Posts Tagged ‘New Deal or Raw Deal?’

AP-Reported FACT: U.S. Economy The Worst Since The LAST Time We Let A Socialist Run It

July 11, 2011

The Los Angeles Times print edition ran this story on July 2 under the considerably more Marxist headline, “Wealthy benefit from recovery as workers struggle“:

U.S. Recovery’s 2-Year Anniversary Arrives With Little To Celebrate
First Posted: 07/ 1/11 05:33 PM ET Updated: 07/ 1/11 05:33 PM ET

WASHINGTON (AP) — This is one anniversary few feel like celebrating.

Two years after economists say the Great Recession ended, the recovery has been the weakest and most lopsided of any since the 1930s.

After previous recessions, people in all income groups tended to benefit. This time, ordinary Americans are struggling with job insecurity, too much debt and pay raises that haven’t kept up with prices at the grocery store and gas station. The economy’s meager gains are going mostly to the wealthiest.

Workers’ wages and benefits make up 57.5 percent of the economy, an all-time low. Until the mid-2000s, that figure had been remarkably stable — about 64 percent through boom and bust alike.

[…]

But if the Great Recession is long gone from Wall Street and corporate boardrooms, it lingers on Main Street:

Unemployment has never been so high — 9.1 percent — this long after any recession since World War II. At the same point after the previous three recessions, unemployment averaged just 6.8 percent.

The average worker’s hourly wages, after accounting for inflation, were 1.6 percent lower in May than a year earlier. Rising gasoline and food prices have devoured any pay raises for most Americans.

The jobs that are being created pay less than the ones that vanished in the recession. Higher-paying jobs in the private sector, the ones that pay roughly $19 to $31 an hour, made up 40 percent of the jobs lost from January 2008 to February 2010 but only 27 percent of the jobs created since then.

[…]

Hard times have made Americans more dependent than ever on social programs, which accounted for a record 18 percent of personal income in the last three months of 2010 before coming down a bit this year. Almost 45 million Americans are on food stamps, another record.

[…]

Because the labor market remains so weak, most workers can’t demand bigger raises or look for better jobs.

“In an economic cycle that is turning up, a labor market that is healthy and vibrant, you’d see a large number of people quitting their jobs,” says Gluskin Sheff economist Rosenberg. “They quit because the grass is greener somewhere else.”

Instead, workers are toughing it out, thankful they have jobs at all. Just 1.7 million workers have quit their job each month this year, down from 2.8 million a month in 2007.

The toll of all this shows in consumer confidence, a measure of how good people feel about the economy. According to the Conference Board’s index, it’s at 58.5. Healthy is more like 90. By this point after the past three recessions, it was an average of 87.

How gloomy are Americans? A USA Today/Gallup poll eight weeks ago found that 55 percent think the recession continues, even if the experts say it’s been over for two years. That includes the 29 percent who go even further — they say it feels more like a depression.

Allow me to start with the second paragraph in the story:

“Two years after economists say the Great Recession ended, the recovery has been the weakest and most lopsided of any since the 1930s.”

The weakest and most lopsided of any recovery since the 1930s, you say???

WHO WAS PRESIDENT IN THE 1930s?  WHICH PARTY DOMINATED BOTH THE HOUSE AND THE SENATE IN THE 1930s?

And next let me ask you, “Are there any similarities between socialist Democrat Franklin Delano Roosevelt and socialist Democrat Barack Hussein Obama???  And the answer is, “HELL YES THERE ARE!!!”:

Which is to say, “This is the worst the U.S. economy has ever been since the LAST time we had a socialist just like FDR – and the mainstream media proudly hailed Obama as FDR and Obama’s as a NEW “New Deal.”

But here’s the truth:

FDR prolonged — not ended — great depression

Two UCLA economists say they have figured out why the Great Depression dragged on for almost 15 years, and they blame a suspect previously thought to be beyond reproach: President Franklin D. Roosevelt. After scrutinizing Roosevelt’s record for four years, Harold L. Cole and Lee E. Ohanian conclude in a new study that New Deal policies signed into law 71 years ago thwarted economic recovery for seven long years.

”Why the Great Depression lasted so long has always been a great mystery, and because we never really knew the reason, we have always worried whether we would have another 10- to 15-year economic slump,” said Ohanian, vice chair of UCLA’s Department of Economics. ”We found that a relapse isn’t likely unless lawmakers gum up a recovery with ill-conceived stimulus policies.”

In an article in the August issue of the Journal of Political Economy, Ohanian and Cole blame specific anti-competition and pro-labor measures that Roosevelt promoted and signed into law June 16, 1933.

[…]

”The fact that the Depression dragged on for years convinced generations of economists and policy-makers that capitalism could not be trusted to recover from depressions and that significant government intervention was required to achieve good outcomes,” Cole said. ”Ironically, our work shows that the recovery would have been very rapid had the government not intervened.”

