As Robbie points out, I say much the same things as Sowell. What he says about tax rate cuts and increased investment and growth having been proven by four presidents over nearly a century (Calvin Coolidge, John F. Kennedy, Ronald Reagan and George Bush) is exactly what I pointed out in my article “Tax Cuts Increase Revenues; They Have ALWAYS Increased Revenues.”
We just had more confirmation of the effectiveness of tax cuts in INCREASING tax revenues (which means that when the government has lower tax rates, it actually collects MORE in tax revenue than it would were it to have higher tax rates):
WASHINGTON – Treasury Secretary Timothy F. Geithner now is saying that, contrary to his recent dire warnings of “catastrophic economic consequences” should Congress fail to increase the nation’ debt limit, there has been an apparent unexpected increase in projected tax revenue, and the deadline for possible default has been benched until mid-spring.
Allow me to define “unexpected” for you: it is an adjective in Democratese for, ‘We’re too stupid to understand why, and too dishonest to admit it, but conservative economic policies are working.'”
A little more information as to why we had this “unexpected” increase in tax revenue comes out of an interview:
CHIOTAKIS: So how did the Treasury Secretary do this? I mean, I thought the old deadline of July 8th was pretty firm.
GENZER: Yeah, that’s what everybody thought. But Geithner actually got a little help from you and me, Steve — the taxpayers. It seems the IRS actually took in more tax revenue than expected last month.
There was an expectation that was building for the entire second half of 2010 that Republicans would win big in November, which greatly stimulated the stock market:
“More than 85 percent of institutional investors see the GOP taking the House next month. While political polls suggest that changes are likely in Washington, a staggering number of professional investors think that the Republicans will win back the House of Representatives in November and that may be adding to their sense of a better business environment going forward. Since government policy error remains the biggest fear of investors, according to the poll, the view of DC trends matters.”
The unemployment rate – which had been steadily going UP, has gone down every month since Republicans were overwhelmingly elected and took over the House. As I have pointed out in the past:
Here’s an interesting factoid that doesn’t seem to get any mention in the mainstream media: Unless I’m seriously mistaken, the unemployment rate has gone down every month since Republicans took control of The House in January:
Unemployment was if anything going UP. And then Republicans took over, and whammo. It started going down. But Republicans didn’t receive so much as a scintilla of credit from the mainstream media. It’s just amazing.
One of the things that investors and businesses were looking for from Republicans was their central promise that they would not budge in demanding that the Bush tax cuts be extended. And as confidence grew that the Republicans would win in November and force Obama to reverse his repeatedly stated intention of pursuing Marxist class warfare and punishing investment, production and growth, people who actually produce in this nation began to act accordingly.
Hence the “unexpected” increase in tax revenue.
Democrats invariably point to the Clinton years as “proof” that the century proving that tax rate cuts increase revenues was just a ninety year fluke.
But the Clinton years actually prove the opposite: conservative policies were right during the Clinton years, too.
First, Clinton and Democrats increased taxes on the top marginal income rates in 1993. Did wonderful things happen after that? Well, if you’re a Republican, yes, they most certainly did: as a result of the complete failure of Clinton’s economic policy, 1994 marked the biggest takeover by Republicans in history, with Republicans slaughtering Democrats and taking over both the House and the Senate.
It wasn’t until Clinton reduced the capital gains rates that we really saw the kind of growth that Democrats love to point to. It wasn’t until AFTER Clinton announced “the era of big government is over.” And yet the actual reasons for that growth prove that their policies are totally wrong.
With the help of mainstream media propaganda, the American people have largely forgotten that Bill Clinton was forced to say, “The era of big government is over.” With the help of mainstream media propaganda, the American people have largely forgotten that the “good” Clinton years came as a direct result of Republicans dominating both the House of Represenatives and the United States Senate. With the help of mainstream media propaganda, the American people have largely forgotten that the “Clinton surplus” was the direct result of the Contract with America and its pledge for a balanced budget – literally over Clinton’s constant attempts to prevent it.
