Posts Tagged ‘the era of big government is over’

‘Unexpected’ Increase In Tax Revenues: More Confirmation That Lower Taxes Increases Growth/Revenue

May 9, 2011

I just finished responding to a pair of enjoyable comments from Robbie (here and here).  And Robbie posts an excellent 5:46 minute video of the great economist Thomas Sowell:

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.

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Obama Turns To Clinton To Advance The ‘Democrats As Party Success’ Myth As His Economy Turns to Crap

July 17, 2010

Barack Obama is widely seen as a complete failure.  Businesses large and small are turning on him and his incredibly harmful economic policies.  Even former staunch allies such as US News & World Report owner Mortimer Zuckerman and GE CEO Jeff Immelt have turned on him.

His answer?  To turn to an impeached, disbarred, lying and oath-breaking, sexual predator and unconvicted rapist to save a failed president for the sake of the Democrat Party.

From Reuters:

WASHINGTON, July 14 (Reuters) – U.S. President Barack Obama sought on Wednesday to lift sagging confidence in his economic stewardship by enlisting the help of predecessor Bill Clinton, as a leading business group issued a scathing critique of the administration’s policies.

Clinton, who presided over the 1990s economic boom, joined Obama at a closed-door White House meeting with business leaders to encourage job creation and investment, including in clean energy.

The U.S. Chamber of Commerce, a top business group, issued a rebuke of Obama’s economic agenda, accusing him and his Democrats in Congress of neglecting job creation and hampering growth with burdensome regulatory and tax policies.

What this country needs is a return to “it depends on what the meaning of the word ‘is’ is.”

It doesn’t matter that Clinton once recognized that Obama is little more than a Chicago thug.

It doesn’t matter in this Obama-era of race-baiting that Obama played the race card on Clinton.

It doesn’t matter that Bill Clinton subsequently demonstrated that he frankly deserved to be labeled as a racist when he outraged Ted Kennedy by telling him regarding Obama, “A few years ago, this guy would have been getting us coffee.”  Or that Clinton essentially said, “MAYBE joining the Ku Klux Klan was wrong” in honoring the former Kleagle and Exalted Cyclops Robert Byrd.

All that matters in the mainstream media propagandist cesspool is that – while Barack Obama is increasingly recognized to be a complete economic failure and fraud – Bill Clinton is an economic hero who can therefore temporarily restore confidence in Obama and his failed policies until after the November election.

As usual, the media isn’t telling the full truth about Clinton.  Or what happened to create the healthy economy of the 1990s.

The mainstream media is remarkably consistent: you can count upon them to never give Democrats the blame they deserve, and you can count upon them to never give Republicans the credit they deserve, about anything.

Bill Clinton is widely hailed for presiding over a great economy that featured a budget surplus.

But let’s consider a very basic fact:

From the Herald-Journal, January 27, 1984

If you took a quiz on government and were asked who writes the national budget, would you answer “The President” or “The Congress”?

The correct answer is “The Congress.”

The U.S. Constitution says that power belongs to Congress. All through our history, the Congress has exercised that power. The president cannot spend one thin dime that has not been approved by Congress.

Article One of the Constitution of the United States refutes the argument that Bill Clinton should receive credit for his “surplus”.  It was the Republican-dominated CONGRESS featuring promises that stemmed from the Contract with America, that resulted in the healthy budget that Clinton the media gave Clinton credit for producing.  Even though all he did was sign (often after vetoes) that which Republicans had actually produced.

What we don’t get told very was that Bill Clinton did such a miserable job running the country for his first two years in office that he suffered the largest (at least until this coming November) political defeat in American history when the Republicans swept into power over both the House and the Senate.  We’re not told that Republicans continued to be the majority party in both the House and Senate during the years that the media assigned Clinton all the credit.

It was those Republicans who were most responsible for the good times that resulted.  They are most certainly responsible for the budget surpluses that Democrats have congratulated themselves for ever since.  The very first item on the Republicans’ agenda was the Fiscal Responsibility Act.

One quick example of these Republican changes was welfare reform.  In his 1996 State of the Union, after losing even more fights, Bill Clinton was famously forced to admit, “The era of big government is over.”  And Republicans were making that statement true by passing welfare reform legislation and an avalanche of other cost-cutting measures that made a budget surplus possible.

Two welfare reform bills were passed by the Republican Congress, which Clinton vetoed.  Then a third bill was passed by the Republicans, which Clinton finally signed.  The National Organization for Women noted:

“There is little difference between the welfare bill (H.R.4) which the president vetoed in January and the new plan H.R. 3734/S 1795.”

An analysis by Steven Dawson for the Saint Louis University Law Journal observed that:

“In fact, President Clinton vetoed two largely similar prior versions of the bill.”

