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March 27, 2009

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It's also delightful that that the official publication of the GOP, signed by a half dozen of their leadership, repeatedly refers to "the Democrat budget" or "the Democrat plan", because including whole "ic" or s-apostrophe would have been an unconscionable waste of pixels in these straightened times, or maybe the Democrats' proposed budget developed political awareness and joined the Democratic party.

The bit where they denounce government-provided healthcare for disallowing some treatments is also a bit special, because it only makes sense if private insurers have never denied potentially lifesaving treatments (and for some of the treatments that get denied to patients, either by government or by private insurers, are because the patients are facing death and clinging to the very faint hope offered by unproven treatments).

They Republican document also performs a nice sleight of hand in that it presents a graph that includes deficits from the last several years that look suspiciously low; I suspect that they don't include the supplemental spending on Iraq and Afghanistan.

The National Endowment for the Arts, the Corporation for Public Broadcasting, Americorps, Title X Family Planning, and a host of spending programs that will do nothing to help our economy recover. And even community organizers, such as ACORN, performing “neighborhood stabilization.”

We hates them! Nassssty programs! Hate them we do!

The 2009 budget for the NEA is $155 million. With an 'm'.

More wierdness: thank you satan.

In other news, everyone loves satan. Or are just on psychedelics.

The plan has plenty of details Publius! You Marxists just can't accept that the free market works. When the government cuts taxes, revenues go up. Why don't you educate yourself by googling "Laugher Curve." Obama's Stalinist/Marxist borrowing will bankrupt this country!

Hey, Chris: that's spelled "Laffer Curve". His name was Arthur Laffer.

Hey, Chris

Basic rule of fishing is: when you're trolling, remember to use a shiny, attractive lure.

Chris, if Google is your educator...you've got bigger issues than the Republic Party!

And that would be the same Arthur Laffer who predicted, on August 28, 2006, that there'd be no recession and the housing bubble wouldn't burst. AFAIK, he still owes Peter Schiff a penny on that bet. Anyone still citing Laffer as gospel is, well, laffable.

Actually, I think the correct spelling is Laughter Curve.

I love the comments by russel and Chris for different reasons. Mainly, I want to know if we can expect years and years of Republicans calling Obama a Stalinist? Are they so stupid and ignorant that they actually believe this attribution? Or are they just saying it?

DO NOT click Chris' link.

Uh...Chris...first of all it's "Laffer's Curve"...and it doesn't always work as hypothesized. And taking up your suggestion, I educated myself on Google and learned how cutting">http://www.time.com/time/magazine/article/0,9171,1692027,00.html">cutting taxes doesn't increase revenue.

i usually don't comment on typos, but I just can't help myself on Warren Terra's one.


Many people are in dire straits. (thus, "straitened times".)

But these times are anything but straight; I'm hoping we're actually in a steady curve to the left. Unfortunately the curve doesn't feel so smooth. (the way my revenue is oscillating, it feels more like i'm riding a bike over cobblestones.)

But Laugher is cooler, and exactly what Laffer deserves.

Actually, it is really the Keynes curve. He pointed out long before Laffer did that at 0% taxation and 100% taxation the government gets no income. By the laws of differential calculus, there is taxation point between 0% and 100% where govt revenue is maximized. And Keynes knew, as does any mathematician, engineer or scientist and even some economists who actually took calculus, that this observation is "trivial" in the mathematical sense, ie, obvious.

The attempt to prove that lower taxation is always good reached its height of absurdity in the most dishonest editorial ever in the Wall St Journal in July, 2007, which is documented on the web site

http://economistsview.typepad.com/economistsview/2007/07/yet-again-tax-c.html

The WSJ used data from many countries (provided by the OECD) to plot corporate taxes as a per cent of tax revenues on the vertical axis against tax rate on the horizontal axis.

The graph shows a bunch of points whose clustering (to a a naive viewer looking from a distance) generally shows tax revenues slowly increasing with tax rate, with some scatter. There are however a few outlier points, most notably Norway, which achieves huge normalized corporate tax revenues (10% of GDP) with a corporate tax rate of 30%. [It may be relevant to note here that Norwegian companies have been making a killing on North Sea Oil.] All of the other countries (10 or so) with tax rates of 25-35% get something like 3-4% of their GDP from corp. taxation.

The WSJ then draws a skewed quasi-hyperbolic (in all senses of the word) curve that starts at 0% revenues for 0% taxation up to the isolated Norwegian outlier (10% revenue for 30% taxation) then down to the large clump of points at 30% +/-3% taxation that yield 3-4% revenue, and says "voila, Laffer was right."

Anyone who knows anything about curve fitting reacted with either laughter or outrage.

This utterly convinced me that the WSJ editorial page has, ever since the reign of that piece of work Robert Bartley, been totally taken over by a bunch of cynical, clueless white guys (and the odd clueless woman) with a sense of entitlement who don't even bother to read the generally high quality reporting in the rest of the paper. I stopped paying serious attention to that part of the paper, dumped my subscription, and read the useful bits free online. And started a paid subscription to the Sunday NY Times.

