From: jfh@rpp386.lonestar.org (John F. Haugh II)
Newsgroups: austin.politics
Subject: Re: Investment or Consumption?  Which helps the economy more?
Date: 1 Oct 92 00:58:17 GMT
Reply-To: jfh@rpp386.cactus.org (John F. Haugh II)
Distribution: austin
Organization: River Parishes Programming, Austin, Republic of Texas

In article <lckcn5INNast@ghidrah.cs.utexas.edu> kovsky@cs.utexas.edu (David Wayne Kovsky) writes:
>My problem with Reaganomics is that I don't believe that the rich 
>are investing instead of buying really expensive candy bars (or boats 
>or European vacations or whatever).

They can either spend it or invest it.  Burning the money is not an
option.  In short, the rich have to do SOMETHING with that money and
there is no point in being rich if you aren't going to spend the
money someday.

>                            These are things we need to invest
>in, but the rich don't stand to make any money by building schools.

Actually, the rich DO stand to make money by building schools.  They
can build schools, hire teachers, start a private academy, etc.

>                                The thought that a tax break for
>the rich is an investment in our future just does not make any
>sense at all to me.  

A "tax break" is usually just a vehicle for reducing the overall tax
rate from some high rate (for example, 33%) to some lower rate (say
25%).  The poor still pay a lower rate (from 0% to 15% under the
current tax code.

Tax breaks do NOT let the "rich" completely off the hook.  Even if
they did the "Alternate Minimum Tax" would come into play and they'd
be screwed anyway.

>I believe that Bush's policies are based on class preservation 
>rather than Clinton's being based on class envy.  

Bush's policies are based on preserving opportunies.  People who are
good at planning for the future, etc. will be able to preserve their
economic status.  But with Clinton's policies, you will have to be
very shrewd to start with less and work up towards more.  A tax scheme
that punishes the old wealthy will punish the new wealthy much moreso.
In part because accumulating wealth requires years of high income.
And with taxes on upper level incomes going up, accumulating that
wealth will be far more difficult.

>If you like Bush's economic policies, what do you think of his 
>performance on the economy?  It is probably clear by now that I 
>will not be voting for Bush, but I am interested in knowing why
>some of you are so supportive of him.  

Bush is paying the price for 8 years of Ronald Reagan.  The current
downturn is the 4th or 5th in a long series of economic expansion and
contraction cycles.  In that regard, there is nothing Bush could have
done to "the economy."  It expanded, and now it is contracting.  The
fact is, it expanded a lot and now it will contract a lot.

What Reagan/Bush did NOT do was pare down the size of government
during the expansion of the 80's so that the contraction of the 90's
would start with the country in good condition.  In part this wasn't
done because we were still in a virtual state of war with the USSR.
In part because Congress has gotten better and better at handing out
largess.  In part because during times of expansion the government
feels the need to create new programs - Johnson did this with his
social welfare experiments and Nixon had to clean things up.  Bush is
playing "cleanup" to the Democratic Party controlled Congress.

The 80's was a very interesting decade.  It saw personal, corporate
and civic debt EXPLODE.  This isn't Bush's fault, but with total debt
at 2.5 times GDP, it is going to take a LONG TIME to get back on a
solid financial footing.  Can Clinton do it?  No way - he's already
promised to jack up taxes and spending.  Can Bush do it?  Maybe,
but only if he is forced to by the conservative wing of the party.

We =must= get back to our Puritan roots - live within your means, save
a lot, and always plan for a rainy day.
-- 
John F. Haugh II           [  TSAKC  ]       UUCP: ...!cs.utexas.edu!rpp386!jfh
Ma Bell: (512) 251-2151    [ DoF #17 ]            Domain: jfh@rpp386.cactus.org