The 4 Trillion Dollar Lie
An interesting battle over the Bush tax cuts is taking shape for the lame duck session of congress. Who blinks first will go a long way toward determining our economic vitality for the foreseeable future.
As is typical of this president, the man with the octagonal mouth (two sides were just not enough), the rhetoric is all over the map. He says one thing in his post-election press conference, another in Asia, another on 60 minutes, another to the Republican leadership, and so on and so on.
The guy has to be pretty damn smart, though. No run-of-the-mill intellect could keep track of so many mixed messages.
Of course, when taxes are at issue, you know what time it is? That's right kids; it's class warfare time! Too bad the libs can't fight the war on terror with the same vigor. I digress.
Will he and his party ever tire of saying bad things about those evil rich people? You know the ones...the 1% of taxpayers who fork over more than 40% of all tax dollars...the same people who also happen to create the preponderance of jobs. Well, they did until the enormous wet blanket of Obamanomics strongly disincented them from doing so.
The spin machine is cranking up. Can you hear it? At least it's green, you know—powered by an infinite supply of liberal hot air...with a back-up engine that runs on mendacity and sophistry. Kinda like the Chevy Volt.
Need to raise taxes and do something about that nasty deficit. That's what the Dems are preaching now. Never mind that they (with a large assist from wayward Republicans) increased the deficit by over $5 trillion since coming to power in 2006. Remarkable transformation, eh? All it took was an election night massacre. They've gotten religion faster than a murderer being strapped into the electric chair. Sincere? Probably as sincere as they were about sticking to their PAYGO rule after wresting control of the purse strings from Bush and a Republican-controlled congress.
The two primary arguments/talking points that the Democrats employ to convince us of the need to let some/all of the Bush tax cuts expire is that a) a $4 trillion hole will be blown in the deficit/debt over the next ten years, otherwise, and b) in a recession we all need to sacrifice.
As always, they base their case on the false premise that tax increases predictably raise revenue and tax cuts reliably reduce revenue. That's right; ostensibly according to the Dems, each happens in a practically perfect vacuum, with nary a coincident consequence. The behavior of individuals and businesses just stays the same. Make sense? Of course not.
Unfortunately for the left, the pesky facts keep getting in the way. As detailed in numerous previous blog entries, there is an abundance of evidence of the stimulative power of tax cuts (e.g. see Kennedy, Reagan, and every capital gains and dividend cut in history) and a paucity of proof regarding the rousing results of tax increases.
Worse yet is that nobody gets hurt more by Dem policies than those they are supposedly intended to help most—the poor and middle class. They, after all, are the ultimate friendly fire victims of the class warfare agenda—sucked into the tangled web of government dependence by the increasingly debilitating effects of disastrous economic policies and concomitant diminishing economic opportunity.
Facts aside, plain old common sense is the answer.
When government spending increases over 40% in a couple/few years, it is probably not wise to raise taxes on the people who are most able to create jobs and drive the revenue necessary to help counterbalance (if only partially) such outrageous spending.
Imagine the government's tax receipts if the unemployment rate were 5% instead of near 10%. Also, consider the revenue potential of a 15 trillion dollar economy expanding at 5% to 8% (post-recession norms), rather than 1% or so.
Do the math. Hundreds upon hundred of billions of dollars of additional revenue per year to the government is at stake. We're at a fork in the road. Prosperity does not lie at the end of the counter-stimulative tax hike prong. It lies at the end of the prong that encourages individuals and businesses to keep, spend, and invest more of their money (coupled with a congress serious about significantly reducing the size and scope of government).
Less burdensome taxes and government equals more revenue.
Choose prosperity, not dependency.
Just like on November 2nd, the choice is just that simple.
As is typical of this president, the man with the octagonal mouth (two sides were just not enough), the rhetoric is all over the map. He says one thing in his post-election press conference, another in Asia, another on 60 minutes, another to the Republican leadership, and so on and so on.
The guy has to be pretty damn smart, though. No run-of-the-mill intellect could keep track of so many mixed messages.
