<p>The tax policy center analyses of the two policies used a static model to calculate the deficits, their model did not take into account the impact of the two tax policies on the GDP growth. I don’t think you can have a specific deficit amount, it has to be in range depending on what happens to the real economy. You need a dynamic model that takes into account the impact of different tax policies will have on the growth rate. </p>
<p>I am not a supply side economist, but the theoritical argument for the theory is very elegant (one of them won the Nobel Prize), although, I have to say that the emprical support is not very strong. I don’t know of any argument that supports the theory that increasing taxes will automatically generate more revenue, in fact, it can have the opposite effect. The tax policy assumed that increasing taxes will generate more revenue.</p>
<p>Some economist have credited the tax cut as part of the reason why the economy is not in recsession right now. This supports the supply side argument. </p>
<p>Also, Obama is proposing over a thrillion dollars worth of new spending, which will increase the deficits far more than extending the tax cuts. If you are worried about the deficits, as I am, Obama is the wrong person.</p>
<p>McCain plans to reduce pork barrel, and make the government more efficient will contribute more to decreasing the deficits.</p>
<p>I used Forbes because the magazine cannot be accused of liberal bias and it quotes a number of economists (and I am not one).
You are right that one has to factor in dynamic factors–which is a reason why the Forbes article was not able to gauge the consequences of some of Obama’s proposals. But engaging in guessing the possible consequences of some policy is risky. For example, the recent tax rebate did not do what the WH would have liked it do do. </p>
<p>Below is a list of Obama’s economic advisors. None of them seem to me to be wild-eyed radicals.</p>
<p>Austan Goolsbee: The University of Chicago economist, who is an expert on tax policy and the role of technology in the economy, has been close to Obama for four years. After he met Canadian officials, the embassy wrote an internal memo questioning Obama’s commitment to renegotiating the Nafta trade agreement, to add new protections for US jobs. According to the officials, anything said on the campaign trail “should be viewed as more about political positioning than a clear articulation of policy plans” . Mr Goolsbee denied saying any such thing.</p>
<p>Jason Furman: Hired as a top campaign staff aide on economic policy shortly after Obama clinched the Democratic nomination, Furman is a close associate of the former Treasury Secretary Robert Rubin. Furman’s reputation as a backer of free trade has concerned some of Obama’s union supporters.</p>
<p>Dan Tarullo: A professor at Georgetown University Law school, Tarullo is an expert on trade and international economics and was a senior White House aide to Bill Clinton. He served as a “sherpa” to meetings of the Group of Eight industrialised economy meetings. Last month, Tarullo said Obama supports free trade but “he’s not for trade policies that don’t protect American workers.”</p>
<p>Paul Volcker: Before Ben Bernanke, and before Alan Greenspan, Paul Volcker was chairman of the Federal Reserve, earning a formidable reputation during the 1980s for having broken the back of the double-digit inflation that marked the early part of the decade. He endorsed Obama early, in January, and made himself available as an informal adviser.</p>
<p>Laura Tyson: Another veteran of the Clinton administration, Tyson is the former chairwoman of the president’s Council of Economic Advisers. She was the first female dean of the London Business School between 2002 and 2006, and is a professor at the University of California, Berkeley. Only recently tapped as an adviser to Obama, she brings Wall Street experience as a director of Morgan Stanley. </p>
<p>On to bigger and more important things now that I actually caught up on the reading…</p>
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I don’t mind that McCain’s strongest suit isn’t the economy. I mean, its pretty clear that its foreign policy based on his military past and work in the Senate; however its his actions and “plans” that leave me worried about his knowledge of economics. His so called plan to balance the budget is full of classical improbabilities and even impossibilities if he is to stay the course with even a few of his policies such as the lower taxes/maintain tax cuts or stay in Iraq until the job is done policy. Also, don’t come back about how lowering taxes is just or leaving Iraq would be failure. The merits of those arguments are not relevant within the scope of this discussion. If McCain really wants to do all those things he proposes, where is the money going to come from? Increasing the national debt to balance the budget one year does not count.</p>
<p>Oh and about McCain’s awesome economic knowledge. How about $300 million for a new electric car battery? In a market economy and in accordance with U.S. patent law, the person or group that discovers how to achieve this will have an incredible technological edge over the competition. The extra prize money will not help find the solution any faster. The high gas prices and current economic conditions have already lead to a very enticing incentive.</p>
