Yeh, right, Iron mentality. Approximately half of the current deficit is due to taxcuts, the other half to increased spending. So we've effectively spent ~$250B/yr in reduced taxes, then borrowed to make up the difference, so that we could collect an additional $78B in revenues...
As the economy recovered from its 2002 trough, revenues would have increased anyway.. it's always convenient to be able to cut taxes at such a time, then falsely attribute the rise in revenue to that, rather than to the natural increase from the business cycle reversal.
Increased revenue has never matched the lost revenue form such cuts- not during the Reagan years, and not today. If the effect were as wonderful as claimed, then we wouldn't have the current monstrous deficits.
You ignore the concept of the velocity of money, which is very important. Part of the problem in a sluggish economy is that the velocity of money decreases, slowing everything down. The transaction rate is lower. The velocity of money is lowest among the wealthy, and highest among the working poor. The velocity of money is also high for the govt, spending all they take in on an annual basis. Lowering taxes for those at the top actually reduces the velocity of money, since they don't spend all of it, anyway, and what they do spend is more for investment in durable items, like real estate or financial instruments. Which cuts into the govt's high velocity share of money, further slowing the transaction rate... there's only one answer in that scenario, which is for the govt to borrow more, spend more, increasing the velocity...
It'll work for awhile, until the effects of mounting debt maintenance become acute...
As the economy recovered from its 2002 trough, revenues would have increased anyway.. it's always convenient to be able to cut taxes at such a time, then falsely attribute the rise in revenue to that, rather than to the natural increase from the business cycle reversal.
Increased revenue has never matched the lost revenue form such cuts- not during the Reagan years, and not today. If the effect were as wonderful as claimed, then we wouldn't have the current monstrous deficits.
You ignore the concept of the velocity of money, which is very important. Part of the problem in a sluggish economy is that the velocity of money decreases, slowing everything down. The transaction rate is lower. The velocity of money is lowest among the wealthy, and highest among the working poor. The velocity of money is also high for the govt, spending all they take in on an annual basis. Lowering taxes for those at the top actually reduces the velocity of money, since they don't spend all of it, anyway, and what they do spend is more for investment in durable items, like real estate or financial instruments. Which cuts into the govt's high velocity share of money, further slowing the transaction rate... there's only one answer in that scenario, which is for the govt to borrow more, spend more, increasing the velocity...
It'll work for awhile, until the effects of mounting debt maintenance become acute...
