The Conspiracy to Keep You Poor and Stupid is a trademark of Donald L. Luskin

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February 9, 2010
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Friday, October 20, 2006

NUMBERS ARE TRICKY THINGS   Reader Rick Gaber asked about a seeming contradiction in Dan Clifton's statistics about the economic benefits of the Bush tax cuts.
Among Dan Clifton's list of facts, how can the "$207,788,000,000 Reduction in the Deficit in the Past 29 Months Due to Stronger Economic Growth" item and the "$60,000,000,000 Deficit REDUCTION Since the Tax Cut Was Signed Into Law" item both be true at the same time? It doesn't make sense to me.
Here's Dan's reply:
...three dynamics were occurring when the tax bill was signed into law at the end of May 2003. First, revenue was declining (negative job growth, no stock market gains) and spending was rapidly increasing as the War in Iraq had just begun. Second, the tax cuts were immediate in which a transition period sets in before the short term gains from increased growth begins to affect tax revenues. And finally, the tax bill increased the child credit from $600 to $1,000 payable in April 2004 and this tax credit has no effect on savings and investment. As such, the deficit widened from May 2003 through April 2004 (although not as much as expected by the bean counters at JCT and CBO). And since that time has steadily declined. The deficit was $307 bill at the time of the signing and then hit a peak of $455 billion by April 2004.
Update [10/21/2006]... Rick posts his own version in pass-it-along format.

Posted by Donald L. Luskin at 10:06 AM | link  

BETTING ON BLOODSPORT   Reader Bruce Dayhuff suggested to me that Tradesports ought to list a futures contract on the impeachment of President Bush by a new Democratic congress. I passed the idea onto Tradesports CEO John Delaney, and he tells me that such a contract will be listed the day after the election. I have no idea what structure it will take (separate contracts on impeachment and conviction? time-limited?). Whatever, at least it will be a way to make a buck off what will surely be a sickening and unnecessary spectacle.

Posted by Donald L. Luskin at 10:06 AM | link  

A WRITER FOR ATLAS SHRUGGED   Randall Wallace, the writer of Braveheart, will be doing the screenplay for the film adaption of Atlas Shrugged. Strikes me as a decent choice. Thanks to Rick Gaber for the link.

Update... Rick also points to this posting by Robert Bidinotto, who has blogged frequently on the Atlas Shrugged project, offers his fantasy league cast list. I'm amazed by how many of his picks are precisely matched to my own visualizations. But how did he miss Jack Nicholson for James Taggart?

Posted by Donald L. Luskin at 7:46 AM | link  

Wednesday, October 18, 2006

OKAY, NOW I UNDERSTAND THEIR EDITORIAL VIEWPOINT   Here's the "Greatest Philosopher" in history, according to the BBC. Thanks to reader Art Patten for the link.

Posted by Donald L. Luskin at 8:57 AM | link  

FACTS ARE STUBBORN THINGS   Our friend Dan Clifton at the American Shareholder Association sends along this "Harpers Index"-style look at the "Bush tax cuts by the numbers." What more should any citizen or legislator need to know?