And of course all the “experts” the mainstream media love to trot out have all bought hook, line and sinker the notion that capitalism is something to be loathed and feared.  So they demand that America pursue asinine government stimulus policies that fail even by the “experts'” own standards, and then these same “experts” proceed to argue that the economy failing to recover somehow is proof that more of the same thing that already failed is necessary.

These “experts” whom the mainstream media give a loud microphone to to espouse their socialist views are pathologically incapable of seeing this connection between socialist policies and an economy in the doldrums.  Every bit of negative economic news is invariably “unexpected” (liberals favorite adjective to wave a hand at bad economic developments whenever a Democrat president is in charge), because these “experts” cannot separate the inevitable results of their ideology from their terribly failed ideology.  There has to be a disconnect, or more commonly, a scapegoat.

I can simply re-cite my conclusion from a previous article to find a particularly laughable example of this phenomena:

I think of the Soviet Union, which literally blamed the total failure of their entire political philosophy and the ruinous policies that philosophy entailed by claiming that their agricultural output had been adversely affected due to 72 years of bad weather.  And the Soviet Union has gone the way of the Dodo bird for that very reason.

Is America under Obama the next Dodo bird to fall apart while we’re assured that everything is fine while some suitable scapegoat bears the blame for every failure that can’t be ignored???

It couldn’t be the fact that socialism is nothing more than state-planned economic failure.  It had to be something else, ANYTHING else.

The Big Brother from the novel 1984 had Emmanuel Goldstein.  The Big Brother who is now occupying our White House has George W. Bush.

The next obvious question to ask and answer is, “Why are the wealthy benefitting while the workers struggle?”

The answer is twofold: 1) because when you attack the employers, the first thing to go is the employees and 2) because that’s exactly how crony capitalism works.

There is a magnificent book entitled, New Deal Or Raw Deal?  How FDR’s Economic Legacy Has Damaged America, which should be required reading.  Burton Folsom Jr. points out that when FDR structured his many policies and regulations that strangled economic growth, he did so in such a way that favored the big crony capitalist corporations at the expense of the smaller businesses that could no longer compete given the costly regulatory requirements.  The smaller businesses were forced out of the market while the big businesses protected themselves with insider deals based on access to and influence with the government that only they could afford.  And there is no question whatsoever that – even as FDR employed the class warfare of socialism – the rich got richer while the poor got poorer.  Income tax revenues plunged as the wealthy sheltered their wealth from the high tax rates and the poor paid an increasingly high overall percentage of tax revenues via excise taxes.  Regulations mandating higher pay for workers priced those workers right out of their jobs.  Folsom provides the official data to back it up.

Check out this fact from page 127 of New Deal or Raw Deal?:

In 1929, prior to FDR demonizing the rich, income taxes accounted for 38% of total revenue collected, and corporate income taxes accounted for 43%.  Excise taxes which burdened the poor only counted for 19% of revenues.  By 1938, the rich and the corporations had protected themselves from FDR’s demagogic tax policies (but the poor couldn’t), such that the only 24% was collected in income taxes (versus 38%) and only 29% from corporate income taxes (versus 43%).  Meanwhile the poor-punishing excise taxes (e.g. gasoline tax) soared from 19% to 47% of the total taxes collected.  Meanwhile, when income taxes were kept low, the wealthy invariably paid FAR MORE in the total tax revenue as they put their money out to invest in and expand the economy in pursuit of the profits.  And they created millions of jobs in doing so.

And guess what?  Regulations mandating higher wages are STILL killing jobs now that Obama is doing it.

And the exact same mindset is yielding the exact same results ALL OVER AGAIN.  Obama has put the fear of God (actually the fear of the Soviet-style STATE) into the wealthy and the corporations.  They keep hearing Obama demagogue them, and they keep sheltering their money.  And they will CONTINUE to keep doing that until the threat of Obama is gone.  Just like they did with FDR.

Here we are today, with “the New FDR,” Barack Obama.  Who is the top dog on Obama’s economic team?  Why lo and behold, it is none other than GE CEO Jeffrey Immelt, crony capitalist extraordinaire whose big corporation has REPEATEDLY benefitted from a cozy insider relationship with big government.  And consider how Obama literally took big auto makers GM and Chrysler away from their legitimate shareholders and gave them to big unions.

Regarding “crony capitalism,” I made a sweeping statement in a previous article:

That said, there is also a deliberate and fundamental misunderstanding of fascism by the left.  If you read leftists, you come away thinking that somehow “fascism” is the takeover of a state by corporations. But stop and think: Hitler, Himmler, Eichmann, Hess and all the other key Nazis WEREN’T corporate CEOs who took over the state; THEY WERE SOCIALIST POLITICIANS WHO TOOK OVER THE CORPORATIONS.  They usurped the corporations and FORCED them to perform THEIR agenda.  They either performed the Nazis’ will or they were simply taken away from their rightful owners and nationalized.

