Comments on: The True Cost Of Stimulus: $3.27 Trillion http://deanesmay.com/2009/02/12/the-true-cost-of-stimulus-327-trillion/ Defending the liberal tradition in history, science, and philosophy. Sun, 12 Feb 2012 00:15:29 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: jrogge http://deanesmay.com/2009/02/12/the-true-cost-of-stimulus-327-trillion/#comment-169081 jrogge Fri, 13 Feb 2009 03:03:15 +0000 http://deanesmay.com/?p=14984#comment-169081 I wouldn't call a tax credit a handout if it has the stipulation that you owe in taxes to receive it. The housing tax credit, for example, is non-refundable and stipulates you have to owe taxes that year. Being non refundable it only allows credit up to what you owe and no more. For first time homebuyers, it is the effect of an extremely large tax cut. Now, if the credit is refundable then we have a handout but this is not the case. The old credit is refundable but is considered a loan to be repaid. The new one is not, but only gives $7500 to those who may have owed that in taxes. I specifically targets the middle class, but offers a benefit to everyone. Well, it did since there are income caps set to the new one because of negotiations. It was also 15,000 originally as well. The credit also has to be claimed if I remember correctly so you will pay for it in the following year. So you get a hit on it that bounces back. The 2 year sunset on the tax cuts may not be necessarily bad. Remember that the Laffer curve works both ways. The only way to prove the optimum is through trial and error unfortunately. I wouldn’t call a tax credit a handout if it has the stipulation that you owe in taxes to receive it. The housing tax credit, for example, is non-refundable and stipulates you have to owe taxes that year. Being non refundable it only allows credit up to what you owe and no more. For first time homebuyers, it is the effect of an extremely large tax cut. Now, if the credit is refundable then we have a handout but this is not the case. The old credit is refundable but is considered a loan to be repaid. The new one is not, but only gives $7500 to those who may have owed that in taxes. I specifically targets the middle class, but offers a benefit to everyone. Well, it did since there are income caps set to the new one because of negotiations. It was also 15,000 originally as well. The credit also has to be claimed if I remember correctly so you will pay for it in the following year. So you get a hit on it that bounces back.

The 2 year sunset on the tax cuts may not be necessarily bad. Remember that the Laffer curve works both ways. The only way to prove the optimum is through trial and error unfortunately.

]]> By: Eric Rall (Maniakes) http://deanesmay.com/2009/02/12/the-true-cost-of-stimulus-327-trillion/#comment-169080 Eric Rall (Maniakes) Fri, 13 Feb 2009 02:39:09 +0000 http://deanesmay.com/?p=14984#comment-169080 My dollar figures were the reported 10-year figures, which I believe is the best comparison in the absense of a good way of estimating the permenant net present value. You (and WSJ) are comparing the first two years of a phased-in long-term tax cut to the total cost of a front-loaded temporary package -- most of the "tax cuts" in the spendulus will sunset after a year or two. My dollar figures were the reported 10-year figures, which I believe is the best comparison in the absense of a good way of estimating the permenant net present value.

You (and WSJ) are comparing the first two years of a phased-in long-term tax cut to the total cost of a front-loaded temporary package — most of the “tax cuts” in the spendulus will sunset after a year or two.

]]> By: Aziz Poonawalla http://deanesmay.com/2009/02/12/the-true-cost-of-stimulus-327-trillion/#comment-169079 Aziz Poonawalla Fri, 13 Feb 2009 02:35:49 +0000 http://deanesmay.com/?p=14984#comment-169079 oh, i suppose ifyou count the tax cuts under the full ten year window, then bush's were bigger, but of course the actual cost was less. oh, i suppose ifyou count the tax cuts under the full ten year window, then bush’s were bigger, but of course the actual cost was less.

]]> By: Aziz Poonawalla http://deanesmay.com/2009/02/12/the-true-cost-of-stimulus-327-trillion/#comment-169078 Aziz Poonawalla Fri, 13 Feb 2009 02:34:39 +0000 http://deanesmay.com/?p=14984#comment-169078 bush's tax cuts were 1.1 trillion in 2001? i dont think so. this is wher ei am getting my data from: http://online.wsj.com/article/SB123111279694652423.html $174 billion in 2001, then $231 billion in 2004/5 for the Bush cuts. the Obama tax cuts are $282 billion, so bigger than either of the two batches by Bush. of course if you add Bush cuts together then its larger but 43's two rounds were not passed as a single legislation. bush’s tax cuts were 1.1 trillion in 2001? i dont think so. this is wher ei am getting my data from:

http://online.wsj.com/article/SB123111279694652423.html

$174 billion in 2001, then $231 billion in 2004/5 for the Bush cuts.

the Obama tax cuts are $282 billion, so bigger than either of the two batches by Bush. of course if you add Bush cuts together then its larger but 43′s two rounds were not passed as a single legislation.

