nate33 wrote:Hands. It's really very simple. As it stands now, the U.S. can't compete on a global market with other manufacturers because of high labor costs, overregulation, and the highest corporate tax rate in the developed world. How do you expect things to improve if they raise production cost with higher worker salaries while also paying an even higher corporate tax rate?
And while Reagan did indeed institute supply side tax cuts, Clinton and Bush were both demand side. Clinton drove down interest rates with Greenspan's easy money policy and Rubin's strategy of financing the debt with short term paper. That promoted more borrowing to sustain consumer demand. But by then other countries had begun to cut corporate taxes so our companies began moving overseas. Capital flowed outward even as the stock market soared. Bush continued Clinton's interest rate policy and doubled downed by engineering demand side tax cuts for the lower and middle class rather than supply side tax cuts for the entrepreneur class. Those tax rebate checks were really nothing more than welfare disguised as tax cuts.
The only supply side policy we've had in the past 20 years was the Gingrich Congress with their capital gains tax cuts. The government surplus followed. (Although, to some degree, that was illusionary. It wasn't a surplus if social security payments were counted properly. And the surplus was due to an unsustainable dot com boom.)
First, thanks for engaging in a debate. Not often does one side or the other have a ah ha moment but stuff usually gets stored away for a rainy day that can influence thinking on the margin. After all, that is how we all come up with our lines of thinking.
Well, we are competing just fine selling cars from what I have recently heard in over seas markets like China I believe. I believe GM is doing very well over there now. And we have always competed well with arms. The arms is straight up government spending to fund the R&D and the cars being sold are the result of the government helping the auto company retool which save a but ton of jobs.
As for the corporate tax rate. What I want them to do is level the playing field. Close the loop holes created by special interests. Stop the oil subsidies. Specially given their record profits. Then with everyone paying what they should, you can lower them. I would learn toward giving tax breaks for start ups as long as the loop holes were properly covered. Starting business can be hard to do. A lot of people just cheat in the early years anyway. But I wouldn't want to create a systems where people take advantage of that by doing start ups just to get around the taxes.
As for our regulations, taxes and pay being high, some of that will work itself out in time as those economies get more established. Then those people will want better stuff like safe work envirnments, days off and clean air also. That is just the nature of things as we opened markets to countries with a lower standard of living. Their cost will rise. What we can do is established better trade agreements with those markets. They want into our market and we want into theirs. The playing field should be as level as reasonably possible. That is part of what the US does. We spread individuals rights and standard of living. International collective bargaining so to speak. I don't know enough about the tax regulations for companies that moved over there but it seems from listening to many that they were written in a way that didn't discourage them from doing it.
Not sure where you get that Bush Jr wasn't a supply sider. He cut dividend taxes, estate taxes and top income taxes. Bushes $200 dollar rebate checks were front-loaded tax refunds from what I recall. You had to deduct those from your returns. IIRC. And only $200. Big deal. What he did do that was demand side ( kind of ) was the tax write off for the gas guzzling trucks when everyone went out and both a Hummer or a Navigator. That was either written the way they wanted or very poorly if they really intended people to buy work trucks.
So I guess if we were to pick one top to get clear it would be the idea that Bush was a demand-sider. You idea of demand side is somewhat different than mine. Demand comes from jobs that pay well not from $200 front loaded tax refunds or allowing people to depreciate a gas guzzling 5000 truck in one year. I'm not against the single year depression model for stimulating a sector but that was a poor bill that lead to us as a nation consuming even more gas that lead to higher overhead for everyone. Terrible bill.
Cash for clunkers was better. At least that got people out of lower mileage car for newer less polluting ones. But even better than that would have been to get them into even higher mileage cars. Once there are enough electric/hybrid out there to satisfy people, they should do something like that again and raise the mileage standards. Seems that time it getting near.
Real demand side would come from large public works projects. Put people to work, not just get people to buy things. Infrastructure, Infrastructure, Infrastructure. Wiring the nation with high speed internet. A push for solar, wind, fuel cells so that more energy is produced locally and cleaner. Then export that technology.
If the goal was the get the world off oil produced in the middle east, it would be a better world and a cleaner world and a less violent world and we could make a but ton doing it. And with people living longer and multiplying faster, unless they plan of killing off a bunch of them, they better get to it learning how to leave this planet on live on another one.