And to the degree that German crony capitalist corporations helped Hitler in his rise to power, THEY WERE JUST MORE USEFUL IDIOTS.

The same sort of takeover of German corporations by socialists is building in America.  Take Maxine Waters, a liberal Democrat, as the perfect example.  What did she say of the oil companies?

“This liberal will be all about socializing … uh uh … would be about … basically … taking over … and the government running all of your companies.”

THAT’S what Hitler did, too.  Hitler got this power through regulations that required corporations to do his bidding, just like Obama has now REPEATEDLY done.

And then consider how willing Maxine Waters used “crony capitalism” (which is the essence of developing fascism) to directly personally benefit even as she shaped the banking industry.

The Democrat party is the party of socialism.  It is the party of Marxism.  It is the party of fascism.

I stand by that sweeping statement.  People need to realize that “Nazi” stood for “National SOCIALIST German Workers Party,” and that both Nazi socialism and Soviet socialism were big government socialist tyrannies that failed their people.  As to our own experiment with socialism here in the USA, I point out in an article that explains how “Government Sponsored Enterprises” Fannie Mae and Freddie Mac policies led us into economic implosion in spite of warnings for YEARS prior to the 2008 economic collapse:

But rigid opposition from Democrats – especially Democrats like Senator Barack Obamawho took more campaign money from Fannie and Freddie and dirty crony capitalism outfits like corrupt Lehman Bros. than ANYONE in his short Senate stint – prevented any “hope and change” of necessary reform from saving the US economy.

The timeline is clear: Fannie Mae and Freddie Mac were giant behemoths that began to stagger under their own corrupt weight, as even the New York Times pointed out:

Fannie Mae and Freddie Mac are so big — they own or guarantee roughly half of the nation’s $12 trillion mortgage market — that the thought that they might falter once seemed unimaginable. But now a trickle of worries about the companies, which has been slowly building for years, has suddenly become a torrent.

And it was FANNIE and FREDDIE that collapsed FIRST before ANY of the private investment banks, which collapsed as a result of having purchased the very mortgaged backed securities that the Government Sponsored Enterprises SOLD THEM.  It wasn’t until Fannie and Freddie collapsed that investors began to look with horror at all the junk that these GSE boondoggles had been pimping.

The man who predicted the collapse in 1999 wrote a follow-up article titled, “Blame Fannie Mae and Congress For the Credit Mess.”  It really should have read, “Blame DEMOCRATS.”  Because they were crawling all over these GSEs that they had themselves created like the cockroaches they are.  But Wallison is nonpartisan

Barack and Michelle Obama have a documented personal history of crony capitalism:

The Chicago way is a very, very ugly way.  And Obama has been in it up to his eyeballs.  Chicago is a dirty place filled with dirty politicians – and Obama was perfectly at home with all the dirt.

That Chicago corruption extends right into Obama’s home, by way of his wife Michelle.  This is a woman who sat on high-paying boards in direct quid-pro-quo consequences of Obama advancing in public office.  And in some of those boards, she participated in the worst kind of hospital patient-dumping.

Here’s a video of Michelle Obama you ought to watch – if you can stand the revelations:

Too bad we voted to nationalize the Chicago Way.

I also pointed out that when you attacked employers, the ones who would be hit the most and the hardest would be EMPLOYEES.

Take a look at what’s happening to small businesses, which create at least half of all the jobs in America, under Obama.  How about the fewest new business startups since the Bureau of Labor Statistics began tracking it:

Through the 12 months ended in March of last year, 505,473 new businesses started up in the U.S., according to the latest data available from the Bureau of Labor Statistics. That’s the weakest growth since the bureau started tracking the data in the early 1990s. It’s down sharply from the record 667,341 new businesses added in the 12 months that ended in March 2006.

And we can tie this right back to crony capitalism, as Obama has created a system in which larger businesses are protected against the threat of competition from smaller businesses:

Many times large corporations will even lobby for more regulations  for their  own industry because they know that they can handle all of the  rules and  paperwork far easier than their smaller competitors can.   After all, a  large corporation with an accounting department can easily  handle filling out a  few thousand more forms, but for a small business  with only a handful  of employees that kind of paperwork is a major  logistical nightmare.

When it comes to hiring new employees, the federal government has  made the  process so complicated and so expensive for small businesses  that it is  hardly worth it anymore.  Things have gotten so bad that more  small  businesses than ever are only hiring part-time workers or  independent  contractors.

So what we actually have now is a situation where small businesses  have lots of incentives not to hire more workers, and if they really do need some extra help the rules make it much more profitable to do  whatever you can to keep from bringing people on as full-time   employees.