]]> By: Eric Rall (Maniakes) http://deanesmay.com/2009/02/12/the-true-cost-of-stimulus-327-trillion/#comment-169075 Eric Rall (Maniakes) Fri, 13 Feb 2009 01:03:57 +0000 http://deanesmay.com/?p=14984#comment-169075 <i>is this a distinction that matters?</i> Absolutely. It matters because it's marginal tax rates that determine the burden of taxation on the economy. It matters because it's nonsensical to talk about giving a tax cut to someone who doesn't pay taxes. It matters because of the conceptual difference between everyone keeping more of their own money, or certain people getting a check from the goverment for doing or being something the government approves of. <i>ok, adjust for inflation and you still get a bigger tax cut than President Bush’s cuts.</i> I rather doubt that. I'm to lazy to run the numbers, but I think 1.1 trillion 2001 dollars + 550 billion 2003 dollars adds up to more than 292 billion 2008 dollars. is this a distinction that matters?

Absolutely. It matters because it’s marginal tax rates that determine the burden of taxation on the economy. It matters because it’s nonsensical to talk about giving a tax cut to someone who doesn’t pay taxes. It matters because of the conceptual difference between everyone keeping more of their own money, or certain people getting a check from the goverment for doing or being something the government approves of.

ok, adjust for inflation and you still get a bigger tax cut than President Bush’s cuts.

I rather doubt that. I’m to lazy to run the numbers, but I think 1.1 trillion 2001 dollars + 550 billion 2003 dollars adds up to more than 292 billion 2008 dollars.

]]> By: Aziz Poonawalla http://deanesmay.com/2009/02/12/the-true-cost-of-stimulus-327-trillion/#comment-169074 Aziz Poonawalla Fri, 13 Feb 2009 00:49:07 +0000 http://deanesmay.com/?p=14984#comment-169074 <i>A refundable tax credit is a handout administered by the IRS, not a tax cut. </i> is this a distinction that matters? ok, adjust for inflation and you still get a bigger tax cut than President Bush's cuts. A refundable tax credit is a handout administered by the IRS, not a tax cut.

is this a distinction that matters?

ok, adjust for inflation and you still get a bigger tax cut than President Bush’s cuts.

]]> By: Eric Rall (Maniakes) http://deanesmay.com/2009/02/12/the-true-cost-of-stimulus-327-trillion/#comment-169071 Eric Rall (Maniakes) Fri, 13 Feb 2009 00:17:51 +0000 http://deanesmay.com/?p=14984#comment-169071 A refundable tax credit is a handout administered by the IRS, not a tax cut. And even if it were, you're not correcting for inflation or economic growth in declaring this to be the largest in history. The financial burden of goverment is a combination of total government spending and effective marginal tax rates (the amount of additional taxes you pay if your income goes up one dollar; deadweight loss due to taxation is proportional to the square of the effective marginal tax rate). Total goverment spending is going *way* up. And since most of the new tax credits phase out around $75,000/year in income, effective marginal tax rates are going way up for much of the upper middle class. A refundable tax credit is a handout administered by the IRS, not a tax cut. And even if it were, you’re not correcting for inflation or economic growth in declaring this to be the largest in history.

The financial burden of goverment is a combination of total government spending and effective marginal tax rates (the amount of additional taxes you pay if your income goes up one dollar; deadweight loss due to taxation is proportional to the square of the effective marginal tax rate). Total goverment spending is going *way* up. And since most of the new tax credits phase out around $75,000/year in income, effective marginal tax rates are going way up for much of the upper middle class.