The mainstream media – like the Democrat Party whose propaganda whores they are – WILL NOT tell the truth about such matters.
But here we are again. Republicans pass tax cuts, and then there’s an “unexpected” increase in revenue. Just like every single other time.
After George W. Bush passed his tax cuts, we had dishonest and confused liberals reacting as the New York Times did:
“For the first time since President Bush took office, an unexpected leap in tax revenue is about to shrink the federal budget deficit this year, by nearly $100 billion.”
And for the record, President George Bush’s 2003 tax cuts:
raised federal tax receipts by $785 billion, the largest four-year revenue increase in U.S. history. In fiscal 2007, which ended last month, the government took in 6.7% more tax revenues than in 2006.
These increases in tax revenue have substantially reduced the federal budget deficits. In 2004 the deficit was $413 billion, or 3.5% of gross domestic product. It narrowed to $318 billion in 2005, $248 billion in 2006 and $163 billion in 2007. That last figure is just 1.2% of GDP, which is half of the average of the past 50 years.
Lower tax rates have be so successful in spurring growth that the percentage of federal income taxes paid by the very wealthy has increased. According to the Treasury Department, the top 1% of income tax filers paid just 19% of income taxes in 1980 (when the top tax rate was 70%), and 36% in 2003, the year the Bush tax cuts took effect (when the top rate became 35%). The top 5% of income taxpayers went from 37% of taxes paid to 56%, and the top 10% from 49% to 68% of taxes paid. And the amount of taxes paid by those earning more than $1 million a year rose to $236 billion in 2005 from $132 billion in 2003, a 78% increase.
It boils down to this: the more you hate America; the more you hate American economic power; the more you want to see the American people suffer; the more you should vote Democrat.
Now, I mentioned two comments to Robbie. The other comment was about QE2 and its impact.
QE2 is the economic equivalent of sugar in nutrition. Will it provide quick energy? Sure it will. Will that quick energy come at the expense of future health? You bet it will.
Right now, as a result of the Obam Federal Reserve’s policy of increasing the monetary supply by buying debt from itself (literally creating money out of thin air), there is more economic activity. Right now, as a result of this policy, credit rates are lower. Fewer banks and corporations are going under because of the ready access to cheap money. Investors see the stability and invest.
We should all feed our children tons of sugar, so we can enjoy the short term bonanza of frenetic activity.
Unless you worry about all the cavities, the weight gains, the diabetes, and of course that huge depressing crash with all of those catastrophic health consequences that necessarily come later..
The first time we ended QE1, the stock market lost 16% of its value in two weeks. Which is to say it didn’t work the first time for the same reason it won’t work this second time. Or a necessary third time, etcetera.
One of the more sinister effects of quantitative easing is that it essentially becomes a tax on saving. You were busy at work putting away as much as you could during a period when your money was worth more. But now, as a result of artificially increasing the money supply, all that money you accumulated in saving is worth less. Why is this? Because you can increase the money supply all you want, but you’ve still got the same finite amount of goods and services. And when you’ve got twice as many dollars in the money supply as you had before, over time those same goods and services will cost twice as much as before, and so on.
Right now, prices are going up dramatically on virtually everything that matters. And yet the only ones who refuse to admit it are the federal government and its stauchest mainstream media propagandists who think and report what the Obama regime wants them to think and report.
Meanwhile, the key factor that led to the economic crash in 2008 – the housing market – just had its worst quarter since the darkest depths of that crash. And as bad as that is, the experts are saying that we are STILL a ways off from hitting bottom. Obama hasn’t solved anything. And economists are described as being in the fetal position over this “unexpected” – (there’s that word again) – development.
It’s just like feeding that little kid sugar: frenetic activity that actually accomplishes nothing, followed shortly afterward by a nasty crash.