And who do all these rules and regulations hurt the most but the very people Democrats cynically and deceitfully claim they are trying to help?  Meanwhile, who does it help the most but the crony capitalist corporations who DON’T do most of the hiring in America who can profit from Obama’s war on business that results in the destruction of their small business competition.

A recent report by the National Federation of Independent Business points out that small businesses are planning to SHRINK rather than EXPAND their payrolls under Obama.  From the New York Times:

A Slowdown for Small Businesses
By CATHERINE RAMPELL
Published: June 14, 2011

In the latest sign that the economic recovery may have lost whatever modest oomph it had, more small businesses say that they are planning to shrink their payrolls than say they want to expand them.

That is according to a new report released Tuesday by the National Federation of Independent Business, a trade group that regularly surveys its membership of small businesses across America.

The federation’s report for May showed the worst hiring prospects in eight months. The finding provides a glimpse into the pessimism of the nation’s small firms as they put together their budgets for the coming season, and depicts a more gloomy outlook than other recent (if equally lackluster) economic indicators because this one is forward-looking.

While big companies are buoyed by record profits, many small businesses, which employ half of the country’s private sector workers, are still struggling to break even. And if the nation’s small companies plan to further delay hiring — or, worse, return to laying off workers, as they now hint they might — there is little hope that the nation’s 14 million idle workers will find gainful employment soon.

“Never in the 37-year history of our company have we seen anything at all like this,” said Frank W. Goodnight, president of Diversified Graphics, a publishing company in Salisbury, N.C. He says there is “no chance” he will hire more workers in the months ahead.

“We’re being squeezed on all sides,” he says.

So let me ask again the question that the Los Angeles Times phrased: “Why are the wealthy benefitting from the ‘recovery’ as workers struggle?

And the answer is simple: because Barack Obama and the Democrat Party are socialist who have destroyed the engine that creates the jobs that workers depend upon to flourish.

An interesting fact is that businesses are now forced to spend $1.7 TRILLION a year in regulatory compliance costs.  That is a massive hidden tax on their viability; it exceeds the overt income taxes businesses have to pay, and it most certainly exceeds their profits.  And right now Obama is attacking them via the Dodd-Frank regulatory legislation, via the EPA, via OSHA, via ObamaCare and via the ridiculous actions of the NLRB in addition to their tax burden.  Just to name a few.  The result is businesses terrified to expand and further place their necks under Obama’s axe blade.

Meanwhile, Obama’s socialist policies have not only devastated the worker by destroying his jobs, but they’ve ruined America on numerous other levels, too.  Take the housing crisis – which was THE cause of the economic implosion of 2008.  Did Obama make it better?  Well, here’s a headline for you from CNBC: “US Housing Crisis Is Now Worse Than Great Depression.”  Which is to say that Democrats – who first created the housing crisis by refusing to allow the regulation of their pet socialist wealth redistribution agencies Fannie Mae and Freddie Mac – took something awful and turned it into an American Dream-massacring nightmare.

The latest job figures simply further document my point: Obama is destroying America job by job.  Not only did the unemployment rate go up to 9.2% (Obama promised the American people that the unemployment rate would be 7.1% by now if he got his massive government-spending stimulus); not only were the previous two month figures adjusted DOWNWARD by some 45,000 jobs; not only have a third of the unemployed been unemployed for at least a YEAR with fully half of the unemployed having been unemployed for over six months (which is unprecedented); not only did the economy create an incredibly dismal 18,000 jobs (versus the 100,000 the economists naively expected); but a quarter million more people simply walked away from the workforce entirely – abandoning any hope that Obama will do anything more than crush their hopes of finding a job.

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Tax Cuts INCREASE Revenues; They Have ALWAYS Increased Revenues

September 8, 2010

We keep seeing the same liberal argument being played over and over again.  As the mainstream media seek to make their case to the American people that the Bush tax cuts should expire, one of the primary strategies being employed is to claim that Republicans are refusing to “pay for” their extension of the tax cuts.  And that therefore the Republicans will hike the deficit.  The problem is that it’s a false premise, based on a static conception of human behavior that refuses to take into account the fact that people’s behavior changes depending upon how much of their money they are allowed to keep, and how much of their money is seized from them in taxation.

As bizarre as it might seem, it is seen as perverse these days to suggest that allowing someone to keep more of the money he or she invests would stimulate people to take more risks by investing in businesses and products, and that such increased investment in business and products would in turn stimulate more economic growth.  Common sense has become akin to rocket science these days.

Then again, liberals aren’t doing much for rocket science, either.

Let’s take a look at the current facts, and then examine the history of our greatest tax-cutting presidents.

The Falsehood That Democrats Are ‘Cutting’ Taxes

Democrats say they are cutting taxes on “95% of Americans, but argue that giving the same tax cut benefits to the remaining 5% would hike the deficit and be fiscally irresponsible.

Well, for one thing, the Democrats are flat-out lying when they say they are cutting taxes for 95% of Americans.  That can’t possibly be true, because as a matter of simple fact a whopping 47% of American households pay no federal income taxes whatsoever.

