Interesting Auto Sales

Ken McCracken • June 7, 2007

With these high gas prices you’d think Americans would be snapping up high gas mileage vehicles and ditching their big, gas-guzzling SUV’s. But that’s just not the case as these two articles indicate.
First this one, which indicates the biggest Ford trucks flying off auto lots:

DETROIT — Three highly profitable versions of the redesigned 2008 F-series Super Duty pickups are exceeding Ford Motor Co.’s sales projections.
Buyers are snapping up fully optioned F-350s, such as the Lariat and King Ranch, in greater numbers than expected. The F-450 pickup also looks like a winner.
The Super Duty, Ford’s most profitable vehicle line, is one of the company’s two key launches this year. The other is the reintroduction of the Taurus sedan this fall.
Through April, Lariat sales are up 30 percent and King Ranch sales are up 53 percent compared with the same period a year ago, Ford says.
But the biggest surprise is the F-450. Ford spokesman Wes Sherwood says that through April, the F-450 was the hottest selling of the new Super Duty pickups in terms of days to turn: less than 15.

And then there’s this article about Honda taking their hybrid Accords off the market:

TOKYO—Honda will discontinue the hybrid version of its Accord sedans, the company said Tuesday, ceding Toyota’s dominance of the market with its Prius hybrid.
Honda Motor Co., Japan’s No. 2 automaker, will continue to make gas-and-electric models of its Civic sedan, but stop offering the hybrid Accord with the new model expected to go on sale later this year, company spokesman Yoshiyuki Kuroda said in Tokyo.
The Accord hybrid, which is sold only in North America, was a dud, selling just 25,000 since going on sale in 2004, and just 6,100 last year.

And then there’s this earlier post I wrote about Americans who are buying more efficient vehicles, but still keeping their larger, less-efficient vehicles.
So what do we make of all this? That despite all the hysterics and weeping from sensationalist journalists and bleeding heart politicians, Americans are weathering high gas prices just fine. They’re feeling financially confident, and our economy is robust enough to make it through these high energy prices just fine.
Ignore the doom-and-gloomers, America. They’ve either got newspapers to sell or a political agenda to advance, but their pessimism is all for show.

Tags: Domestic Issues, Politics

http://Array Bat One

…an enormous housing bubble full of speculators.

Mark D,

An enormous housing bubble? You call this an enormous housing bubble?

And speculators? A moment ago you were wailing indignantly about homeowners. Now its the speculators?

As for tax rate cuts, back in January, I wrote a post commenting on the capital gains tax cut to 15%, some figures released by the Treasury, I quoted from an article by economist Daniel Clifton or the American Shareholders Association noting that CapGains rate cuts had substantially increased revenues received:

The debate about the capital gains tax cut is over. When Congress passed the 15 percent reduction on capital gains all we heard from the naysayers is this will produce massive deficits. When Congress extended the 15 percent rate in 2006 we heard the same tired rhetoric – only louder

…Today’s CBO report puts the debate to bed. We were told by the Joint Committee on Taxation (JCT) the capital gains tax cut would “cost” the Federal Treasury $5.4 billion in fiscal years 2003-2006. Thus, the initial CBO forecast (January 2004) forecasted capital gains revenue to be $42 billion in 2003, $46 billion in 2004, $52 billion in 2005, and $57 billion in 2006.

Well in what could now be considered the worst forecast in modern times we find out today capital gains tax collections were actually $51 billion in 2003, $72 billion in 2004, $97 billion in 2005, and $110 billion in 2006. For 2005 and 2006 collections nearly doubled the initial forecast.

Translation = total capital gains tax collections over this period were 68 percent higher than forecasted. But even more important, a loss of $5.4 billion is actually a gain of $133 billion. That is a swing of $138 billion in just short years since the January 2004 forecast. Oops!

As I noted in my post,

In short, the 15% cut in the capital gains tax rate has generated not the $5.4 billion loss in tax revenues as was predicted, but a revenue increase of $133 billion instead.

For those who are arithmetically challenged, that’s means that the revenues generated were actually $138 billion plus higher than the loss that had been predicted.

$138 billion more! Art Laffer has been right all along.
robert108

Tax cuts are only bad when they are unfunded Here’s your mistake: the whole “unfunded” meme is based on the position that the govt is entitled to as much of our money as they want, and any reduction is “unfunded”, which is pure crap. and thats why we come to this discussion. You guys say the economy, GDP, tax revenue was a direct result of dubya’s tax cut, I say lower interest rates played a greater role.

Here’s your mistake about interest rates: Some markets like lower interest rates, and other markets like higher interest rates. Therefore, lowering interest rates yields no net gain; what some gain, others lose. On the other hand, tax rate cuts(which are really revenue increases) benefit everyone, including the politicians. This is why Dems are economic idiots.
http://proof-proofpositive.blogspot.com/ proof_positive

corporations could make money

Exactly, resulting in an increase in tax revenue.

Captain Obvious, here! Corporations that don’t make money don’t remain corporations! They no longer provide goods, services or JOBS to the communities they serve. Duh!

resulting in an increase in tax revenue

So the evil Bush lowered taxes so he could increase tax revenues? Fiendishly clever!
Mark D

Sure will suck if you need to sell your home and all you can get is $450,000 when you owe P0,000.

