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A Keynesian Fantasy - A Fiscal Nightmare
Topic Started: Dec 6 2008, 01:32 PM (594 Views)
Dwayne
Profanity deleted by Hoss
Quote:
 
Obama Pledges Public Works on a Vast Scale
By PETER BAKER and JOHN M. BRODER

Published: December 6, 2008
WASHINGTON — President-elect Barack Obama committed Saturday to the largest public works construction program since the creation of the interstate highway system a half-century ago as he seeks to put together a plan to resuscitate the reeling economy.

more


With a government debt already in the trillions, just where the H. E. double-hockey sticks does this man think the money will come from?

Oh, yes, I forgot, from us small business people through higher taxes. Just on the weight on his pledge to increase taxes, I've let go of a 19 year old who I paid $10 per hour.

That's Obama-nomic for you.
Edited by Dwayne, Dec 6 2008, 01:36 PM.
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RTW
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Vice Admiral
"Obamanomics".

:rotfl:

What is the definition of Obamanomics? The killing of an economy brought on by the hoarding and hiding of assets to avoid excessive taxation?

Many fear that we won't be laughing for long. link
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STC
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Commodore
He's highly unlikely to increase taxes by a greater amount than the increase in public spending because he's deliberately deficit-spending to stimulate the economy, boost aggregate demand (AD) and get your economy out of recession.

Doing nothing will result in a continued low level of AD, possibly falling further, reducing tax revenues and making the government deficit even bigger, but without hope of an economic recovery.
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Admiralbill_gomec
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I don't believe that we must just "do something."



Obama's plan can work. Sure it can. We simply print more money...

This will of course devalue the currency, increase the inflation rate, and lead to a Carteresque stagflation spiral.

EDIT: STC, what you state has often been suggested as the reason the Great Depression lasted as long as it did. Massive public works projects did not end that period, WWII did.


Edited by Admiralbill_gomec, Dec 6 2008, 04:19 PM.
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Dwayne
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The tech bubble burst 8 years ago and now the housing bubble just burst, but I wonder when the government growth bubble will burst?

Soon I hope.
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STC
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Admiralbill_gomec
Dec 6 2008, 04:17 PM
I don't believe that we must just "do something."



Obama's plan can work. Sure it can. We simply print more money...

This will of course devalue the currency, increase the inflation rate, and lead to a Carteresque stagflation spiral.

EDIT: STC, what you state has often been suggested as the reason the Great Depression lasted as long as it did. Massive public works projects did not end that period, WWII did.


Devaluing your currency will make your goods cheaper in international markets and boost your export revenues.

As for increasing your inflation rate, well deflation is a bigger danger than an inflation spiral at the moment.
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RTW
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Can the differing views expressed here be summed up as short-term thinking vs long-term thinking?
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ds9074
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RTW
Dec 6 2008, 07:53 PM
Can the differing views expressed here be summed up as short-term thinking vs long-term thinking?
Maybe, but which way round are you suggesting that divide? ;)
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Franko
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I agree, raising taxes on small business is not the way to go.


Essentially, small to intermediate private sector business has usually been the biggest job creators of all. Not to mention a good starting point for people to learn skills, retailing and management within the private sector.

However, in light of the massive bailouts, with still more likely to come, I see little alternative over the practice of borrowing from the Fed and printing more and more money. Is this really helping, or are these just "circular" solutions ?

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whitestar
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if memory serves, the usernames critisizing were the same who ridiculed the prospect of a meltdown, same who ridiculed the bailout, same who ridiculed opposition to Iraq... let history be the judge and then point fingers

Ten bucks an hour you say Dwayne... 19yrs old is adult age.. does that not deserve an adult wage?

