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Economy: Mission Accomplished
By Matt Margolis | October 31, 2003
Yesterday we learned that economy has had its strongest quarter of growth in nearly 20 years. It looks like the economists were right—tax cuts stimulate the economy!
The economy grew at a blistering 7.2 percent annual rate in the third quarter in the strongest pace in nearly two decades. Consumers spent with abandon and businesses ramped up investment, compelling new evidence of an economic resurgence.
The increase in gross domestic product, the broadest measure of the economy’s performance, in the July-September quarter was more than double the 3.3 percent rate registered in the second quarter, the Commerce Department reported Thursday.
The 7.2 percent pace marked the best showing since the first quarter of 1984. It exceeded analysts’ forecasts for a 6 percent growth rate for third-quarter GDP, which measures the value of all goods and services produced within the United States.
Scott McLellan, President Bush’s spokesman, said that while today’s numbers are “another positive sign,” and that Bush’s strategy of cutting taxes to boost the economy is “is working, getting more money into people’s pockets,” there is still more work to be done. “We need to continue to act and build upon the steps we have taken to get our economy growing so we can continue to translate growth into job creation,” McLellan said.
Despite Democrats claiming that the tax cuts would ruin the economy, President Bush showed his leadership by getting the tax cuts passed. As a result, our country is recovering from the Clintonian Recession.
Near rock-bottom short-term interest rates, along with President Bush’s third round of tax cuts, have helped the economy shift into a higher gear during the summer, economists said. The next challenge is making sure the rebound is self-sustaining, they said.
We need President Bush to continue this phenomenal progress with the economy. The same tax cuts, which resulted in this economic boost, are at the risk of being repealed under a Democrat president. We can’t let that happen.
Topics: Bush 2004 |
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October 31st, 2003 at 9:30 am
Ahhh I picture the campaign ads showing donk after donk calling this the Bush Economy. Worst economy in history, right?
October 31st, 2003 at 10:41 am
You are dillusional. Most economist stated the tax cut would not work to stimulate the economy. You would be just as correct to give credit to the fact that we shifted back to standard time. The long term effect of the tax cuts are going to be crushing to the economy. The trickle down effect of some dollars in rich peoples hands may be having some effect or it may be that the economy is finally awaking after years of slumber. inventories are at the lowest levels in years and the increased GDP is surely a good sign for the economy. But giiving sole credit to the tax cut is a joke and I am sure you know it is., but that doesn’t matter as long as you can fall in line with the administration maybe you too can be on the presidential advisory team one day!
October 31st, 2003 at 11:45 am
You could show Frank a video of Mumia Abu Jamal shooting Danny Faulkner in the face and he still wouldn’t believe he’s guilty…
October 31st, 2003 at 12:13 pm
Java,
Fuck you, brain washed moron.
Frank
October 31st, 2003 at 12:17 pm
You repsonse makes it clear to me that I am right.. Thank you…
And if you wanna talk about brainwashing….
October 31st, 2003 at 12:28 pm
Even the Globe painted this as good news.
But what Bush really needs is for employment to pick up, then he’s set…
And cutting down on spending would be nice
October 31st, 2003 at 12:32 pm
Java,
Fuck you again. You don’t know me, my views on anything. go ahead and assume to know, it makes you look like an idiot. Delude yourself. It is typical for any administration to take credit for any good news and disavow any bad news. It is only ideological morons who believe.
Frank
October 31st, 2003 at 12:34 pm
To translate Frank’s original comment:
“While I only care about what the economists who agree with me say, I still don’t think the tax cuts have anything to do with the improving economy. The economists who predicted an economic boost were lying - even if yesterday’s news suggests otherwise. The tax cuts don’t work - even though they’ve done exactly what Bush said they would do and boosted the economy. When the economy is bad, Bush is to blame… when the economy improves, it can’t possibly have anything to do with Bush’s policies… even though economists are creditting the tax cuts with this boost.”
October 31st, 2003 at 1:27 pm
“It is typical for any administration to take credit for any good news” -Frank
Case in point: The Economic Boom of the 1990s that people attribute to Clinton.
Clinton was too busy getting his johnson buffed to have been able to do anything to take credit for the economic. He was in the right place at the right time.