WASHINGTON (AP) — Tax Day is a dreaded deadline for millions, but for nearly half of U.S. households it’s simply somebody else’s problem.

About 47 percent will pay no federal income taxes at all for 2009. Either their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability. That’s according to projections by the Tax Policy Center, a Washington research organization. […]

The result is a tax system that exempts almost half the country from paying for programs that benefit everyone, including national defense, public safety, infrastructure and education. It is a system in which the top 10 percent of earners — households making an average of $366,400 in 2006 — paid about 73 percent of the income taxes collected by the federal government.

What Democrats are doing – deceitful liars that they are – is giving Americans “tax credits” and calling them “tax cuts.”

tax cut is a reduction in the percentage or amount of taxes that is being imposed on a citizen.  The government is cutting the amount it had been collecting from taxpayers.  A government cannot “cut” a citizen’s taxes unless that citizen had been paying taxes in the first place.

A tax credit is when you give someone money that has been collected from another taxpayer.  It is redistribution of wealth.  It is what Karl Marx described as “from each according to his ability, to each according to his need.”  Do you notice that “to” in the middle?  It means, “transferring the wealth from one government-penalized group of people TO another government-privileged group of people.”  It is what Obama described as “spreading the wealth around.”

What Obama and the Democrats in Congress propose is NOT a “tax cut.”  And it is nothing but a lie to call it that.  And every single journalist who has suggested that it is a tax cut is as much of a liar as the Democrats are.

That’s the first point.  Democrats are advancing a central tenet of Marxism and deceitfully and even demagogically relabeling it as “capitalism.”  And the media helps them get away with it.

The Falsehood That Cutting Taxes For the Rich – But NOT The Other Classes – Contributes To the Deficit

Next comes the idea Democrats argue that tax cuts for the rich contribute to the deficit.

Let’s say for the sake of argument (just for the moment; I’ll prove it’s wrong below) that tax cuts for the rich raise the deficit.  Let me ask you one question: how then do tax cuts for the rest of us not ALSO raise the deficit???

Why wouldn’t raising taxes on the middle class and the poor not correspondingly lower the deficit?  So why aren’t Democrats going after them?

Are Democrats too stupid to realize that there just aren’t enough rich people to pay off our deficit, especially when this president and this Congress have raised said deficit tenfold over the last Republican-passed budget deficit?  The last budget produced by congressional Republicans was in 2007.  That year, the deficit was approximately $160 billion; now under Obama, Nancy Pelosi and Harry Reid it is $1.6 TRILLION a year as far as the eye can see.

Wouldn’t ANY tax cuts raise the deficit?  And shouldn’t we therefore tax the bejeezus out of EVERYBODY to lower the deficit?  Wouldn’t every single dollar collected reduce the deficit correspondingly?

Let me put it concretely: say I took a $100 bill out of the wallet of a millionaire.  And then say I took a $100 bill out of the wallet of a poor person.  If I took both bills to a Democrat, would he or she be able to tell the difference?  Would he say, “Ah, THIS bill will lower the deficit because it comes from a rich person; but THIS one clearly won’t because it clearly came from a poor person.”

Update, Sep. 10: A study by the Joint Tax Committee, using the same static methodology that I refer to in my opening paragraph, calculate that the government will lose $700 billion in revenue if the tax cuts for the top income brackets are extended.  And that sounds bad.  But they also conclude that the Bush tax cuts on the middle class will cost the Treasury $3 TRILLION over the same period.  If we can’t afford $700 billion, then how on earth can we afford $3 trillion?  And then you’ve got to ask how much the Treasury is losing by not taxing the poor first into the poorhouse, and then into the street?  And how much more revenue could we collect if we then imposed a “street” tax? [end update].

Hopefully you get the point: if tax cuts for the rich are bad because they increase the deficit, then they are equally bad for everyone else for the same exact reason.  And so we should either tax the hell out of everyone, or cut taxes for everyone.  And a consistent Democrat opposed to “deficit-hiking tax cuts for the rich” should be for raising YOUR taxes as much as possible.

Republicans don’t fall into this fundamental contradiction (see below), because they don’t believe that tax cuts create deficits.  Democrats do.  Which means they are perfectly content with shockingly supermassive deficits – as long as its 95% of Americans who are creating those deficits, rather than 100%.

Joe Biden said it was a patriotic duty to pay higher taxes.  And yet Democrats are trying to make 95% of Americans unpatriotic traitors who don’t care about their country?

Now, Democrats will at this point repudiate logic and punt to the issue of “fairness.”  But “fairness” is a very subjective thing, when one group of people decide it’s “fair” for another group of people to hand over their money while the first group pays nothing.  Even George Bernard Shaw – a socialist, mind you – understood this.  He pointed out the fact that “A government that robs Peter to pay Paul can always depend on the support of Paul.”

