Moody's shoots down Republican's Arguments in Favor of Tax Cuts for the Wealthy.

[laughingliberal]

Hand the wealthiest Americans a tax cut and history suggests they will save the money rather than spend it.

Tax cuts in 2001 and 2003 under President George W. Bush were followed by increases in the saving rate among the rich, according to data from Moody’s Analytics Inc. When taxes were raised under Bill Clinton, the saving rate fell.

The findings may weaken arguments by Republicans and some Democrats in Congress who say allowing the Bush-era tax cuts for the wealthiest Americans to lapse will prompt them to reduce their spending, harming the economy. President Barack Obama wants to extend the cuts for individuals earning less than $200,000 and couples earning less than $250,000 while ending them for those who earn more.

“I would tend to wonder how much the tax cut actually influences spending behavior,” said Chris Cornell, an economist who mined government reports back to 1989 for West Chester, Pennsylvania-based Moody’s Analytics. “Spending by the top 5 percent of households seems much more closely tied to business- cycle issues than it does to tax-cut issues.”

Read more: http://www.bloomberg.com/news/2010-09-13/rich-americans-save-money-from-tax-cuts-instead-of-spending-moody-s-says.html

The dominoes are falling. Obama, Geithner, Moody's, the IMF are all seeing jobs and economic stimulus trump tax cuts and deficit reduction. By election day, McConnel will be speaking into a wind tunnel and no one will be able to hear him.

[T Wolf]

1. Not only do they save/invest their ill-gotten gains, they tend to do it overseas.

Cannot find the source at the moment, but this was posted here last week...

According to the U.S. census, US capital investment in foreign countries has gone from $1.3 trillion in 2000 to $3.2 trillion in 2008 while at the same time the Bush tax cuts which overwhelmingly went to the wealthy cost 1.3 trillion.

So the wealthy essentially took their tax cuts, intended according to the Republicans to spur U.S. jobs, and invested them and more in foreign countries, not the U.S."

And they call us unpatriotic.......

[Supersedeas]

2. but but but the lady on Squawk talks says....CNBC and Morning Joe