October 31st, 2003 at 1:29 pm
Not what I am saying at all. The long term effect of cutting taxes while increasing spending is going to be a huge drag on the economy. You are probably aware that the reason for tax cuts are to decrease the size of government. It was for Reagan and it is again for Bush. I follow the economy closely. It has been trying to revive for years now, the war kept the economy in the doldrums as Bush himself has acknowledged. Inventories are low and have been for a long time. The economy had to improve at some point. Saying it is solely the cause of the tax cut is ignorant. The first tax cut happened 2 1/2 years ago, follow by another half as large a year ago. All of a sudden the economy jumps and you say “see, told you.” Had the economic news been bad the Democrats would have blamed the Republicans, it is the other way around so the republicans take credit. It is all a bunch of posturing bull shit. The tax cuts were a bad idea then and are still a bad idea. Even when unemployment responds to the increase in production, which hopefully it will there is no justification for the debt burden we will face. The Neocons know this and that is thier plan. bankrupt as much of the government as you can to make it small enough to “drown in a bath tub.” That is the purpose and you know it.
October 31st, 2003 at 2:49 pm
Frank- there’s a bottle of Haldol with your name on it. Lowering taxes reduces the transaction cost of doing business. When that decreases, business activity increases.
The effect of tax cuts, changes in the Prime interest rate, and other fiscal tactics, are not felt immediately. It takes time, and saying it takes a couple of years is not unreasonable at all.
Get a grip, man!
October 31st, 2003 at 3:17 pm
You’re right Frank. Yes the government does know best. Everyone should be taxed 100%, right? You first. Oh that’s right, my mistake, I am sure you have already given your entire check over to the government because it can spend it better than you can.
October 31st, 2003 at 4:07 pm
In all seriousness, Frank does have a good point. When he said:
You are probably aware that the reason for tax cuts are to decrease the size of government
That is partially true. The other benefit form when taxes are cut (aside from what others have mentioned) is that according to the Laffer Curve, [Federal] revenues increase.
But a lot of conservatism is about the idea of limited goverment and tax cuts work to that end. Unfortunately, we’ve gotten to a point in time when people think everything is an entitlement, and the gov’t has grown to a bloated size
October 31st, 2003 at 6:51 pm
Mission Accomplished?
What, you mean like bush’s carrier landing indicating that the Iraq war is over? Get real. By the way, you still haven’t come clean on the fact that there aren’t any WMDs in Iraq, Matt. But seriously, ONE quarter of growth and its mission accomplished…
Wow.
At one point under Clinton, we had 16 consecutive quarters of growth. And that was in his second term, so don’t try giving Poppy credit for it.
Why don’t you just put your little banner away for now. Bush is only going to be prez for another 3 quarters so he thankfully won’t get a chance to challenge Clinton’s record for economic growth.
October 31st, 2003 at 6:56 pm
Jaws– there are a lot of assumptions in your statement… are you saying that the according to the Laffer curve, the lower taxes the more Federal revenue there will be?
Try this exercise. Marginal Tax rate of 0% multiplied by 1,000,000,000,000.
Its a huge number right.. oh wait, um… shit… uh… huh. Right.
October 31st, 2003 at 11:21 pm
This clown above me tips his hand by spewing, in his so-called exersise, that the tax rate is zero.
His attitude is quite apparent that taxes are not nearly high enough. He obviously is a parasite who’s not paying much taxes (if any) and feels entitled that others more productive pick up the tab.
He also shows how devastated he is by yesterday’s good news. Pretty obvious now your heroes aren’t coming back to power pal. Cry me a fucking river.
Dirtbag.
November 1st, 2003 at 4:28 am
I noticed how the Bush people here always make assumptions about the others…think the tax cuts weren’t the best thing for the country? Then you must be in the free Mummia crowd. Or you want taxes at 100%, or you’re on the dole.
Hurl insults instead of arguing. Way to go!
Tax cuts coupled with increases in government spending will no doubt stimulate the economy, but if you know anything about economics such a situation isn’t good for the long term health of the economy. Interest on federal debt must be paid somehow, with futher taxes. While paying interest on federal debt doesn’t lower GDP-as long as the bond holders are American- it does limit choice by raising taxes.