Of course, when taxes are at issue, you know what time it is? That's right kids; it's class warfare time! Too bad the libs can't fight the war on terror with the same vigor. I digress.
Will he and his party ever tire of saying bad things about those evil rich people? You know the ones...the 1% of taxpayers who fork over more than 40% of all tax dollars...the same people who also happen to create the preponderance of jobs. Well, they did until the enormous wet blanket of Obamanomics strongly disincented them from doing so.
The spin machine is cranking up. Can you hear it? At least it's green, you know—powered by an infinite supply of liberal hot air...with a back-up engine that runs on mendacity and sophistry. Kinda like the Chevy Volt.
Need to raise taxes and do something about that nasty deficit. That's what the Dems are preaching now. Never mind that they (with a large assist from wayward Republicans) increased the deficit by over $5 trillion since coming to power in 2006. Remarkable transformation, eh? All it took was an election night massacre. They've gotten religion faster than a murderer being strapped into the electric chair. Sincere? Probably as sincere as they were about sticking to their PAYGO rule after wresting control of the purse strings from Bush and a Republican-controlled congress.
The two primary arguments/talking points that the Democrats employ to convince us of the need to let some/all of the Bush tax cuts expire is that a) a $4 trillion hole will be blown in the deficit/debt over the next ten years, otherwise, and b) in a recession we all need to sacrifice.
As always, they base their case on the false premise that tax increases predictably raise revenue and tax cuts reliably reduce revenue. That's right; ostensibly according to the Dems, each happens in a practically perfect vacuum, with nary a coincident consequence. The behavior of individuals and businesses just stays the same. Make sense? Of course not.
Unfortunately for the left, the pesky facts keep getting in the way. As detailed in numerous previous blog entries, there is an abundance of evidence of the stimulative power of tax cuts (e.g. see Kennedy, Reagan, and every capital gains and dividend cut in history) and a paucity of proof regarding the rousing results of tax increases.
Worse yet is that nobody gets hurt more by Dem policies than those they are supposedly intended to help most—the poor and middle class. They, after all, are the ultimate friendly fire victims of the class warfare agenda—sucked into the tangled web of government dependence by the increasingly debilitating effects of disastrous economic policies and concomitant diminishing economic opportunity.
Facts aside, plain old common sense is the answer.
When government spending increases over 40% in a couple/few years, it is probably not wise to raise taxes on the people who are most able to create jobs and drive the revenue necessary to help counterbalance (if only partially) such outrageous spending.
Imagine the government's tax receipts if the unemployment rate were 5% instead of near 10%. Also, consider the revenue potential of a 15 trillion dollar economy expanding at 5% to 8% (post-recession norms), rather than 1% or so.
Do the math. Hundreds upon hundred of billions of dollars of additional revenue per year to the government is at stake. We're at a fork in the road. Prosperity does not lie at the end of the counter-stimulative tax hike prong. It lies at the end of the prong that encourages individuals and businesses to keep, spend, and invest more of their money (coupled with a congress serious about significantly reducing the size and scope of government).
Less burdensome taxes and government equals more revenue.
Choose prosperity, not dependency.
Just like on November 2nd, the choice is just that simple.
You site in this blog (and in past blogs) the examples of economic stimulus after the Kennedy and Reagan tax cuts. Are there examples of the opposite effects that the Dews hold on to? Either economic stimulus after a tax cut? Or economic slowdown after a tax increase?
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Good question. Yes. Everytime that the capital gains and/or dividend tax has been raised, it has resulted in an immediate subsequent nominal and/or percentage decrease in dollars collected. Additionally, income tax increases have frequently slowed the economy. A good example would be 1937. A combination of significant income tax hikes and bad fed policy ended a 4-year post-depression recovery, and resulted in another prolonged and massive recession (only ended by the onset of WWII).
Some may argue that the economy was able to thrive despite the Clinton tax hike in the 90's. I would, however, point out that the hike came during a peak in the business cycle and conicident with the inflating of three of the largest bubbles of the 20th century (Internet, telecom, and Y2K). As such, the Clinton tax hike had a less immediate, more delayed impact.
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