I encourage every thinking person to do the same.


Note to Chris Chandler, from another small business economic conservative:

The current national debt is approx 12.8 trillion. It was just < 1 trillion when R. Reagan took office and began to apply your apply-spelled Laugher Curve. Of the current 12.8 trillion, approx 10.5 trillion has accrued under Republic presidents. You can google it up, assuming you'd like to re-enter the fact-based monetary world.

-- stan

Chandler's link has been stolen and replaced with something more palatable.

Err...so to speak. Something SFW, anyway.

shouldn't that quote from page 5 end with 'also, too.'?

"Of the current 12.8 trillion, approx 10.5 trillion has accrued under Republic presidents."

Makes sense, given that of the 28 years from Reagan taking office until this January, 20 had Republican Presidents. Reagan, Reagan, Bush, Clinton, Clinton, Bush, Bush. That's 71.4% of the time. And 10.5 Trillion is 82% of 12.8 Trillion. Close enough to proportional for.... government work.

Kinda hard for Democratic Presidents to accumulate deficits while the White House is held by Republicans. But based on budget projections, I expect Obama, to blow that proportion out of the water by the time he finishes his time in office.

Brett: the debt/GDP ratio actually *dropped* under Clinton. I doubt the value of the exercise, but if we're going to do it, then we need to recognize that virtually all of that debt was generated under "Reagan Revolution" Republican Presidents.

Brett, your point?

Democratic presidentss are better than Republican presidents at accruing debt. Even by your calculations, after which you wave a way a fairly significant number.

But I suppose Republicans are still...better...or not, but...something.

I want to know if we can expect years and years of Republicans calling Obama a Stalinist?

No, it's going to stop the minute Obama starts sending them to the Gulag.

Dan, you don't accumulate debt to GDP ratio, it's a momentary ratio which fluctuates according to the performance of the economy. Clinton ended in a stock market bubble which popped on Bush's watch, so his debt to GDP ratio looked good going out.

BUT, Clinton added roughly his share to the debt, and his share of the debt did not evaporate magically when the stock market imploded. So I think I'm being fair to point out that, while most of that debt was added under Republican Presidents, that's primarilly because most of the PRESIDENTS during that time frame were Republican Presidents. Democratic Presidents can scarcely add to the debt when they're not in office, but they do their share when they can.

It appears that the combination of a Republican Congress and a moderate Democratic President is capable of restraining spending growth, all other combinations suck. But it's a circumstance so rare in our history, that it may just be a fluke, and the truth be that ALL combinations of Republican and Democrat suck at restraining spending.

Brett,

So, Democratic President, Libertarian Congress?

Brett's right. Obama is a Stalinist. The Laugher Curve is real guys. I saw it on Larry Kudlow.

I'm normally to the left but I agree with Chandler about the Laugher curve.

Debt to GDP ratio is the right measure if what you are concerned with is the ability to pay back that debt.

Starting in 1945, the Democratic party controlled the presidency for 7 terms before the current one. In all of those 7 terms, the debt to GDP ratio fell.

The Republican party controlled the presidency 9 times in the same period, in 6 of those terms, the debt to GDP ratio rose.

The best record by far was in the immediate postwar period, as you might expect, by far the worst record was during the Reagan-Bush 1 years, as you might not.

Draw your own conclusions, but Brett's isn't justified by the facts.

Is it time for Chris/Chandler whack-a-mole?

I'm normally to the left but I agree with Chandler about the Laugher curve

Not me. So, who's posting using other people's handles?

"Debt to GDP ratio is the right measure if what you are concerned with is the ability to pay back that debt."

Only if you assume that GDP is monotonically increasing. Because debt does not magically shrink if your GDP shrinks. And it does that occasionally.

I suppose you could reasonably compare debt to some kind of long term rolling average of GDP, but it's just nuts to compare it to short term GDP numbers, which you have to do to say things actually improved under Clinton.

Because debt does not magically shrink if your GDP shrinks.

GDP can shrink but it rarely does, more rarely shrinks very much, and even more rarely shrinks very much for very long. And when it does, the debt to GDP ratio is a good number to use to quantify the worsening situation.

It is the right measure for ability to pay, in the same way that income is a measure of ability to pay debt for a consumer.

And by that measure, things have always improved under Democratic presidents going back to the Great Depression, and have very rarely improved under Republican presidents in the same period.

Democratic presidents are always fiscally responsible. Republican presidents are almost always fiscally irresponsible.

The Republicans are a lot like the Cylons. They keep saying that the have a plan, but nobody will tell us what it is.

"Democratic presidents are always fiscally responsible."

Under what definition is Obama's budget "fiscally responsible" with trillion dollar deficits as far as the eye can see?

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