Government browing does increase demand for loanable funds putting upward preasure on interest rates.
Certainly the Bush plan has upsides but look at the downsides too.
One more thing…On the Histroy channel a while back I saw Reagan give a speech before congress right after his first tax cut. “By 1984 the deficit will be eliminated” (parapharse) Yeah that happened. Don’t try and say the Dems in congress kept spending because congress approved budgets that were less than 1% larger than what Reagan requested.
November 1st, 2003 at 4:44 am
btw, consumer spending was down in september by .3 %. Real Consumer spending and income has been going up all year but it went down in Septemeber. If I jumped to conclusions like Matt I would go off about how he is wrong and how the impressive 4th quarter growth won’t be all that impressive. But i hope it is impressive…this decline in consumer spending worries me, though.
November 1st, 2003 at 4:48 am
one more thing these GDP figures are only preliminary. And since they don’t have the september decrease in consumer spending factored in no doubt these figures will be revised downward on Nov. 20th.
November 1st, 2003 at 5:07 am
Ok Drew you want realistic numbers lest go.
Assume a base national economic figure of 100 on Jan 21, 2001. As President Bush had stated during the transition by that time the air was leaving the Clinton economic bubble. (You may remember the donks screaming that “he is talking down the economy.” No he was being truthful.)
Ok assume the base 100 economic number. No tax cuts at all to stimulate growth. Assume (these are general trend numbers, I could go and look up the actual percents but it is 4A here and I am half way trying to go back to bed…) the economy grew at 1% in Q1 2001, .5% in Q2, 0% in Q3, -1% in Q4, -1% in Q1 2002 (so far looking fairly close to what actually happened), keeping it at -1% for next 5Qs so you don’t get too depressed at what lack of tax cuts can do. The final economic number is 94.61.
Now let’s take what actually happened: Assume the economy grew at 1% in Q1 2001, .5% in Q2, -.5% in Q3, -1% in Q4, -1% in Q1 2002 (Got the official Recession here.), 1% growth in Q2 2002, 3% in Q3 2002, 1% in Q4 2002, 3% in Q1 2003, 2% in Q2 in 2003 (there have been a lot of fluctuations in growth since this recovery has started) and 7% in Q3 for a total of 116.92.
116.92 - 94.61 = 22.3 points. The economy has a much stronger base in the second example correct? If we have a -1% growth on 116.92 we will still have a stronger economy than a -1% on 94.61. More tax revenue comes from 116 as opposed to 94. More economic activity means more taxes coming in.
To look at if from another way. Let’s look at my income as the federal government. I earn $94,610 with expenses of $104,610 (running a deficit of $10K, thank gawd for credit cards). In the other reality I earn $116,920 with expenses of $126,920. Which version of me would have to do the biggest belt tightening as a proportion of total economic resources.
Now you may have picked up on my earlier 100% tax comment but it is not far from the mark. People who claim that “people aren’t paying their fair share” what is the fair amount. 40%? Well according to your logic why not 50%, why not 60%? If more taxes are the panacea why not 80%? Why not 100%?
And do you recognize that as taxes go higher there is less of an incentive to actually go out and produce. Why? Because if the government keeps taking more and more of my income in taxes, why should I go out and bust my hump? It’s not like *I* will be getting any of that back. After all I am still a net tax payer.
Most of us recognize that taxes are a necessary evil, if nothing else to “provide for the common defense.” We also realize that a tax rate of zero would bring in $0. However we know that the level of proper taxation is lower rather than higher. We also believe that with few exceptions the individual and not the government is better at making economic decision. The $400 screwdriver anyone?
November 1st, 2003 at 11:24 am
What amazes me is that when the economy improves under a Republican President, and economists say it is improving, and credit the tax cuts with contributing to the boom, these politically castrated liberals come out and say “No, it’s not improving… You can’t credit Bush for that… I don’t care what the economists say…”
Drew, what you see to have forgotten is that no one has said the 4th quarter is going to mimick the 3rd. So far, anything that I have read, there has been acknowledgement of the fact that it would be virtually impossible for the numbers to stay where they are — however that doesn’t deny the fact that econmists are saying that this is the signs of a booming economy.