  • $14,374,330,000,000 Total Increase in Household Wealth Since April 2003
  • $5,700,000,000,000 Total Increase in Shareholder Wealth Since May 20, 2003
  • $863,654,000,000 Total Amount of Tax Cuts Enacted Since Fiscal Year 2003
  • $783,890,000,000 Total Amount of Additional Tax Cuts to be Returned to Taxpayers Through 2010
  • $625,000,000,000 Total Increase in Federal Tax Revenues Since FY 2003
  • $207,788,000,000 Reduction in the Deficit in the Past 29 Months Due to Stronger Economic Growth
  • $98,600,000,000 Combined Income Gains for Shareholders From Dividend Increases & Tax Savings 03-05
  • $62,000,000,000 Surplus of Capital Gains Tax Revenue Not Accounted For By Revenue Estimators
  • $60,000,000,000 Deficit REDUCTION Since the Tax Cut Was Signed Into Law
  • 300,001,643 Total Number of Americans benefiting from President Bush’s Tax Cut
  • 91,000,000 Number of Individuals Owning Shares of Stock in America
  • 23,000,000 Number of Small Businesses Benefiting from Income Tax Reductions
  • 6,600,000 Number of Jobs Created Since the Tax Cut Was Signed Into Law
  • 12,000 The Magic Number of the Dow Jones Industrial Index is an Arms Length Away
  • $2,092 Tax Increase for a Family of Four With $50k of Income if Tax Cuts Are Repealed
  • 200 Number of House Members Who Voted Against This Growth Generating Tax Cut
  • 50 Number of US Senators Who Voted Against This Growth Generating Tax Cut
  • 25 Number of Years Dividend Paying Companies Declined Prior to the 2003 Tax Cut
  • 164.0% % Increase in the Dividend Tax Rate if the Income and Dividend Tax Cuts Expire
  • 123.0% % Increase in Dividend Income and Share Repurchases Since 2003 Tax Cut
  • 91.0% % Increase of Stock Ownership in the Bottom Quintile of Income Distribution Since 1995
  • 74.0% % Increase in S&P 500 Companies Boosting Their Dividend Since 2002
  • 65.0% % of Voters Who Were Investors in the 2004 Elections
  • 51.2% % of Total Tax Cut “Cost” That Has Been Recouped From Higher Levels of Growth
  • 14.0% % Margin of Victory for Republicans From Investor Voters in 2002 Elections
  • 4.6% Unemployment Rate Which Continues To Disprove the Constant Economic Pessimism
  • 3.7% % Average Quarterly GDP Growth Since Tax Cut Was Enacted (long run average is 3.3%)


Posted by Donald L. Luskin at 8:30 AM | link  

SCIENCE V. RELIGION AMONG TRADERS   Institutional investors have to follow the money, not their political religions. From the daily bulletin of Black Swan Capital, quoting private commentary from Gavekal Research:

“As religious readers of Paul Krugman (the New York Times columnist), we had expected the Bush tax cuts to be an unmitigated disaster. Because of President Bush’s “fiscal recklessness” we thought, in 2003, that the US would stay in a recession.

“Then we felt that the recovery would be a profitless recovery. When the profits hit record highs, we then feared that the recovery would be jobless. When the US economy ended up creating more jobs than anyone had thought possible, we fell back on our default position, namely that the Bush tax cuts had endangered the US fiscal position and that we were set to leave mountains of debt to grand-kids etc… (at least the US, unlike Japan or ever larger parts of Europe, has grand-kids to leave debt to!).

“And today, here we are, with our back against the wall as tax receipts in the US are absolutely booming. Maybe, instead of reading Mr Krugman, we should have remembered what Milton Friedman once told us: “I’ve never met a tax cut I did not like”. If so, we may have been able to foresee that, over the past six quarters, tax receipts have been growing at 2.5x the growth rate of US nominal GDP?”

Gavekal Research

Posted by Donald L. Luskin at 8:19 AM | link  

Tuesday, October 17, 2006

TO HEAR IS TO OBEY   From the Club for Growth blog:
David...Obey is a liberal appropriator from Wisconsin who has been in the House for 37 loooong years. In his Almanac of American Politics, Michael Barone described Obey as "a true believer in traditional liberalism, in Keynesian economics and economic distribution." Obey thinks high [sic] of himself and his campaign name reveals it -- "Lot of People for David Obey".

Posted by Donald L. Luskin at 9:53 AM | link  

Monday, October 16, 2006


Posted by Donald L. Luskin at 10:24 PM | link  

ANOTHER NOBLE NOBEL   Really great choices this year in the economic domain. The Peace Prize went to Muhammad Yunus of Grameen Bank in Bangladesh. The bank makes "microloans" -- loans of sometimes just a few dollars at a time -- to help the poorest people in the world better their lots with that first critical application of financial capital that can make all the difference. When you're farming with a hand-plow, even the simplest application of capital can create enormous productivity gains.

Here's an op-ed from Yunus in the Wall Street Journal, making the heretical suggestion that microloans might be the way to help the victims of Hurricane Katrina.

Posted by Donald L. Luskin at 9:54 AM | link