Thread: The Clinton / Bush Recession
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Old 01-19-2007, 12:53 AM   #29 (permalink)
Jefferson
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Quote:
Originally Posted by Jaxian View Post
Yes, I understand the economic theory that investing more into the economy earlier pays off later, and I agree that we should operate under some amount of deficit. But that deficit can't be as large as the ones Reagan and Bush Sr created, or we'll be paying for it in the end. The deficit can only be large enough that your Debt to GDP ratio stays the same.

Look again at the first graph in this link:

http://zfacts.com/metaPage/lib/National-Debt-GDP-L.gif

The line in that graph should remain relatively flat. If the line goes up, that means your debt is increasing faster than your GDP, and each year that happens, a larger percent of our budget intake goes toward paying off debt. If we keep that up, eventually we'll have to dedicate our entire budget toward paying off debt.

What I mean is, the sort of mass-spending that Reagan and Bush Sr did is unsustainable. While Reagan and Bush Sr might have seen a short-term economic boost from spending like crazy, today we have to allocate a larger percent of our budget toward paying off debt.

So like I said, the line in that graph should generally be flat. Now, in a time of recession, we can give the economy a boost by cutting taxes and increasing debt. This causes the line to go up. But sooner or later, someone's going to have to bring the line back down again. We can't keep making it go up, or our budget will eventually be overwhelmed by debt.

Do you follow what I'm saying?
I know exactly what you're saying.

Now, here's what I'm saying: YOU'RE ONLY LOOKING AT A FRACTION OF THE PICTURE.

Who pays more taxes? The person who is paying 15% of $50,000 per year, or the person who is paying 10% of $100,000 per year? The answer? The person paying 10% in taxes.

Now, take that exact same principle times 1 billion - and you're starting to see the relevance to our national economy.

The FACT is that lower taxes stimulate economic growth. In other words, more income. Higher taxes stifle the economy. In other words, less income.

When companies lose money, they can't pay taxes - no matter how high the rate. When companies make money, they pay taxes.

And here's what you Democrats are never able to figure out: 100% taxation on zero dollars is still zero dollars. An economy CANNOT survive over-taxation.