etech - As I have stated in multiple previous posts, I am well aware who is the real "Jr." I refer to Dubaya as a Jr because I consider him inferior to his father in every way.
As for the increased revenue argument (the Laffer theory), you are absolutely correct that a cut in rates sometimes resulted in increased tax revenue. But every study I have ever read has shown it to be a temporary benefit to the Treasury. And the biggest differential came from cuts in the capital gains rates as investors held off selling appreciated assets until the new lower capital gains rate kicked in. The problem is that tax revenue after the initial pop was less than expected.
The incredible deficits run up during the Raygun years are a case study. Spending increased and the rate of tax revenue growth fell far short of the Laffer expectation.
I think your post demonstrates quite well that only limited tax cuts will get passed and that only those most favored by Democrats will succeed. $300 billion or so is far less than the $1.6 trillion that Jr claims he will achieve. When the dust settles, the cuts will look a lot more like the targeted cuts proposed by the Democrats than the across-the-board major reductions in rates proposed by Republicans. And, if the economy is slowing, that means the surpluses will evaporate, making it even tougher for Jr to justify a large tax cut. It will be far too easy for the Democrats to demonize it further by showing how the largest portion will go to the so-called "rich." Who cares how they define who is rich? The public overwhelmingly sympathizes with that argument.
With lower expectations for the surplus, Jr will be forced to choose among his tax cut, prescription drug, education and Social Security programs. I am betting that major compromise will be on the tax cuts. The public (other than hardcore conservatives) will accept compromises on tax cuts far more readily than his other programs. Remember, he told us all he wants to be the president of all the people. He'll use that as cover.
Republicans will cave in to the Democrats because they will be desperate to say they got something done while they were numerically in control of government. The Wall Street Journal lamented that point in a recent editorial where the editors encouraged Congress to stand up for the full slate of Jr's initiatives, but then the editors lamented that it was highly unlikely that the Republicans would even try.
ElFenix - A recession is two consecutive quarters of declining GDP.
"Generally defined by economists as two quarters of negative growth in the gross national product." Source:
http://db.uia.org/cgi-shl/oicgi/INET_UIAF
A slowing in the rate of growth is a slowdown in economic activity, not a recession. Though some have argued that a very serious slowdown coupled with large declines in wages and living standards might be a better definition of recession. Even using the alternate definition, we're still not in a recession on a national level.
Some industries and regions of the country might actually be in recessions, but the national growth rate remains positive. By the way, I think the Fed went too far with its tightening and now is trying to keep the economy from slowing too much. That said, the high rate of growth we saw the previous two years was not sustainable anyway.
Russ - See above. Because you seem to sneer at anyone you think lacks the same perspective as you, I work in institutional finance, and my wife owns a business. I can speak with credibility (at least in your interpretation of such things) on these matters.
Thanks for catching that so early.
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