The Tax Cut Con by Paul Krugman

George Bush's Tax Cut Con by Paul Krugman

Paul Krugman is a MIT trained well-respected academic economist who is now on the faculty of Princeton University. He writes a weekly op-ed political/economics column in the NYTimes.

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22 comments

Iðunn 9 years ago

on target.


braudboy profile image

braudboy 6 years ago from Long Beach, MS

A highly educated liberal is still a liberal. His intellect is wasted on the garbage of socialism and progessivism that relies on government for all solutions. The real truth of tax cuts is that it increases the revenue of government every time it is tried. Liberals try to apply simple math to a complicated math formula known as the American economy. When you lower tax rates, you spur economic activity and you encourage businesses to grow and expand, with the promise of keeping more of what they earn in the process. This creates more jobs, which starts the whole economic ball rolling. THese people with jobs, will spend more money going out to dinner, or shopping, or whatever which stimulates businesses everywhere. It is the same principle as a company who cuts prices to encourage more business. A liberal would argue that this is losing this business money. A conservative would have the intellect to realize that this business just stimulated his business by creating more activity. The business was not selling much at the higher price and is now selling out at the lower price. He makes less per unit but more than makes up for it in increased sales.


braudboy profile image

braudboy 6 years ago from Long Beach, MS

I am not surprised there is no comment to my comments on how tax cuts work and how they accomplish increased economic activity and ultimately more tax revenues for government. It really makes liberals mad for some reason.


Ralph Deeds profile image

Ralph Deeds 6 years ago Author

When you make an intelligent comment on something you actually know something about, I'll be happy to comment.


braudboy profile image

braudboy 6 years ago from Long Beach, MS

Ralph...would you like to explain what comments I made about tax cuts that are inaccurate??? Or is it just that you do not like individuals being in charge of their own money instead of governments being in charge of it???


Ralph Deeds profile image

Ralph Deeds 6 years ago Author

Tax cuts are one way of stimulating the economy, depending on which taxes are cut--taxes on the very rich or payroll taxes that affect the ordinary working stiff. Bush cut taxes on the rich. Here's what Krugman had to say about that in 2003 under quite different economic conditions:

"Anyway, they're missing the point. Opponents of the administration's plan always warned that it was foolish to lock in a giant tax cut on the basis of hypothetical surplus projections. They urged, to no avail, that we wait to see the actual budget results. Now their warnings have proved prophetic — and ordinary Americans will suffer because they were ignored.

The administration now says that the tax cut was necessary to fight the current recession. But nobody is questioning the $40 billion in rebates actually paid out so far, and few would complain about another round of temporary tax cuts for the year ahead. It's the huge further tax cuts that will take place after 2002 — tax cuts that are now the law of the land — that are the problem. But we're supposed to accept those future cuts as a fait accompli. Hey, Bush hit the trifecta.

Meanwhile, the return of budget deficits has real, nasty consequences. Prescription drug insurance is, of course, dead. Bolstering Social Security? Don't be silly: payroll tax receipts are being used neither to acquire assets nor to pay down federal debt; instead, they are subsidizing deficits in the rest of the government. "

My recollection is that Obama has proposed tax cuts on small businesses and a cash bonus for each worker hired.

In evaluating the articles linked in this hub you should bear in mind that the hub was put together 7 years ago when conditions were quite different.

Everybody likes a tax cut. But it's proved to be much harder to cut government services and expenses, especially military expenditures, than it's been to cut taxes. Cutting taxes is easy. Cutting programs that various constituents value is hard. Why don't you list the items/programs you would cut out of the budget?


braudboy profile image

braudboy 6 years ago from Long Beach, MS

Deeds, in typical liberal fashion...you miss the whole proven picture of what tax cuts do! THey INCREASE tax revenues to our government treasury every time they are tried. It spurs economic development and energizez investors. IT increases employment, raises salaries, encourages more personal spending and all are good things. THe net result is more money into the treasury for our government. Liberals are too busy worrying that someone else is making too much money and their hatred of others doing well gets in the way of clear thinking. THey only want to confiscate money that does not belong to them and are willing to do it at the expense of our economy.


