Thursday, April 14, 2005

Why Bush's Economic Policies Are Flawed

I actually posted this in Rightwingsparkle's blog as a comment, and realized it was a topic that I have wanted to bring up here for awhile, so here it is, slightly modified.

One of the big reasons is the borrow and spend program that he has been on. I would rather the pain not be so back-loaded for the next couple presidents to deal with. Who would have thought that Democrats would end up being the fiscal conservatives in many ways? Making the tax cuts permanent will ensure that we run a deficit for years to come. It's fine to cut taxes a bit to give the economy a bit of a boost, but to then not let it go gradually back to levels where we will be solvent again just to appease his base seems foolish. Yes, I would rather pay somewhat higher taxes now so that we don't get into more debt, cause the dollar to lose value, and other trouble that goes with it. I would rather pay more now than be socked with a bigger bill later as the money the government takes in goes a shorter way because of the debt financing.

Capital gains tax cuts that Bush supports, as well as this new estate tax law, seem geared toward rewarding wealth over work. It's very easy to make money with money as it is. Do we really need to make the tax code encourage this still more, and at the same time be against raising the minimum wage? To me, leaving the minimum wage low seems like it is just helping inefficient businesses stay afloat instead of making way for better run businesses that pay better. Isn't this back-door corporate welfare?

The middle class is shrinking because health care, housing, and secondary education expenses are running at a few times inflation and have been for years. This particular problem was not caused by Bush at all, but he also seems to not be addressing it with policy changes, aside from tort reform which I think is a good idea, but the impact is overrated. Just reversing some of the tax cuts that were made for the wealthiest Americans could be used to incent home-buying or secondary education to a higher degree, getting more people from the lower to the middle class, increasing consumer spending, thus business, investment, and so on to actually end up helping the rich in the long run as well! This is *not* income redistribution, and it would *not at all* have to be done in a way that squelches business or the rich. I hope to be rich one day, and if I am, I guarantee I won't complain about paying extra to help keep the system running that helped vault me into success.

Money needs to flow through the system in order to keep the middle class strong and the overall standard of living high. Bush is making it easier to stay rich and allowing it to get harder to go from lower to middle class, and that I believe is deeply wrong for the economy, and for all Americans.

10 comments:

Two Dogs said...

Erik, the middle class is shrinking but so is the poorer class. Are these people dying or actually moving into the richer class? If you find a contradiction, you have to check your premises. Somewhere you produced an error.

I can tell that you actually mean well, but your premises are flawed. Your intellect tells you that what you are saying is correct, but data tells you that you are wrong. Check your premises.

Any tax cut is a good one. "Oh, I don't need a tax cut on groceries, I eat out all the time." Duh, the restaurant gets a cut too.

Death taxes are double taxation. It should not cost anyone a penalty to leave their property to their dependents, they have already been taxed on the stuff. Elementary conclusions, reduced for the "short bus" rider.

Now, the "wealthy" (top 3% of wage earners) pay 90% of all taxes. This is a disproportionate level. The lower 50% of wage earners pay no taxes. Tax cuts for the wealthy, very simply put, means tax cuts for the people that pay taxes. Damn, you have a grad degree.

And minimum wage laws hurt everyone. You simply cannot possess even marginal intelligence and think that minimum wage or maximum hour laws are good policy.

Erik, these are not personal attacks, I think that you can deduce that your premises are WRONG. Or otherwise your ideas are so blatantly EVIL to think that to take my money (which I worked for) at the point of the government's gun is a good idea.

Erik Grow said...

"The national poverty rate declined from 1993 to 2000, when it reached a low of 11.3 percent. In the next three years, 4.3 million more people fell below the poverty line, and the median household income dropped by more than $1,500 in inflation-adjusted terms."

http://www.washingtonpost.com/wp-dyn/articles/A35175-2004Aug26.html

Before you attack the source, keep in mind that these are census numbers, not research that the paper did. 2004 might be better, who knows? We'll see. I know we were in a recession, but supposedly things have been back to the good times for a year or two now. Regardless, the number of poor people is not shrinking as you claim as far as I have been able to find.

As for minimum wage, what kind of argument is that? You are basically saying "every moron knows that's wrong". Why?

Tax cuts targeted to one group will help that group the most and help other groups slightly. You are still ignoring the big picture of insolvency as a whole and racking up debts to pay off later. Won't cutting taxes for the lower middle class increase consumer spending which will help businesses which will help the middle and upper class people that run them?

Also, if we eliminate the estate tax, who should foot the bill for the even bigger deficit that is produced?

Nobody wants to pay more taxes, and nobody wants waste. The government will be collecting taxes, so it isn't like you're going to ever be free from that. The more middle class there is, the more people can afford to pay your for your services.

nicnerd said...

Interesting that you bring this up today as Tax Freedom day is this weekend, two days earlier than last year and 2 weeks sooner than the date under Clinton. I just thought that I would mention that.

Did you pay less in taxes this year, I did. I am not wealthy.

