Recession - Should governments Increase or Decrease expenditure?

BlackHawk141

Join Date 08/2008

Recession - Should governments Increase or Decrease expenditure?

What do you guys think?

Should goverments increase thier expenditure in recession?

(More left Wing View)

for example, increasing a countries infrastructure, reduce taxes, increase benefits (welfare), more tax reliefs? and also change the monatary and fiscal policy of that country to help increase demend within the economy?

is more better?

(More right Wing View)

or limit there spending and only change the monatary and fiscal policy of there country?

is less better?

Whats your views guys?

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National sales tax is pretty much a f**k the poor tax. Maybe you're crazy rich, but it means a wild shift in tax revenue and where those taxes come from.

If you expect the bulk of taxes to come from lower and middle income people while the highest income brackets pay squat, then we will never see eye to eye, and neither will most of the country.

It's just naive to think a single and simple tax can fix all our problems, or that any one thing can fix our problems.

And in case anyone is wondering..

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psychoak

Join Date 07/2007

+225

Thanks for reminding me how utterly fucked last years budget was...

There are plenty of ways to do a sales tax. For instance, Texas doesn't tax food.

The Fair Tax plan has a minimum income level where the tax amount is refunded. Under that plan, anyone under the level would recieve a net gain on their taxes through the rebate everyone gets, which could be further augmented by buying used goods, like a car, or a house. Only new goods would be taxed, leading to a refund for nothing.

Our current tax system punishes our exports by leaving them double taxed over seas, gives imports an advantage over domestic goods by not taxing them, and swings significantly with shifts in growth because the top earners take the hardest hits and have the highest gains during those periods, matching up with the business cycle. Basically, it's fucking stupid.

States with sales tax based revenue are far more stable than those with graduated income taxes, and stability allows planning ahead with something resembling accuracy. Think Texas versus California, who's fiscal condition would you rather have right now? The one where businesses are flocking to it and revenue is still strong, or the one where you can hear the flushing sound from the next state?

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I live in Cali, and our budget problem is huge. But we have a sales tax of 10%! It's insane to try to buy anything when you have to spend a $1 on every ten.

We are $22 Billion in the red, but even if we fired EVERY state employee, it would only save $5 billion. Our real problem here is a budget system that requires a 2/3's majority vote. Which pretty much means NOTHING ever gets done to fix budget out problems.

Our big problem is spending, and a messed up budget voting system.

In the meantime however, we've cut from schools to the point where even Arnold says there's nothing left to cut. The whole system is messed up.

I have to ask though, what happens when consumers cut back on spending. How do you deal with the cut backs in tax revenue when you need it most?

I know this seems like a few random points, but I kept having to deal with other things and turn my attention elsewhere.

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psychoak

Join Date 07/2007

+225

Then you can hear it really good. Out of curiosity, is it a standard flush, or one of those powered toilets with a jet?

Your debt level is so high because of pension plans. You have to go back in time and fire people to fix that.

I was referring specifically to the volatility in your tax revenues. You also have an income tax, Texas doesn't. Your year to year changes over there in California can be huge, it goes up and down with every business cycle. Texas doesn't, it has slight shifts in the degree it rises, but it lacks entirely any downward curves over the last 20 years.

People foam at the mouth whenever he gets mentioned, but Glenn Beck has a habit of letting out seriously useful information on a regular basis. He did a whole show on state tax schemes, comparing the states that are in the toilet right now with the states that aren't.

I have to ask though, what happens when consumers cut back on spending. How do you deal with the cut backs in tax revenue when you need it most?

Assuming, wrongly, that this is really when you need it the most, when do you think consumer spending has ever fluctuated as quickly as upper level incomes have? When consumers cut back on spending, upper level incomes drop like a rock by comparison. Selling 90% of a production run instead of 95% can be half your profits out the window.

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The question is misguided, because the fact is, as every economist worth his salt knows, governments (through central banks such as the Federal Reserve) cause the very recessions that you then propose that they cure, through either spending or spending cuts.

The answer is that governments should not cause recessions in the first place through government or central bank policies. Furthermore, it would help if governments didn't allow coporations to ship millions of good jobs overeas - jobs that will never come back. Look at the real unemployment rate in the US, which is actually around 22% when calculated the way it used to be calculated, and ask yourself what that unemployment rate would be if those millions of jobs that were shipped to China were still in the U.S.

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