We are on the threshold...

[Vi Vicdi]

"... the Reagan tax rate cut had nothing whatsoever to do with the increase in deficits in the 1980s. On average, federal receipts as a share of GDP were higher in the 1980s than in the 1970s - 19.0 percent of GDP versus 18.5 percent. What caused the deficit is that spending exploded. Although Reagan was often attacked for "slashing" the budget, outlays as a share of GDP actually rose from 20.6 percent of GDP in the 1970s to 23.1 percent in the 1980s."
-- National Center for Policy Analysis

http://www.public-policy.org/~ncpa/bg/bg140/bg140.html

Maybe your figures were not based on percent of GDP?

[This message has been edited by Vi Vicdi (edited February 26, 2000).]

[gnome]

It's not exactly valid to use % of GDP here... the claim, I believe, is that a decrease in taxes causes the economy to expand, leading to an increase in tax revenue. The claim hinges on the actual real dollars collected in taxes (both before and after the economy expands).

And to look at average figures for the entire decade is an oversimplification also without also examining how tax rates fluctuated over that decade.

A year-by-year analysis shows a decrease in revenue in 1983 especially. There are a lot of ways to look at the numbers, and a lot of conclusions that can be drawn from it. The only real point I was trying to make was that the claim "Reagan cut taxes and the government collected more money anyway" is far too simplistic and in many ways inaccurate.

[gnome]

This is an interesting conversation that I'd love to continue, but unfortunately way off-topic. Any way to move the whole thing to one of the misc forums?

[Vi Vicdi]

I was under the impression that using %/GDP ensured that you were comparing "apples to apples" as the expression goes. (Statistics might refer to this as "norming".)

Of everything produced in the country the government took a larger proportion in the 80's than in the 70's. Is that not what the figures mean?

I am concerned with what might be wrong with the commonly-used %/GDP figures in comparing economic activity from one year to the next. It seems like it should work. Why doesn't it?

[Vi Vicdi]

Ok.

[gnome]

Ok I've gone over to the "Off-Topic" forum... find me in the subject "Pickup from AC-General"

Any other armchair economists welcome.

[Sikander]

I was looking back through some old threads and found this one. It's kind of amusing considering the election fiasco of last autumn.

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