Serious recession? wow… you thought 2000 was a serious recession?
Mark D

Yes, Ignore the doom-and-gloomers, America.
Everything is just fine. Housing bubble is contained.
Go and take out another HELOC and pay off those pesky credit cards before your home equity vanishes and filler up!
Mark D

Wow I missed all that stuff. Thanks Justin.
I love government reports……I believe everything that my government tells me.
Glad to see inflation is in check.
Sure hope those foreigners who own 80% of our short term treasuries don’t ask for higher yields……ooops they are already.
As soon as housing picks back up things will be just peachy…right Justin?
http://proof-proofpositive.blogspot.com/ proof_positive

how about the $1.5 trillion in 05 that was pulled out of home equity extraction so consumers could buy stuff at the malls increasing corporate profits thus increasing corporate tax revenue.

Oh, those poor dupes of the capitalist shills, who bought their big screen TVs stereos, ipods and computers so that the evil corporations could make money and all they received out of the deal was…big screen TVs, stereos, ipods and computers!
Bat One

Mark D,

I know its been a long 8 years since the tech bubble burst toward the end of the Clinton administration and the last serious recession began, but I wonder if you were as virulently pessimistic about the state of the economy back then, when P/E ratios were two to three times as high as they are today.

Come to think of it, what exactly is it you’re complaining about anyway? That some Americans have taken advantage of low interest rates to pay off debts with much higher rates of interest, thus increasing their monthly cash-flow, often substantially? Or are you bothered that they’ve managed to capture a portion of their equity before it disappeared, using it to improve their personal balance sheet while reducing their monthly cash disbursements?

Of course that home equity you speak of is only hypothetical in any case… at least it is until its actually realized when the property is sold. But if the hypothetical value of my home were to diminish from P0,000 to $450,000, would it not be prudent of me to capture that extra value before it disappears?
http://www.bikebubba.blogspot.com/ Robert M. Perry

Regarding the Accord hybrid, that never really was that economical. They tweaked the EPA ratings, but in a Detroit News review (believe it or not generally kind to Japanese makes), it scored a mighty 21mpg.

http://info.detnews.com/autosconsumer/autoreviews/index.cfm?id=22157

In other words, it scored like a minivan or SUV, not a hybrid car. No wonder people go for a pickup with just a small reduction in mileage, and no wonder it doesn’t sell.
http://www.ski-blog.com/ sayanything-24

Of course that home equity you speak of is only hypothetical in any case… at least it is until its actually realized when the property is sold.

So is the value of my stock portfolio and 401k. Matter of fact, the value of my bank account balance is only hypothetical until I spend it. Perhaps Mark believes that the government should limit HELOC’s and cap appreciation rates. You know, tell folks what their property is worth and how they can spend the money. And really, what is the difference between me taking out a second and maxing out my equity as opposed to selling my house and getting cash, then buying another house for the new inflated property values? Why, none at all. But if I sold and bought a new place, Mark thinks that would be different than taking out a HELOC. Only difference is that I would pay 7% in real estate commissions instead of not paying that money and taking out a HELOC and staying in my current house. Hence why HELOCS are such a bad move for folks. Please explain it to me again, Mark.

But the reality that Mark doesn’t want to tell you is that the BLS released numbers that the average hourly wage of American workers rose by 4% last year and that the CPI–including higher gas prices and all other inflation–went up 3%. Higher gas prices are offset by Walmart charging less and less for everyday goods because they don’t pay their workers anything, right? All new jobs are low paying service jobs, right? How can Americans that are making less and less at Walmart affording big vehicles and high gas prices? Oh, yeah, rising wages and low unemployment… Makes your Liberal head swim that American consumers have more disposable income from sources other than 2nd mortgages and HELOCS.
http://proof-proofpositive.blogspot.com/ proof_positive

My car is completely environmentally friendly. It runs on baby seal flesh and the tears of little children.

Too bad you didn’t opt for the spotted owl afterburner! Zero to sixty in 2.4!
Mark D

If a person buys a condo and later sells it making a profit, is that considered a capital gain?
If this person does it repeatably wouldn’t that make him a speculator? Would he be taxed on his profits?
Mark D

I’m with you bat boy, make dubya’s tax cuts permanent and I say we cut even more, after all the tax cuts increased revenue and created a robust economy, or was that coz we created a shitload of $ and credit which created an enormous housing bubble full of speculators.
Anyway the bottom line is when you cut taxes you create revenue……right?
Mark D

Oh Justin…..your always good for a laugh.
Did you mention .06 GDP
Bat One

Mark D,

I see you were unable to come up with any sort of cogent answers to the very basic questions posed by me and by Justin. That’s hardly surprising. Most folks on the Left don’t know their assets from a hole in the ground, and obviously you’re no exception.

As for your questions(?), there is no earthly reason why I would need to sell my home. I have excellent insurance, and I’m far smarter than to live in a flood plain. If I found my self i dire need of money I would either tap into my savings, or if necessary sell something else, an investment property or other asset, rather than the roof over my family’s head. Thus, your question appears to be gratuitous. Big surprise!

As for the 2000 recession, if you care to quibble I’d point out that many on the Left have tried to lie about that economic downturn having occurred on Mr. Bush’s watch, rather than that of Clinton, so its nice to see you managed that small bit of honesty, despite your liberal perspective.

The correct answer is that any recession is serious to those effected, which is all the more reason to focus our nation’s efforts on continued economic growth with increased prosperity for all, rather than the class warfare economic stagnation that Democrats are so famous for inducing with their congenital insistence on raising taxes.

Which berings us to one final question: do you favor increasing taxes as do the rest of those on the Left, and can you manage, however lamely, to support that position, or are you going to support making the Bush tax cuts permanent and further reducing taxes paid by Americans?
http://proof-proofpositive.blogspot.com/ proof_positive

Proof
Really….Why bother?

Why bother trying to explain economics to clueless dunderheads? I’m sure we all wonder here sometimes!
http://www.bikebubba.blogspot.com/ Robert M. Perry

How do you manage that, Justin? I’ve got to render the baby seal oil to run my car! The meat fouls the turbines.

