Tax Cuts Spur GDP Growth? Oh Really! Let's Just Take a Look - (Expanded Version) [16]

What Are Right-wing Conservatives Really About? This is a MUST READ!

Red, White, and Blue - What Does That Bar Chart Tell Us About Taxes and Growth?

I was starting to write this hub about solving the deficit through spending cuts alone when I heard Senator Mitch McConnell, for the umpteenth time, say the Republican mantra about "cutting taxes always spurs growth in the economy", allegedly by putting more money into the People's hands to spend. Consequently, I got sidetracked into doing this hub. As an INTP, that happens easily!

After a days worth of research and some calculations, I ended up with the chart above. In the process, I had a few preconceived notions blown away except for the primary one ... I didn't really think that tax cuts was as strongly tied to economic growth as the Republicans love to claim.

Addendum - Based on comments I received, I added as an epilogue an analysis of each tax cut/increase from 1954 to 2001 at the bottom of the first part of this piece. If you are a glutton for punishment or just want to check on my assertions, have at it. A summary of the results, however is included in Part 1.

WARNING TO TEA PARTYERS and RIGHT-WING CONSERVATIVES: you might want to skip the analysis section as it might tend to upset your world or change your party affiliation! (Just kidding, I know you are as open-minded as the rest of us)

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My Method

I will try to keep this upbeat and not too dry and numbery. The Conservatives, including the tea partyers, claim, constantly, that cutting taxes automatically leads to economic growth. You can't get through one political speech from them without hearing that statement.

Well, as it turns out. THEY ARE WRONG!!

What I did, the simplified version, was

  1. To gather up the annual percentage increases or decreases in Gross Domestic Product (GDP) from 1947 to 2010. GDP is one generally accepted way of measuring economic growth.
  2. I made sure the effects of inflation were removed so that we can compare each year in the same terms. (FUN FACT - Did you know that a 1947 dollar is worth $7.39 today?)
  3. I converted these percentage increases into dollars in order to measure growth over a period longer than a year

Next I researched when we had major changes in our tax policy and laid those dates against my column of GDP numbers.

In order to determine whether we experienced economic growth or not as a proximate cause of the change in tax policy, I looked at the 5-year period of GDP figures following the year of the change (the RED bars in the chart at the top or bottom). I compared it to the previous 5-year period before the change (the Blue bars in the chart at the top or bottom)

If there was economic growth as a result of a tax cut, then the growth in GDP in the 5 years following the cut should be greater than the GDP growth in the 5 years previous to the cut. Similarly, if there was a tax increase, then the reverse should be true; The growth in the next five years should be less than the previous five years.


IMPACT OF TAX CUT/INCREASE ON GDP GROWTH

CHANGE IN ANNUAL GDP BEFORE AND AFTER A SIGNIFICANT TAX CHANGE
CHANGE IN ANNUAL GDP BEFORE AND AFTER A SIGNIFICANT TAX CHANGE | Source

What Are The Results?

SURPRISING, actually! To me at least. The chart is laid out with the earliest tax cuts/increase on the left and the most recent on the right. The Blue bars represent the annualized percentage growth in the five years previous the tax change and the Red bars represent the annualized percentage change in the five years following the tax change.

Also provided below the bars are the respective Presidents who were in power at the time, whether the change was a tax cut or a tax increase, and what year the tax change was passed.

So, what do we see? First we see that there were a total of 8 major changes in tax policy between 1954 and 2010. Six were tax cuts, 2 Democratic and 4 Republican, and 2 were tax increases, 1 Republican and 1 Democratic. Now look the pairs of Blue/Red bars. How many of them have the Red bar below the Blue bar? Four, right? That means that Growth Slowed after the tax policy changed and each one of those was a Tax Cut! In only two, Kennedy and the 1st Reagan cut, out of the six tax cutting circumstances was there actual growth in the GDP after five years! Wow, Mitch McConnell, John Boehner, Rand Paul, what have you been smoking??

Also notice that in the two times that taxes were increased, growth increased. That is 100% of the time!!! OK, so now I am acting like a politician ... it is only 2 out of 2 after all and one followed close on the heels of the other when coming out of a significant downturn under Reagan, The result isn't all that surprising but it does show that both Bush Sr. and Clinton did the right thing, even though Bush Sr. paid a heavy price for it with his own party.

Notice one final thing. The Johnson tax cut of 1965 and the Reagan tax cut of 1986 came two years and five years, respectively, after the previous tax cut. Both of those tax cuts ended up with slower growth.

What Say You About The Future?

ONE should consider this history carefully when listening today's Republican House calling for even more tax cuts today so soon after this recession let alone extending the tax cuts on the wealthy.

If history is any guide, I would place my money on letting the tax cuts on the wealthy expire and wait until we have a healthy economy before considering additional tax cuts.

What do you say?

SUMMARY FROM EPILOGUE BELOW

  • The analysis covers the period from 1954 through 2001 where there were six significant tax cuts and two significant tax increases.
  • In four situations, economic growth was declining prior to the tax action, three of them before a tax cut, 1954, 1981, and 2001, and once before a tax increase in 1991.
  • The other three tax cut cases, 1963, 1965, and 1986 and the final tax increase were preceded by economic growth.
  • Federal Revenues results
In all three cases where the worsening economy was followed by a tax cut, federal revenues decreased. In the one case where a worsening economy was followed by a tax increase, federal revenue increased In the three tax cut and one tax increase cases that were preceded by economic growth, federal revenues also increased. Economic Growth results
In only three of the eight cases were there significant increases in growth between consecutive five year periods. All three of those the tax actions, 1963 tax cut, 1981 tax cut, and the 1993 tax increase, were preceded by economic growth, In the other five cases, there was, regardless of the reason, either no difference between the two periods or a decline in growth. The Republican tax philosophy, as portrayed by Senator McConnell, et al, is that tax cuts will 1) increase federal revenues by 2) increasing economic growth and that tax increases will a) decease federal revenues by b) decreasing economic growth. They make no other caveats or complications. It is a simple philosophy to understand and to put into believable sound bites. It helped win them the House this month. The problem is, of course, their philosophy doesn't hold water except in certain circumstances, i.e., when the previous year or two has been experiencing growth already and there is nothing in the environment to quash growth in the future. The bottom line is that the Republicans have zero grounds for making the claims they do, especially when talking about saving us from a declining ecomony' tax cuts don't work, tax increases might. They simply don't know what they are talking about. Does anybody have any facts that prove me wrong?

Epilogue - Sponsored by eovery

IN the kind comment Eovery wrote, he pointed out that many other factors are involved in whether we experience growth over any given period of time. He is absolutely right. However, one can still analyze the Republican hypothesis that "cutting taxes leads to economic growth" based on the data I have presented.

First, let me apologize and warn. In the sections to follow, I present a lot more numbers in text form. I attempt to keep these at a minimum but when trying back up my claims, some will be needed. I hope the narrative that accompanies them is sufficient to keep your eyes open and your interest keen.

I have already mentioned the first top level indication, out of six tax cuts only two were followed by growth that was better than the preceding period, regardless of the reason. The four other times the growth declined, again regardless of the reason. So the question I would have is, what basis are the Republicans using to make their claim? It certainly isn't a top level view. From that perspective, tax cuts and tax increases seem to have the same effect. While, based on just looking at the graph, I can't say for certain, that tax cuts don't spur growth, I can say it with more certainty than the Republicans can say it does.

PRESIDENT EISENHOWER'S TAX CUT

Eovery also points out that certain events may have interrupted good intentions. So I looked into that a little. Starting with the 1954 Eisenhower tax cut, one would find that in the five year period prior to the cut, the first four were boom years, probably resulting from all of the money being spent on the Korean War. The last year, however, we went into a recession as that spending dried up and the troops came home. I would guess that might have been the impetus behind the tax cut. Nevertheless, the boom was so strong, the 5-year period showed a growth of 4.7%!

Eisenhower's tax cut was substantial. While it only dropped the top tax rate from 92% to 91% (and they are complaining today!) and, 23 tax brackets later, the lowests tax bracket from 22.2% to 20%. It was the middle tax brackets that saw the largest decline. You can see from the chart that this tax cut did have the desired effect, only 2.9% growth in the next 5 years. Why?

IN the last two quarters of 1954 and the first three quarters in 1955, there actually was good growth as the troops got back to work and the economy went from a war footing to domestic production. The same thing happened following WW II. But after that, the economy went into decline. For no particular reason that I can easily find, the economy floundered for the next six years with the exception of 1958 which, as Frank Sinatra once said, "was a very good year". So, were the good times in the couple of years after the tax cut due to the tax cut or Americans going back to work in an economy depressed by the previous war? Whatever it was, it was short lived.