The defecit is misleading, we are financing military operations in multiple countries at the moment. This is an investment in tomorrow much like the Reagan military buildup cost a lot at the time but ultimately resulted in huge savings as the communist governments crumbled.

I have more on this subject later, when I have the time.

nicnerd said...

Why minimum wage is bad

Who is making minimum wage? In 2002 50% of minimum wage workers were under 25, and 25% were aged 16 to 19. 33% of those people had no high school diploma. 60% of minimum wage employees worked only part time.

Increasing the minimum wage to $6.65 would cover roughly 4.1 million workers, 53,6 to 57.4 percent of which are teenagers.

Now before you go telling me what is wrong with giving a pay raise to about 3 fifths of our neediest teenagers and their "families", consider this.

54% of employers that pay minimum wage are small businesses (fewer than 100 employees)

Small business creates 75% of all new jobs annually

Small businesses cannot afford a 25% across the board increase in labor costs

90% of minimum wage employees do not make minimum wage within one year of employement

Economist studies have shown a 2 to 6 percent decline in the employment rate for each 10% that the minimum wage is increased (Burkhauser, Couch, and Wittenburg)

Raising the minimum wage sounds like all good news until you do your economic homework. A job at the current rate is better than no job at all. If you mandate what wage empployees will make, you will mandate many jobs right out of the market. Every past hike in the minimum wage has resulted in overall job losses and has a negative impact on the economy. On the positive side, voters often don't check the numbers and it sounds great to them.

Two Dogs said...

Nicnerd, you know this, just ignore me for a second. What part of increasing your labor costs do you think is not going to be passed on to the consumer? Damn, Erik, it has been proven again and again, only 100% of the time, that when you raise the minimum wage, small business owners have to let people go. it has NEVER raised people from poverty, it has ALWAYS increased the number of people in poverty. There is no debating that.

Economics 101: Class come to order. Rule 1, if I increase the wage to my lowest paid employee, everything in the entire economy goes up by that exact same percentile. Oh, I am just going to reduce profits, you say. No, I will pay the wage, but I'm going to fire that percentage of employee and work the rest that much harder. Class dismissed.

And Erik, while the Washington post cites numbers from the census they show the false thing. The percentile of people in poverty has fallen since 1980, that ios known as 'a cycle'. You see, the economy changes constantly and you have to average things over more than eight years. I know that you would like to believe that Clinton did one thing right, but he didn't. It is funny that your years correspond exactly with his tenure as President and are quoted from a Left-wing dog trainer. What you fail to acknowledge is that for the first two years of Clinton's terms, Reagan's (HW just raised taxes on the top wage earners) policies were in effect. Then Congress changed hands. Clinton was a big hunk of shit and will always be. I'm guessing that at some point he might even rank as badly as FDR.

Erik Grow said...

Oh, so if the economy just "adjusts" after a wage increase as you postulate, then why does lowering or raising taxes make a difference. Would it not just "adjust" in the same way? Hmmm...

Two Dogs said...

No, because taxes go to things that hurt the economy. You see, the federal government produces nothing. Absolutely nothing. On the other hand, when you institute a regressive economic change into the system, such as an idiotic thing like a minimum wage increase, you throw the brakes on in the engine.

Erik, I am not an economist, but I am not a moron either. There are very few adults living on the minimum wage. This is set aside for people just entering the workforce who are basically unskilled.

A specific case study: At the age of seventeen, I took a job as a construction laborer at 5.00/hour. At the time, minimum wage was 3.35/hour, if memory serves. Within two years, I had increased my salary or hourly wage to 11.50/hour. Damn, that's over two times as much money. Oh, and I started the job in 1982.

Erik, the people that stay at minimum wage any amount of time are for the most part unemployable, and that segment of the population is always (yes always) going to hover around 5%.

If you FORCE businesses to pay more and more for people that are basically unemployable, what do you KNOW will be the end result?

In my mind, the only people that advocate any type of minimum wage are the same people that are simply trying to switch to a socialistic market or worse still, a fascist one. If government is so damn good at creating wealth, then why has the "War on Poverty" been such a dismal failure. Why have the numbers changed so little or gotten worse as you think?

nicnerd said...

You know the quickest way out of minimum wage? Work hard, increase your skills, become more valuable. Like two dogs, my first job was at $5.00 an hour when minimum wage was $3.35. That job was as a simple cashier at Kmart. I worked there through highschool and came away making something like $12.50 an hour. As Twodogs said minimum wage is just what the name implies, it is the wage paid to the most unskilled part of the labor force (mostly teenagers) who have no family to support and no valuable skills to merit more money. Once they attain skills, they command a higher wage. Shall we pay people more than they are worth?

You know sometimes I just disagree with liberals but I still see their grounds for the argument. This is one of those times where I am just baffled about where the heck you are coming from. Your argument makes absolutely zero sense. This is very basic stuff that most people grasp in primary school.

Two Dogs said...
This comment has been removed by a blog administrator.
Two Dogs said...

Yea, nicnerd, as long as the primary school was not a Federally funded one.