Did Thucky Lie Again?

Posted by Bob Lord

I almost missed this whopper by the Thuckmeister in a comment to a BlueMeanie post:

You are running the Roosevelt play book in using Hoover as a metaphor for Bush. But, that doesn't cut it any more. Thanks to Lee Ohanian's (top ranked economist) work we know that a modest recession was turned into the Great Depression by Roosevelt's destructive regulatory schemes. [emphasis mine]

So, you be the judge. The unemployment rate hit 25% in 1932, before Roosevelt took office. How, then, could Roosevelt have turned a "modest recession" into the Great Depression? If unemployment had hit 25% before he took office, it already was a Great Depression before Roosevelt could implement any "regulatory schemes." 

If Thucky knew this at the time he commented, he's pretty clearly a liar.

What if he didn't know it? In other words, what if he remained willfully ignorant of the truth while purporting to have knowledge of the subject about which he spoke? I'd say that is tantamount to lying, but I'm sure ole Thuckenheimer will claim otherwise. 

9 responses to “Did Thucky Lie Again?

  1. You just can’t really think very deeply. People coming off welfare, taking low-end jobs and paying the lowest effective tax rates would drive the ratio down, not up.

    This is not about growth, except to the extent the growth drives gains, which increase the numerator of the ratio, not the denominator.

    If what you’re saying were correct, you’d see the ratio peak during W Bush’s term. But it didn’t.

    And get some rest. The times of night at which you’re posting comments are not lost on me.

  2. No, the record was set after the Republicans limited welfare years and 50% of welfare recipients poured into the economy.

    Once that surge stopped in 2000 the economy collapsed under an all time record of tax burden. Cost al gore the election.

    Welfare+taxation+regulation+rational expectations = economic growth determinates

  3. You make no sense. The 20.6 number was reached during Clinton’s presidency. In fact, the best 4 year period was the last 4 years of Clinton’s presidency, right after he hiked tax rates in his first term. The number came down to 16.1% during W Bush’s first term, after massive tax cuts across the board. So, your theory has no support in practice. Nor could it. Even Arthur Laffer wouldn’t sign on to your theory. Lowering tax rates might increase total revenue if the stimulative effect were strong enough, but how could lowering rates increase revenue as a percent of GDP. If you, and Laffer, are correct, the effect of lowering tax rates would be to increase the DENOMINATOR of the revenue to GDP ratio more than it increases the numerator.

    If you look at the history of this ratio, you’d notice that the average over the last 40 years is nowhere near 20.6%. So your analysis either is dishonest or off base. You pick.

    What’s really going on with the tax revenue to GDP ratio is that it ticks up in years when there are likely to be cap gains, and down when there are likely to be losses or only marginal gains. Why? Because gains don’t go into the GDP number, the denominator, but the revenues go into the numerator.

    Think of the captial losses that folks took in 2009 and which were carried forward to later years. Those depress the numerator of the revenue to GDP ratio, but not the denominator.

    The revenue to GDP ratio over the long-term reflects the effective overall tax rate, and nothing more.

    One other thing. If you look at the ratio for 2011 and 2012 and drill down to the categories of receipts, you’ll see that employment taxes, which are fairly consistent from year-to-year, are down half a percentage point in those years. That depressed the total by half a percentage point. And that decrease was directly attributable to a tax decrease, not a tax increase.

    Your analytical skills are terrible. They really are.

  4. Your point that the federal government is showing revenue strength doesn’t appear to be supported by the data. No matter how you slice it. Federal revenues are, at most, 16.3% of gdp, down from a peak of 20.6%. 4.3% of gdp is 600 billion. That’s a breathtaking loss of common good.

    The economy is once again only growing in the dimensions which are reasonably taxed, or, not taxed at all, dimensions which aren’t creating many jobs.

    We have to reduce taxation of small businesswomen to get revenues moving again.

  5. First, my comment was in reference to your claim that Roosevelt inherited only a moderate recessioin, which in fact was not true. You intentionally avoided responding to that comment, which is dishonest on your part.

    So, again, are you going to acknowledge you were dead wrong on that point, or do you lack the character to do so?

    As to my previous post, to which you appear to be referring to now, had you read the entire post, which you acknowledge not to have done, you would see that your argument does not hold water.

  6. You admitted that i was correct. Revenues per capita havent increased for three years. More spookily, that havent reached their pre-recession peak, six years later, for the first time in us economic history.

    Your exckusion of investment returns isn’t legitimate.

  7. Do you not acknowledge that your original statemnent could not have been correct? If not, how could Roosevelt’s policies have turned a modest recession into a great depression when it already was a great depression at the time Roosevelt took office?

    I’ve noticed in your comments that you just don’t have the internal strength to own up to it when you’ve sakd something that’s dead wrong. What are you afraid of?

    And it’s easy to reference the post WWII period, but the reality is that effective corporate rates are lower now than they’ve been in decades, and Reagan actually raised corporate rates in order to lower individual rates. The reason the “titans of industry” did so well iin the post-war era is that the rest of the world was in ruins. They had no competition. Get real.

  8. Bob, you miss the most powerful phenomena of economics. Rationale expectations. People don’t wait till the car goes over the cliff to exit the car, they get out as soon as they see the cliff. Hoovers policies were horrible, Roosevelt’s policies were more horrible. Increasing tax rates from 25% to 93%. Throwing hundreds of thousands out of work farming while people were starving. Forcing industry to price fix and limit production. Case study on complete economic ineptitude. Ohanian documents this thoroughly.

    It was only after the regulations were shut down and corporate taxes were reduced that recovery began. It completely reshaped how we grew economically in the US. Instead of the Titans of industry growing us at 10 percent, C corps grew us at 3 %, still enough to lead the world, but not the gilded era. By 1983, C corps were 83% of economic activity, up from essentially zero at the start of the great depression.

    You are very comfortable using the word liar to describe careful scholarship.

    Milton Friedmans cover, that it was all caused by money supply, has been completely blown in the current downturn, you can’t pump out more money than we’ve pumped out. Its had no positive effect other than to accumulate huge liabilities for the future. The reduction in monetary velocity has exactly offset the increase in money supply. Freidmans thesis that money supply would be positively correlated with velocity has been completely disproven.

    We are reliving the great depression Playbook. Too much regulation, 90,000 pages, tax rates way too high and an explosion in people on the dole. With world war three sounding a ominous warning bell in the distance.

  9. I think he is willfully ignorant. Conservatives have always hated the programs enacted under FDR and have attempted to use every means possible to discredit those programs and/or their need. The only government spending that conservatives wish to acknowledge had any positive affect in ending the Great Depression is the massive war spending of World War II. Kind of like today, where the right wing nut jobs believe that government can’t create jobs but refuse to cut spending on military weapons systems because, wait for it, military weapons contractors will have to lay off people. Yeah, wrap your head around that bit of nonsense.