Another astute comment by American Romance led me to generate the table below that considers the Federal receipts following the enactment of a tax cut or tax increase. In this case, we are looking at the effect of the 1954 Eisenhower tax cut. In this case, it doesn't appear the tax cut had the desired effect. Tax receipts actually fell, dramatically, from the year preceding the tax cut. In fact, receipts did not equal those received in 1953 until 1960! In only one year, 1957, did receipts actually exceed those of the year of the tax cut.

Federal Receipts (constant 2005 $)

Year 
Receipts ($ B) 
1953
619 
1954 (tax cut enacted)
599 (recession ends in May)
1955
544 
1956
591
1957
603 (recession begins in August)
1958
567 (recession ends in April)

PRESIDENT KENNEDY

IN the few years prior to President Kennedy's tax cut, the economy was strong; GDP was growing at a reasonable rate. For the previous five years the GDP grew at 4.53% which is great by anybodies standards. After the tax cut, the economy continued to expand at 5.5%, almost too fast. Sustained growth like that can lead to inflation. So why the tax cut? I am not sure.

If my memory serves, I was about 16 then but politically curious, I think it was primarily due to most everybody but liberal Democrats being upset with the high tax rates. They still ranged between 20% and 91%. There was definitely a big push from the Right whose political power peaked a few years before but had momentum going their way. (Keep in mind, Right-wing Conservatives then, think Goldwater, are not from the same mold as those who call themselves that today; their mindsets are quite a bit different on how they approach getting their agenda into law.) As I remember, a tax cut was a big part of Nixon's platform and Kennedy tried to mitigate that with one of his own. The rest is history.

Kennedy won and enacted a massive tax cut. He took the top rate down to 77% from 91% and the lowest rated down to 16% from 20%. The biggest beneficiary again was the middle class with reductions as large as 16% points! He did manage to add two more tax brackets though, bringing the total to an astounding 25.

What was the result? Success this time. The tax cut fed into the growth that was already going on and magnified it. There was nothing happening in the world yet to upset the applecart. Vietnam was waiting in the wings, we had weathered the Bay of Pigs fiasco and the Cuban Missile crises, which could have undone everything, was history. From the chart below, you can see that federal revenues increased substantially from the increased growth apparently sparked by the additional capital flowing in from the middle class; just as the Republicans claim will happen ... but wait there is more (which I will get to after we look at some more recent examples of where it didn't work as planned.)

I think I am going to call it a night and continue tomorrow. Please come back.

Federal Receipts (constant 2005 $)

Year 
$ B 
1962 
$ 660 
1963 
$ 675 
1964 (tax cut enacted)
$ 704 
1965
$ 721
1966
$ 789
1967
$ 875

PRESIDENT JOHNSON

TALK about being in the wrong place at the wrong time; mostly of his own making. Vietnam came front and center, the Great Society was born, and this was the season for massive social unrest in America. Nevertheless, save for 1968, after the 1965 Johnson tax cut we again see substantial growth in federal receipts.

What is in common with the Kennedy tax cut of 1963 is that it was large and that it occurred in league with substantial economic growth in the previous 5-year period. The growth was an amazing 6.58% and the tax brakets, reduced again to 23, was further lowered with the top rate going to 70% from 77% and the lowest rate went to 14% from 16%. Once more, the middle class got most of the benefits. Also, let me point out that this is still the era of massive write-offs, deductions, and tax shelters where many millionaires (when it meant something) and billionaires could get away with pay no taxes at all!

What is not in common with the Eisenhower tax cut of 1954 is that the Eisenhower tax cut occurred when the economy was winding down. The tax cuts were roughly the same size but growth in the 5 years previous to the 1954 cut was a robust 4.72%, it was actually negative the last 2 quarters of 1953 and the 1st quarter of 1954. Keep this in mind for latter analysis.

Like Kennedy, tax receipts soared! Unlike Kennedy, growth declined, sharply. Over the 5 years following the Johnson tax cut of 1965 the economy grew at a much lower, but almost normal, 2.76%. So what happened?

Lots of things converged which can be summed up as the precursor to one of the most turbulent economic periods in America until 2008. Further, one can argue that part of the blame for the turbulance can be laid at the feet of the Kennedy and Johnson tax cuts (which, remember, had the Republicans cheering loudly). What tax cuts are supposed to do is pump money into the economy. This works very well when the economy is humming along. But with growth, comes inflation if not planned for; sometimes even if it is. In this case it wasn't.

So what did Johnson, and later Nixon, face? A Vietnam war intertwined with social unrest that was getting out of control leaving the future uncertain and a drain on the economy. A war that was nowhere near the stimulus to the economy like WW II and Korean War were. Increasing inflation and increasing Federal Reserve rates to combat it, thereby depressing growth, and the impact of the Great Society. (I need to write a hub on this because I don't think Transfer payments like this harm growth, per se. In fact, I might be able to argue that it can help.)

In summary, probably four things combined to slow growth in the 5 years after the 1965 tax cut: 1) the transfer of capital out of the economny due to the Vietnam war, 2) the depressing effect of the large increases in the Federal reserve discount rate (up to 8%), 3) uncertainty as to where America was going, 4) the business cycle may have been coming to end anyway. In fact, the economy experienced negative growth near the end of the 5 year period.

Federal Receipts (constant 2005 $)

Years 
$ B
1964
704
1965 (tax cut enacted)
721
1966 
789
1967
875
1968
867
1969
994

PRESIDENT REAGAN - PART 1

NOW it becomes personal. I was a two-time Republican voter by this point (I am not sure if I was eligilble for the 1968 election, but if I was, I think I would have voted for Johnson) and was a Reagan supporter in 1980. Not for his politics though, which were a little bit to far right for my tastes, but because the country needed uniting and he could do the job ... and he did.

It becomes personal, however, because after serving in Vietnam and getting out of the Army, I started one small business in 1975 and then another, a game store (war games of course, lol) 1978. Later, I sold the first one for a small profit. The economy was OK but inflation was still out of control. As it turned out, my timing was terrible; 1978 was the last good year for the next five years. The Federal Reserve, in order to get inflation under control, put the brakes on, HARD! By 1981, the year President Reagan introduced his first tax cut, the discount rate was a whopping 16.3%!!! By the 2nd quarter of 1982 we were in a recession. I still remember it being announced in the papers in June 1982, In July 1982, my sales dropped through the floor, By 1983, I was out of business (always one for irony, I closed on April 1, 1983) and by the end of the year, the whole gaming industry, manufacturers, wholesalers (including the one I sold my first business to), and retailers had largely disappeared. There are remnants around today, but not like what it was.

What got us in this position can probably be boiled down to a few things. Three of which were the unconstrained growth in the 1960s powered by two big tax cuts, the increasingly short-sighted thinking of the business/political communities, and THE OIL EMBARGO. The first two factors would have probably gotten us into trouble as they always do, but the oil embargo's impact on supply and price magnified the effect by a couple of orders of magnitude. It drove huge inflation and led to recession.

We had Stagflation ... inflation with a recession; a terrible thing for those of you who remember. I don't believe Stagflation had really raised its ugly head by the time President Reagan decided on a tax cut; that was part of his campaign. (Previously President Nixon had a tax restructure as well but he basically reduced the number of brackets from 24 to 15. The top and bottom rates remained unchanged although the cut-offs within the brackets did not.)

Now we have the Federal Reserve, which controls Monetary Policy, and the President/Congress, which controls Fiscal Policy, at loggerheads. The Fed is trying with all its might to restrain growth and bring inflation under control and the President is trying to do the political thing and increase growth. All the while oil prices, even though the embargo ended in 1974, were skyrocketing. The result was a mess and the Fed won. Federal income fell while outlays (think Great Society) increased leading to our first soaring deficit, as well as debt.

Surprisingly, the recession was short lived, even though it wasn't until 1986 when Federal receipts were larger than they were in 1981. Several things were in play in the 1981 to 1984 time frame.

  1. You had whatever the effect are going to be of the presidents tax cut starting in late 1981
  2. You had the Fed cutting its rate to around 10% in 1984, 8% in 1985, and 6% in 1986.
  3. Where the price of oil skyrocketed from 1973 to 1981, they plummeted even faster from 1981 to 1986. Sadly, they didn't come all the way back down.
  4. Now, you tell me, which had more impact on economic growth: plummeting oil prices, plummeting Fed discount rates, or a healthy tax cut? How much weight would you put on each? To here today's Right-wing politicians and their supporters tell it, 100% goes to the tax cut.
  5. Anyway, as a result, the economy grew beginning in 1983 and didn't stop until 1987. Growth for the period 1982 - 1986was 4.06% compared to the 5-year period 1977 - 1981 of 2.95%. Just for the record, the 2nd and 4th quarters of 1981 and the 1st and 3rd quarters of 1982 had negative growth.