Which is to say it’s NOT fair at all.  Paul may think it’s fair, but poor Peter gets screwed year after year.

And it is a fundamental act of hypocrisy – not to mention advancing yet ANOTHER central tenet of Marxist class warfare – to claim to oppose tax cuts for the rich in the name of the deficit, but not to oppose tax cuts for everyone else.

And for the record, I despise both hypocrisy AND central tenets of Marxism.  Which is why I despise the Democrat Party, which is both hypocritical and basically Marxist.

[Update, September 20] Brit Hume demolished the Obama-Democrat argument regarding the Bush tax cuts being a “cost” to the government, saying:

But the very language used in discussing these issues tells you something as well. In Washington, letting people keep more of their own money is considered a cost. As if all the money really belongs to the government in the first place in which what you get to keep is an expenditure.”

And, again, that mindset about government control and in fact government ownership over people’s wealth represents a profoundly Marxist view of the world. [End update].

For what it’s worth, Democrats will only maintain the massive contradiction of “tax cuts for the rich raising the deficit” for so long.  Obama already admitted he was willing to go back on his promise to raise taxes on the middle class.  And his people are already looking to tee off on middle class tax hikes.  In addition, if you have any private retirement funds, they may well be coming after you soon.

The Falsehood That Tax Cuts Increase The Deficit

Now let’s take a look at the utterly fallacious view that tax cuts in general create higher deficits.

Let’s take a trip back in time, starting with the 1920s.  From Burton Folsom’s book, New Deal or Raw Deal?:

In 1921, President Harding asked the sixty-five-year-old [Andrew] Mellon to be secretary of the treasury; the national debt [resulting from WWI] had surpassed $20 billion and unemployment had reached 11.7 percent, one of the highest rates in U.S. history.  Harding invited Mellon to tinker with tax rates to encourage investment without incurring more debt. Mellon studied the problem carefully; his solution was what is today called “supply side economics,” the idea of cutting taxes to stimulate investment.  High income tax rates, Mellon argued, “inevitably put pressure upon the taxpayer to withdraw this capital from productive business and invest it in tax-exempt securities. . . . The result is that the sources of taxation are drying up, wealth is failing to carry its share of the tax burden; and capital is being diverted into channels which yield neither revenue to the Government nor profit to the people” (page 128).

Mellon wrote, “It seems difficult for some to understand that high rates of taxation do not necessarily mean large revenue to the Government, and that more revenue may often be obtained by lower taxes.”  And he compared the government setting tax rates on incomes to a businessman setting prices on products: “If a price is fixed too high, sales drop off and with them profits.”

And what happened?

“As secretary of the treasury, Mellon promoted, and Harding and Coolidge backed, a plan that eventually cut taxes on large incomes from 73 to 24 percent and on smaller incomes from 4 to 1/2 of 1 percent.  These tax cuts helped produce an outpouring of economic development – from air conditioning to refrigerators to zippers, Scotch tape to radios and talking movies.  Investors took more risks when they were allowed to keep more of their gains.  President Coolidge, during his six years in office, averaged only 3.3 percent unemployment and 1 percent inflation – the lowest misery index of any president in the twentieth century.

Furthermore, Mellon was also vindicated in his astonishing predictions that cutting taxes across the board would generate more revenue.  In the early 1920s, when the highest tax rate was 73 percent, the total income tax revenue to the U.S. government was a little over $700 million.  In 1928 and 1929, when the top tax rate was slashed to 25 and 24 percent, the total revenue topped the $1 billion mark.  Also remarkable, as Table 3 indicates, is that the burden of paying these taxes fell increasingly upon the wealthy” (page 129-130).

Now, that is incredible upon its face, but it becomes even more incredible when contrasted with FDR’s antibusiness and confiscatory tax policies, which both dramatically shrunk in terms of actual income tax revenues (from $1.096 billion in 1929 to $527 million in 1935), and dramatically shifted the tax burden to the backs of the poor by imposing huge new excise taxes (from $540 million in 1929 to $1.364 billion in 1935).  See Table 1 on page 125 of New Deal or Raw Deal for that information.

FDR both collected far less taxes from the rich, while imposing a far more onerous tax burden upon the poor.

It is simply a matter of empirical fact that tax cuts create increased revenue, and that those [Democrats] who have refused to pay attention to that fact have ended up reducing government revenues even as they increased the burdens on the poorest whom they falsely claim to help.

Let’s move on to John F. Kennedy, one of the most popular Democrat presidents ever.  Few realize that he was also a supply-side tax cutter.

Kennedy said:

“It is a paradoxical truth that tax rates are too high and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now … Cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus.”

– John F. Kennedy, Nov. 20, 1962, president’s news conference


“Lower rates of taxation will stimulate economic activity and so raise the levels of personal and corporate income as to yield within a few years an increased – not a reduced – flow of revenues to the federal government.”