.. I know your argument.. better $10 than nuthin...
Edited by whitestar, Dec 6 2008, 11:00 PM.
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RTW
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whitestar
Dec 6 2008, 10:31 PM
Ten bucks an hour you say Dwayne... 19yrs old is adult age.. does that not deserve an adult wage?
Nineteen an adult? In the US of A? There's a good chance that teen lived free of charge with his parents. Even if not, the answer is simple. If he's worth more than $10/hour then someone will pay him that. Based on what's out there, he may have considered himself fortunate to be earning so much over minimum wage.
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whitestar
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RTW
Dec 6 2008, 11:26 PM
Nineteen an adult? In the US of A? There's a good chance that teen lived free of charge with his parents. Even if not, the answer is simple. If he's worth more than $10/hour then someone will pay him that. Based on what's out there, he may have considered himself fortunate to be earning so much over minimum wage.
Yea, does the US of A not deem that same person an adult in a court of law? would they be tried as an adult? would they be able to vote, certainly old enough to lay down their life in wartime.. an adult in every way but pay and access to alcohol in the USA.
Where they live, how they spend their earnings not your business. If it comes down to what your bills are then we all would be on varying wages.
Quote:
 
he may have considered himself fortunate to be earning so much over minimum wage.

You mean that is above the minimum wage? you gotta be kidding right?
Edited by whitestar, Dec 7 2008, 12:19 AM.
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Dwayne
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It's quite easy to live on $10 per hour. You live frugally. You take public transportation. You eat modestly. You learn your place and you gain character.

19 year olds right out of high school can do far worse.

$10 per hour comes to about $300 per week after taxes, or some where over $1,100 per month. In a city like the one I live, a person can rent a quality 1 bebroom apartment for less than $500 per month. Utilities wouldn't run you more than another $300 per month and food is another $200.

Of course this is all predicated on the concept that a person live by their means, and act rationally.
Edited by Dwayne, Dec 7 2008, 11:10 AM.
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STC
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Franko
Dec 6 2008, 08:31 PM

I agree, raising taxes on small business is not the way to go.


Essentially, small to intermediate private sector business has usually been the biggest job creators of all. Not to mention a good starting point for people to learn skills, retailing and management within the private sector.

However, in light of the massive bailouts, with still more likely to come, I see little alternative over the practice of borrowing from the Fed and printing more and more money. Is this really helping, or are these just "circular" solutions ?

I agree with you Franko. Given, in particular, the cashflow problems that small busineses are currently facing, this would put them under more pressure.

However, and this is a genuine question, has Obama said he is going to increase taxes on small businesses right now in this economic climate? If so, what is being defined as a 'small business' i.e. its turnover?

With respect to how to cover the deficit once (hopefully) the economy recovers, over here the government is going to increase the top rate of tax. Not by a lot, just from 40% to 45%, but I think, given that the increase in government spending does have to be covered over the economic cycle, that this is the way to do it. Its not the politics or economics of envy, its simply asking those most able to contribute, to do so. I'm a top rate tax payer and quite honestly I'm quite happy to pay a little more so that very small businesses, people on low incomes etc. don't have to.

Re. the rest of your post, I know what you mean about whether fiscal measures will really help or not. The truth is, its uncertain. What is more certain though is that doing nothing will prolong a recession, or depression, and make the fiscal deficit we are all worrying about even worse.

If people here have an alternative plan to a fiscal stimulus, and / or running a government deficit in any shape or form, I'd like to hear it. :)

Edited by STC, Dec 7 2008, 06:18 AM.
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whitestar
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STC
Dec 7 2008, 06:14 AM
I'm a top rate tax payer and quite honestly I'm quite happy to pay a little more so that very small businesses, people on low incomes etc. don't have to.




Do you actually pay the full rate or do you have legal measures to minimise your due?

I too am in the high bracket... not 45%.. but as a business entity I have extensive leeway for deductions.. eg my vehicles (work and personel) are leased, owned by the business.. all expense incured are tax deductable, the lease payments, fuel, insurance, maintenance.
Then there is real estate ownership outside of residing home.. any real estate that incures cost greater than income is deemed negative gearing, all costs, mortgage, maintenance, insurance is tax deductable, the list of legal deductions goes on and the final figure is no more than the average wage earner.

P.S have you received a PM from me in the last few hours?
Edited by whitestar, Dec 7 2008, 10:12 AM.
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