Reason #406 to scrap the tax system and have a 15% flat tax, Danivon.

danivon wrote:Man, your tax laws are complicated.

While I agree with you, it is probably not for the same reason. Why do you say this?

danivon wrote:I wonder if a temporary measure is less effective than a permanent one (particularly in terms of forward planning).

I don't think people think that much about it that way. In which I mean, I don't think people say "I have an extra $28 in my take home pay but only for 12 months so I had better save it and not spend it."

Rather, I think the lack of stimulative nature is primarily in the size of the tax cut. I mean for me $28 doesn't even cover a tank of gas for my car. Therefore, the Obama payroll tax cut is not going to cause me to change my current spending habits.

danivon wrote:I don't know that its results are easy to determine, frankly. Has the US economy started to grow? Yes. Has it grown a lot? No. Would the growth have been lower or later without that measure? Don't know.

I tend to agree with the latter point here. However, I think the experiences of the last 2 years has shown that these tax cuts are not going to be overly stimulative. Therefore, I think I am on solid ground when I say Freeman's claim that the tax cuts will stimulate the economy enough allow Obama's reelection is wrong.

danivon wrote:I can't see how with a complex economy anyone can be so definitive.

Again, I tend to agree with you on this. Personally, I don't think any one school of economics has all of the answers. Rather, I think each has a little right and a little wrong. One needs to pick a little from each school.

The large conumdrum is that there is excessive debt around the world that has to be wound down. Until all the losses of the financial collapse have been absorbed economic gains will be fitful at best.
The paying off of debt at pace, can only happen if the economy grows. Particularly because so much of that debt has been assumed by governments. (Bailouts) The post war period saw that happen with rapid growth and very high tax rates....
However imperfect the economic measuring tools, two things have to happen. Government spending has to be lowered while taxes are increased. And both have to happen without turning the economy backwards.
In the UK austerity alone seems to have tanked the economy. In the US, spending without tax increases to pay for the spending, has probably saved the economy from tanking but it isn't growing sufficiently to magically create revenues at the reduced tax rates to change that equation.
The financial crisis did not start the trend to debt . It greatly exacerbated it, but it wasn't started there. In the US, debt really grew out of control from 2001... By returning to the conditions that existed before the debt began to grow can the current direction be changed. (Before 2001 tax rates were higher and spending was lower.)
As long as the law makers spend most of their time in a constant battle for campaign donations for the next election, they won't have the courage to make the tough decisions. Maybe Buddy Roehmer has the right idea, and no one should be able to spend any money on campaigning, except travelling to public events and debates... Eliminate political advertising and eliminate the need for huge war chests and the law makers will stop being beholden to the corporations, big unions, and lobby groups that stop the tough decisions being made...
I think the current political strife condemns the economy to 30 years of bumping along. Where quibbling about a two month extension to a payroll tax cut creates an impasse, there's little hope that a genuine consensus will be reached that actually has a chance of creating change.