I can't say the tax cut, which was substantial, was wasted, but it didn't live up to the Republican promises. Did it make the recession less of one? Maybe. It certainly put money into the pockets of those still earning it but the unanswered question is, was this money spent on consumption or was it spent on paying personal debt? In the former case, that spurs growth, in the latter it doesn't. Nevertheless, it can be said that within two years of the tax cut, the US experienced growth. What can't be said is the other half of the Republican claim is that tax cuts de facto increase revenue to the Treasury.

One thing is for certain though, the Republicans cannot point to this action as proof their philosophy works. Now let's look at President Reagan's second tax cut.

Federal Receipts (constant 2005 $)

Year
$ B 
1980 
$1,198
1981 
$1,251
1982 (tax cut enacted)
$1,203 (recession ends in November)
1983
$1,114
1984
$1,174
1985
$1,251

PRESIDENT REAGAN - PART 2

PRESIDENT Reagan's round 1 tax cuts took 15 tax brackets that spanned from 14% to 70% and compressed them into 14 tax brackets that spanned from 11% to 50%. Round 2, in 1986, reduced the 14 brackets into the more familiar 5 brackets of 38.5%, 35%, 28%, 15%, 11% and then in 1987 to 28% and 15%,  In all of these moves though, there were many other changes tended to increase taxes such as the Alternative Minimum Tax to make sure the rich actually paid taxes, many didn't, and the elimination of certain items that can be deducted on Schedule A. Regardless, the overall effect was to lower taxes.

The environment was different. Reagan and the Republican and then Democratic Congress were on a spending spree. Prior to 1986, it was for defense. After 1986, entitlements began to raise its ugly, monolithic head. The Cold War was won and the race was on as to who could destroy the military the fastest, Democrats or Republicans. They both won, to America's huge disgrace. However, the real gorilla in the room was the deficit and the debt. It was working its way from infancy to adulthood.

(At the time, having lost my business to the 1981 recession, I did the next best thing, I started working for the government. Actually, a friend of mine and my ex-wife dragged me kicking and screaming into it but it was the best torture I ever endured! I ended up taking a job as a GS-4 Mathematician at McClellan AFB in Sacramento, CA right at the time when everything was blowing up about overpriced hammers and toilet seats. My base commander led up the task force investigating it.)

It would appear Reagan's second tax cut had leg 1 of the desired effect, it might have spurred increased revenue for the federal coffers. We probably should expect that if we look at the Kennedy and Johnson models of initiating a tax cut during a growth period. This is now our third example of where this works.

Did it, however, spur more growth, the second leg of the Republican model? Apparently not when you compare 2.63% growth in the 2nd five years vs 3.69% growth in the five years before that. But were there other factors? Maybe. Probably the most influential was the 1st Gulf War. It seems to have had a depressing effect on our economy. I certainly can remember the jitters of the stock market and oil prices. I believe the real problem, though, was the soaring deficit and debt, just like today.

The high point of the deficit was in 1983 and then again in 1986. Many measures were taken, including this tax cut, to increase federal revenue and decrease spending. It worked for three short years, from 1987 to 1989; receipts increased at a faster rate than outlays.

But it couldn't last. Other forces over took the temporary relief from the tax cut and the deficit ballooned in 1990. Receipts actually declined in 1991. Nevertheless, can the Republicans point to this tax cut and call it a success? Maybe. It did increase revenues, even though growth declined, and it was done in conjunction with spending constraints. It worked for three years at least. If their spending cuts had been more successful, maybe growth would have returned.

But as I just said, it didn't last and it caused President Bush Sr. to commit political suicide by raising taxes at the end of his term in 1990. From his point of view, a necessary evil but from the Democratic point of view it was just what the Doctor ordered.

Federal Receipts (constant 2005 $)

Year 
$ B 
1985 
$1,251 
1986 
$1,278 
1987 (tax increase on lower and middle class, tax cut on rich enacted)
$1,376 
1988 (tax increase on lower class, tax cut on middle and upper class enacted)
$1,421
1989
$1,494
1990
$1,509

PRESIDENT GEORGE H. W. BUSH

PRESIDENT Bush's tax increase was small, breaking the 28% into two brackets, a 28% and 31% bracket. It was passed at the very end of his second year. With that and a few other unpopular compromises with the Democrats, President Bush lost the support of right-wing and fundamentalist Christian-wing of his party. His loss in 1992 was all but guaranteed.

The tax increase was passed such that it effected the 1991 taxes which are to be paid in 1992. As you can see from the table below, tax receipts immediately increased. There was no apparent effect on growth as the before and after 5-year rates are about the same and both above 3%. 

There wasn't much else major going on at time which would have a significant impact on the economy beyond the looming deficit and debt..  I was working in the Pentagon by this time for an office in the Secretary for Defense (OSD) involved in the review and assessment of the OSD and Service six-year budgets.  I had the privilege of having a birds-eye view of the process from 1988 to 2008; what a sight!!  The major fight in my arena was protecting the military and civilian budgets from stupid reductions by Congress ... notice I didn't identify a party, I don't need to. 

The one thing that was set in stone during the final year of the Bush administration was the stark downward path of our military Force Structure.  When the President Bush submitted his Budget to Congress in January or February 1992, we analysts just shook our heads.  I can say this now, enough time has past, we all knew that by 1998, America's military would not be able to carry out its mission as laid out in the Strategic Plan.  Therefore, I hate to burst the Republican bubble of blaming Bill Clinton for the sorry state of the military.  They need to look to one of there own first!  I must say though, Clinton still bears some responsibility as he could have changed things when he assumed office.  He didn't until it was too late.  Sorry for the digression, it still haunts me.

Where was I, oh yes, not much on the horizon to impact the economy so where do things stand?  We have growing revenues, we have an economy that is growing, albeit only a little bit, and we finally have the deficit under control.  All from a tax increase and some spending cuts he was able to get the Democrats to agree to, (in a fit of spite early on, the Republicans shot down Bush's tax increase/spending cut plan designed to shave $500 B off the deficit over five years) and, to be fair, the winding down of the Cold War.

In comes Bill Clinton.

Federal Receipts (constant 2005 $)

Year 
$ B 
1991 (tax increase on upper class enacted)
$1,473 (recession ends in March)
1992 
$1,468 
1993 
$1,512 
1994
$1,612
1995
$1,691
1996
$1,776

President Clinton

PRESIDENT CLINTON

This should be a short one. Not much happening in the world besides Monica Lewinsky, the impeachment of President Clinton, and the Right-wing Conservative take-over of Congress. Economically, things are running along peachy-keen with one small exception; a still too big deficit.

The solution? One more tax increase which President Clinton pushed through while he had the chance. I think this was before his health care debacle. The tax changes were for 1993, the year he assumed office, but would show up in 1994 and beyond. As you can see from the table below, not only did revues increase, they were increasing at an increasing rate! This far surpassed any increase in outlays and by 2000 the budget surplus hit $269 billion. Ah, those were the days ... short lived ones though because Al Gore lost to George W. Bush.

What about growth? Where growth was a meager but still OK 2.29% under Reagan/Bush, it was a sustainable 4.2% from 1994 - 1998. I distinctly remember the remember the Right-wing Conservatives howling because Alan Greenspan and Clinton would not implement monetary and fiscal policies to push the rate of growth higher, to unsustainable levels like those of the Kennedy/Johnson years.

Talk about the right move at the right time! (My opinion, of course.)

There is one sour note, however. Near the end of his Presidency, the lynch-pin was pulled that led, again in my opinion, to our destruction in 2008 when, in 1999, President Clinton signed a compromise bill named the Gramm-Leach-Bliley Act which repealed the part of the 1933 Glass-Steagall Act that kept banks and financial institutions apart.

And along came Bush.

Federal Receipts (constant 2005 $)

Year 
$ B 
1993 (tax increase on upper class enacted)
$1,512
1994 
$1,612 
1995 
$1,691 
1996
$1,776
1997
$1,890
1998
$2,041

PRESIDENT GEORGE W. BUSH

WHAT an unbelievably complex period this was, 2001 - 2008! We start with the cowardly terrorist attack on the Twin Towers and the Pentagon (I was driving to National Airport that morning to catch a flight to Boston when I heard the first report on the radio.) Then there is a significant tax cut followed followed huge increases in spending from three horribly mismanaged wars (I suspect a few die hards will disagree with me on that one), and capped by, in my opinion, a predictable economic meltdown. Not bad for two terms.

In the tax cut arena, what do we find? Did the tax cuts work as designed? I am again stuck with a maybe. Once again the predictable happened and tax receipts fell below 2001 level and didn't catch back up until 2006. Why? Because they followed an economic downturn in 2000 and 2001 with a tax cut. This happened in 1954, 1981, and now in 2000; do we see a pattern yet? Aren't the Tea Party and Right-wing Conservatives once again screaming for a tax cut to solve the world;s, or at least America's. problems? They need to look at history.

How about on the growth front? My chart shows the previous five years being better but really it is flat; I am not sure I can tell the difference. The only thing I can say for certain is it wasn't worse and it wasn't better.

