The economy under Dubya: Part I, 3 areas you should care about

[axio]

All my information is from the Congressional Budget Office (CBO) reports, the Council of Economic Advisors (CEA) reports, the Bureau of Economic Analysis (BEA) indexes, Bureau of the Public Debt's "The Debt To the Penny" (DTP) report, FedStats reports, and Gregory Mankiw's monthly reports.

These are all freely available at any library, and are all from the government.

I would suggest reading their reports with a Microeconomics book next to you to explain what some of those big, nasty words mean and what those graphs mean

Lets get started shall we?

1) Tax Cuts

Bush's tax cuts won't effect the economy, nor will they jump start it (CBO)

The Congressional Budget Office (CBO) clearly stated in the conclusion of their report that "tax cuts and other policies President Bush proposed in his $2.4 trillion budget would probably have a minimal impact on the economy." It then goes on and states that "the differences are likely to be small, affecting output by less than one-half of one percentage point."

Nor have they. From the BEA's Q2 report, a graph of our GDP:

Advance Preliminary
Real GDP............................... 3.0 2.8
Current-dollar GDP..................... 6.3 6.1
Gross domestic purchases price index... 3.5 3.5

Real GDP change = 3-2.8=0.2%
CD GDP change = 6.3-6.1=0.2%
GDP PI change = 0%

Now you might say that it is a postive change, but look at the graph that accompanies it:
http://www.bea.doc.gov/bea/newsrelarchive/2004/gdp_large.gif

less and less, a downward slide since Bush stopped listening to Mankiw

Notice the star? It means that in QI-III they are estimated, and then adjusted in QIV. LOOK AT FUCKING QIV IN 2003! SEE THE DROP!?

2) National Debt and the Deficit

We owe more money now than ever before to other nations.

Ever wonder where the rest of the money is collected from when we had the tax cut? We borrow it, mostly from the World Bank and other nations.

Our debt went from: $5,674,178,209,886.86 in 2001, to $7,352,775,396,125.18 in 2004.

Normally our debt increases regardless, but it usually increases by 0.1% (on average in a Q); in the last 2 years or national debt increased by 2% per Q! Even one percent is considered stupidly huge, but 2% is insane. That is ~40% increase in our national debt over the last 3 years (Mankiw).

We also went from a $281 billion surplus to a $521 billion deficit.

You may say... so what? A surplus goes towards paying off our debt to other nations, making us less reliant on them... a deficit only goes towards us borrowing more.

3) Unemployment in 2Q 2004

Unemployment fell from 5.7% to 5.5% in 2Q... but only 1,344 new jobs were created, and all of those in lower tier positions (think: fast food, although the Bush Administration tried hard to add them to higher tiers).

Economy 101, when the economy is booming does the work force grow... or shrink? It grows. In our case it is shrinking: ~309,000 people stopped looking for work (estimated by Mankiw). This is just in a quarter. Over all about 2 million jobs have been lost, and about ~3,000,000 people stopped looking for work (Mankiw).

[MuddyJEEP.com]

finally, an excellant post showing facts I can believe........still doesnt say the reason for the crappy economy was due to the big corp scandals and the attacks of 9/11
I can and do understand its been a bad 4 years for our country, I appreciate your time invested with this post.......
ok.....I'll bite....seriously, how do you feel Kerry will make this better, I am honestly listening and am open for more real info...as in facts.....
how about the green party, do they have a plan or chance at making this any better?


I never said I was a die hard bush man, but, I feel with the facts I have been shown he is the right choice at present....or to appease some of you...the lesser of two evils......
educate me on kerrys plan to help our ailing economy and health care issues......hoping it doesnt say what I have been saying...taxing the "haves" heavier to give to the "have nots"

[axio]

still doesnt say the reason for the crappy economy was due to the big corp scandals and the attacks of 9/11
Too bad the economy doesn't work that way. 9/11 and the corporate scandals all happened and were wiped clean at the end of the 2001 QIV and the 2002 QIV.

Why didn't 2003 react to the tax cuts? Why did we loose more jobs from 2003-2004? Simple, our economy is fucked, mostly thanks to the tax cuts.