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I’m sorry, but wishing it were not so does not make it true. No one is saying that he is not capable just on the evidence of his age, which is considerable. Other evidence exists to suggest he is quite forgetful and lacking in health. He has been show to forget very recent details including his voting record on recent bills as well as forgetting the existence, or lack thereof, of a country, twice… Do you think his staff didn’t remind him the first time he made the mistake? You’re also right, he is probably sharper than some people younger than he is, but none of them are asking to be our president. I believe that his health, not his age, should be a factor, if only because it is 4 of the most intense years for anyone to handle.</p>
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Saying you were against the troop surge then saying you were one of the leads in suggesting it is not based on DATA. Saying the surge was successful is not good enough an argument to say you’ve had the same position all along. If you changed your stance on something based on new data, I respect that. Saying you’ve always had that stance is (morally) objectionable.</p>
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Both of the candidates are doing what they believe to be good and right for America. They’re both passionate. John McCain has a bad temper sometimes; it is fact. Do some research, its clearly evident in many of the congressional hearings he’s attended (look specifically for one about taking care of veterans, which he does not favor and one a long time ago about budget).</p>
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They might be considered detriments if you left your first wife because she had an accident to be with a younger, more attractive, and wealthier woman. That’s just my opinion.</p>
<p>I agree with you that McCain has more experience. No argument there.</p>
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??? Obama doesn’t use drugs now? He admits to trying them, which I guarantee you more people have tried than you think. And why do you think that Obama wouldn’t last a day at Annapolis? If your argument is physical, I would remind you that Obama is in excellent shape and would hope you also mean he would be attending when he was 18 or 22, when he was in even better shape. If you mean academics, then your argument is really flawed. You mentioned maybe 5 posts earlier that you believe they have similar mental talents. What would stop Obama from “lasting” then? Finally grades and scores at Annapolis, like they are at most institutions, are reflective mainly of academics more than physical ability. McCain finished low in his class because because he didn’t try harder than the others. Obama, on the other hand, has excelled at all of the academic institutions he has attended, which is not simply a reflection of talent, but effort as well. I want the president to try very hard. </p>
<p>Way to change the subject to drugs by the way, that really avoided maybe an informative conversation.</p>
<p>Marite, I am in a different branch of economics, so I am not familiar with his advisors (I only know Volcker). I am not familiar with their work, but their argument that increaseing taxes for people making more than $250,000 will somehow generate more revenue does not have an empirical support. </p>
<p>It is good campaign gimmick because about 95% of the population earn less than that. </p>
<p>I don’t think the advisors are radicals, they have not run models to evaluate their own policies (McCain also has this problem). The social security argument for instance, they don’t even know whether increasing the cap will help the problem.</p>
<p>Oh for God’s sake - you lost all credibility with this one!!</p>
<p>I guess it would have been better for her to grow up in poverty, with little chance for an education or betterment of her life.</p>
<p>I think if you asked the daughter, who was adopted from an orphanage in Bangladesh, if she has been endangered by being adopted by the McCain’s she would answer NO.</p>
The probability of this happening is very small, but it is not impossible. If for some reason, the economy starts growing at a minimum of 6% per year, enough tax revenue could be generated to balance the budget. Under McCain’s presidency, federal spending will probably be lower, so I won’t worry about this side of the equation (I know that congress control spending) </p>
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<p>No, he does not have to suspend these two programs, he has to create an environment for the economy to grow at 6% per year. Education is mainly funded by property taxes. </p>
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<p>Are you talking about the same economic stimulus package that Obama championed during the primary season (and he even scolded McCain for not caring about working people)? Did you forget the stimulus package was created by the Democratic congress? </p>
<p>Michelle Obama even said that you can’t use it for earrings because it is too small, maybe, she should have told her husband that. We have to wait and see whether this money will stimulate spending ( I think you also believe that it won’t increase consumption).</p>
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<p>Do you know that some of the highway funds are used for pork barrel projects:</p>
<p>Tega: If one accepts that taxes will have to be raised in order to close the deficit, then it makes sense to shield the majority of the population from increases. I happen to belong–just–to the 5% earning over $250k. I don’t think it is just a campaign gimmick. It would have to be approved by Congress. And I’m sure members of Congress would hear from their constituents if he raised taxes on a lot more people (file under Phil Gramm, “A nation of whiners.”)</p>
<p>I guess the smileys are supposed to soften the tired old “texas” slam? Been there, done that, you need to find some new material:) :)</p>