So, was the tax cut worth it? Here I need to say no. I say no only because it destroyed the surplus Clinton managed to start. Would tax receipts been worse? One has to wonder as our only data point is George H. Bush's tax increase following a weak economy. Tax receipts grew and the deficit decreased. I would certainly like to give that another go, for sure. There is no doubt the reverse isn't working. What say you?

Would growth have been different? Don't know. I only know that in George H Bush's example they improved a bit. Given the number of "I don't knows", I think I would have like to stay with the bird-in-the-hand budget surplus. What say you, again?

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Federal Receipts (constant 2005 $)

Year 
$ B 
2001 (recession ends)
$2,215 
2002 (tax cut for lower class, smaller cut for rest enacted)
$2,029 
2003 (tax cit enacted)
$1,901 
2004
$1,951
2005
$2,154
2006
$2,324

BOX SCORE

Summarizing the results of tax cuts and increases over the last 50 years provides us this little chart.

 
FOLLOWED BY
INCREASE REVENUES
DECREASED REVENUES
TAX INCREASE
 
3
0
TAX CUT
 
2
2
 
 
 
 
For consistancy, I counted the Kennedy-Johnson cuts as one continuous cut as I did for Reagan and Bush I

2013 TAX INCREASE

AT THE END OF 2012, Congress finally reached a compromise which, among other things, increased the marginal tax rate on those earning $400,000 or more back to the Clinton era rates. It will be sometime before it can be determined if it had a positive effect on tax revenues and economic growth, but we should quickly see if it has the negative effect predicted by most conservatives.

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Comments 33 comments

eovery profile image

eovery 6 years ago from MIddle of the Boondocks of Iowa

One thing I see is missing is the other things going on at the time. The economy, I think is too complexed to draw a direct conclusion like this, i.e. 2001 we had 9/11 which caused us to go through a mini recession, which all Europe went through a larger recession due to the transition to the Euro.

Reagan had large inflation going on.

Also, from my studies, I see the tax decrease to take about 10 years to pay back.

But in a time like we have right now, the business need a boost to help them to grow and hire.

But this is interesting work. I would like to know more.


My Esoteric profile image

My Esoteric 6 years ago from Keystone Heights, FL Author

Thanks for your comment eovery. What you say is absolutely true and I think I will add an additional section to address this aspect. The complexity of the economy is enormous and to boil it down to a simple mantra of "cut taxes, grow the economy" doesn't do it justice.

As I understand it though, for businesses, at least the large ones, they are sitting on a bundle of money just waiting as are the banks. As you have probably seen from my writing, I have a very high suspicion of big business, well earned in my opinion. It is the small and medium size businesses that need the help you rightly talk of and those are the ones that are not effected by the current debate, just their big brothers.


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American Romance 6 years ago from America

Esoteric, There is no denying that the Reagan tax cuts cause more money than ever to flow into the government coffers! This has been tried and proven! Now common sense says substantial tax cuts would ease burden on all ready strapped Americans! Right now the middle class is looking at health care taxes and the loss of Bushs tax cuts! How many do you know can afford another 3 or 4 thousand in taxes next year? You could have written just as well to the fact that government doesn't need any more money! yes yes I know they are in the hole, I mean they can begin to cut government and downsize! If I had the authority to take away all taxes from just your paycheck next year you would consume more! period! you might buy a boat, new car, television or products to fix up your house! This is common sense! Harry Reid said by allowing the wealthy to keep the Bush tax cust it would cost the govt 4 trillion dollars! This is absurd! What does that mean! COST! Yes I understand what he is saying but its WRONG! Harry Reid isn't running his own personal business, he is supposed to be helping Americans! Govt is not a business it is supposed to be a protector or business and free enterprise! How many more tax hikes can the people endure? Taxes need to be cut by 50% for everyone! .....and MORE! 10% from all would be sufficient to build a military, protect our borders and take care of necessary business! While my governemnt is giving Pakistan billions they want to raise my taxes? .......I think NOT!


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My Esoteric 6 years ago from Keystone Heights, FL Author

Thank you for your comment American Romance. I am, however, confused on a couple of points. You say the middle class is looking at a substantial increase in taxes right now; I am not sure that is quite right. As I understand it, if the Democratic plan were passed as is, the middle classes taxes (about 95% of Americans) would actually be lowered slightly, not raised. Only the wealthiest of Americans who, except maybe for the bottom rung of the wealthy, won't even notice the increase; it is a pitance to them. I will agree, though, that for those at the $250,000 level, it will sting a bit. Having said that, it isn't likely now that the Bush tax cuts will be changed for the next couple of years.

As far as the increase in federal receipts go, check back to the hub in a few days. I will have posted a chart showing the impact in the years following each tax cut/increase, including President Reagan's. I think you are going to be very surprised!


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LRCBlogger 6 years ago

My Esoteric,

excellent research but there is one problem that I see. You are using actual 'facts' which will confuse many on the right. You need to use 'rhetoric' which is more easily understandable to them.

All kidding aside, this is great. I will say that the only recent surpluses we have had in my lifetime was when Clinton was pres and the GOP controlled congress. We had tax increases, a strong economy (dot.com era) and a balanced budget ammendment.


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My Esoteric 6 years ago from Keystone Heights, FL Author

Thanks LRCBlogger, LOL. :-)


Kevin 6 years ago

Good information, but I would be remiss not to point out a couple of omissions with respect to President Clinton.

First, tax revenues increased, but the economy was riding a huge tech boom for most of his administration (which also happened to die as President Bush took office). To say that the revenue increase was because of the tax increase is a bit over-simplified. More likely, the revenue increase was in spite of the tax increase, not because of it.

The second thing is regarding the supposed surplus. This has got to be one of the most misunderstood economic myths of all time. To claim that President Clinton had a surplus (and Bush destroyed it) is complete ignorance of the facts. Clinton did NOT have a surplus. The total financial impact of his tenure was a claimed surplus of approximately $63 billion (including all eight years of deficits and surpluses). During his time, however, the total national debt increased by $1.4 trillion. It is not possible to claim a surplus the country went deeper in debt. It's the same as borrowing $10,000 against your house and calling it income. Clinton's financials claimed a surplus, but it was actually the result of Social Security surpluses being used to purchase Treasury Bonds (as required by law) and the proceeds being called income. It was borrowed money, and we spent much more than we took in. The government does not comply with GAAP, so the only way to accurately measure a surplus or deficit is to look at the change total national debt (both debt held by the public and intergovernmental holdings). If the debt goes up (as it has every year since 1957), then we spent more than we took in, which by definition, is a deficit.

I do have to applaud you, however. You obviously did a lot of research, which is not something most people can say. I can't say that I entirely agree because there is a lot more to it than to just compare tax rate changes to GDP and Tax Revenues, but it's refreshing to see someone attempt to reach a conclusion based on the numbers and not ideology.


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My Esoteric 6 years ago from Keystone Heights, FL Author

Kevin, Great comments, thanks. I do have responses however, with charts, lol, so I need to put it in another hub. Should have it up in a day or two.


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road2hell 5 years ago from Linden, AB

This is one brilliant piece of research. I agree fully that tax cuts do NOT increase revenues, or GNP, or employment. These tax cuts play right into the hands of the supra-rich. With a non-progressive tax rate on the well-to-do and unbelievable tax breaks and tax havens, they have increase the economic disparty enormously.

Government needs a some form of revenue to do its job and taxes are its main income source. Well, not necessarily true. Probably campaign contributions and lobbyists may be the number one source. But all for the wrong reasons. These predators to want to get rid of any influence of BIG government so they can play the game of politics in THEIR favor. They now have bacome BIG BUSINESS. Guess who is running the whole show -- BIG BUSINESS. They don't taxes, they don't want interference from government. They want the government to get out of the job of governing. So was is the government's main function? Would we have utilities, roads and bridges, social programs running effiecently or at all? Let the corporations take over running are essential services? Do you really trust them? Once they have control, they can raise the price, leave them in shambles, or discontinue them entirely. These programs sometimes do not provide the BIG BUSINESS's bottom line-profits!


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My Esoteric 5 years ago from Keystone Heights, FL Author

I certainly appreciate your comments, Road; it has been awhile since anybody has, and with such a kind one as well.

I think you are right, one point about the Conservatives argument against taxes that Independents miss, and probably a lot of RWA followers, is that they don't want the services it pays for either. You hear it said directly from Liberbarian Presidential candidate Ron Paul who basically believes FEMA is a waste of federal and taxpayer money or President Grover Cleveland, a Bourbon Democrat who are today's Conservatives, when he vetoed federal support to drought stricken Texas in the middle of a sever depression who said in his veto message, "I can find no warrant for such an appropriation in the Constitution, and I do not believe that the power and duty of the general government ought to be extended to the relief of individual suffering which is in no manner properly related to the public service or benefit ..."