For crying out loud, can’t liberals take any joy in the fact that the economy is getting better, which will be good for a lot of people?
November 1st, 2003 at 11:28 am
no jobs just oil money
November 1st, 2003 at 11:40 am
Cannon-
I understand the whole idea behind supply-side economics. No real economists think cutting taxes will increase revenue. Certainly if taxes were in the 80% this would be true. (btw, guys like Stephen Moore are actvists no economists)
Matt-
All I’m sayin is all I’m sayin. I’d like to see the economy grow, but I think the way Mr. Bush has gone about it is all wrong. I fear with the mounting debt and the retirement of the baby boomers younger guys like us will have to pay much higher taxes in the future.
November 1st, 2003 at 7:17 pm
Cole–
I’m no economist, but I know that the laffer curve doesn’t call for the emlimination of taxes.
From how I understand it, the laffer curve is shaped like an inverted parabola–and there is a vertex. With the x-axis being tax rate; and the y-axis being federal revenues.
Basically, when taxes are too high or too low, federal revenues are less than when the tax rate is at the middle point or in other terms, the optimal level.
So no, we wouldn’t abolish taxes all together.
November 1st, 2003 at 9:15 pm
drew said: consumer spending was down in september by 0.3%. Real Consumer spending and income has been going up all year but it went down in Septemeber
I agree with Drew. The optomistic side of me is hoping that this is only a slight “blip”, at the same time, spending is on the “positive” side of the scale, which is for the better.
As for the 4th quarter GDP report, I’ve heard a lot of talking heads saying that the growth rate will only be in the 3-4% range. That’s a very good stat (I mean it isn’t the amazing 7.2%) but it shows economic growth.
I also agree with the assesment that Drew makes when he says (said?):
I fear with the mounting debt and the retirement of the baby boomers younger guys like us will have to pay much higher taxes in the future
I’ve worried about this for a long time. In my eyes, it’s all the entitlements, or the notion of these entitlements that are going to cost those of us who are younger in the long run.
November 1st, 2003 at 11:31 pm
Drew:
I understand the whole idea behind supply-side economics. No real economists think cutting taxes will increase revenue. *blink blink*
Ok what you are saying is: assuming a 30% rate you don’t make more tax revenue on $116K as opposed to $94K correct?
Well if that is what you are saying then, you win. I can’t debate against that. In your worldview the laws of mathematics don’t apply the way they do in the rest of the universe. Thank you for playing. Buh bye.
Ok folks whatever Drew says is correct. With logic like his, we can’t hope to beat him or even contain him.
November 2nd, 2003 at 3:04 am
“no real economist”?
Sorry, but the guys I know with PhD’s in economics disagree with that. True, if the rate drops, then there will be an initial fall in revenue, but the decreased transaction costs will spur the volume of transactions, which will cause a net increase in total revenue.
Lemme put this another way:
I make $100K/yr (I wish, but for the sake of argument….)
if taxes are 50%, than the government will get 50K
If the rate is 25%, then I get to keep more of my income, which motivates me to produce more, so now, I work 50% harder, and earn 150K. The gov then gets 38K, and I get 112K
I splurge and spend this extra cash (62K) on goods and services, which will increase someone else’s income. this 62K then is taxed again, which at 25% nets another 15K for the gov.
adding 15K to 38K sums at 53K. Somehow, the drop in income tax netted the government an extra 3K.
An important point in all of this is the idea that people will work harder and longer if you pay them more per unit of time. I would go into it for you, but I believe that if you do not understand that concept, then you should go back to school.
November 2nd, 2003 at 8:57 am
The difference is doc that the left doesn’t believe that people will work extra if the tax rate is slashed. They believe that people will work harder if the government takes care of all their needs.
November 2nd, 2003 at 11:48 am
its really very simple. tax cuts are good for the economy but not if it causes a huge deficit. Thats like living on your childrens money causing them to live in debt. and its also better to cut the taxes of the poor because they’re more likely to spend the money. so in short: bush is creating short term growth, long term weakness and no jobs.
