I think that a few of you have already seen Robert Reich’s video, T**he Truth About the Economy. I had shown Bob Murphy’s video to someone as a reply to someone subscribing to Reich’s view. As a defence the person contended that the Increase in tax receipts as a percentage of the GDP during the Reagan was due to the stimulative effects of Reagan’s borrowing policies. Other than the fact that this doesn’t dismantle Murphy’s argument at all, I’m guessing he’s making the point that the fact that Reagan cut taxes on the rich and tax receipts as a percentage of the GDP remained high, that the increase in revenue as portion of the GDP was illusory because of what he said was the result of easy credit. I later pointed out how much credit expansion has occured under Obama and how tax receipts is at an extremely low percentage of the GDP, showing the opposite of what he was saying. He replied that credit was directed towards banks to squander and not towards consumers.
For anyone interested, the related videos are here. In fact, LearnLiberty actually put out a response just a few weeks ago (late, I know). I’ll add it to that thread.
(Was there a question intended in your post?)
The question was whether or not the influx of tax receipts during the Reagan years was due to the stimulative effects of Reagan’s borrowing policies. The person I’m talking with says yes. He believes this does away with Bob Murphy’s argument because if there wasn’t easy credit floating around, we wouldn’t have seen the influx. Therefore cutting the taxes on the rich still will inevitably cause a decline in tax receipts as a percentage of the GDP.
I later tried to explain with empirical evidence that credit expansion early in Obama’s presidency didn’t manifest in an increase in tax receipts. He said that since the credit is directed towards banks to speculate with and not towards the consumer then we wouldn’t expect a rise in tax revenue.