(what are you driving, Bat One? I can’t think of anything with a V12 from that era–lots of V10s like the Viper & Dodge pickups, but no V12s)

And for the record, the housing boom is an unlikely source for capital gains revenues, as capital gains from house sales are exempt from the tax unless you do more than one sale every two years, or unless you clear more than half a million bucks on a sale. The capital gains revenues are coming overwhelmingly from the stock market and the appreciation of other taxable assets.
http://www.ski-blog.com/ sayanything-24

Oh Justin…..your always good for a laugh.
Did you mention .06 GDP

That is .6% GDP growth for 1Q2007. And that sucks, but it is one single quarter.

I assume that you are quoteing figures from this news story:

Under the administration’s new forecast, gross domestic product, or GDP, will grow by 2.3 percent as measured from the fourth quarter of last year to the fourth quarter of this year. That’s down from a previous projection of 2.9 percent.

The main reason for the downgrade: The first three months of 2007 got off to an extremely weak start. Economic growth at that time had skidded to nearly a halt, increasing at a rate of just 0.6 percent, the worst showing in more than four years.

Perhaps you missed this part two paragraphs down:

The economy grew by 3.1 percent in 2006. The persistence of the housing slump is a factor behind the economy’s projected loss of momentum this year.

The White House, however, expects the economy will regain speed and grow by 3.1 percent – a solid performance – in 2008 and 2009. Those forecasts are unchanged from previous estimates.

or maybe this:

Meanwhile, the nation’s unemployment rate, which averaged 4.6 percent last year, a six-year low, is expected to dip to 4.5 percent this year under the administration’s new forecast. That is slightly better than its old forecast that the unemployment rate would hold steady at 4.6 percent.

The employment climate has remained healthy even as the economy has endured a sluggish spell. That’s because troubles have mostly been contained in the ailing housing and the struggling automotive sectors and have not spread widely, affecting other types of employers.

On the inflation front, surging prices for gasoline and other energy products prompted the administration to raise its inflation forecast for this year. The White House now expects consumer prices to rise by 3.2 percent this year. That’s higher than the 2.6 percent increase previously projected.

or maybe you missed this article last week:

The day’s leading report was the Labor Department’s job report, which showed employers added 157,000 jobs to payrolls in May, up from a revised 80,000 gain in April. Economists surveyed by Briefing.com had forecast 135,000 new jobs in May…

The report showed average hourly wages rose 6 cents, or 0.3 percent, to $17.30, also in line with forecasts. The average hourly wage is now up 3.9 percent from a year earlier, above the 2.6 percent gain in prices for the 12 months ending in April…

That report also showed that prices paid by consumers for goods other than food and energy rose less than expected, putting the so-called core PCE deflator up just 2.0 percent over the last year.

Please, Mark, enlighten me with some economic numbers again.
robert108

R108
I never said it was their money,You disapproved of how they were spending it, as if you should have anything at all to say about how people spend their money. the question is whether the tax cuts generated the revenue or was it low interest rates, monetary and credit creation. Interesting dance you’re doing. The only reason I can see for you trying to make this distinction is your BDS; you are wrong, but what does it matter how people generate their wealth? It’s about freedom, dude! Even if you were right, so what?

Anyone with a basic economics education knows that taxes suppress earning power, and that cutting tax rates encourages all manner of economic activity. It’s true, no matter how much you strain to deny it. It’s about the numbers.
http://www.ski-blog.com/ sayanything-24

Bat Boy said the $138b revenue is from dubya’s capital gains tax cut. I say it is from low interest rates and the housing boom.
Housing boom is over…. so will the capital gains revenue.

Capital gains revenue increases are not because of the housing bubble, but rather because it encourages the disposal of less profitable assets in favor of investing the money in other more profitable ones.

I do not sell one stock and take capital gains on it unless I believe that the potential of the new investment minus the cost of the taxes is greater than the potential of the current investment. If I take a capital gain to spend the money instead of investing it, then that money instead of going into a more profitable investment, contributes to other companies by purchasing their products.

Lower capital gains taxes encourages the mobility of capital into new investments by decreasing the differencial between the value of holding and the cost of selling an equity. This affects far more than real estate holdings. Real estate holdings are already subject to 1031 exchanges that most savvy investors use to move real estate capital gains into other real estate properties. Do you think that most real estate speculators want to pay 15% or 20% to have cash instead of different real estate properties when you have already admitted that HELOCS are easy to get as long as you have an equity position in the property? Pay Capital Gains tax of 15% to get access to your equity of simply take out a HELOC or other mortgage against the property and have the cash, keep the property, and avoid the tax.

What does your portfolio look like? If you are smart, you will retire well off by making good investment decisions and capital gains taxes just take away yuour ability to invest and provide for your own retirement by impacting your ability to make smart invests. All Capital Gains taxes do is penalize small investors and business owners. The wealthy don’t own stocks, they own companies and if you are wealthy anyway you don’t need liquid funds or to sell assets or stock. You can buy and hold. If you own your own company, you pay out dividends and take expenses. I assume that by advocating for higher capital gains taxes, you are participating in class warfare because you lack the knowledge to build wealth yourself or work the tax code to your advantage.
Mark D

You missed the point again Justin.
Bat Boy said the $138b revenue is from dubya’s capital gains tax cut. I say it is from low interest rates and the housing boom.
Housing boom is over…. so will the capital gains revenue.
http://www.ski-blog.com/ sayanything-24

What bothers me about people like Mark is that good economic news isn’t just good for Republicans, but good for Americans. 4.5% unemployment, 3% GDP growth, 4% wage growth, 3% inflation with 2% core inflation, and consistent job creation is what we all should be wishing for.

