brownback experiment, the reinvestment. The next step is supposed to be hiring.
CHACE: Did you hire anybody?
HARB: Not really, because you hire people not based on how much money you have - based on your business. So it didn’t really have immediate help on the business. I didn’t really notice any more business purchasing, you know, around here. So didn’t really trigger anything to hire more employees.
The longer version (full thing) is here: Episode 577: The Kansas Experiment : Planet Money : NPR
There is a great line from a grocery store owner in that article , something like (paraphrasing) “Having no taxes doesn’t do you any good if you’re not making any money to start with”.
The GOP loves to give money and breaks to the rich and the corporations, but the rich and the corporations don’t spend into the economy with nearly as much power as the Middle Class. Giving a family earning $60,000 a year a tax break that puts $600 back into their pockets in the form of an extra $50 per month in their paychecks multiplied by all the Middle Class families in America is going to have a much more profound effect on spending in the economy than giving $60,000 back to even a million wealthy people and $600,000 back to a few thousand corporations. The rich people and the corporations will most likely hoard/invest most of that giveback, the family will spend it without even thinking about it. Spending drives the economy.
On a slightly positive note it seems like the economics people Trump hired can at least do basic math, right? And Ryan will stay away from this one, too, right?
Right which is why you often target the Middle Class… which seems to be shrinking. On the other hand if you want a quick jump start, you might drop the money into lower class and middle class knowing the lower class group is likely to buy non-durables and money goes direct into the economy but doesn’t really factor much, but the Middle Class continues when that dies off with purchasing durables… like cars, home repairs, appliances…the things that have a cascading sort of effect.
The simple (and perhaps, too simplistic but still relevant) answer is, Americans by and large all feel that they, one day, will be one of the 1%, so anything that helps the rich will ultimately help then. At the same time, anything that helps the less wealthy is seen as a “give away,” no matter how much the person declaiming such actually benefits themselves from government programs. It’s the result of a combination of mythology, ideology, and deliberate political mind-shaping over the past several decades at least. For many Americans, the biggest fear they have is that someone, somewhere, is getting something that they aren’t getting, and that they “don’t deserve,” which usually means that the recipient doesn’t somehow meet whatever arbitrary criteria for worthiness the person in question has in mind.
For many, worthiness is directly correlated to whiteness, but that’s far from the only criterion in play. The closer someone is to the cultural norms the true believer holds, the more likely it is that any benefits they receive will be seen as justified and, the holy word, “earned.” The farther from that cultural norm, the more likely the recipient is to be seen as a freeloader, and taking stuff they “didn’t earn.” This makes it possible, for instance, for someone on disability and using Medicare and food stamps to be appalled at someone else doing exactly the same thing.
no they would not. the auto parts supply chain companies ford and others depended on would have collapsed with gm and chrysler:
[quote]Without financing during bankruptcy, GM and Chrysler would have had to go out of business, taking down many suppliers. That would have likely caused bankruptcies at the healthier automakers such Ford Motor (F), who would not have been able to get the parts they needed to build cars. That is why Ford went to Capitol Hill in late 2008 pushing for the rescue of its rivals.
The Center for Automotive Research, a well-respected Michigan think tank estimates that the bailout therefore saved 1.5 million U.S. jobs by keeping GM, Chrysler and the companies that depended on them in business.[/quote]
if ford would have profited why did they ask for a rescue of their competitors? patriotism? concern for the gm workers?
I’m aware of how the automobile supply chain works. That’s a simplified statement as it exists in a vacuum as if others could not purchase said suppliers.
The bailout is not an example of trickle down or supply side economics. GM and Chrysler did not function as private companies when the Fed basically took them over. The supply chain scare is not the sole reason Ford went before Congress.
It’s pretty clear though that a full-on collapse of two of the big three American automakers would have been an economic catastrophe across the board. Even if eventually thing would have sorted out, the intervening time would have been rather dismal for a great many Americans. One can still argue, though, that by the principles of capitalism, both GM and Chrysler should have been left to flounder, regardless of the costs. Whether that would have resulted in a better situation today or not is an open question, though all things considered I think we did about the best we could have in that situation.
It does still gall me, however, that we as a nation bailed out companies that had quite consciously backed themselves into their own greed-driven corners.
Or, in the case of the banks, had caused the collapse themselves through underhanded and deceptive means.
The banks bother me a hell of a lot more than the auto makers. We got absolutely nothing out of the deal, we straight bailed them out with no concessions on their side.