– John F. Kennedy, Jan. 17, 1963, annual budget message to the Congress, fiscal year 1964

“In today’s economy, fiscal prudence and responsibility call for tax reduction even if it temporarily enlarges the federal deficit – why reducing taxes is the best way open to us to increase revenues.”

– John F. Kennedy, Jan. 21, 1963, annual message to the Congress: “The Economic Report Of The President”


“It is no contradiction – the most important single thing we can do to stimulate investment in today’s economy is to raise consumption by major reduction of individual income tax rates.”

– John F. Kennedy, Jan. 21, 1963, annual message to the Congress: “The Economic Report Of The President”


“Our tax system still siphons out of the private economy too large a share of personal and business purchasing power and reduces the incentive for risk, investment and effort – thereby aborting our recoveries and stifling our national growth rate.”

– John F. Kennedy, Jan. 24, 1963, message to Congress on tax reduction and reform, House Doc. 43, 88th Congress, 1st Session.


“A tax cut means higher family income and higher business profits and a balanced federal budget. Every taxpayer and his family will have more money left over after taxes for a new car, a new home, new conveniences, education and investment. Every businessman can keep a higher percentage of his profits in his cash register or put it to work expanding or improving his business, and as the national income grows, the federal government will ultimately end up with more revenues.”

– John F. Kennedy, Sept. 18, 1963, radio and television address to the nation on tax-reduction bill

Which is to say that modern Democrats are essentially calling one of their greatest presidents a liar when they demonize tax cuts as a means of increasing government revenues.

So let’s move on to Ronald Reagan.  Reagan had two major tax cutting policies implemented: the Economic Recovery Tax Act (ERTA) of 1981, which was retroactive to 1981, and the Tax Reform Act of 1986.

Did Reagan’s tax cuts decrease federal revenues?  Hardly:

We find that 8 of the following 10 years there was a surplus of revenue from 1980, prior to the Reagan tax cuts.  And, following the Tax Reform Act of 1986, there was a MASSIVE INCREASE of revenue.

So Reagan’s tax cuts increased revenue.  But who paid the increased tax revenue?  The poor?  Opponents of the Reagan tax cuts argued that his policy was a giveaway to the rich (ever heard that one before?) because their tax payments would fall.  But that was exactly wrong.  In reality:

“The share of the income tax burden borne by the top 10 percent of taxpayers increased from 48.0 percent in 1981 to 57.2 percent in 1988. Meanwhile, the share of income taxes paid by the bottom 50 percent of taxpayers dropped from 7.5 percent in 1981 to 5.7 percent in 1988.”

So Ronald Reagan a) collected more total revenue, b) collected more revenue from the rich, while c) reducing revenue collected by the bottom half of taxpayers, and d) generated an economic powerhouse that lasted – with only minor hiccups – for nearly three decades.  Pretty good achievement considering that his predecessor was forced to describe his own economy as a “malaise,” suffering due to a “crisis of confidence.” Pretty good considering that President Jimmy Carter responded to a reporter’s question as to what he would do about the problem of inflation by answering, “It would be misleading for me to tell any of you that there is a solution to it.”

Reagan whipped inflation.  Just as he whipped that malaise and that crisis of confidence.

This might explain why a Gallup poll showed that Ronald Reagan is regarded as our greatest president, while fellow tax-cutting great John F. Kennedy is tied for second with Abraham Lincoln.  Because, in proving Democrat policies are completely wrongheaded, he helped people.  Including poorer people who benefited from the strong economy he built with his tax policies.

Let’s move on to George Bush and the infamous (to Democrats) Bush tax cuts.  And let me quote none other than the New York Times:

Sharp Rise in Tax Revenue to Pare U.S. Deficit
By EDMUND L. ANDREWS
Published: July 13, 2005

WASHINGTON, July 12 – 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.

A Jump in Corporate Payments On Wednesday, White House officials plan to announce that the deficit for the 2005 fiscal year, which ends in September, will be far smaller than the $427 billion they estimated in February.

Mr. Bush plans to hail the improvement at a cabinet meeting and to cite it as validation of his argument that tax cuts would stimulate the economy and ultimately help pay for themselves.

Based on revenue and spending data through June, the budget deficit for the first nine months of the fiscal year was $251 billion, $76 billion lower than the $327 billion gap recorded at the corresponding point a year earlier.

The Congressional Budget Office estimated last week that the deficit for the full fiscal year, which reached $412 billion in 2004, could be “significantly less than $350 billion, perhaps below $325 billion.”

The big surprise has been in tax revenue, which is running nearly 15 percent higher than in 2004. Corporate tax revenue has soared about 40 percent, after languishing for four years, and individual tax revenue is up as well
.

[Update, September 20: The above NY Times link was scrubbed; the same article, edited differently, appears here.]