Thomas Jefferson wrote, in the Declaration of Independence are the words, ".. That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, ..." which go immediately to your concerns about the coercive and abusive power of corporations and the need for regulations plus the need for a maintainable internal infrastructure upon which our national security ultimately depends.


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PoliticsNOW 5 years ago from New York

Great Hub and I agree tax cuts do NOT create jobs. Just look at the past 10 years. We spent 3 trillion and LOST millions of jobs. Obama and his stim pack created more jobs than Bush did in 8 years. The tea party funded by the Koch brothers spend millions to keep billions in tax breaks.

Thanks for taking the time to get the truth out.


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My Esoteric 5 years ago from Keystone Heights, FL Author

And thank you, PoliticsNow, for taking time to read and comment and what are often long and boorish hubs, as the truth often is, unfortunately, lol.

I am a couple of days away from publishing a pictoral hub on why a stimulus can work when you have lots of unemployed people.


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bloggerbryan 4 years ago from Riverton, Utah, US

I don't believe that the tax reductions are responsible for the downward GDP growth. I also don't believe that raising taxes are responsible for the upward GDP growth. Look at the chart on this page. http://www.sodahead.com/united-states/deficit-inhe...//saynsumthn.files.wordpress.com/2009/09/federal-deficit-spending.jpg

I believe the deficit spending is the cause of the lower GDP growth. It doesn't matter which party is in charge, when the feds spend more than we bring in, the GDP is going down. Bill Clinton had the fortune of being dead locked in a fight with a republican congress at the same time the Internet and Housing bubble where going full steam. I don't think he can take credit for that, because he and congress didn't pass more than a few laws that had no bearing on the economy.


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My Esoteric 4 years ago from Keystone Heights, FL Author

Thanks for your comments, BloggerBryan, I do appreciate them even though I do believe you are wrong on most counts. Unfortunately, I couldn't see the charts you were referring to to, but have probably seen them before as I do a lot of research in this arena.

A few points, you are simply quite wrong when you make the "general" statement that deficits bring down GDP. In fact, well mangaged deficits actually push up the GDP because $$ are being inserted into the economy th rough the purchase of goods and services by the government. You are only correct when we are running out of control deficits such as under President Reagan and now under President Obama "as a result of the 2008 Republican Recession"!

I assume you do realize deficits are caused in "two" ways. One is overspending, Reagan's problem, and lack of revenue, Obama's initial problem, followed by overspending trying to solve the cause of the initial problem.

Now, you might say why isn't the overspending having the same impact as normal deficit spending, that is buying goods and services to, isn't it? Well, yes it is, but the difference is, runaway deficits have a very disturbing psychological effect on the marketplace leading to a slowdown; that is the difference, that is why Reagan spent himself into a second recession in 1992, I believe after Bush I took over.

As to my comments on taxes, I am simply stating what actually happened, I am not giving you an opinion. You can look at the data yourself when Kennedy cut taxes (economy improved), Reagan cut taxes on the wealthy and raised taxes on the poor (economy declined), Bush I/Clinton raised taxes on the wealthy (economy improved), and Bush II cut taxes on the wealthy (economy stagnated then declined).


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secularist10 4 years ago from New York City

My Esoteric:

Excellent and important analysis, and well-sourced. It's funny what happens when we actually check the claims being made by our political leaders against reality!

If you look at a simple chart comparing annual economic growth rates since WWII and the top marginal income tax rate since that time (roughly from the 1940s to today), we see that lower taxes do not correlate with higher growth rates. In fact, if anything, there is the opposite relationship--there was higher economic growth in the 1950s and 60s (when manufacturing was much more important in the economy) than in the late 1990s and 2000s.

The power of simplistic ideology is strong, though.

I wrote a few hubs recently on progressive taxation. One of them deals with the myth that the rich are "job creators." Well, logically, if the rich are job creators, we should see more jobs created when their taxes are lower. In reality, we don't see that relationship. Today, taxes on the rich are at their lowest ever in the last half-century, and the unemployment rate is the highest it's been in a long time. The unemployment rate in general shows no correlation with top marginal income tax rates. Another myth bites the dust.

The world is far more complex than Republican ideology wants to make it out to be.


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My Esoteric 4 years ago from Keystone Heights, FL Author

Thanks for the comment, Secularist, much appreciated. I see I need to update my charts, at least make the letters and numbers bigger.

Your last statement is a theme I have been trying to get across for a long time, that and Austrian economic theory is an unstable system and doesn't work in the long-run.


Choyce 4 years ago

I enjoyed your thoughtful research. However, I don't really enjoy your use of the word conservative as a perjorative or your straw man arguments. I've just started reading your posts and it seems that you like to contribute a lot ignorance to the conservative philosophy. Granted many of those on the right are extremely lacking in deep political thought but I am sure you agree that this is a condition that thrives on the left also.

I used to be a democrat for many years and now I am very conservative. So perhaps I can give you a different perspective on conservatism than you currently have. I don't look at a tax cut as a way to spur growth, create jobs, or increase tax receipts. Tax cuts mean I get to keep my hard earned money to pay for child care, my mortgage, groceries and items for my classroom. I think it is grossly unfair that an ever ballooning government get to decide how much of my money I get to keep. True conservatives believe a lean government would operate more efficiently. Personally I wouldn't mind paying more for government services if I knew every dollar was accounted for and spent wisely. Can a liberal justify increasing taxes on anyone while federal dollars are being wasted? A true conservative believes that a government closer to its citizens governs best because they live in the community that they make rules for. This would explain why I go to my local city hall and get great customer service. I go to a Social Security office and get treated like a criminal while I wait for an hour. A true conservative believes that any government action should be constitutionally based. Any service that liberals want should be made as a constitutional amendment. For example, Obamacare and Social Security should have truly been put to the states not backdoored as a tax. Let the people vote for federally ran health insurance or retirement.

Although I truly appreciate you using numbers and math to support your ideology it seems a little one-sided. You like to debunk a number of republican beliefs but appear to be silent on a number of liberal ones. In the name of fairness how about you work on the myth that conservatives are callous and mean when it comes to the needy. It has always been my observation that conservatives give more to charity than liberals. It is apparent to me that Democrats only like to give other people's money away. Secondly, I would love to see a hub on how much of our tax dollars actually get to its intended place. I read your hub on the breakdown of one tax dollar but what happens to that 13 cents spent on non social security Medicare once it reaches the federal bureaucracy? If these topics don't interest as a liberal maybe you would then concede that maybe conservatives do have salient points after all.


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My Esoteric 4 years ago from Keystone Heights, FL Author

I appreciate you comments as well as you criticisms, Choyce. First to your major criticism, using 'conservatives' in the perjorative. If I were writing in the 1980s, you probably wouldn't sensing that, and in the 1970s, you might be substituting the word 'liberals'. The more appropriate word to use is 'political extremist, left or right' and that would be intentional. I should also note the "perjorativeness", which is real enough, has nothing to do with inate intelligence but with the use of it. I don't mind people using hyperbole, but continuing to use it in the face of facts which can easily be checked out with a little work on their part, rather that rely on radio/TV talking heads, deserve a special category all to themselves, it seems to me.

Many of "today's" conservatives fit this mold, unfortunately; many of them are in Congress now. Not all do, obviously. There is a large number who score high on Professor Roger Altermeyer's Right-wing Authoritarian follower survey (I have a hub on it) which measures the likelihood of a person to blindly, without thought, follow leaders like Limbaugh, McConnel and Boehner.

OK, off that soap box.

Let me throw some propositions at you since must of what this discussion is about is theory with some, but not much in the way of emperical evidence draw hard conclusions. The evidence there is, leads me to the conclusions I do come up with.

You make the categorical statement that "Personally I wouldn't mind paying more for government services if I knew every dollar was accounted for and spent wisely. Can a liberal justify increasing taxes on anyone while federal dollars are being wasted?"

- I ask you, "Can you name me one administration or Congress since that of George Washington where federal dollars weren't wasted ... badly?" Keep in mind, the majority of Congresses were conservative (whether they be Democratic, Whig, or Republican) from 1801 to 1960.

- Then, if you can't, "How do you analyze your statement vis-a-vis conservative vs liberal?" and "Does your question have any real meaning other than 'Should I contribute any taxes since all gov'ts waste?"

When you say, "I don't look at a tax cut as a way to spur growth, create jobs, or increase tax receipts."

- Does that imply you don't believe gov't stimulus of any kind to the economy can do those things?

I have to go now, but will answer more latter. Btw, I was a Republican until the conservatives forced me out with their social and fiscal reactionaryism; voted for Reagan twice, actually, although I regret the second vote.


