Debating a so-called "Democrat Centrist" now

So last time I made a post like this it was to a complete rethug, now this time it's a "centrist".

She claims that:

-Reagan got us out of a recession

-Democrat/Liberal economic policies cause inflation

-Taxing businesses makes them go overseas

-If it weren't for Republican administrations, Democrat spending would go through the roof

I'm sorry I am not well schooled enough on economic history to debate these things, but neither are my "opponents" and yet they seem to think they know all the answers.

If Reagan got us out of a recession, he did but using the national credit card. See if you can find a graph of the national debt and see the rise from around 1980 on.

Reagan kicked the slats out from under the Unions and started this disasterous slide.


(Anyone who says they're part of the "Democrat Party is lying)

There is no such thing as a Democrat Centrist. Not even a Democratic Centrist. S/he's just another bullshitting, war-mongering, religion-thumping, I-got-mine-f-u, me-first conservative.

As long as wages keep pace, no biggie. It creates a dis-incentive against wealthy people saving, and thereby, encourages economic investment and growth.

"Taxing businesses makes them go overseas"

If a business cannot operate domestically and remain viable while paying taxes on profits (earnings realized after expenses), it has no right to exist according to any economic model. They merely want to pay less tax. Why should such a desire forever be catered to? Doesn't everyone want to pay less tax?

"If it weren't for Republican administrations, Democrat spending would go through the roof"

Spending and government growth soars under Republican administration. A large part of the reason is the allocation of defense funds.

"Reagan ....."

Saint Ronnie's carcass smells

Volcker raising the federal funds rate and the prime interest rate had more to do with ending the 1980 recession than the tax policies of Reagan. The problem with your debate partner is that he or she doesn't understand how recessions can come about.

The 1980 recession was due to inflation that had been generated over the past decade, in large part from the energy crises in 1973 and 1979. To increase the value of currency, Volcker promoted a contraction in the money supply. Because Federal spending did not decrease in 1980 and 1981 (it actually increased), its a pretty big stretch to claim that the tax cuts Reagan pushed had a similar effect with regards to fiscal policy. The current economic climate is due, in large part, to deflation in several key markets (Housing being the largest). Asset prices have fallen and the dollar has gotten stronger. This requires an expansionary monetary and fiscal policy (cutting rates, increasing government spending, lowering taxes on people who spend the most). People who are calling for a spending freeze, and other contractionary measures, know little about macroeconomics.

Government spending in general causes inflation, and there has been no time in contemporary American history that government spending has gone down compared to Real GDP. This is most often countered by contractionary policies implemented by the Federal Reserve. Tell the person to research Federal spending since the Great Depression. He or she will find that it has kept a fairly steady upward pace regardless of which party controls Congress. The same is true with respect to whether the President is a Republican or Democrat at the time.

The specter of inflation is being overblown currently, because there is little evidence that the current levels of increased government spending will overshoot the amount of money that is being drained out of the economy due to depressed prices. If anything, it might be too little. Regardless, the Fed is in a good position to combat inflation once the recession ends, since rates are at historic lows.

On business taxes, it depends on what they mean by "go overseas". If the person is referring to outsourcing, they should realize that the corporate rate has been at fairly historic lows throughout the decade, along with a plethora of loopholes, and we've seen a consistently high degree of outsourcing during that same period.

If they're referring to capital flight (when money/assets rapidly flow out of a country), then it makes for a nice bumper sticker, but doesn't have any bearing on history. Capital flight occurs largey in developing nations or nations that see large increases in their debt to GDP ratio (like Argentina in 2001, which went from 35% to 65% in half a decade) or when countries offer extremely low interest rates. It's also extremely difficult for a firm to pick up and move its operations from one country to another. It's not simply the case of opening up a PO Box in the Cayman Islands and having your revenue go there. Those are just subsidiary tax havens.

All that aside, what determines capital investment is expected profitability. Small increases in the corporate tax rate have very little impact on determining this expectation.

The cost of the Viet Nam war. Which was paid for using IOU's underwritten by the Social Security Fund. A second cousin to the procedure used to fund the Iraq war. That off budget expense of an additional trillion dollars.

The Viet Nam bill came due in the 1970's as the military was demobilized. The rebuilding of the US military in the 80's under Regan was started under Carter. That old military industrial complex just will not go away.

The oil crisis was a politically motivated disruption that failed to dissuade American policy makers to re-think blanket support for Israel. We are still paying for that in capital out flows to oil producing national governments. This beget the fraud of energy independence proposals by the political parties currently in Washington. Which continues.

Government policy of deficit spending, low tax rates that can not cover government costs and expansion of government programs, belong to both political parties. Inflation of asset prices creates wealth. At least the perception of wealth.

If you are not producing anything that is taxable, based on regulation set by the government, the way to generate a tax base is to inflate the one you already have. Housing prices being a good example. Local assessments pay for schooling. If the prices are inflated, funding is not a problem. Pump in enough money at low interest rates and you create a bubble. Then tax the bubble. As the bubble expands, inflates, there are jobs to build and furnish houses. Income is generated and more taxes collected.

What caused the current depression was fraud. Not any "Black Swan" event. Not inflation either. We have lived with inflation based policy for a hundred years in this country. We are completing the cycle. The bubble has burst once again.

That's the FED's job. Keep the economy growing. To create manageable bubbles. Keep get reelected and setting policy to get reelected is the political parties' job. Need a tax cut, need funding, just donate to..( put name of PAC here ) and it's a deal.

What happened this time around was simple. The whole bubble,created by government policy, low interest and huge amounts of money, all converged in the hands of a few who knew exactly what they were doing. Those few are still free and in power today.