You got $300 back in the mail, well... IBM didn't pay any taxes for the last 3 years. The tax cuts help higher tier people more than it helps you, trickle down economics is a sham and if you want proof go read up on Reganomics.

ok.....I'll bite....seriously, how do you feel Kerry will make this better, I am honestly listening and am open for more real info...as in facts.....
Kerry has Warren Buffet advising him, WARREN "I HAVEN'T HAD A LOSS IN 30 YEARS" BUFFET. Plus he is going back to what Mankiw said at the start of 2001: keep it simple

Kerry is working under Mankiw's "cut middle class taxes, tax higher class more" mantra. Kerry wants to cut taxes for businesses that create jobs in the States and tax the ones that outsource, which I disagree with personally. I say we tax the piss out of businesses. The EU does, we did after WWII and we had amazing economic growth thanks to it. But I don't have Mankiw's credentials. Kerry wants to cut the deficit by taxing corporations and capping our budget (it is the Real Deal circa Post-WWII again). Most large corporations don't pay taxes these days, you make up the difference and we borrow whatever is left over.

The green party wants to end the "Living Corporation" loophole, corporations are treated like a living people. They want to end that since it will make sueing them easier... but thats crap and no economist agrees with it.

This isn't taxing the haves, and not the have-nots. Because the majority of large businesses aren't paying taxes at all. Tax them and cut the deficit.

Mankiw has been saying this for the last 4 years, but he has been ignored.

[Mobil1]

could someone explain to me how large corporations get out of paying taxes?

[CovertPenguin]

could someone explain to me how large corporations get out of paying taxes?

they dont get out of taxes, tstiger is saying to tax them more.

"the only thing certain in this world are death and taxes"

[Jason W]

could someone explain to me how large corporations get out of paying taxes?
Tax loopholes: write-offs such as business expenses, supplies, etc.

[veritas]

they dont get out of taxes, tstiger is saying to tax them more.

"the only thing certain in this world are death and taxes"

No he isn't. "Most large corporations don't pay taxes these days, you make up the difference and we borrow whatever is left over."

You can read about it in "Loopholes of the Rich" by Diane Kennedy, C.P.A.

[axio]

could someone explain to me how large corporations get out of paying taxes?
1) Borrow Pork Barrel politics' ideas: $500 toilet seat covers, $100 pencils, etc ... all written off.
2) "Move" their headquarters (on paper at least) to tax havens like Bermuda. If they can't do that, or are blocked... just form subsidiaries and have them do all the "work".

EX: Company A forms Company B in Bermuda. Company B gets paid for work Company A did in the States. Company B pays no taxes on this money, but since Company A owns Company B... the money is really going to them.

In a few rare instances Company A will report how much Company B made, but this is extremely rare, and even then they just pay taxes on the first 60K that is earned... out of a whole year.

It used to be that corporations and individuals paid about 50-50 in total tax revenue (1940). In 2000 corporations paid about 18%, we paid the rest. In 2003 corporations paid about 16.4%, we paid the rest.
3) tax breaks, get your friends in Washington to give you a fat tax break

[Flores]

Tax loopholes: write-offs such as business expenses, supplies, etc.


You only get taxed on your net income... if I run a business, and bring in $1 million dollars in a year, but it costs me $1,000,050.00 in 'tax exempt' expenses to do it, then I have a net loss of $50 for the year, and pay no taxes...

tstiger would have you believe that most of the expenses businesses write off at the end of the year are actually 'loop holes' that businesses politcal lackeys write into the tax code so they can avoid paying taxes..

what these loopholes are it pretty close, it's the 'tax cuts' for the rich you have been hearing so much about...

What you don't hear is that the $1 million dollars I spent, provided jobs directly for several hundred people and indirectly for several 1000....

so, it seems (in what I will admit may be a bit simplistic) the choice is to give 'tax cuts to the rich' to improve the chance that an everyday joe can succeed in his own business without being taxed to death, therby enriching his/her comunity, or we can tax corporate profits 100%, and give it to the folks that arn't working because those 'evil corporations' arn't making enough money to expand their operations... Of course, this type of welfare is hugely popular with Kerry, because he seems to believe the roll of government is to 'help people'... Of course, we know from experience that accepting help from the government has a price... Ask anyone who has had to... since you are using their money, they have a say on what you do and how you do it...