Ralph Deeds profile image

Ralph Deeds 6 years ago Author

Apparently you aren't aware that 40% of the $787 billion stimulus package came in the for me of tax cuts.


braudboy profile image

braudboy 6 years ago from Long Beach, MS

Ralph....what I am aware of is the democrats disdain for tax cuts and their denial that they accomplish economic activity and growth at all times, not just in time of emergency. It is obvious that democrats only want government in control of the wealth of America.


braudboy profile image

braudboy 6 years ago from Long Beach, MS

Ralph...you made a comment that Bush cut taxes for the rich. This is an absurd statement that illustrates the liberal philosophy to hate the rich. Cut taxes were made accross the board. Of course, the rich will benefit as they make much more money. But, to hate and envy their position makes no sense. Tax cuts are for all people. The "so called" rich are usually the employers and are the most important players in the American economy. It only makes sense to energize them to get our economy moving.


Ralph Deeds profile image

Ralph Deeds 6 years ago Author

BB, check your facts before wasting our time. Don't you think its a bit inconsistent to whine about taxes and the national debt, without suggesting any cuts in programs?


braudboy profile image

braudboy 6 years ago from Long Beach, MS

I would suggest cutting all of governments programs. I dont believe in our governments ability to perform any of their social programs with any efficiency. It is better done in the private sector. Our government is a wasteful, corrupt entity and must be reigned in.


braudboy profile image

braudboy 6 years ago from Long Beach, MS

...AND what facts am I wrong on with tax cuts....if you accuse me of being wrong, I wish you would be more specific.


Ralph Deeds profile image

Ralph Deeds 6 years ago Author


braudboy profile image

braudboy 6 years ago from Long Beach, MS

Deeds.....I understand that there are critics to Bush's tax cuts. THey are called liberals, big government types, and socialists. But they ignore the fact that these tax cuts spurred economic growth as they always do. They ignore the fact that the net result was more tax revenues into government coffers. Now, there are other reasons that government runs deficits, usually from the usual incompetence of government officials. It is why you or anyone else should be very skeptical of turning over your freedoms to those in Washington. YOU shouldnt get suckered into the nonsense that government has a right to take from those who make money and then redistribute this money to others. It only allows for a corrupt government that grows in power while they break their promises, and, instead use this money for their own political advantage.


Harvey Stelman profile image

Harvey Stelman 5 years ago from Illinois

Ralph, The only link I clicked on was two year old, by the always wise Paul Krugman. Why not look at todays reality. Republican's want to keep it, Democrat's are split on the issue and even Obama is willing to make changes. Does that make it sound as if Bush was wrong?

Krugman & Obama = present and future failure.

Great tour Obama is having in Asia. America is now looked at as being weak and stupid.

Congrat's Mr. President!


Bob Francis profile image

Bob Francis 5 years ago from Springfield, MO

Well said Broadboy; now we have a wonderful, "Tax cut" for the rapidly disapearing middle class. My,My if your un-employed what the hell good is a tax cut! I've thought for years that the Demon-crats were working toward establishing a two class system, "the very rich and the very poor" What we need is a complete government cut, like what the hell are czars in the land of Oz (D.C. that is) Can we fire Robin Obama Hood and his merry band of thieves?


Ralph Deeds profile image

Ralph Deeds 5 years ago Author

If you could replace Obama who would you replace him with? Sarah Palin, Newt Gingrich, Glenn Beck. Obama isn't to blame for our current ills. Were it not for the GOP the measures designed to pull us out of the recession would have been more effective.


Bob Francis profile image

Bob Francis 5 years ago from Springfield, MO

Deeds, Where have been for the last two years


Ralph Deeds profile image

Ralph Deeds 5 years ago Author

Around. Where have you been, going to Tea Parties?


Bob Francis profile image

Bob Francis 5 years ago from Springfield, MO

Deeds, Unfortunately, there is no one on either side of the fence. As they would say in the Navy we need a clean sweep down fore and Aft! All we have is self serving Politicians who have forgotten who they are elected to serve. By the way, I don't like tea in any form!


Ralph Deeds profile image

Ralph Deeds 5 years ago Author

Thanks for your comment. Here's an article from this morning's NYT Magazine that's relevant to the subject.

http://www.nytimes.com/2011/01/23/magazine/23Econo...

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