So why is Mark routing against it? Because it validates tax cuts or Bush’s handling of the economy and that bodes poorly for Liberals.

He comes here and tries to make a point that people should not be buying F-350′s because the economy sucks… Problem is that if people are doing well individually and the country is doing well collectively it breaks his brain because Bush is Chimpy McHitlerburton and is a pile of sh1t with a flag in it like his avatar.
Mark D

I would assume that you have an authoritative source to point to which gives a breakdown of capital gains tax revenue by source and type over a ten or 15 year period

Just like I’m sure you have and could share with me.
Yeah right.

Like I said I could care less what you drive.
Justin…I will read your jibber jabber when I have time.
Mark D

He comes here and tries to make a point that people should not be buying F-350′s because the economy sucks

I could care less what people drive….. my car gets 36 mpg, if you want to drive one that gets 12mpg knock your socks off.
Mark D

Bat
We are talking about dubya’s tax cuts aren’t we?

RP

letting taxpayers keep more of their money is helpful, too

And what is the average taxpayers savings from the tax cut?
Was it greater than the $1.0 trillion in 03 or the $1.2 in 04 or how about the $1.5 trillion in 05 that was pulled out of home equity extraction so consumers could buy stuff at the malls increasing corporate profits thus increasing corporate tax revenue.
Mark D

R108

I’ll make it simple for you: Govt social spending is bad for us. What part of that don’t you understand?

Sorry.
And how much has government social spending increased under republican majority since the tax cuts? Oops, forgot, let me answer…… it’s coz of 9/11

Please answer the question, if you can. You didn’t answer, you asked three questions.

Same reason why we are concerned about our dependency on foreign energy.
We will have to use our military for securing our financing of our lifestyle.
The effect of rising interest rates on home owners as their ARMs reset will not be good.
Mark D

Bat

Let me try this one last time, using smaller words so you will understand.

Let me type slow so you can follow. When corporations are able to borrow money at historically low interest rates they expand their operations, like build new stores, new housing developments etc. and consumers get to borrow more money with easy monthly payments thus creating more tax revenue. Am I typing too fast?
JFK….Ford…tax cuts, so they had tax cuts too. who cares. Apples and oranges.

Proof
Really….Why bother?

Justin
Yes inflation is 2%. good one. How money creation can be 13% but inflation be 2% is cookoo ain’t it?.

And funny, but the Fed was lowering rates starting in early 2000

Wrong….
01/2000, 5.45
02/2000, 5.73
03/2000, 5.85
04/2000, 6.02
05/2000, 6.27
06/2000, 6.53
07/2000, 6.54
08/2000, 6.50
09/2000, 6.52
10/2000, 6.51
11/2000, 6.51
12/2000, 6.40
01/2001, 5.98
02/2001, 5.49
03/2001, 5.31
04/2001, 4.80
05/2001, 4.21
06/2001, 3.97
07/2001, 3.77
08/2001, 3.65
09/2001, 3.07
10/2001, 2.49
11/2001, 2.09
12/2001, 1.82
01/2002, 1.73
02/2002, 1.74
03/2002, 1.73
04/2002, 1.75
05/2002, 1.75
06/2002, 1.75
07/2002, 1.73
08/2002, 1.74
09/2002, 1.75
10/2002, 1.75
11/2002, 1.34
12/2002, 1.24
01/2003, 1.24
02/2003, 1.26
03/2003, 1.25
04/2003, 1.26
05/2003, 1.26
06/2003, 1.22
07/2003, 1.01
08/2003, 1.03
09/2003, 1.01
10/2003, 1.01
11/2003, 1.00
12/2003, 0.98
01/2004, 1.00
02/2004, 1.01
03/2004, 1.00
04/2004, 1.00
05/2004, 1.00
06/2004, 1.03
07/2004, 1.26
08/2004, 1.43
09/2004, 1.61
10/2004, 1.76
11/2004, 1.93
12/2004, 2.16
01/2005, 2.28
02/2005, 2.50
03/2005, 2.63
04/2005, 2.79
05/2005, 3.00
06/2005, 3.04
07/2005, 3.26
08/2005, 3.50
09/2005, 3.62
10/2005, 3.78
11/2005, 4.00
12/2005, 4.16
01/2006, 4.29
02/2006, 4.49
03/2006, 4.59
04/2006, 4.79
05/2006, 4.94
06/2006, 4.99
07/2006, 5.24
08/2006, 5.25
09/2006, 5.25
10/2006, 5.25
11/2006, 5.25
12/2006, 5.24
01/2007, 5.25
02/2007, 5.26
03/2007, 5.26
04/2007, 5.25
05/2007, 5.25

Does it take 3-4 years of Fed cuts before the economy starts improving?

Wrong….see above

What about the fact that Fed rates have been rising for the last 3-4 years?

Rates were still at 3% 2 years ago
Are we back to 6% yet?

Why hasn’t job creation stopped?

I will discuss the Death/Birth Model at a later time
http://www.bikebubba.blogspot.com/ Robert M. Perry

My family’s annual savings from Bush’s tax cuts are about $3000, and our extraction of home equity to buy junk at the “Stuff Mart” is zero.
Mark D

Dog

What about short term
Mark D

Bat

Look, there’s no doubt that lower interest rates encourage more economic activity, business expansion, job creation, trade, etc., but you’re going to have a difficult time demonstrating any sort of direct link between lowered interest rates and increased personal income tax receipts

Business expansion = increased corporate tax revenue
job creation = personal income tax receipts
robert108

MarkD: So, the citizens get to buy what they want? How terrible! /sarcasm
In your Marxist “workers’ paradise”, then, only the political class gets to do that; the proletariat must sacrifice for “the common good”. Great.
Hint: It’s all our money, not the govt’s. In our system, the govt is a parasite.
Mark D

RP
Well good for you. Do you use your savings to pay for the increase in property and other taxes?