November 2nd, 2003 at 2:42 pm
R–
you make some good points, but your partisanship leads to some errors.
its also better to cut the taxes of the poor because they’re more likely to spend the money
The question that needs to be asked–is how much do the poor pay in taxes?
Also, the rich will also spend the tax money–they do spend money too.
Another part the theory underlying tax cuts is that if you give cuts to buisnesses, that means the buisness has more money, and thus can hire more employees and such.
Finally, R is right in saying not if it causes a huge deficit. I’m sure you’ve heard a lot of conservatives complaining about excessive non-defense spending on the Presidents part. That’s one reason why.
November 2nd, 2003 at 3:41 pm
In response to Radical Redneck’s personal attack on me, not to mention his less than inciteful analysis of my comments, I have this to say.
Turn about is fairplay, bitch. You are obviously just an angry jack off, and you most likely have a moustache. Even though you refer to liberals as Nazis, you are most likely secretly fascinated by Hitler and Third Reich. What better a way to get your agenda accomplished, right Red? The next time you take time off from your busy schedule of shining your undersized helmet to militia stories and pictures of assault rifles, try to come up with something of substance, or a least come up with something humorous, as I clearly have.
November 2nd, 2003 at 4:04 pm
I have no time or need to polish my helmet myself. That is taken care of at my every whim in the deep regions of both your mom and sisters’ throats.
- Colee’s pimp
Oh, and your secret is out - despite the donkey biting it off, everyone knows you are a hermaphrodite. They have operations to take care of that now - look into it next time you have your fake boobs enlarged and your stockings scraped off.
November 2nd, 2003 at 4:27 pm
So you do have a moustache. That’s all I needed to know.
November 2nd, 2003 at 5:08 pm
Brilliant comeback!
Why is a moustache important - does it remind you of your moms?
November 3rd, 2003 at 10:04 am
Jaws,
—The question that needs to be asked–is how much do the poor pay in taxes?
Also, the rich will also spend the tax money–they do spend money too.—
there are two reasons for cutting taxes of the poor. 1 they need the money more. 2 they spend more of the ‘extra’ money. of course you’re right that the rich will also spend some of it but on average the poor will spend more because they have to, they spend it on things they need but couldnot afford before. why would the rich spend it and on what? they already have enough money to buy what they want and certainly what they need.
—Another part the theory underlying tax cuts is that if you give cuts to buisnesses, that means the buisness has more money, and thus can hire more employees and such.—
thats right, but this only a good policy if you have a budget surplus. because businesses will invest anyway when they see a rise in demand. so its not a good idea to give money away to businesses when you already have a deficit.
—-Finally, R is right in saying not if it causes a huge deficit. I’m sure you’ve heard a lot of conservatives complaining about excessive non-defense spending on the Presidents part. That’s one reason why. —-
do the tax cuts not contribute to the deficit? bush is not spending it on health and education so what the hell is so important that he needs to neglect those services AND loan money.
personally i think its possible to have both good education/health and a balanced budget but bush manages to fail to get just one right. thats not bad. thats terrible. and i havent even mentioned the things he does to the environment.
ps: im not a democrat so no partisan bias.
November 3rd, 2003 at 7:26 pm
R, how does the Federal Government cut taxes to the ‘poor’, when the bottom 40% of wage earners DO NOT PAY INCOME TAXES? Do you think they should get a free ride out of Social Security, and not have to pay payroll taxes? Hell, they got checks from the Government larger than their income tax payments last year. That is not a ‘tax cut’, is freakin’ INCOME REDISTRIBUTION.
And why throw any more money at Education? The Gubment has been doing that for 40 YEARS and look what that has gotten us. $11k+ per student per year in DC, and the worst schools in the country. And why send any more cash to the teachers, when their unions won’t let the incompetent ones get fired, or even testing to find out which ones ARE competent.
On the health care front, whose model do you want to follow, Canada’s? They have a chronic shortage of doctors and drugs. That is not even mentioning that better than half of the drugs introduced in the last 2 years in America aren’t sold in Canada, BECAUSE of their government’s price fixing. If Canadian healtch care is so great, why do so many Canadians come to the US for care?
And R, where are your cites for the ‘neglect’ Bush has shown to Education and Health Care?