Agreed. You can make the case that Detroit’s problems, while largely self-inflicted, also part of a broader national blindness to the unique situation obtaining after WWII, with a booming economy, a largely captive market, and incredibly cheap oil. The banks…well, nothing but sheer greed there.
The banks should bother you more than the auto makers, but not for the reasons you might be thinking. The banks are the backbone of our financial system. The system people are generally confident enough in to go to an ATM and believe they can always get money from their account kind of confidence. Hell Washington Mutual was ginormous and we let it collapse but oh no, if two of our automakers go down, not counting Ford because they were in a completely different position than the other two, well… that’s just unthinkable.
I guess the next time an industry that is seen as some sort of American heritage type industry flounders, they can just approach the government to avoid the economy’s natural process.
In any case, the bailouts are not examples of the GOP’s consistent failed plan to give more money to the rich so they can expand their businesses and create jobs in the USA. As was mentioned above, the Fed controlled those companies, so hoarding their cash in foreign accounts, building factories in other countries, or just continuing to lower wages or layoff workers to provide dividends to more rich people wasn’t an option. Tax breaks does not suddenly create more demand for a product or service, so it doesn’t make a lot of sense for them to expand an existing business unless they think they will have that.
You could get rid of deductions but keep a progressive system.
I’d grandfather a few deductions that might cause instability in the future such as mortgages (but no new mortgages would quality), but my system would top out at a 40% rate for income.
Capital gains would be 0% for folks earning under 100k, 15% for folks earning 6 figures, and full tax rate for millionares.
I’d also consider a federal property tax of 1%, which would only apply to millionaires.
As for Ford- they had fear of contagion. Even Ford took steps to receive bailout money if necessary- they just didn’t need to do it.
nesrie
what’s your vision of what might happen if the auto companies didn’t get the money, who would be buying the parts companies? the auto companies get no bailout, there’s not enough private loan money or will form the banks for the auto companies, so now the banks are going to loan tons to the parts suppliers, whose main customers are going bankrupt? i don’t see any good end result of a star trek vi james kirk economic policy. what others are going to buy the parts companies when their main customers are bankrupt?
alstein
npr had some economists set up their perfect econ policy (including getting rid of the mortgage deduction) and made ads for a fake candidate to show off that policy, then showed it to a focus group. things went…poorly.
You need to look at these companies’ models and look at where exactly these cars are made. The Big Three are not the only companies buying from these suppliers. If you look at specific foreign models, they’re more American than some of these “American” made cars based on the parts they use and where the factories are at. Again, Ford was not anywhere close to being in the same position as GM and Chrysler, so I am sort talking about them separately.
Let’s look at demand instead of supply. If every American say has two cars per household, and suddenly we’re down to 1 American owned company instead of 3, that doesn’t mean people start buying a third of what they used to buy. The demand could have shifted to another company, maybe even a company that was buying the same part from the supplier GM and Chrysler was… These auto companies are intertwined, and if we were really, really that concerned about suppliers, why not prop up factories and companies that made better decisions?
3 to 3.5 percent of GDP, approximate for the auto industry, give or take year to year. We could lose the entire group and not feel nearly what we did with the almost collapse of the financial industry. Ford’s declines prior to the bailout event was right with industry standards, demand was just going down for everyone,right up there with Honda and Toyota. The other two were worse off not only in terms of market but how they ran their business and planned for future, if they planned at all.
For better or worse, GM and Chrysler are here today because of the bailout. It’s iffy about Ford, and while the deal wasn’t necessarily bad for the economy or as expensive as initially thought, clearly this was a heartstrings pull. The auto industry is not critical to the US economy; it’s not even close to what stabilizing the financial industry meant. A better comparison would be the textile industry, the one where we used to dominate but then it started shifting to developing countries that just compete in that area better than we do. In that case, we let it go for the most part and focused on other industries as our dominants.
I think our minds are just to this idea that we have to have a strong auto industry in this country or… or what exactly? And I’m not talking about not spending money to give a jumpstart to the economy. We certainly needed to do that, but where we injected it, well again, heart strings.
The Big 1 probably doesn’t have the same ring as the Big 3, or the Big 0.
As for tax reforms, I think we need start by simplifying the process. It’s too complicated. We don’t need to prop up HR Block and TurboTax forever, and the rich use every badly written law under the sun to get out of their taxes no matter what rate we set.
And speaking of Brownback:
Just you remember that… all Republicans are… Super duper evil, yeah!
(sung in a happy, children’s TV theme sort of way, so it’s even easier to remember!)