R108
WTF? where did I say I’m mad that homeowners withdrew equity?
http://www.bikebubba.blogspot.com/ Robert M. Perry

Mark, you’re actually not getting much argument from me about the issues with the Federal Reserve, which does create a great deal of the business cycle by using the “dog leash” of the money supply. On the other hand, you’re also never going to persuade me that we can effectively decouple business expansion, interest rates, and job creation. The three go together, and it’s incumbent upon you to realize this.

So did credit expansion do some things? You bet. However, letting taxpayers keep more of their money is helpful, too. To pretend it isn’t is to leave the “reality based community.”
robert108

Not quite sure why you think I’m against buying SUVs.

I never mentioned SUVs, so you just made that up. I was directly referring to this statement of yours:

…how about the $1.5 trillion in 05 that was pulled out of home equity extraction so consumers could buy stuff at the malls increasing corporate profits thus increasing corporate tax revenue.

Your allegiance to Marxist ideology is evident. It’s still the citizens’ money; you just don’t approve of how they choose to spend it. Not your call.
Bat One

Mark D,

It’s obvious that you would prefer to Move On, ignoring the Inconvenient Truth that tax cuts have stimulated the economic growth and increased federal tax receipts, just as they did when Presidents Coolidge, Kennedy, Ford, and Reagan cut tax rates in the past.

You might as well give up and go home. You have not demonstrated the causal relationship you claim exists, nor are you able to explain evidence from the past that directly contradicts your assertion. Since past tax rate cuts generated the same sort of increase in both economic activity and federal tax receipts, even when interest rates were much higher… and rising… there’s simply no reason for you to continue making economic claims that aren’t supported by the evidence.
robert108

R108
WTF? where did I say I’m mad that homeowners withdrew equity?

It’s your statement; you said what you said. Pardon me if I didn’t perceive it as being complimentary. /sarcasm

I didn’t comment on your feelings, just your ideology.
Mark D

R108

still singing that old Marxist song

Ah yes….the ole Marxist card

Carrick

However, the same can be said for reducing the tax rate. Increasing the amount of money that people have to invest certainly will yield greater investments, which translates necessarily into an increase in GDP and federal tax revenues.

Yes but my point is that by lowering the fed rate it had a greater impact on revenues and GDP than what came from the tax cuts that is why we are seeing the GDP skid when interest rates were raised while the tax cuts are still in place. GDP will continue on a downward trend coz consumers are tapped out and housing bubble has popped.

MarksD appears to think that a lower savings rate equals doom for the economy, when in fact what it signals is we as consumers can earn more by direct investment than by loaning our money to the bank to invest for us.

Good one…..consumers have soooooooo much money now that the housing has collapsed and cheap credit has dried up.

2Hotel

Middle class is shrinking, not because everyone is getting poor, because everyone is becoming increasingly wealthy

That one was so funny I passed gas.

Proof
zzzzzzz

Bat Boy
Ah yes….clinton years, same economic situation as we are in now. Record deficits, more dependency on foreign countries for our energy, inexpensive products and interest rates to name a few.
Did I mention 80% of all short term treasuries are now owned by foreigners? Will the fed have to raise rates again when they demand more return? How will that affect our consumer led economy? Corpoprate profits? Fed revenue? What will happen when our debt ridden corporations run out of cheap funding?

I’m not against tax cuts so long as we can afford it, passing our debt on to our kids is not the answer.
It’s a no-brainer right R108
Bat One

JFK….Ford…tax cuts, so they had tax cuts too. who cares. Apples and oranges.

Mark D,

This is exactly the sort of “it doesn’t agree with what I said, so I’ll just ignore it…” idiocy we’ve come to expect from you.

Of course the examples I gave aren’t “apples and oranges” at all, but a clear, rational demonstrations that your argument that declining interest rates, not tax cuts, are responsible for economic growth and increased federal tax receipts is without foundation. In both instances, JFK and Ford (twice!), tax rates were cut, in both instances interest rates rose, so the increase in economic activity and the increase in federal tax receipts simply could not have been the result of falling interest rates, could it?

Along the same lines, while I’m not especially impressed with your “cut and paste” of the Fed funds data, it does bring up another point. If declining interest rates are the primary cause of economic growth and increasing federal tax receipts, what explains the supposedly strong economy that Democrats are forever crowing about during the Clinton years?

Using the same Fed Funds data you’ve cited above, we find that the Fed Funds rate was 2.92% in December of 1992, and basically increased through most of the Clinton years to finish at 6.40% in December 2000 while averaging 5.85% for the entire 8 year period. So either the Clinton economy wasn’t as good as its been made to seem in retrospect, or interest rates aren’t really the economic lodestone you would have us believe.

