barackobama: Chart of the day: the impact for consumer spending if Congress fails to prevent tax hikes on the middle class. No, see, here you go again. You’re behaving and speaking as though spending will stay that low and have a serious, long-term effect on the economy.  And okay, yes, if taxes go up, people will spend less money!  What else is new?  That happens every time the tax numbers increase!  But what you’re forgetting is that spending will return to pre-tax hike levels and the market and economy will adjust.   Things are bad now, this is true, and that things can get worse is also true.  But things will also get better.  That’s the nature of things.  The economy will not always be this bad; if the economy gets worse, it will not stay worse.  Will keeping taxes low make things better sooner or later?  My money is on later. Going off the fiscal cliff is something that has to happen eventually and might not be as bad as people are making it sound.  Make some additions to the tax code, provisions that allow taxes to remain effectively stable for those people who seriously cannot afford to pay more taxes.  Have you forgotten that’s possible?  You can’t do it, Mr. President (or whoever is blogging for you), but there are people who can and will. So far, I haven’t heard you address one simple truth: We can’t afford to keep taxes where they are. Address that, please, or explain why taxes can’t go up for the middle class.  As I noted in a previous post, the “middle class” covers everybody between the poverty line and $250,000 income; many households with $250,000 of income can absolutely afford to pay more taxes.  (Also on the subject of truth and clarity: please disclose a list of what goes into “other services.”) This graph does not take into account the inevitable changes in consumer behavior to take advantage and work around the new (old!) tax regulations.  Whenever a new provision, deduction, or credit is introduced, consumer behavior changes in response, and those changes are not limited to decreasing in spending.  My impression is that new laws are often introduced with the assumption that the environment in which the laws will exist is not going to change with their introduction.  That’s not accurate at all. Someday, I’m going to write an actual coherent paper on all this.  Maybe then it will make sense.

barackobama:

Chart of the day: the impact for consumer spending if Congress fails to prevent tax hikes on the middle class.

No, see, here you go again.

You’re behaving and speaking as though spending will stay that low and have a serious, long-term effect on the economy.  And okay, yes, if taxes go up, people will spend less money!  What else is new?  That happens every time the tax numbers increase!  But what you’re forgetting is that spending will return to pre-tax hike levels and the market and economy will adjust.  

Things are bad now, this is true, and that things can get worse is also true.  But things will also get better.  That’s the nature of things.  The economy will not always be this bad; if the economy gets worse, it will not stay worse.  Will keeping taxes low make things better sooner or later?  My money is on later.

Going off the fiscal cliff is something that has to happen eventually and might not be as bad as people are making it sound.  Make some additions to the tax code, provisions that allow taxes to remain effectively stable for those people who seriously cannot afford to pay more taxes.  Have you forgotten that’s possible?  You can’t do it, Mr. President (or whoever is blogging for you), but there are people who can and will.

So far, I haven’t heard you address one simple truth: We can’t afford to keep taxes where they are. Address that, please, or explain why taxes can’t go up for the middle class.  As I noted in a previous post, the “middle class” covers everybody between the poverty line and $250,000 income; many households with $250,000 of income can absolutely afford to pay more taxes.  (Also on the subject of truth and clarity: please disclose a list of what goes into “other services.”)

This graph does not take into account the inevitable changes in consumer behavior to take advantage and work around the new (old!) tax regulations.  Whenever a new provision, deduction, or credit is introduced, consumer behavior changes in response, and those changes are not limited to decreasing in spending.  My impression is that new laws are often introduced with the assumption that the environment in which the laws will exist is not going to change with their introduction.  That’s not accurate at all.

Someday, I’m going to write an actual coherent paper on all this.  Maybe then it will make sense.