[axio]

You only get taxed on your net income... if I run a business, and bring in $1 million dollars in a year, but it costs me $1,000,050.00 in 'tax exempt' expenses to do it, then I have a net loss of $50 for the year, and pay no taxes...
But if you set up shop overseas, you get to write off your tax exempt expenses and only have to pay on the first 60K you earn (only if you even bother to report it). You look like you have a fat loss, and will get a tax bail out when you don't need it. This bail out will be used to pad their end of the year statements to investors.

Enron did this like crazy.
tstiger would have you believe that most of the expenses businesses write off at the end of the year are actually 'loop holes' that businesses politcal lackeys write into the tax code so they can avoid paying taxes..
uh, actually there are some pretty famous loopholes.

Here are 4 of the most abused:
1) Switching a C corporation to a S corporation, then switching back at the next fiscal year.
2) Shift income to a lower-tax bracket with a QSST
3) When switching from a C to a S corporation you write off everything as a loss (100% legal!)
4) Going ape with the fringe benefits as a C corporation (they can write off mostly anything as a fringe, even gifts to them)

This has nothing to do with tax cuts like you said, so I'm guessing you didn't get it. Tax cuts to higher tier individuals have to do with the Laffer Curve and trickle down economics. If you want a case study on those, feel free to check out what happened with Reganomics. If you want to see how taxing the hell out of C corporations helps look at the EU's 16% development increase, and post-WWII reconstruction.

If Bush wanted to help the average joe's business he would give LLCs and to a small part S corporations tax cuts instead of C corporations tax cuts and massive bail outs. Kerry wants to do that and he wants to close the C corporation loopholes.

How many people with a LLC got a tax bail out from Bush? 0 How many people with a S class corporation got a tax bail out from Bush? 0 How many people with a C class corporation got a tax bail out from Bush? 42 this year alone, none of them are paying taxes this year.

[stretch-d]

So your's and Kerry's point is....To increase costs (taxes) on the businesses that would potentially hire all those people who are out of jobs. Common sense tell us that more dollars out due to taxes, leaves less dollars to be spent on expansion--which equates to less dollars avalible for jobs.

Bush's plan is to provide tax relief to said businesses so that they have less overall operating costs. This then opens the door for expansion of those businesses and free trade--creating what you ask??? That's right--JOBS.


This post contains zero 'cut and paste'.

[axio]

So your's and Kerry's point is....To increase costs (taxes) on the businesses that would potentially hire all those people who are out of jobs. Common sense tell us that more dollars out due to taxes, leaves less dollars to be spent on expansion--which equates to less dollars avalible for jobs.

Bush's plan is to provide tax relief to said businesses so that they have less overall operating costs. This then opens the door for expansion of those businesses and free trade--creating what you ask??? That's right--JOBS.


This post contains zero 'cut and paste'.
Incorrect.

Kerry just wants to do what Mankiw has been saying for the last 4 years. Kerry wants to close the loopholes that allow companies to shift their businesses out of the country to not pay taxes. He also wants to tax companies that oursource harder. Like say... Dell, for opening a call center in India instead of here. He wants to be leniant with companies starting out here and wants to offer tax breaks to LLCs and S corporations instead of just C corporations as it has been for the last 4 years.

Bush is spewing trickle down economics bullshit. It doesn't work, the 80s proved that. If a massive corporation has an extra dollar it isn't going to invest that dollar back into the economy. The problem with the Laffer Curve is that it works up a certain area, Bush wants to push it all the way outward where it doesn't. Bush has been stubborn about closing C corporation loopholes. Halliburton is also one of the companies that massively abuses loopholes, and recieved bail outs even while it was working reconstruction projects in Iraq. Guess who worked for Halliburton as their CEO.