The problem with liberals today is their irrational insistence that there are no such things as principles, no hard and fast rules that apply universally, no consistent standards for all. Whether the subject is criminal behavior, political corruption, economics and tax policy, national defense, immigration policy, or judicial interpretation, for those on the Left the only rule, the only standard, the only mark of intellectual honesty and consistency is partisan expediency. Even the name “Democrat” is a blatant misnomer. And you. Mark, are but one more sorry example.
robert108

MarkD: You’re still singing that old Marxist song that borrowing money to make money is some sort of capitalist scam, when economic debt(debt that leads to wealth creation) is what produces economic growth. Marx was ignorant of the fact that capital is valuable; he thought all value was created by labor, but he was wrong. The free enterprise system creates wealth, which is a mystery to Marxists like you. It doesn’t matter how that wealth is created, but then we aren’t hung up on the Marxist illusion of “social justice”. I know it’s beyond your ken that reducing tax rates creates prosperity, and especially reducing tax rates on capital, but that’s exactly how it works. You can deny it all you want, but it’s true.
robert108

I’m not against tax cuts so long as we can afford it, passing our debt on to our kids is not the answer.
It’s a no-brainer right R108

The real no-brainer is that the debt is caused by social spending; if you really don’t want to pass debt on to our kids, then advocate for an end to govt social spending. Tax rates can really be cut then, especially taxes on capital, and the prosperity will be legendary. Govt is a drain on prosperity, and we get nothing for it. Keep it to national defense and road-building(and the like), let the independent individuals run the markets, and our kids will have tremendous prosperity to deal with, rather than the old wasteful social spending debt we are creating now.
2Hotel9

markie, if you don’t want people to know you are a Marxist, then stop spewing Marxist dialectic every time you hit submit.
robert108

Bat: Great post! There is an even more fundamental principle here: govt cannot cause economic growth; it can only lessen its negative effect on the economy. Tax rate cuts work because they decrease the harm caused by taxes draining capital from the private sector; interest rate cuts only encourage certain economic activities, while discouraging others. Therefore, tax rate cuts are much better at removing obstacles(govt caused) to economic growth. It’s really a no-brainer.
HG

So all expansion and spending is solely related to borrowed moneis and not in any way related to monies realized from tax rate reductions?

Apparently it is established in this thread that:

1. more money in the private sector increases prosperity and subsequently tax receipts — even with lower tax rates.

2. business invests its money rather than hoarding it at the expense of the economy.

If tax rate reductions puts more money into the private sector why is it that tax cuts are bad?
robert108

And how much has government spending increased under republican majority since the tax cuts?

I’ll make it simple for you: Govt social spending is bad for us. What part of that don’t you understand?

Mark, please explain why this is significant to you

Please answer the question, if you can. You didn’t answer, you asked three questions. I don’t agree with your Marxist ideology, so those questions have even less meaning to me than your original assertion that “foreigners” investing in our short term treasury notes has some significance.
Still waiting for the answer to that one.
Mark D

R108
And how long did republicans have control? Did they do something about illegals entering this country that I’m not aware of?
I’m sorry I don’t recall ever mentioning my stance on the immigration issue…..or are you just assuming.
robert108

Did I mention 80% of all short term treasuries are now owned by foreigners?

Almost missed this gem of leftie hypocrisy. When they are invading our country to exploit our superior economic system, they’re “undocumented immigrants”, but when they are participating in our economy as investors, they’re “foreigners”?
Nice. Nice manipulative use of language.
Mark D

R108

the debt is caused by social spending

And how much has government spending increased under republican majority since the tax cuts? Oops, forgot, let me answer…… it’s coz of 9/11

Carrick

Because those are the only two reasons that GDP ever increases… Right?

Didn’t you claim GDP has risen coz of the tax cuts?
However, the same can be said for reducing the tax rate. Increasing the amount of money that people have to invest certainly will yield greater investments, which translates necessarily into an increase in GDP and federal tax revenues.

what we would have called “middle class” twenty years ago

Inflation?

R108

Mark, please explain why this is significant to you

Then should we be concerned about our dependency on foreign energy?
Can we use our military for securing our financing of our lifestyle also?
What effect will rising interest rates have on home owners as their ARMs reset?
2Hotel9

Bottomline? Middle class is shrinking, not because everyone is getting poor, because everyone is becoming increasingly wealthy. That is what pisses off Marxist mouthbreathers like markD.
HG

Tax cuts are only bad when they are unfunded and thats why we come to this discussion.

I’m with R108 on this one MarkD. You already acknowledge more money in the hands of business and citizens translates into economic growth and higher tax receipts. So whether tax cuts provide the investment (Kennedy, Reagan, Ford) or borrowing (Bush — according to you), the result is the same — economic growth and subsequently, higher tax receipts. And, this in light of lower tax rates that are “unfunded”. Therefore, tax cuts fund themselves. Your argument is not only irrelevant, but lost. Once you cede that more money in the hands of the private sector translates into econmic growth and subsequently higher tax receipts, as your argument clearly does, you cannot argue that lower tax rates do not spur econimic growth nor that tax cuts must be funded. Reduced tax rates means more dispoable income for citizens and more profit and subsequently investment for business.
Mark D

HG

So all expansion and spending is solely related to borrowed moneis and not in any way related to monies realized from tax rate reductions?

Never said that. I said lower interest rates had a greater impact than tax cuts did.

If tax rate reductions puts more money into the private sector why is it that tax cuts are bad?

Never said tax cuts are bad. Tax cuts are only bad when they are unfunded and thats why we come to this discussion. You guys say the economy, GDP, tax revenue was a direct result of dubya’s tax cut, I say lower interest rates played a greater role.
robert108

MarkD: Let me rephrase my question, because you obviously didn’t understand it.

What is the economic significance, in your opinion, of “foreigners” owning 80% of our short term treasury notes? Please give actual cause and effect relationships, with factual information, rather than simply reciting more leftie talking points. If you want to make analogies, please explain how they work in real life. Got it now?

