> The economy then proceeded to have the longest expansion in American history thus disproving all Republican tax-cut theories, though no one seems to have told them.
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You use "disprove" in a very odd way.
No one has said that tax increases necessarily kill economic growth. The claim is that tax increases hurt economic growth.
A dollar taxed (or borrowed) and spent by govt accomplishes something. A dollar left in the private sector accomplishes something else. Do you really think that the average govt spending is more valuable than the average private spending?
"The claim is that tax increases hurt economic growth."
You still have to square that claim with the fact that the 1993 tax hike was followed by the longest expansion in US history.
As far as the value of "average govt spending" vs "average private spending", it obviously depends. When the markets decided that the best use of capital was to build a massive oversupply of houses and condos that was not very valuable, when the government decides to fund more college tuition that's a pretty good investment in society's future. When private money decided to fund Brin and Page that was very valuable, when the government decides to spend billions on unneeded fighter jets that's not valuable at all.
> You still have to square that claim with the fact that the 1993 tax hike was followed by the longest expansion in US history.
There's no inconsistency.
We had the dot-boom, the cold war ended, and we'd thrown a lot of underpriced real-estate onto the market. Any one of those three would have produced significant economic growth. All three at once was a bonanza.
> As far as the value of "average govt spending" vs "average private spending", it obviously depends.
Yup, it does. However, you're asserting that it doesn't, that govt spending is better. That's what it means to say that tax increases are good.
> When the markets decided that the best use of capital was to build a massive oversupply of houses and condos that was not very valuable
Not so fast. Fannie and Freddie and govt regulation etc had a huge role in that. I mention regulation because banks that didn't play were punished. Also, govt regulation was behind much of the securitization and "insurance". Fannie and Freddie was a double-hit - regulations basically forced banks to hold their stock, which pretty much guaranteed that they'd all have solvency problems when Fannie and Freddie hit the skids.
> when the government decides to fund more college tuition that's a pretty good investment in society's future.
Oh really? Do we have a shortage of women's studies majors? A significant fraction of college degrees are dead-weight.
The bulk of financial aid goes to tuition increases that it causes.
I never said that tax increases are good in general, Republicans are the ones that claim that every tax increase is going to result in the end of the republic. My personal belief is that at the margins taxes have little effect on overall economic growth, especially when they are targeted at the upper income levels, and they are generally a better way of paying for government than financing it with debt which seems to be Republican's preferred way of paying based on the trickle down theory that tax cuts to the rich will pay for themselves by stimulating the economy and thus increase tax receipts. When I look at the economy that resulted from Bush's tax cuts (i.e. a slow jobless recovery) vs Cliton's tax increase my conclusion is that there's very little correlation between taxes and growth and that we are very far on the left side of the Laffer curve.
On the housing issue, we disagree very much on the cause of the problem. I believe the problem was the deregulation that allowed the creation of entities like AIG Financial Products which was probably the major sink of risks that drove the bubble, and also there was a catastrophic market failure that allowed Wall Street to run their companies into the ground for short term gain. But there's no way to deny that a LOT of private capital was directed at the building of useless condos.
> I believe the problem was the deregulation that allowed the creation of entities like AIG Financial Products
AIG Financial Products sold products "encouraged" by regulators.
Regulators realized that there was some risk in securitized mortgage pools. However, they really wanted to be able to call them "no risk" investments so they could push them onto asset sheets and make them more popular among folks who they couldn't bully. (They were pushing cheap housing.)
The regulator's solution was "insurance", which they defined (regulators define what's acceptable for banks to hold as assets) and AIG (among others) sold.
Since "everyone" believed that the securitized mortage pools were "no risk", folks saw selling insurance as "free money". AIG did a lot of middleman work in this area as well as writing its own contracts.
> But there's no way to deny that a LOT of private capital was directed at the building of useless condos.
"free money" pushed by govt policy (through loans and the like) isn't private capital.
> My personal belief is that at the margins taxes have little effect on overall economic growth, especially when they are targeted at the upper income levels
The median worker in the US pays almost no federal income taxes. (They do pay SS and medicare, but the former is an okay investment for such people and the latter will be a train wreck for everyone.) As a result, they have no incentive to get value for money.
Note that the income of "the rich" is somewhat voluntary and fairly portable - that makes it quite volatile. That's why CA gets hammered every so often.
You use "disprove" in a very odd way.
No one has said that tax increases necessarily kill economic growth. The claim is that tax increases hurt economic growth.
A dollar taxed (or borrowed) and spent by govt accomplishes something. A dollar left in the private sector accomplishes something else. Do you really think that the average govt spending is more valuable than the average private spending?