<p>Texas is a big ole diverse state, pardner, with people voting for all different kinds of folks. I think you might be surprised at all the Obama 08 stickers driving around on all of our big ole gas guzzling Ford F150’s. Maybe when I get done teasing my big hair, I’ll let you know how many times I voted for Bush. ;)</p>
<p>Marite, I agree with you, if you accept the argument that increasing taxes on the top 5% will generate enough revenue to decrease the deficits, then it makes sense to shield the lower 25% from paying more taxes. My argument is that, we don’t know the implications of this policy (The Obama campaign has not provided any estimates) on economic growth, unemployment rate, and other macro variables. This policy can potentially worsen the current economic situation. </p>
<p>Even with the current tax levels, more people are hiding their money in offshore accounts, and I can imagine what will happen if Obama gets congress to increase the income and capital gains taxes.</p>
<p>I don’t agree with Gramm that we are a nation of whiners, but he was technically correct when he said that the economy is not in a recession, we have experienced two consecutive quarters of positive growth (about 1%).</p>
<p>I’m using the figures provided in the Forbes article, that the deficit would be less by $900 billion under the Obama rather than McCain plan, and the argument made in the article that taxes WILL need to be raised. It’s a matter of whose taxes will be increased rather than whether they will be increased at all. But you’re right we don’t know what consequences any tax policy will have. We don’t know the consequences of most decisions we take. But a president must act, must make decisions, must have a policy s/he can communicate to the public and get the public to embrace.</p>
<p>Now, if Obama did not have a economic plan (“more detailed than the past two Democratic candidates”) he’d be accused of being an empty suit.</p>
<p>Capitalgains - I recognize that Wikipedia is the be all-end all source for this generation (but I wouldn’t site it when turning in a paper;) just a little hint to you).</p>
<p>But, these are direct quotes from governmental agency reports including the federal reserve (amazing what googling can do), and I tend to think they are a wee bit more reliable than Wikipedia…</p>
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<p>And then, there’s the national media - according to Forbes Magazine:</p>
<p>So, I guess we’ll start seeing all those northern plates down here again like back in the early 80’s! You could barely meet someone in a bar who wasn’t from Michigan, New Jersey, Ohio, etc… People were shocked, SHOCKED, I tell you, when I told them I was actually born in Texas;)</p>
That is exactly why he’s out of touch – he is relying on a technical, economists measure of “recession” rather than looking at the reality of what is going on in the lives of real people.</p>
<p>Here is the reality:
Home foreclosures are up.
Health care costs are rising.
Cost of living, particularly with basic day-to-day expenses – gas & food-- ils increasing dramatically.
Stock market is plunging, which can hurt small investors terribly because they can’t afford to weather the loss.
Many business are closing or downsizing, resulting in loss of jobs.</p>
<p>Bottom line: times are tough, and the lower the person is on the economic spectrum, the tougher they are. No one cares about the technical term that is given to the current conditions – any fool can see that the economy is not doing well right now – I mean, when banks start failing, its always bad news.</p>
<p>Where did you get that little tidbit of information, barrons? Has some admissions officer come forward and made that claim? And how is it relevant in light of the fact that he went on to become President of the prestigious Harvard Law Review, and graduated at the top of his class from Harvard’s Law School?</p>
<p>Psssst…Did you know that John McCain graduated at the bottom of his class at the US. Naval Academy? Yeah, irrelevant, I know, given that there’s probably zero correlation between class rank and war heroism. But I bet you think the Occidental tidbit somehow “says something” about Obama:rolleyes:</p>
<p>“That would be a valid point if it were not for the underhanded & despicable strategy employed by the Bush operatives in ONE STATE ALONE. After South Carolina, the other states didn’t even get much chance to support McCain. Clearly, he should’ve been elected. From your post, it appears that you’d agree - or would you have supported Gore over McCain??”</p>
<p>I’ll be honest here: I didn’t like Bush or Gore in 2000. In fact, I cast a write-in vote that year. If I didn’t live in a very blue state, and I thought my vote might have made the difference, I suppose I would have held my nose and voted for Gore. In retrospect, I’m persuaded that Gore would have been a better president, but that would also be true of Curly of the Three Stooges. If McCain had been running against Gore, I would have had a more difficult time deciding what to do. Again, based on most of the issues, I probably would have preferred Gore, but I liked the McCain of 2000. Whatever happened to that guy?</p>
<p>Last week or the week before, I heard that Wachovia was in fine shape. Hey, not to worry.</p>
<p>Did anyone see today’s financial headlines?</p>
<p>When the financial <em>leaders</em> post losses, I don’t see how the “R” word can be avoided. We’re talking leaders from many sectors here, & in goods + services. Other students of economics have even invoked the “D” word. (I don’t recall in the last “official” recession, customers standing in line outside banks.)</p>