Note the newspaper’s use of liberals favorite adjective: “unexpected.” They never expect Republican and conservative polices to work, but they always do if they’re given the chance.  They never expect Democrat and liberal policies to fail, but they always seem to fail every single time they’re tried.

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.

Budget deficits are not merely a matter of tax policy; it is a matter of tax policy AND spending policy.  Imagine you have a minimum wage job, but live within your means.  Then you get a job that pays a million dollars a year.  And you go a little nuts, buy a mansion, a yacht, a fancy car, and other assorted big ticket items such that you go into debt.  Are you really so asinine as to argue that you made more money when you earned minimum wage?  But that’s literally the Democrats’ argument when they criticize Reagan (who defeated the Soviet Union and won the Cold War in the aftermath of a recession he inherited from President Carter) and George Bush (who won the Iraq War after suffering the greatest attack on US soil in the midst of a recession he inherited from President Clinton).

As a result of the Clinton-era Dot-com bubble bursting, the Nasdaq lost a whopping 78% of its value, and $6 trillion dollars of wealth was simply vaporized.  We don’t tend to remember how bad that economic disaster was, because the 9/11 attack was such a huge experience, and because instead of endlessly blaming his predecessor, George Bush simply took responsibility for the economy, cut taxes, and fixed the problem.  The result, besides the above tax revenue gains, was an incredible and unprecedented 52 consecutive months of job growth.

Update September 12: Did somebody say something about “jobs”?  Another fact to recognize is the horrendous damage that will be done to small businesses and the jobs they create if the tax cuts for the “rich” aren’t continued.  As found in the Wall Street Journal, “According to IRS data, fully 48% of the net income of sole proprietorships, partnerships, and S corporations reported on tax returns went to households with incomes above $200,000 in 2007.” Further, the Tax Policy Center found that basically a third of taxpayers who are expected to be in the top tax bracket in 2011 generate more than half their income from a business ownership.  And while Democrats love to point out that their tax hikes on the so-called rich only impact 3% of small businesses, the National Federation of Independent Business reports that that three percent employs about 25 percent of the nation’s total workforce.  “Small businesses that employ 20 to 250 workers are the most likely to be hit by an increase in the top two tax rates, according to NFIB research. Businesses of this size employ more than 25 percent of the U.S. workforce.”  So if you want jobs and an economic recovery, you simply don’t pile more punishing taxes on those “rich” people.  Especially during a recession [End update].

We’re not arguing theories here; we’re talking about the actual, empirical numbers, literally dollars and cents, which confirms Andrew Mellon’s thesis, and Warren Harding’s and Calvin Coolidge’s, John F. Kennedy’s, Ronald Reagan’s, and George W. Bush’s, economic policies.

Harding and Coolidge, Reagan and Bush, with Democrat JFK right smack in the middle: great tax cutters all.

The notion that small- and limited-government conservatives who want ALL Americans to pay less to a freedom-encroaching government are somehow “beholden to the rich” for doing so is just a lie.  And a Marxist-based lie at that.

[Update, 12/15/10]: Check out these numbers as to how the Reagan tax cuts INCREASED the taxes paid by the wealthy, and REDUCED the taxes paid by the middle class and the bottom 50% of tax payers:

Income tax burdens (from the Joint Economic Committee for the US Congress report, 1996):
1981: top 1% of earners paid 17.6% of all personal income taxes
1988: top 1% of earners paid 27.5% of all personal income taxes (+ 10%).

1981: top 10% of earners paid 48% of all personal income taxes
1988: top 10% of earners paid 57.2% of all personal income taxes (+ 9%).

So rich clearly paid MORE of the tax burden when their tax rates were LOWERED.

For the middle class:
1981: middle class paid 57.5% of all personal income taxes
1988: middle class paid 48.7% of all personal income taxes (- 9%).

The middle class’ tax burden went DOWN by 9%.  They paid almost 10% LESS than what they had been paying before the Reagan cuts.

For the bottom 50%:
1981: bottom 50% paid 7.5% of all personal income taxes
1988: bottom 50% paid 5.7% of all personal income taxes (- 2%).

So the Joint Economic Economic Committee concludes that if you lower the tax rates on the rich, the rich wind up paying MORE of the tax burden and the poor end up paying LESS.  When you enact confiscatory taxation policies, the people who can afford it invariably end up protecting their money.  They do everything they can to NOT pay taxes because they are getting screwed.  When the rates drop to reasonable rates, they don’t shelter their money; rather, they take advantage of their ability to earn more – and improve the economy by doing so – by investing.  If you take away their profit, you take away their incentive to improve the economy and create jobs.

Some articles to read:

The Reagan Tax Cuts: Lessons for Tax Reform

The Historical Lessons of Lower Tax Rates

Income Tax Cuts Increase Revenues and Help Low Income Families

[End Update, 12/15/10]