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Tax Cuts Work

  1. You have chosen to ignore posts from gabootwo2006. Show gabootwo2006's posts

    Tax Cuts Work

    The Great Depression of 1920 ( Tax cuts work folks )
    The Melting Pot ^ | February 10th

    Posted on Saturday, February 14, 2009 5:44:49 AM by Halfmanhalfamazing

    Never heard of it? That's not surprising - it didn't last long. The 20's were roaring, not greatly depressing. Yet virtually none of the American population knows that the nation's economy actually took a worse hit in 1920 than it did at any point during the Great Depression.

    Federal spending was cut from $6.3 billion in 1920 to $5 billion in 1921 and $3.2 billion in 1922. Federal taxes fell from $6.6 billion in 1920 to $5.5 billion in 1921 and $4 billion in 1922. Harding's policies started a trend. The low point for federal taxes was reached in 1924; for federal spending, in1925. The federal government paid off debt, which had been $24.2 billion in 1920, and it continued to decline until 1930.

    With Harding's tax and spending cuts and relatively non-interventionist economic policy, GNP rebounded to $74.1 billion in 1922. The number of unemployed fell to 2.8 million— a reported 6.7 percent of the labor force— in 1922. So, just a year and a half after Harding became president, the Roaring Twenties were underway. The unemployment rate continued to decline, reaching an extraordinary low of 1.8 percent in 1926. Since then, the unemployment rate has been lower only once in wartime (1944), and never in peacetime.

    The worst economic crash since we started keeping most relevant records didn't happen during the Great Depression. It happened in 1920. Yet America was back on its feet in less than two years, while the next crunch was dragged out for a decade. The free markets have proven beyond a shadow of a doubt that they grow faster than planned economies - why on earth wouldn't they fix themselves faster, too?

  2. You have chosen to ignore posts from DirtyWaterLover. Show DirtyWaterLover's posts

    Re: Tax Cuts Work

    Sure tax cuts work.  But so does increasing gov't spending.  It's called deficit spending, also known as expansionary fiscal policy.  It Economics 101.

    However, you have to ask yourself, what's better for society. Is it better for the country to go into debt so that people can but new TVs or is it better for the country to go into debt to improve infrastructure.  By investing money in schools, roads, bridges, the power grid, sewer system, etc., the investment will result in economic developmenmt which in turn leads to higher tax revenues down the road. 

    Gov't spending can be used to spur consumer demand in a more focused way than a tax cut.  Take the cash for clunkers deal.  It was basically a tax cut for people who want to trade in cars with bad gas mileage for more fuel efficient vehicles.  It focused the consumer consumption on cars, helping out Detroit.

    There are times when tax cuts are better and there are times when increased gov't spending is better.  To suggest that one is always better is nonsense.