WASHINGTON - Republicans muscled a tax cut bill through the House on Friday that they said would right the teetering economy, overcoming Democratic arguments that it would swell federal deficits already expected to set a record this year.


The legislation, which would reduce taxes by $550 billion through 2013, was approved by a 222-203 party-line vote. The Republican-led Senate plans to vote on a similar but smaller measure next week, after which the two chambers ? joined by White House officials ? will negotiate a final package.

Is it good fiscal policy to cut taxes in times of record deficits?

The definition of a negative deficit is that you are spending more then you are taking in.
They either need to reduce spending or leave the tax as is.

Will this tax cut cause you to spend more money in the next 12 months?

Read this

President gets good grades in fuzzy math
Why do we never hear President Bush use real numbers or data to support his new tax-cut proposal?

Usually he speaks in bland affirmative terms, like the need to "get our economy moving" and to "give the people back their money." When he does use numbers, it always sounds a bit more like fuzzy math than anything else.

Well, I've got some real numbers here, courtesy of a new report by the Institute for America's Future and the Economic Policy Institute, released in our state by Washington Citizen Action. Almost half of all tax filers will receive less than $100 from Bush's tax cuts. Meanwhile, the top 1 percent of Americans will get an average $24,000 back. Millionaires, the neediest of them all, will get an average $90,000 in tax relief.

I now know why Bush is hesitant to use real numbers to describe his tax cuts: No one would like what they heard. He needs to go back to the drawing board.

Suzanne C. Stauffer
Washington Citizen Action

With the first of G.W.s tax cut already in effect, the United States economy has lost 1.7 million jobs. How many jobs will magically appear/ dissappear when the remaing cuts go into effect? Regan saddled the U.S tax payer with $4 trillion in debt, at G.W.s rate the debt will be around $10 trillion when all the proposed cuts go into affect. Currently the U.S. pays almost 25% of the budget to just pay intrest on the debt, that isn't paying anything on the actual debt. The U.S. $ has lost value to the Euro since G.W. took office. Is this a coincidence?

Here we go again

The economy was headed down hill before GWB came into office...


Another liberal attack on the republican party!


Why don't they just call democrates socialist thats what there agenda is all about..TAKE TAKE TAKE. The government takes more then it needs as it is...STOP giving to other countries and buying there support and keep the money here!


I find it hard to believe that you liberals arent tired of the overtaxing!

You guys are lucky that's it not me doing the cutting!
I would make Gorge W Bush look like a saint!!


Cowlitzfisherman

Timber Man

“The economy was headed down hill before GWB came into office...”

That may be but the point is what is a $100 bucks given to you going to do for your efforts to help boost the economy, IMHO nothing.

Don't increase the taxes, I agree, but why cut them when their is already more spending then they can pay for now.

This is not about tax cuts for you and I look at the numbers, the rich get richer.

I approve of it. Gave the IRS $20,000 for 2002 and still owed more at the end of the year.Enough is Enough already.

the rich get richer??? what about the government!!!

i would rather have the extra money in my pocket to spend locally than to send it 3000 miles away so some east coast congressman can spend it on his pet projects to beef up his re-election hopes.

Hey Duroboat,

Have you ever thought about hiring a different accountant?

I should have asked how many of you have significant dividen income? Those of you said you will spend more this year beacuse of the tax cut, should remmeber that the cut will not take effect this year, and will only effect dividend payments. Please try to understnd that this has no effect on you if you do not have dividend income. NONE! Well it will one day drive up your taxes if, that is, we ever decide to balance the budget.

I'm sure the conservatives out there must have serious angst supporting a president who has dramatically increased our national debt and who now wants to increase it even more. There was a time when conservatives believed in a balanced budget. Remember the balanced budget amendment? Remember how they told us it was vital for our nation's health?

Why did the conservatives suddenly abandon that once sacred concept - maybe cuz G.W says we have no need for a balanced budget? And becasue the last president who brought us a balanced budget was Clinton. The two presidents who created the biggest deficits were Reagan and G.W.

Who would have thought that the republicans would turn out to be the ones who are the big spenders and do not want to balance the budget?

The good news is, one day we will elect another of theose liberals and they will once again clean up the conservative's budget mess.

Metalhead Mojo

"i would rather have the extra money in my pocket to spend locally than to send it 3000 miles away so some east coast congressman can spend it on his pet projects to beef up his re-election hopes"

Or maybe he was going to send it our way and help improve our roads!!! Ya never know.

[QUOTE]Originally posted by lead thrower:
[QB] Is it good fiscal policy to cut taxes in times of record deficits?

The definition of a negative deficit is that you are spending more then you are taking in.
They either need to reduce spending or leave the tax as is. [QUOTE]


What is a negative deficit other than a double negative? What you described is a deficit, ie spending more than you take in.....