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My Esoteric 4 years ago from Keystone Heights, FL Author

With this statement, Choyce, it would seem to me you are mixing a few things together:

"A true conservative believes that a government closer to its citizens governs best because they live in the community that they make rules for. This would explain why I go to my local city hall and get great customer service. I go to a Social Security office and get treated like a criminal while I wait for an hour. "

To be honest, I don't see where the first sentence has anything to do with next two. My take away from the last two is the city hall has a good manager and the social security office has a bad one. I can counter, of course, with horror stories of all the local DMVs I have gone to and almost cried, lol. Bottom line, customer service is a function of manages the office and who manages the manager.

Having said that, your first sentence has much more import. The argument over it in 1787 almost resulted in there being no America. Conservatives simply didn't see how men sent to Philadelphia, even though they were elected by their fellow peers, could represent them, they were too far away and would forget their interests. These conservatives argued ferociously against the ratification of the U.S. Constitution. The other problem of course was the Senate was not elected nor was the President. Of course, as we all know, the Constitution was ratified the appropriate Amendments passed to directly elect the Senate and President.

So, the situation today is the citizens of each State directly elect members to the House of Representatives and the Senate and these members travel back and forth between D.C. and their districts, supposedly talking to the people they represent; Gabriel Giffords was doing that the day she was shot. Every two and four years, the people of a state elect or re-elect new Representatives or Senators.

So, the question I have, how does that representation fit with your discontent regarding the federal gov't being so distant from citizens it governs?


Choyce 4 years ago

Esoteric,

To your first point about blindly following hyperbolic speech... How can you in all honesty attribute this phenomena mainly to the right? Have you ever watched MSNBC? Even as a conservative I make it a point to listen to divergent views but some on that show are just as bellicose and self-righteous as you claim right wingers are. I bet you Chris Matthews, Al Sharpton, Lawrence O'Donnell and of course Keith Olbermann would rank pretty high on that same test. But let's focus a moment on those that you mentioned on the conservative side. I do believe Rush, Mitch O'Connell and John Boehner are all very smart men but I also believe you get their personalities mixed up. I get the impression that you feel that all conservatives fit this RWA caricature. We don't. Neither do we all blindly follow Rush, Hannity, and Levin. I am a conservative after years of seeing how liberal policies don't work for the people in the impoverished class. I don't need these guys to influence me or lead me. I sometimes listen to these "entertainers" to get information that you can't get anywhere else. And I don't call them entertainers lightly or as a diss because I listened to them even when I was strongly liberal. Rush makes me laugh more than Comedy Central and furthermore his donations to cancer causes rival any of those on the left. I think you give these talking heads way too much credit. In fact you and the media prop them up as straw men then generalizes that all conservatives must agree with everything they say and do. What an unfair and burdensome thing to do. Rush, himself, would say he is not that powerful.

As far as the liberal commentators many of them fit many of the characteristics of your supposed RWA. I've watched them a few times so I can see if their show is an intellectually honest one I would enjoy watching. They're not. The one liberal show I truly enjoyed watching on that network was Chris Hayes on the weekend. He appears to be willing to honestly characterize the conservatives' viewpoint without the demeaning nastiness. The rest remind me of sheep. This is probably the same feeling you get with conservative shows.

Esoteric, excuse me for droning on about this issue. I realize this was not the main point of your response, however, I believe this is my biggest complaint with your hub pages. I am new to Hub so I just had time to glance at your comments but all of them eerily begin to remind me of a MSNBC show. For sure you have more facts, data, logical analysis, and awesome insight. But the biggest thing missing was balance. Where are the takedowns on liberal ideology and policies? Are you insinuating that all liberal policies are great and wonderful while conservative ones are misguided and lacking? Surely you can't be because almost everything on a progressive wish list is given here in California and we are going to hell in a handbasket. We are one of the most progressive states in the union, high taxes, high regulations, bastion of green energy, social welfare programs everywhere, and I feel like any day now we will fall into the ocean.

I will discuss your other points in later comments but I had to get this off my chest first. The thought that many of us on the right are just blindly following RWAs off a cliff because we don't think for ourselves, I found highly objectional and insulting. With all due respect, and I truly mean that, I think you are suffering from a serious case of pot calling the kettle black. I think many on the progressive side are. I believe this because despite the fact that many blacks have been hurt by liberal policies throughout the years we continue to vote for a Democratic party with percentage numbers ranging in the 90's (how's that for dogmatism?). I say we because I am one of the few blacks that truly see the devastation caused by liberal policies.


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My Esoteric 4 years ago from Keystone Heights, FL Author

Choyce, I understand your protestations, especially with the existance of, shudder, MSNBC. Nevertheless, my point is still valid in the main. Go look at my hub whose title begins "An Analysis of the Right-Wing Authoritarian Follower...", then look at the bottom for the graphs of the results between those who declare themselves Republican-leaning and those who declare themselves Democratic-leaning; the differences are startling to say the least.

The survey they took from my hub is based on work done by Professor Altemeyer which originated from the question of why sensible Germans were so easily swayed by Hitler as to go along with such horrific atrocities as the holocaust. Based on the answers to the questions in the survey, the higher the score, the more likely it is a person will be to follow the directions of an authority figure without question. When you look at the distribution of these people along the political spectrum, you end up with a bi-modal distribution. The two high points being at the extremes, Right and Left, of the political spectrum, but with the height of the Right being much, much higher than that of the Left. You see that in my charts.

You will notice that 72% of those who identify themelves as Republican-leaning, score less than 50% on the survey, meaning they often think for themselves, but of that 72%, 20% are in the 25 - 50% bracket.

As you can see, this is a fascinating field of socialogy and psychology, it explains a lot and helps me keep my temper.

You don't need to be escused for droning on ... it is a sensitive, yet important area for everyone to understand and needs to be talked about a lot more. Liberals who don't have a clue fall into exactly the same trap, just from the other direction, but, so long as they aren't too far Left, they can often see "reason" a lot easier than those on the Right because they simply don't have the same built-in psychological baggage that gets in the way. When they have gone too far Left, they have actually completed the circle and joined their brethern on the Right, for all practical purposes; personally, I don't see much difference between Stalin and Hitler yet most people believe them to be examples of extremes of each end of the political spectrum.


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My Esoteric 4 years ago from Keystone Heights, FL Author

As to news sources, I basically have given up on them since they became essentially for-profit entertainment centers. MSNBC and Fox News are a joke and should be ashamed of themselves trying pass themselves off as legitamate sources of unbiased news.

I limit myself to CNN, which is the least unbiased of the majors, and POTUS on Sirus/XM, as well as glancing through the CNN web site once in awhile; its all I have time for anyway.

Regarding Limbaugh, Hannity, Beck and whoever (whomever?) their idiotic counterparts are one the Left, keep in mind these guys really are entertainers and nothing more. They earn their mega-millions stirring up the pot any way they can while truth, logic, reason, etc have absolutely no bearing on their output except by pure coincidence.

Do they have a right to do what they do? Of course they do, and I will go to war protecting it ... well maybe not Limbaughs, lol, ... but the thing that bothers me is that 28% of Republican-leaning hubbers who reported scoring 50% higher on the RWA survey; that is a lot of Americans who don't think for themselves but rely on the thoughts of other authoritarian figures.

A note about the results of the RWA survey - there are only 25 Rebublican-leaning results, not enough to draw any real conclusions about the total population yet, 30 is the minimum for most statisticians, but it is getting close and you can see the trend. However, as I pointed out in the last comment, the difference between Democratic and Republican survey-takers is extremely meaningful, even with less than 70 results.


Choyce 4 years ago

Esoteric,

After reading your posts the biggest thought that came to mind was... Wow!!! You must really have very little respect or regard for us conservatives to assume that we are comparable to Milgram's "teachers" or to Nazi followers. You now know at least two conservatives: me and your friend Mr. B. Do you honestly feel that either one of us are RWA followers? Or better yet that we would follow Michelle Bachman or Mitch O'Connell anywhere? I mean no disrespect to either one of them but when I think of a true conservative I would agree with most of the time it is not them. I tend to gravitate towards John Shadegg, Tom Coburn, Paul Ryan (pre Romney campaign), and at times Marco Rubio. I appreciate their respectful tone more than anything else. But even them I wouldn't blindly follow over a cliff.

Milgram's experiment was flawed for a variety of reasons. Social Science experiments, in general, are never considered 100% conclusive because they deal with the human mind and heart and those are two of the most flaky variables. Furthermore, the results can always be twisted and skewed to support a preconceived notion which is what I suspect is the case with Altemeyer.

However, for the sake of argument, let's assume that I agree with you, Altemeyer, Dean, and Milgram. That conservatives are more prone to follow authority figures. As a first grade teacher and mom of four boys I can say that I would think that is a good thing. There is nothing wrong with following rules that are there to protect the individual and society. In fact, still assuming that your RWA theory is correct, 99.9% of time it would be preferable to have this kind of citizenry around instead of those creating chaos because they don't trust authority figures. The only times this creates a problem is when you have a despotic leader bent on destroying another group of people. America is very lucky... We haven't had such a leader. In fact, our political system is set up so that these leaders can't rule us at all.