Once again, you single out Republican spending, but omit the vast majority of govt social spending done by Dems since the 1930s. Why is that significant to you? If you agree that govt social spending is harmful, isn’t it all harmful, or just the Republican spending? If so, please explain.
Mobilizing against terrorism, especially after Clinton gutted our military and intel capabilities, isn’t social spending; it’s spending on national defense, which is a legitimate function of govt. Can’t you tell the difference?
http://SayAnythingBlog.com The_Whistler_ofnd

Sure hope those foreigners who own 80% of our short term treasuries…

Here’s who owns our debt.
robert108

HG: That’s a big 10-4, good buddy!
Of course, the “secret” of tax rate cuts is that they reduce the bite from the individual taxpayer; collectivists tend to ignore individuals, which are the source of prosperity in the “free people making free choices” system.
robert108

So what do we make of all this?

The absolute vitality of free people making free choices, which is what the Marxists hate the most about our economic system.

Bring back the Excursion!
HG

R108,

You’ve made an excellent point. Up until now I viewed your argument as merely semantic, but clearly tax rate cuts do not translate into tax cuts (revenue). I’m sure we would also agree that government social spending needs to be drastically reduced if not altogether eliminated.
2Hotel9

And apropos of nothing in this thread, go check out the Frogman’s new and improved blog. The comic is just gravy over the fries!
robert108

Right, HG. Some of the confusion(especially the lie about “unfunded”) comes from confusing “tax cuts”(a reduction in the amount of revenue from taxes) with “tax rate cuts”(which generally increase revenue from taxes). I think this mislanguaging is deliberate deception from lefties, but who knows? In either case, they’re wrong.
Bat One

Mark,

You’re not very good at this logic stuff, are you?

Let’s try it again. If lower interest rates are the reason for economic expansion increased tax receipts now, then what explains the economic expansion and increased tax receipts after the JFK and Ford tax cuts?
robert108

R108
And how long did republicans have control? Did they do something about illegals entering this country that I’m not aware of?
I’m sorry I don’t recall ever mentioning my stance on the immigration issue…..or are you just assuming.

This is the second time you have mentioned a political party in this discussion, when no one else did so; why is that significant to you? Is Republican spending better or worse than Dem spending, to you? The Dems are far more guilty of social spending than Republicans, but my point was about govt spending, with no Party mentioned.
As far as calling foreign investors “foreigners”, I just contrasted that with the leftie obsession with calling them “undocumented immigrants”. Did you find that offensive? If so, why?
You still haven’t answered my question about the significance of foreign investment in our short term treasury notes.
robert108

GDP will continue on a downward trend coz consumers are tapped out and housing bubble has popped.

More Marxist “fixed pie” thinking; our economic system creates wealth, so capital moves from one market to another, in a natural fluctuation. In your ignorance, you confuse the free movement of capital with collapse, which is what happens in Marxist economics when the State withdraws its largesse from one group to give it to another.

Marxists have been predicting the collapse of the West for over a century, while we get ever more prosperous and the Marxist economies remain stagnant.
Mark D

R108
Not quite sure why you think I’m against buying SUVs.
I could care less what people drive….. my car gets 36 mpg, if you want to drive one that gets 12mpg knock your socks off.
robert108

Did I mention 80% of all short term treasuries are now owned by foreigners?

Mark, please explain why this is significant to you.
robert108

Proof: You just don’t get it; all money belongs to the State(in MarkD’s world), and the State should determine how it will be spent. Free people making free choices is just evil. /humor
2Hotel9

mark, I like your avatar! W stomping the dogshat out of you. Now that is topical and funny.
Bat One

Mark D,

Let me try this one last time, using smaller words so you will understand.

If the lower interest rates were the cause of economic growth and increased tax revenues, and not the Bush tax cuts, why was the result the same with past tax cuts, even when interest rates were rising?

When Kennedy cut taxes, interest rates were rising. When Ford cut taxes, interest rates had just started to rise and continued to do so right through the entire Carter administration. Since interest rates were rising, how do you explain the increased economic growth and increased federal revenues that followed the JFK and Gerald Ford tax rate cuts? Since it couldn’t have been lower interest rates, as you’ve claimed, what was it?
http://www.ski-blog.com/ sayanything-24

Business expansion = increased corporate tax revenue
job creation = personal income tax receipts

Well, this is a start. First, you actually admit to job creation on Bush’s watch.

Now as to the other issue of rising money supply and lower interest rates–as long as inflation remains at around 2% per year, what is the real problem? We need our currency devalued some to make up for the trade imbalances. And funny, but the Fed was lowering rates starting in early 2000 and it didn’t have any effect until the tax cuts of 2003. Does it take 3-4 years of Fed cuts before the economy starts improving? What about the fact that Fed rates have been rising for the last 3-4 years? Why hasn’t job creation stopped?
Mark D

Proof

corporations could make money

Exactly, resulting in an increase in tax revenue.

R108
I never said it was their money, the question is whether the tax cuts generated the revenue or was it low interest rates, monetary and credit creation.

Bat
It’s obvious you cannot prove to me that the BUSH tax cuts generated the revenue and it was not due to the lower interest rates, monetary and credit creation.
Bat One

Mark D,

Try using a little logic. If lowered tax rates on the movement of capital, capgains and dividends, did not cause the huge influx of revenue in those categories of taxes as you’ve insisted they did not, then what caused the equally huge increase in personal income tax receipts, or the increase in corporate tax receipts, when the rates on those taxes were reduced?

And if lowered interest rates are responsible for the increased tax revenues, as you’ve suggested, then how do you explain tax revenue increases when rates were cut? Kennedy’s tax cuts went into effect in 1963, yet interests rates had already started to rise at that time led by the Fed Funds rate which increased steadily from 1961 until 1970.

Similarly, when President Ford cut tax rates twice in 1975, both economic activity and tax revenues increased, while both inflation and unemployment diminished. And this despite the fact that interest rates bottomed out in 1976 and then started rising again.