]]> By: Aziz Poonawalla http://deanesmay.com/2009/02/12/the-true-cost-of-stimulus-327-trillion/#comment-169068 Aziz Poonawalla Thu, 12 Feb 2009 23:59:21 +0000 http://deanesmay.com/?p=14984#comment-169068 Whither all this whining? President Obama's bill contains <b>the largest tax cut in history</b>. And the spending is still less than the Iraq War. This sudden conservative fascination with balanced budgets and "generational debt" is rather convenient. Whither all this whining? President Obama’s bill contains the largest tax cut in history. And the spending is still less than the Iraq War. This sudden conservative fascination with balanced budgets and “generational debt” is rather convenient.

]]> By: CosmicConservative http://deanesmay.com/2009/02/12/the-true-cost-of-stimulus-327-trillion/#comment-169032 CosmicConservative Thu, 12 Feb 2009 21:55:50 +0000 http://deanesmay.com/?p=14984#comment-169032 jrogge: Yeah, I think the tree of liberty thing is a little over the top too, although I have a vague memory of making a similar reference in my Jefferson quotes comment, so I can't give Kevin too much grief for that from my own seat without at least appearing to be hypocritical. And I think that in general the criticisms of me may be accurate about me being a jerk, but I don't think I'm a hypocrite. As far as policy perpetuation is concerned, I just review history and note that we have had numerous Republican adminstrations and Congresses since the New Deal, but virtually everything Franklin (and Johnson after him) put in place is still in place today. I just know that politically it is VERY hard to terminate a program once it is in the budget. That's just political reality, not partisan bickering. -sdg jrogge: Yeah, I think the tree of liberty thing is a little over the top too, although I have a vague memory of making a similar reference in my Jefferson quotes comment, so I can’t give Kevin too much grief for that from my own seat without at least appearing to be hypocritical. And I think that in general the criticisms of me may be accurate about me being a jerk, but I don’t think I’m a hypocrite.

As far as policy perpetuation is concerned, I just review history and note that we have had numerous Republican adminstrations and Congresses since the New Deal, but virtually everything Franklin (and Johnson after him) put in place is still in place today. I just know that politically it is VERY hard to terminate a program once it is in the budget. That’s just political reality, not partisan bickering.

-sdg

]]> By: CosmicConservative http://deanesmay.com/2009/02/12/the-true-cost-of-stimulus-327-trillion/#comment-169031 CosmicConservative Thu, 12 Feb 2009 21:50:58 +0000 http://deanesmay.com/?p=14984#comment-169031 Dean: I think you have to admit in reading my posts that I have been vocal in my opposition to this bill, but have not been one of those claiming it's the end of the world. In this very thread I made many of the points that you are making, so you are lecturing the wrong conservative. :) I do "get it." And as I have said many times, I would be fully behind this bill if it truly addressed what it is supposed to. I have to be honest and admit that I have not seen the final version of the bill, and maybe it is better than I feared. It's smaller anyway. But as long as it has massive amounts of liberal wet-dream spending in it under cover of the need to "avoid catastrophe", I'll be critical of it. Even if that is only 10% of it. It should have ZERO percent pork if this is truly the crisis Obama/Reid/Pelosi are claiming it to be. But since you are in the mode of criticizing people for running around like Chicken Little, you have to be at least intellectually honest enough to admit that Obama and his buddies are the WORST examples of that, claiming that we have to pass the largest spending bill in US History in DAYS, UNREAD and UNDEBATED. If anyone is sowing panic and using it to gain political advantage, it's Obama/Reid/Pelosi. Dean:

I think you have to admit in reading my posts that I have been vocal in my opposition to this bill, but have not been one of those claiming it’s the end of the world. In this very thread I made many of the points that you are making, so you are lecturing the wrong conservative. :) I do “get it.”

And as I have said many times, I would be fully behind this bill if it truly addressed what it is supposed to. I have to be honest and admit that I have not seen the final version of the bill, and maybe it is better than I feared. It’s smaller anyway. But as long as it has massive amounts of liberal wet-dream spending in it under cover of the need to “avoid catastrophe”, I’ll be critical of it. Even if that is only 10% of it. It should have ZERO percent pork if this is truly the crisis Obama/Reid/Pelosi are claiming it to be.

But since you are in the mode of criticizing people for running around like Chicken Little, you have to be at least intellectually honest enough to admit that Obama and his buddies are the WORST examples of that, claiming that we have to pass the largest spending bill in US History in DAYS, UNREAD and UNDEBATED.

If anyone is sowing panic and using it to gain political advantage, it’s Obama/Reid/Pelosi.

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