I think it is best that we stop contributing the worse to political groups, and figures and argue the ideas. Whenever I talk about President Obama I acknowledge what a great father he is (no small feat in the black community), but that I fundamentally disagree with his approach to government. You should try this approach. I've found, even though I am a conservative living in California, that I can still keep my friends and family.


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My Esoteric 4 years ago from Keystone Heights, FL Author

If Milgram was the only one whose experiments experienced those results, you may have a point regarding it being flawed, but unfortunately, this characteristic of people has been studied for a very long time since WW II to gain an understanding of what happened to allow a mass of ordinary people to follow such a leader as Hitler; Milgram was just one experimenter whose experimenter became famous.

What Altemeyer looked for were basic belief sets common among those who were "easily" led by authority figures to do things they would not normally do when left to their own ethics, such as shocking a stranger beyond a tolerable level because another stranger wearing a white coat told them to. He converted those to a series of questions for his survey, which I reproduce in my hub. (You notice I have mentioned political pursuasion once, yet.)

When Altermeyer's results were in, he found were those belief-sets most closely matched those held by conservatives as defined by Edmund Burke back in the 1770s, which is where the terms "right-wing", "conservative", and "reactionary" (all French) come from; hence the term "Right-wing Authoritarian".

It is not that I have "no respect", I simply acknowledge a reality, which is, if I am talking to a person who scored higher than 50% on the RWA or SDO surveys, I will probably get nowhere with reason and logic unless their chosen authority figure changes their mind. This, of course, is limited to the Right, I can find many examples on the Left as well who worship people like Barney Franks or Pelosi or others on the far Left. No amount of logic, facts, reasoning, etc is ever going to change their minds either.

The fact that you are discussing this intelligently with me suggests that if you took the survey, you scored well below 50%.

Ohhh, time for work.


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My Esoteric 4 years ago from Keystone Heights, FL Author

When you say "we" conservatives, that "we" encompasses a wide spectrum of beliefs, including mine; if you draw a line between the far left and the far right on the social spectrum, I fall some to the left, but not a whole lot. If draw another line on the fiscal spectrum, I fall a bit to the right, but again, not a whole lot.

The fact remains, whether you want to accept it or not, there is that set of people, mostly those who identify themselves as very strong conservatives and fundamentalist Christians who will go to their graves believing 1 + 1 = 3, even though they may know in their heart that it isn't true, based solely on the fact their authoritarian leader who they have chosen to follow and believe, says it is true.

This doesn't make them bad people or anything else for that matter, but it does make them people SDO (Social Dominator Orientation)-types know they can manipulate easily; Newt Gingrich, Limbaugh, Boehner are all probably high scoring SDOs. Besides being a sociopaths, you can guess how high Hitler, Mao, and Stalin might have scored, I am not sure the survey goes that high.

As to the children you mention, my response is that they aren't adults, different rules apply; they haven't matured, they haven't experienced, etc. I do hope, however, America never adopts the robotic kind of educational structure seen in Asian countries even though they do turn out better educated childern in the 3-Rs than America does with much, much better study ethos and desire to learn. At the same time, they also produce stilted adults whose ability to copy is wonderful but to innovate is somewhat mitigated;(of course, now I have to do some research to back up that stereotype slap in the face of the Asian culture, but I don't think, on average, I am wrong, but, even I can find plenty of anecdotal examples that say otherwise, unfortunately, they are just anecdotes.)


Choyce 4 years ago

Esoteric,

Again I think we will have to agree to disagree. I continue to believe that Social Science is such a flaky way to establish causal relationships because there are too many variables. Milgram's experiment did not refer to any political or social group. Therefore can not be used to justify your conclusion. Furthermore the same conclusion that you are reaching about RWA followers can be extended to us blacks voting so overwhelmingly for the Democrats. Are you ready to make that conclusion?

Enough on that. I really want to answer your question:

"How do you analyze your statement vis-a-vis conservative vs liberal?" and "Does your question have any real meaning other than 'Should I contribute any taxes since all gov'ts waste?"

My complaint is not just with liberal administration's waste. It is with all government waste. So no, I don't know of one president or Congress that has a satisfactory record. That doesn't mean that Americans shouldn't want, expect, or demand efficiency and effectiveness in our government. As a teacher I hear about accountability all the time. My test scores are dissected every which way. Shouldn't we hold our government responsible also. Every time I hear about money spent on a Solyndra or unnecessary fighter jets I think how much money my husband and I pay in taxes or that this money would have been better spent taking my students on a field trip. This doesn't mean I don't think I should pay any taxes. It does mean I want every dollar spent as wisely as possible before I cough up more. I think I could spend my money better than any government bureaucrat. Just because government efficiency and effectiveness hasn't happened yet doesn't mean it's not a worthwhile goal.

As far as government stimulus goes I think it should also be spent wisely or not at all. Imagine if during the prosperous times we saved money so that we can use it during these economically strenuous times. I still remember a time in California when we had very little to no money problems. Now we have no dough and businesses are fleeing here. I love my state. I hurts my heart that we are compared to Greece. What a joke! We are like the fifth or sixth economy of the world and we can't pay our bills. What say you Esoteric? Do you think a stimulus would help us here? Or do you agree with me that we have structural problems that start with trying to pay for too much stuff and end with very basic math? The numbers don't lie!

More on your questions about small government and representative democracy later.


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My Esoteric 4 years ago from Keystone Heights, FL Author

Agreed on the Milgram thing but I do ask you to explain the two results from my hub, each political group answered the same set of survey questions; even with such small numbers, the differences are statstically significant. BTW, I give lots of kudos to the conservatives who offered their results, I do appreciate that very much. I suspect many more took the survey but didn't report their result. When I took it, I was probably closer to 25% than 0%, as I recall. But then, while I am not opposed to war or the death penalty, I am opposed to hunting for the pleasure of hunting, go figure.

I mostly agree with your second paragraph, but will make one of my few declarative statements - if you have a large organization, you will have waste, fraud, and absue; the larger the organization, the more WFA their will be; the less autocratic the organization, the more WFA, there will be; the more complex the lines of authority; the more WFA their will be. The second thing I want to grab onto is one that makes by blood boil and that is proving a point by anecdote then crossing their arms as if they had just discovered fire; a technique common among politicians and passed along by those supporting their point of view. In this case, of course, I am talking about your Solyndra reference, something used in the conservative playbook to exemplify the horrors of 1) the stimulus, 2) political intrigue, 3) alternative energy over oil, 4) gov't interfering in business, and 5) gov't favoritism; depending on the argument of the day.

Did Solyndra end up being a bad bet, of course it did, that is history. So did several others. But so what?? Until you tell me what the denominator is of which Solyndra is the numerator, you haven't told me anything. If Solyndra was one of one, they you are probably dead-on. If, on the other hand, Solyndra is one out of a thousand, what does that have to say about you making an honest argument? I don't know what the real number is, so I am not going to try to characterize it in that manner other than to ignore for what it implies.

What I do know about the program is this, 1) it was started under Bush to give high-tech alternative energy companies a boost in a market that is virtually closed out to start-ups; that, by its nature is a risky proposition so the failure rate would be expected to be higher than normal, 2) Solyndra itself was vetted under Bush and its financials were found wanting and sent back to the drawing board for another shot. They came back and apparantly passed muster. 3) the main reason Solyndra failed was for external pricing reasons, primarily subsidized pricing by China for a similar product by their companies (if those subsidies didn't exist, Solyndra might still be in business), 4) Solyndra hire and employ about 1400 American workers at a time when they most needed it doing two things, reducing unemployment payments and increasing tax revenues, thereby fractionally offsetting the thumping we took on the loan guarantee. Do I have questions about the arraingement of the loan guarantees, you betcha. Do I have an order of magnitude more questions about the relationship between Dick Cheney and Halliburton and the contracts Halliburton had with DoD, you betcha. Do I wonder where all the money went in the prosecution of the Iraq war? Same answer; Solyndra was a blip complared to the FWA that went on in Iraq and Afghanistan. If you want to get upset, you should really think about turning your attention there.

Here is a no-brainer for you. Do you know one reason why the federal gov't can't track its money? It uses single-entry accounting!! It can't do true cost accounting can you believe. Guess where I worked in the non-military part of gov't career, you guessed it, the Air Force and DoD Comptroller and I had an accounting degree where you live and breath double-entry accounting so that you can actually account for and track the money you spend.

It has been a long time since I looked at CA, but today, not four years ago, I would say you probably have a structural problem, one that a stimulus wouldn't help, but without sitting down and studying it, I can't go much further than that.