I want to tax C corporations regardless of if they open up shop here or in India, forced disclosure is a good idea also. But neither one of them wants to do that, and I'd rather listen to Mankiw for economic advice.

[stretch-d]

I 'cut and pasted' this from a site that quoted Mankiw:

CEA: Outsourcing of professional services is a prominent example of a new type of trade. The gains from trade that take place over the Internet or telephone lines are no different than the gains from trade in physical goods transported by ship or plane.When a good or service is produced at lower cost in another country, it makes sense to import it rather than to produce it domestically. This allows the United States to devote its resources to more productive purposes.

That's standard economic theory, of the sort that can be found in any freshman-level economics text. And in fact, several such textbooks have been written by none other than Council of Economic Advisers chairman Gregory Mankiw, an economist on leave from Harvard University. Mankiw's words may be good economics, but they are also bad politics, especially at a time when unemployment remains at 5.7% of the workforce.

The last sentence sums it up.

[axio]

I 'cut and pasted' this from a site that quoted Mankiw:

CEA: Outsourcing of professional services is a prominent example of a new type of trade. The gains from trade that take place over the Internet or telephone lines are no different than the gains from trade in physical goods transported by ship or plane.When a good or service is produced at lower cost in another country, it makes sense to import it rather than to produce it domestically. This allows the United States to devote its resources to more productive purposes.

That's standard economic theory, of the sort that can be found in any freshman-level economics text. And in fact, several such textbooks have been written by none other than Council of Economic Advisers chairman Gregory Mankiw, an economist on leave from Harvard University. Mankiw's words may be good economics, but they are also bad politics, especially at a time when unemployment remains at 5.7% of the workforce.

The last sentence sums it up.
It didn't quote Mankiw... it quoted the CEA. You copy pasted a moot point. It doesn't bother to state how it is bad politics. There isn't an economist alive who isn't for free trade and outsourcing. But that just pisses people off on the lower end who don't have the education to go out and snag another job, like say... that steel mill worker who lost his job to China.

Neither Kerry or Bush are following Mankiw 100%; or else we'd have a badass economy right now.

[Mobil1]

dont you think though that if we taxed big business too harshly they would lay off even more people? or they could potentially just up and leave the country all together?

you cant tell a company they cant hire cheap labor over seas, can you? i know exxonmobil has outsourced a large portion of their white collar jobs to south america, canada and parts of europe over the last year, mostly because of the cheaper labor and also the lack of insurance benifits, doing this saves the company alot of money.

i understand the loopholes, but what if the company just packs up and leaves completely? what if alot of companies did this?

[axio]

dont you think though that if we taxed big business too harshly they would lay off even more people? or they could potentially just up and leave the country all together?
They can only lay so many people off, and most of them did that after 9/11. If they leave... where are they going to go? The EU? The EU taxes the living piss out of corporations. South America? Same story there. Japan? Holy shit do they tax them there.

And even if they leave the US and are based 100% out of Bermuda they are going to have to bother with tarrifs, etc... and who the hell wants to bother with all that? Being a foreign entity in the States sucks ass. Add in negative press, etc and you have a company basically making a noose for itself by leaving.
you cant tell a company they cant hire cheap labor over seas, can you? i know exxonmobil has outsourced a large portion of their white collar jobs to south america, canada and parts of europe over the last year, mostly because of the cheaper labor and also the lack of insurance benifits, doing this saves the company alot of money.
Dont get me wrong. I'm all for globalization/free trade/etc. But not at the expense of jobs here, especially during a recession.

This is like offering a kid a punch, or a punch with some ice cream. Either way he is going to cry, but if you offer him some ice cream he'll be happy in the end.

[axio]

Alright guys, meet the Laffer Curve.
http://www.steveverdon.com/archives/laffercurve.gif
(ignore the numbers going up in this one, it has nothing to do with the topic at hand and has to do with a specific company; I just want you to see the percentage)

http://www.bized.ac.uk/virtual/economy/policy/tools/income/inctaxth5.gif

Basically it states that if you tax a company up to 50% it will still be profitable and it will put in enough income into the economy since you are getting maximum revenue out of a company. They did this in post WWII reconstruction without realizing it.