Look, there’s no doubt that lower interest rates encourage more economic activity, business expansion, job creation, trade, etc., but you’re going to have a difficult time demonstrating any sort of direct link between lowered interest rates and increased personal income tax receipts, just as you’ll have a difficult time linking increased federal tax receipts to lower rates of interest in a period when interest rate remianed relatively steady or were actually increasing.
Mark D

Bat Man
And you back up your claim that it was the tax cuts that increased the revenue with…………what.

When dispsh1t took office fed rates were at 6% and by November they were down to 2% and stayed there for 3 years. Before you spill your “it was coz of 9/11″ bullsh1t just keep in mind on 9/11 they had already dropped it down to 3%.
Corporations and consumers had cheap $$$$ and credit and thats what increased revenues not dingleballs tax cut.
http://www.ski-blog.com/ sayanything-24

If a person buys a condo and later sells it making a profit, is that considered a capital gain?
If this person does it repeatably wouldn’t that make him a speculator? Would he be taxed on his profits?

Funny, but I didn’t think they would be able to buy a condo and sell it later to make a profit because:

Sure will suck if you need to sell your home and all you can get is $450,000 when you owe $500,000.

Won’t the bubble and the losses erase all those capital gains anyway?
http://www.bikebubba.blogspot.com/ Robert M. Perry

A “flipper” is in general a poor source for capital gains tax, as it does not tend to generate large returns, and the revenues from “flipping” tend to be eaten up in real estate fees.

Here’s a source from CATO about cap gains; about half comes from corporate stocks. http://www.cato.org/pubs/pas/pa-242.html

In other words; sorry, Mark, but the reality is that you’re pulling statistics out of your nether regions, and it not surprisingly stinks.
Bat One

Bat Boy said the $138b revenue is from dubya’s capital gains tax cut. I say it is from low interest rates and the housing boom.

It is you who has missed the point, Mark, not Justin, although in your case the ignorance is no doubt willful, for you are surely not as dumb as you seem to be.

Still, if you say the monstrous increase in capital gains tax revenue received by the federal government is from low interest rates and the housing boom, I would assume that you have an authoritative source to point to which gives a breakdown of capital gains tax revenue by source and type over a ten or 15 year period… a documentary source to backup your contention which you will happily share with the rest of us in the interest of proving that your conclusions were correct?

Yeah, right!

Incidentally, the car I drive is 10 years old, has a V-12, burns premium only, gets about 12 mpg in town if I remember to restrain myself, and even at $4.00 per gallon would be worth every penny. And best of all, I don’t feel the least bit guilty.
http://www.ski-blog.com/ sayanything-24

My car is completely environmentally friendly. It runs on baby seal flesh and the tears of little children. I would use kitten power, but we Repugnatkins eat kittens instead.
Bat One

Just like I’m sure you have and could share with me.
Yeah right.

Mark D,

So… in other words, you got nothing to back up or document your contentions, nothing but your own verbal diarrhea.

Of course, even if there was some sort of authoritative support for what you claim, it would also have to explain why the result was the same each of the previous four times tax rates were cut over the past 100 years (Coolidge, Kennedy, Ford, and Reagan). Each time the economy began a substantial growth spurt which was otherwise unexplained, and each time tax revenues to the government increased as a result of the increased level of economic activity.

But then, as you are unable to provide any sort of authoritative support or documentation for your contention about this current round of tax cuts, there’s no reason to expect you to be able to explain those in the past either, is there?

Perhaps if you stuck to septic work, instead of economics and tax policies.

(Robert Perry, BMW 850… and its 11 years old, not 10 as I stated before.)
Mark D

Mr. Perry

and the revenues from “flipping” tend to be eaten up in real estate fees.

Really?
The revenue was from massive $$$ and credit creation which created a housing bubble and made it possible for corporations to borrow cheap $$$. Not dubya’s tax cut.
Mark D

13% increase in money supply but .06 GDP growth.
Tell me boys….what does that spell?
carrick

MarkD:

GDP will continue on a downward trend coz consumers are tapped out and housing bubble has popped.

Got it. Because those are the only two reasons that GDP ever increases… Right?

Save your ignorance for other fart sniffers.

Middle class is shrinking, not because everyone is getting poor, because everyone is becoming increasingly wealthy.

Look at those “at risk for poverty” (what used to be our “poverty class”). Increasingly they resemble what we would have called “middle class” twenty years ago. Our middle class is migrating upwards as well.

It is a fact in general, even if you’re too ignorant to understand the implications of 2Hotel9′s statement.

Did I mention 80% of all short term treasuries are now owned by foreigners?

BFD
carrick

Robert108:

economic debt(debt that leads to wealth creation) is what produces economic growth.

Which is exactly the point. Reducing the prime rate allows people to assume a greater debt, thereby increasing economic growth and commensurately increasing federal revenue.

However, the same can be said for reducing the tax rate. Increasing the amount of money that people have to invest certainly will yield greater investments, which translates necessarily into an increase in GDP and federal tax revenues.

The problem with MarkD’s one-sided argument is that devaluating the federal rate is of course highly inflationary, so it can only be done as a short-term “fix”, and further the economy can continue to grow just fine even at a higher than e.g. 3% fed rate. The historical fact is that MarkD’s entire argument is based on a very myopic view of history of the fed rate. During most of the 1990′s economic boom, for example, the fed rate was well 5% and well above the current plateau value.

Beyond this, MarksD appears to think that a lower savings rate equals doom for the economy, when in fact what it signals is we as consumers can earn more by direct investment than by loaning our money to the bank to invest for us.
Mark D

Robert Perry
What’s a flipper?

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