November 3rd, 2003 at 8:12 pm
R–
I’m not a nitpicker, but there are those who will ask, what exactly defines “poor”.
There’ve also been reports in raise(s) in demand recently.
November 4th, 2003 at 3:03 pm
Yes, but where are the jobs? The true unemployment rate is at least 15% when you count the people working at Walmart who used to have real jobs and those who can only find part time or temp jobs. And all the administration can do is try to pass more tax cuts and deals for multinational corps to take even more jobs out of this country. It is absolutely pathetic and disgusting, the total disregard that the administration has for the common man. Unless you make several hundred thousand dollars a year, why would anyone in their right mind vote for Bush again?
November 4th, 2003 at 3:28 pm
Jobs don’t occur overnight. have patience. Outside of the economy, you HAVE to vote for Bush or else we’ll become a pussy nation that won’t fight back when attacked.
November 4th, 2003 at 8:09 pm
Friday is when employment numbers come out for the last month. (Or so I’ve heard).
Unemployment levels were also at ~ 6.1% [I think]
Also, from Don Luskin:
Let’s talk about whether Bush will “end a presidential term with fewer jobs than when [he] started.” As Krugman Truth Squad member Robert Musil pointed out on his Man Without Qualities blog, it’s all a matter of which jobs statistics you look at. Naturally, Krugman chooses to look at the worst. He focuses on the “payroll” survey produced by the Department of Labor, which shows 2.6 million jobs lost since Bush took office. But the DOL’s alternate jobs statistics — the “household” survey that is used to compute the unemployment rate — shows that the economy is down only 273,000 jobs. That small job deficit can be cured with even the most modest recovery over the next year.
For more= source
Oh, and also see Lower Taxes = More Work
November 5th, 2003 at 2:14 am
Joe you are right Wal-Mart jobs are not “real” jobs. After all everyone who has a Wal-Mart name tag on is not actually getting paid, correct? Oh I am sorry everyone is entitled to a job making $100K per year, right? Hell the easiest way to do that is raise min wage to $50 an hour. That will do it.
November 8th, 2003 at 1:50 pm
Health
any other system would be better than the current one. a lot of people dont have access to high quality healthcare because its too expensive.
infant mortality for example is much higher in the US than in other western countries. life expectancy is lower.
education
illiteracy is higher than other western countries.
the problems with health and education in the US are related to poverty which is also alot higher (the gap between the rich and the poor is a disgrace).
jobs
Payroll jobs increased by 126,000 in October. While far preferable to further job losses, those job gains fall short of the 150,000 jobs a month necessary to prevent the slack in the labor market from worsening. Jobs remain 2.4 million below the level of March 2001 when the last recession began. This post-recession labor slump has now become the first (since the collection of monthly jobs data began in 1939) without a full recovery of jobs within 31 months of the start of a recession.
The Bush Administration called the tax cut package, which took effect in July 2003, its “Jobs and Growth Plan.” The president’s economics staff, the Council of Economic Advisers ), projected that the plan would raise the level of growth enough to create 5.5 million jobs by the end of 2004—306,000 new jobs each month, starting in June 2003. Last month, October 2003, the jobs and growth plan fell 180,000 jobs short of the administration’s projection. The cumulative shortfall since June 2003—the amount by which the projected jobs exceeded actual job growth—is now 995,000.
November 22nd, 2003 at 12:15 pm
ASSHATOLOGY ALERT: Fellow asshats, you are doing a commendable job in trying to “talk down” the economy. However it’s not working due to facts getting in the way. This is seriously eroding the “economy is bad”, “Iraq is a quagmire”, “Bush is a nazi” triangle strategery that is essential for our retaking of the White House. Our only option is to “amp up” the fallacies and distortions in all future comments. (If that’s possible) Don’t forget to act outraged about personal attacks even though you frequently engage in the same tactics. Maybe the hypocrisy won’t be noticed. REMEMBER: Credibility is expendable in the name of the liberal asshat cause.
November 27th, 2003 at 12:55 am
I take great pleasure in reporting that the revised numbers are in. I’d like refer evreyone to Drew’s comment above where he predicted the economic growth numbers would be revised downward….
Well… na na na nah nah - ha ha hah hah hah! They went up, a full percentage point!