Even in the national economy, I am not so sure it is a stimulus we need anymore, what is desperately need is a signal from government to business that government is ready to govern, that both parties are ready to compromise their principles to achieve a common American goal, and not, forgive my bias, one Party publically stating their political goal of unseating the incumbant President and doing everything in their political power to do so. To try to put more money in an economy where business is not willing to grow is sort of pointless since the reason of a stimulus is to prime the economy to increase demand such that private business will take over. But if private busines is unwilling ... it might be reasonable just to keep extending and funding unemployment and waiting until 2015 for the mid-term elections, given America returned the same uncompromising Congress.


Choyce 4 years ago

Esoteric,

I am glad we can actually agree on some things. You are not as progressive as I actually thought. And I believe your second paragraph proves my original point. Looking back on your following paragraphs they all prove my point. Government wastes a whole bunch of money for a variety of reasons. As you've pointed out it is too big, too complex, and in some cases too corrupt. Military expenses included. You see I am not ideologue. I don't care where the money is being wasted. It is inexcusable.

Specifically let me address the reasons I believe government has these problems. I will acknowledge you have way more insight into this issue because of your work background. However, I have worked since I was fourteen in dozens of private businesses and this is my take away about government waste, fraud, and abuse. First, of course the size and scope of government is an issue. You've mentioned this already but you included all big organizations. I disagree with this overarching statement. I worked for Walmart while I was in college and that organization is amazingly efficient. Their point of sale and distribution systems are a marvel worth noting. I think Fed Ex and UPS are quite efficient also. So just being big is not enough of an excuse to be inefficient. So reason number two may explain part of the problem: government is not held accountable enough. Who is watching our dollars and giving us financial statements every month? You would know. My guess is there isn't a financial statement. At my school we are given two boxes of paper for the whole year. If we run out we are out of luck. Some teachers at other schools don't even get that. They have to purchase most of their class supplies. I feel like I am getting audited every time I ask for an ink cartridge. Guess how much overtime I get? None. When we work over our scheduled time we either get nothing or half our regular rates. But do I complain? No, because I know our funds are low and it could be worse. Besides I am there for my students and their parents. What if all government agencies were ran this way? Accountability and careful auditing... Hmm... sounds great for a conservative.

The real reason I believe government doesn't work well is because bureaucrats are dealing with Monopoly money. Essentially the money is not really real to them and they don't feel it's theirs anyway. Basically there isn't a shareholder requiring them to be efficient or effective. No knock on these people. I am sure they are great human beings but they are not asked to be careful with our tax dollars so why should they be?

Unfortunately our representatives are no longer representing us they are managing us. You asked:

So, the question I have, how does that representation fit with your discontent regarding the federal gov't being so distant from citizens it governs?

These "representatives" stay in Congress so long they haven't a clue about what we need. They no longer have to deal with the messes they create. For example, the whole health care mess could have been avoided if they had just initiated some common sense solutions. Now our premiums are going up significantly (more than usual) and my husband and I are worrying about having to pay taxes on our employer provided health care. It seems to me that these guys only stay in Washington DC to clean up problems that they've created but don't have to suffer through. I love the idea of a Congress for only half a year and term limits.

By the way, government wasting our money and abusing our trust should really bother you as a progressive. When government is so big, bloated, and ineffective it is unable to really deal with problems you really want solved. Instead of focusing on all the problems of the day they should focus on the ones that are in its scope to fix. While California was so busy spending massive amounts of money on social programs we couldn't afford, healthcare for prisoners we couldn't afford (at one facility doctors were making $200,000 per year while inmates were still being sent out for basic care), and expensive retirement plans for government workers, important stuff like education was being cut. Our roads and infrastructure are falling apart all because we tried to do too much instead of doing the most important things.


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My Esoteric 4 years ago from Keystone Heights, FL Author

I only have a few moments left, but I will be back. Let me say though, you have to have worked in gov't high up to understand why it is the way it is, meaning I don't really disagree with the symptoms you describe. But, I have a much different insight as to why they are the way they are; using Walmart as a comparsion will be useful.

First, a little background. I worked in the upper reaches of the Dept of the AF and OSD in their Comptroller offices. In my career, I had three basic functions, make sure the AF, or Services when I worked in OSD, were spending their money efficiently, my official title was Cost Analyst), determine if the Services had adaquate reserves of men and material to meet wartime needs, and finally to improve on a database so one could figure out easily what it cost to run the AF or some sub-set of it like the F-16 fighter, then I retired. To say the least, with somebody with my kind of curiosity, this was an ideal job. Also, it goes without saying, I was able to observe a massive amount of processes involving Congress, the Dept of State, and of course, DoD.

Along the way, I took many management courses, Air War College, and the like to broaden my knowledge base. So, I will leave you with this teaser from the first management course I took up on Long Island at the old Chrysler summer home where he could view his Chrysler building going up (it is now the Merchant Marine Acadamy). Government's inefficiency was purposly built-in by our founding fathers, they didn't want the American gov't to be run like Walmart. Then they spent the next two lectures telling why this is so. When it was over, I went back to work with an entirely new understanding and approach to my role in government.


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My Esoteric 4 years ago from Keystone Heights, FL Author

In a physical system, waste can be in the form of the heat lost when two objects slide past each other; the more similar they are and the smoother they are, the less heat lost, meaning less wasted energy.

In DoD alone, there are many rough, dissimilar forces pulling at the bureaucrats hired to execute the jobs they have been assigned. The major ones are the President, representatives of the House, represntatives of the Senate, OMB, the Secretary of Defense, the Chairman of the Joint Chief of Staff, each Service Chief, each Combatant Command commanders, and each Service Secretary. Everyone of these people have an agenda, frequently at odds with the others and all having a say, to one degree or another, in what the DoD bureacracy does. What is worse, it changes every two to eight years and new guidance is given out. Now, exactly how efficient and waste-free do you think Walmart would be working under those conditions?

In Walmart, everybody reports to the CEO through a distinct, well known and understood chain of command; no such luck in government. In Walmart, the focus is clear and generally unchanging - increase profits by keeping costs as low as possible and prices as high as possible within the business model. Again, no such luck in government.

In DoD, The bureaucrat's ultimate boss is the President, down through the Sec Def, the Service Secretary, and so on. The combat soldier's ultimate boss is the President, down through the Sec Def, the Combatant Command commander, and so on (no, not the Joint Chief of Staff or Service Chief). Finally, a soldier in say a stateside training position, their chain of command is the Prisident, Sec Def, Service Secretary, Service Chief of Staff , and so on. Doesn't sound like Walmart, does it.

You know who else works for Wamarts CEO? The CFO. Well, in gov't, Congress does not work for the President; hell, they can hardly work with each other! In any case, they control our purse strings, not our boss. Every two years, the make up of Congress changes and therefore so do our priorities. We go to Congress year end and year out with our budget plans and year end and year out, we come back with different budgets for virtually each and every program the bureaucrats have been hired to run. Tell me, how is a bureaucrat expected to run a waste-free operation under those conditions?

I will leave you with that question as I trundle off to work again.


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My Esoteric 4 years ago from Keystone Heights, FL Author

Let's consider Congress vs Walmart for a second. Congress' purpose of course is to pass laws and budgets to fulfill the intent of the Constitution; the Executive branch is to execute Congress' will with the funds provided.

Walmart has a strategic plan, created often by him or herself and maybe some trusted partners, then staffed by experts until it is operationally sound. Then the CEO executes it using all of the resources available to him or her.

Congress has 538 (100 Senators and 438 Representatives) different ideas on how the Constitution should be implemented in any two-year cycle, Walmart has 1, the CEO. Once Congress gives the executive branch a plan via the 13 appropriation bills each year, or an omnibus bill, or some other mishmash of funding authorization with the guidance on how to spend it, they turn around and start changing the rules, giving out new guidance. Does the CEO of Walmart do that? No, but politicians do.

Then, in one year, they give out a new chunk of money which may or may not be a logical follow-on to the budget they provided the year before and the poor bureaucrats that manage the programs run by the Congressional largess must react to these changes the best way they can. And, being one those bureaucrats that last eight years of my AF career, I wasted a lot of resources making sudden changes to the direction of my program from year to year. It is simply built into the system of any government and unless you are run by a dictatorship such as Walmart is, you will never obtain the efficiencies of a dictatorship.


hubbahubba 2 years ago

After days of my own research I found many of the statistics you have posted to be invalid. It is hard to consider anything you have posted if I cannot myself find your information anything near correct. If you would post links to your sources that would be great.


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My Esoteric 2 years ago from Keystone Heights, FL Author

That is a very broad condemnation @habbabubba, can you be more specific as to what you find different and I will look into it; I always want to improve things.

My methodology is simply charting gov't GDP statistics (from the Bureau of Economic Analysis) or copying from the various applicable Federal Budgets.

The formula for the GDP growth is ((1 + (GDP(last) - GDP(initial))/GDP(initial)) ^ .2) - 1 (that is the geometric method for when growth is compounded and the .2 is 1/5 for the 5-year period)

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