The dividend piece of the tax package is without a doubt going to only provide significant benefit to the wealthy and probably not a good idea on top of the rest of the package.

I find a couple of things suprising in this whole tax cut debat in DC:

1. Democrats are actually calling for a tax cut, just smaller than the one Bush is calling for. This is strange considering that normally they oppose tax cuts stating that they only benefit the wealthy and do not stimulate the economy. So if this is true why are they proposing a $350b tax cut???

2. If this huge tax cut is going to be so bad for the economy and the next Presidential election is going to be largely effected by the state of the economy and the candidates view of how to stimulate it. Why don't the Democrats give him the tax cut and assure themselves the Presidency in the next election?

Regarding tax cuts and the effects on the population I think the following by Professor Kamerschen is better than anything I could write.


" Let's put tax cuts in terms everyone can understand.


Suppose that every day, ten men go out for dinner. The bill for all ten
comes to $100.


If they paid their bill the way we pay our taxes, it would go something like

this:

a.. The first four men (the poorest) would pay nothing

b.. The fifth would pay $1

c.. The sixth would pay $3

d.. The seventh $7

e.. The eighth $12

f.. The ninth $18

g.. The tenth man (the richest) would pay $59.

So, that's what they decided to do.


The ten men ate dinner in the restaurant every day and seemed quite happy
with the arrangement, until one day, the owner threw them a curve.


"Since you are all such good customers," he said, "I'm going to reduce the
cost of your daily meal by $20."


So now dinner for the ten only cost $80.


The group still wanted to pay their bill the way we pay our taxes. So the
first four men were unaffected. They would still eat for free. But what
about the other six, the paying customers? How could they divvy up the $20
windfall so that everyone would get his "fair share?" The six men realized
that $20 divided by six is $3.33. But if they subtracted that from
everybody's share, then the fifth man and the sixth man would each end up
being "paid" to eat their meal.


So the restaurant owner suggested that it would be fair to reduce each man's

bill by roughly the same amount, and he proceeded to work out the amounts
each should pay.


And so:

a.. The fifth man, like the first four, now paid nothing (100% savings)
b.. The sixth now paid $2 instead of $3 (33% savings)

c.. The seventh now paid $5 instead of $7 (28% savings)

d.. The eighth now paid $9 instead of $12 (25% savings)

e.. The ninth now paid $14 instead of $18 (22% savings)

f.. The tenth now paid $49 instead $59 (16% savings)

Each of the six was better off than before. And the first four continued to

eat for free. But once outside the restaurant, the men began to compare
their savings.


"I only got a dollar out of the $20," declared the sixth man. He pointed to

the tenth. "But he got $10!"


"Yeah, that's right," exclaimed the fifth man. "I only saved a dollar, too.

It's unfair that he got ten times more than me!"


"That's true!" shouted the seventh man. "Why should he get $10 back when I
got only $2? The wealthy get all the breaks!"


"Wait a minute," yelled the first four men in unison. "We didn't get
anything at all. The system exploits the poor!" The nine men surrounded the

tenth and beat him up.


The next night the tenth man didn't show up for dinner, so the nine sat down

and ate without him. But when it came time to pay the bill, they discovered

something important. They didn't have enough money between all of them for
even half of the bill!


And that, boys and girls, journalists and college professors, is how our tax

system works. The people who pay the highest taxes get the most benefit
from
a tax reduction.


Tax them too much, attack them for being wealthy, and they just may not show

up at the table anymore. There are lots of good restaurants in Europe and
the Caribbean. "


David R. Kamerschen, Ph.D

Distinguished Professor of Economics

University of Georgia Athens

So what? The richest 1 percent pay a whole hell of of a lot more in taxes than the bottom 50%. Of course they should recieve more if a tax cut is proposed.

Plus they're more likely to use the money to help the economy, such as investment and business growth.

Stadle, that is the greatest!!! Thank you for passing that on. That should be required reading for all Americans!!!

Stadle

Good post

Negative deficit, I was typing while listening to another conversation, you are correct. It’s deficit

My point is not that the rich are going to get more money then me!!!!

I could care less about that. People hear tax cut and they think they are going to become loaded and that is all they care about. You will most likely get less then $100.

My point is my $100 plus everyone else’s $100 is not going to stir up the economy. So why bother with the cut, put the money to better use.

The government puting our money to better use. Oh boy, now thats funny.

It doesn’t make sense. If your credit card is maxed out, why donate to a charity

Remember Glum on Gullivers Travels

It'll Neeeevvvverr Woooooooooooork

IMHO this will never work

It’s a good thing I cannot be hung for disagreeing with the masses

Doo Doo economics...

Since alot of people are pretending to be economic experts and perhaps some of you may be, well then may i pose a questions as to what would help stimulate this "down economy" (just for the record my finances have never been better, 401 and all) a tax increase? or just ride the supposed minor recession out? I would really like to hear solutions rather than the doomsday predictions.