Goat wrote:
heatseeker wrote:
...which I don't think anyone here is advocating.
Nice edit, heh. I was going to say that like every economics argument, it depends on who you ask. Tax cuts certainly can help when directed right, as can governmental spending... but doing either
just because won't help. I think even Milton Friedman criticised Bush's tax cuts, but that doesn't mean tax cuts are always useless, you know? My point earlier about how spending in a bust relies on saving in a boom is a good argument against quoting Keynes as an argument against deficit-cutting, but that obviously doesn't mean everything Keynes said was rubbish.
Let's remember, by the by, that Keynes was far from the socialist he's sometimes painted as these days, but was a (comparatively) small-state liberal.
Your point is well-taken. But, take a simple look at the GDP formula:
GDP=Consumption+Investment+Government spending+Exports-Imports
As you can see, an increase in government spending causes a direct increase in GDP. To a slightly lesser extent (considering that people don't spend all the money they'll get back), a tax cut will cause an increase in consumption, which increases GDP also. Higher GDP means higher income, since all of the money that's spent will eventually find its way back into someone's pockets. So no matter what, these things
will increase GDP. It's just in the math. And, GDP is the most widely accepted measure of economic well-being out there. Not sure how much simpler it can get.
Sorry if I sound like I'm lecturing. It's hard not to when explaining economic formulas and such. I don't really know much about this shit, it's just very basic stuff. Unfortunately, most people know less than I do. Everyone should know it, though.
My point is that the economy is not in such a state where the government should be disregarding recovery measures in favor of worrying about the deficit, since I argued that interest payments could very well persist at 6% of gov spending for a long while.
And of course, this is totally beside the point that Ryan's proposed bill doesn't really do much to ameliorate the deficit while incurring huge societal costs with the cutting of funds for Medicare and Medicaid. The tax cuts (for the wealthy and corporations, as far as I can tell) in his proposal will cause a $2.9 trillion reduction in government revenue over the next 10 years. That ain't deficit reduction, folks.