Tx is what is important in a Laffer Curve

Right now a C corporation is taxed roughly 18% (x=0.18, or T0.18). Go to the blue chart, do you kinda get how little revenue it is? Where do you think the rest is coming from?

[PissYellowGTi]

I heard at school that we are importing more than we are exporting right now (for 25 years), which is usually never healthy for an economy.

[stretch-d]

It didn't quote Mankiw... it quoted the CEA. You copy pasted a moot point. It doesn't bother to state how it is bad politics. There isn't an economist alive who isn't for free trade and outsourcing. But that just pisses people off on the lower end who don't have the education to go out and snag another job, like say... that steel mill worker who lost his job to China.

Neither Kerry or Bush are following Mankiw 100%; or else we'd have a badass economy right now.

Well...He's the chairman of the CEA...I'd say that's a quote considering that the chairman dominately forms the ideas and speaks for the organization.

We're really not discussing bad politics as much as we are how the different economic plans are better for America.

We should and do care about how the steel mill worker feels if he loses his job, but I thought that the main topic in this thread was to determine which economic plan was best for America....The man that you refer to (Mankiw) has written books about how free trade is best for the economy. I consider this to be a relevant point.

[axio]

Well...He's the chairman of the CEA...I'd say that's a quote considering that the chairman dominately forms the ideas and speaks for the organization.
Thats not how the CEA works. They vote on everything, put together a plan and then send it to Bush. As chairman he basically opens and closes the meetings.
We should and do care about how the steel mill worker feels if he loses his job, but I thought that the main topic in this thread was to determine which economic plan was best for America....The man that you refer to (Mankiw) has written books about how free trade is best for the economy. I consider this to be a relevant point.
How is free trade a bad thing?

Anyway, all you did was copy pasted a quote out of a website that was talking about a Kerry ad in which Democrats went after Mankiw for saying that we needed to open our borders to free trade in Feb 2004... without actually realizing what it said and who said it.

[stretch-d]

Ok...With your 'superior intellect' you pointed out the fact that I sometimes get info from the net...Impressive indeed.

But, I think that a 'chairman' of an agency or organization does more than bang a gavel and say "meeting ajourned".

..and so either you admit that Bush's plan is best for America by agreeing that the 'free trade' is never a bad thing....or you're asking me personally how free trade is a bad thing...

So what are you trying to point out in this thread?...Supporting free trade by referring to Mankiw (who's appearantly written books supporting it)?...or opposed to it?

In your first posts in this thread, you stated that if Bush listened to Mankiw 100%, that the economy would be doing a lot better...Help someone of obvious lesser intelligence than yourself understand. :)

[axio]

But, I think that a 'chairman' of an agency or organization does more than bang a gavel and say "meeting ajourned".
The CEA itself has 5 jobs
1) to assist the President directly in the preparation of the Economic Report through studies/reports/etc
2) to gathering of data about economics trends/developments/etc
3) to appraise programs that the gov't is undertaking
4) to develop economic policies
5) to make reports/studies/recommendations to the President

The Chairman is just one of 3 guys there, his job is to open meetings and to present the reports/etc to the President.

Bush has made the choice to ignore Mankiw and his reports.
..and so either you admit that Bush's plan is best for America by agreeing that the 'free trade' is never a bad thing....or you're asking me personally how free trade is a bad thing...
You pasted a quote that made it sound like free trade was bad, I'm asking you how it is... since you did paste the quote and all.
So what are you trying to point out in this thread?...Supporting free trade by referring to Mankiw (who's appearantly written books supporting it)?...or opposed to it?
I've always been for free trade. Which is why I'm pro-globalization... but that has nothing to do with the topic :eh:
In your first posts in this thread, you stated that if Bush listened to Mankiw 100%, that the economy would be doing a lot better...Help someone of obvious lesser intelligence than yourself understand. :)
Look at the first graph:
http://www.bea.doc.gov/bea/newsrelarchive/2004/gdp_large.gif

Bush followed Mankiw 100% until the start of 2002 (02 QI), notice how the 01 QIV rises? While the rest of the QIVs fall?