What is your problem? I never said that the only answer is cutting taxes. That is a creation of your own fevered imagination. I noted cutting taxes for one particular problem. Taking that suggestion and applying it to other topics other than the one I was discussing is at the very least dishonest.

Cutting taxes becomes a problem when it leads to more problems than it solves. I have actually posted on this before, but like a blithering jackass with blinders firmly in place you assume that I'd never actually do something like that.

The problems with taxes are manifold, and this post tried to point out a few of them. I have posted more extensively on this over at my blog and I'm not going to repost them all here simply for your benefit.

As for the rest of your post, I find it boring. You seem to be operating under some sort of delusion that I think deficits are just hunky dory. You couldn't be more wrong...which by now is something you must be intimately familiar with.

Seriously though what solution do you see to our economic problems, whether they be low rates of saving, deficit spending or whatever that does not include or rely exclusively on cutting taxes?
And when does cutting taxes become a problem rather than a solution?

Having spent a great deal of time investing municipal money I can tell you first hand the problem caused when tax reciepts fall year after year: streets not swept, parks not maintained, libraries closed, schools shut down, police not hired, etc. Life for the residents of these municipalities become grimmer in a manner not considered by idealogues whose only purpose is to deny the public sector money.

That is a view from the personal level. On the larger level though we have tax cuts adding huge amounts to our borrowing needs. I don't need to go through all the potential problems that presents from a weakening dollar (and it's replacement by the Euro as a reserve currency) to the potential for economic blackmail.

I presented a solution in a previous thread that called for a restoration of fiscal responsibility. It is not an immediate cure but over the long run I believe it is our only hope.

There is also the consideration that lowering the tax and not raising another tax elsewhere to offset the decline in revenues could be worse than doing nothing.

See, I note that cutting taxes alone might not be a good idea. Yet in your moronic partisan blindness you keep insisting that I have only one goal and that is cutting taxes. Clearly I indicated that making the tax cut revenue neutral (i.e., cut taxes on savings, but raise taxes elsewhere) might be the best course. It is for reasons like this that I think you are a low grade moron and that it is a minor miracle that your drool hasn't shorted out your keyboard.

What is so damn hard to understand about this? This can be proven quite simply:

(1-t)*r < r,

whenever t is in (0,1).

Don't they teach about inequalities in 4th grade anymore?

ken keeps harping about the low taxes. Well look at the data in the link in the other post. It looks like the decline in the savings rate moderated some around 2000/2001. Was it due to the tax cut? Maybe...maybe not. I don't know, but it is a possibility.

I never said cutting taxes would result in a huge surge in savings, but that it would act to increase savings. Given basic economic theory this is a very reasonable assertion.

Further, note that ken has offered not one single alternative policy. He says, "raise interest rates so that the return is more attractive than bling blings." Great...how the fuck do we do that? Can't cut taxes because ken doesn't seem to think that will do any good. So what is left? Government fiat? Yeah, price controls are a really great method of solving a problem. What other policies are their? Reducing the deficit? I'm not sure I see how that will work? American's simply aren't saving enough, it isn't of question of how they are saving.

ken is emblematic of what is wrong with the Left. They have zip on ideas, generally speaking. All they know is that if somebody who is ideologically different than them offers a possible solution it must be bad because of ideology. That is just plain vanilla stupid.

Steve, if conservatives had any other solution to any economic problem, including the budget deficit, besides futher cutting taxes I might take you guys more seriously.

As it is your single minded solution appears driven by idealogy rather than by facts and circumstances.

And you think this makes me moronic? What is they say about people who keep doing the same thing over and over again each time hoping for a different result?

You are a moron. First the Left bitches about the budget deficit. I post on why it might be a problem (i.e., I agree) and point to a possible solution and you have to drag in your partisan biases and try to read partisanship into eveyrthing. Get help, get medicated.

As an institutional bond trader for over ten years why did no one ever tell me that was why my bank, credit union, insurance company, money manager, municipal, and other institutional customers were buying UST notes from me?

And all this time I thought it was because of my charming personality.

My points (made in the previous thread) are that firstly the low rate of savings has nothing to do with tax policy. The big savers (baby boomers) are retiring or cutting back savings outside of already maxed out 401ks. The following generation has never been a big saver outside of employer sponsered plans.

And secondly, to increase savings people need to get more than a 2% CD return in a 3% inflationary environment. This cannot be achieved by tax reduction. Cut the tax to zero on the 2% interest and you are still below the rate of inflation.

It’s like those pennies people leave on the counters of convenience stores. Ever wonder why nobody just picks them up? Same reason why people won’t bother to chase the pennies in a low return savings environment. Notch up the interest rates to 8 to 10 percent and people may start to give up their bling blings and put that money away for a rainy day. You are not going to achive that with a tax cut.

Your repeated claim that reducing taxes on savings will increase savings in the face of counterfactual evidence that this is not happening earns you a place of honor among right wing nuts. Yeah, in theory it should work. But then in theory a bumblebee shouldn't be able to fly.

Economic theory is neutral. It is your partisan use of it that gets you in trouble. Like the administrations focus on the possibilities of WMD led them to lie to us about their actually being WMD you focus on the possibility (in some possible worlds) of a tax cut working to increase savings and ignore the reality that (in this world) it hasn't.