All rhetoric aside, Bill Clinton was FORCED to sign welfare reform into law by the Republican Congress.  Just as he was FORCED into a balanced budget, and any subsequent budget surplus.

But after being literally dragged into signing it, Bill Clinton took credit for it as though it had been his idea all along.  And the media duly reported that slanted history as a matter of “fact.”

That said, we can also point out that “the Clinton budget surplus” also had a lot to do with budgetary smoke and mirrors.

And like I said, the same media that will never give Republicans credit for something good will never give Democrats blame for something bad.

Consider the last three plus years’ worth of reckless spending.  The Bush administration has been blamed for much of this reckless spending, but it was actually a Democrat Congress that swept into power in 2006 (largely due to what we can now readily see was hypocritical demagoguery over the Iraq War and Hurricane Katrina rather than any economic issue) which proceeded to spend America into the stratosphere:

For the record, the last budget from a Republican President AND a Republican Congress – FY-2007 (passed in 2006) – resulted in a$161 billion deficit at a time when unemployment was 4.6%.  That’s what happened the last time the GOP was in control.

What happened when the Democrats took control in January 2007?  Harry Reid and Nancy Pelosi passed a FY-2008 budget that had a $459 billion deficit – nearly three times the deficit in the immediately previous Republican-passed budget.  Three times.  And this before the financial crisis that somehow “necessitated” all this massive spending.

Now, that’s a pretty crazy increase under Democrat control.  But you aint seen nothin’ yet.

The Democrats passed a FY-2009 budget with a staggering, mind-boggling, totally reckless $1.42 TRILLION deficit.

The FY-2010 budget approved by Reid and Pelosi and signed by Obama had an estimated $1.6 TRILLION deficit.

The deficit has increased from $161 billion in the last budget before Democrats took control of the Congress (FY 2007) to $1.42 trillion in the most recent fiscal year (FY 2009)—an increase of $1.26 trillion or 782%.

With three months remaining in the fiscal 2009 budget, the federal deficit just officially passed the $1 trillion mark.  Worse yet, Obama borrowed more than forty cents for every single dollar he spent.

We also suffered a budget shortfall of $94 billion in the month of June, which marks the first June in more than ten years (read, “encompassing the entire Bush presidency”).  Bush’s success in raising revenues is bookended by two Democrat presidents who failed.

And now the Democrats aren’t even bothering to pass a budget for the next fiscal year, so they can simply spend without any accountability whatsoever.

The old annual deficits under Republicans have now become the monthly deficits under Democrats:

In the 12 years that Republicans controlled the House, the average deficit was $104 billion (average of final deficit/surplus FY1996-FY2007 data taken from Table F-1 below).  In just 3 years under Democrats, the average deficit is now almost $1.1 trillion (average of final deficit/surplus FY2008 and 2009 data taken from Table F-1; FY2010 data taken from Table 1-3).  Source: CBO January 2010 Budget and Economic Outlook

Rep. Eric Cantor (R-Minority Whip) rightly pointed out on ABC’s “This Week”:

“If you look at the kind of deficit that we’ve incurred over the last three years that the Democrats have been in control of Congress, 60% of the overall deficit from the last ten years has occurred in that period. And frankly with the incurrence of the debt, we’ve seen very little result. That’s why we think we ought to choose another way.”

And yet the media falsely blame BUSH and Republicans for that spending, rather than Nancy Pelosi, Harry Reid, and the Democrat-controlled House and Senate, even though factually speaking the Democrats were ENTIRELY to blame for every single penny that was spent from January 2007 on.  Because our Constitution forbids a president from spending; it is CONGRESS that spends.

I also point out in that article (and many others such as this one) that Democrats were primarily responsible for the disastrous policies that led to the 2008 collapse.  They were basically completely responsible for Fannie Mae and Freddie Mac and their reckless policies, and then utterly refused to allow any reforms that would have averted the ensuing disaster.

In an honest world, Bill Clinton wouldn’t get anywhere near as much credit as he does for the strong economy of the 1990s.  And Republicans wouldn’t get anywhere near as much blame as they received for the 2008 collapse.

The problem is, our mainstream media advances one outright lie after another.  And the lies become “truth” through sheer repetition.

Obama isn’t calling upon Bill Clinton to actually offer advice on how to turn the economy around; he’s calling Clinton in as a prop.  Bill Clinton was forced to change his failed policies when the Republicans swept into power.  Hopefully, that is exactly what will happen beginning this November.

Democrats’ Effort To Fearmonger Path To Socialized Medicine Has Been Tried Before

August 18, 2009

In the mainstream media narrative, Sarah Palin is demonized as “about half a whack job” and her statement about “death panels” is literally interpreted in a way I’d love to see them apply JUST ONCE to the Constitution.  Conservatives were denounced as an “angry mob,” as “un-American,” and as exhibiting Nazi characteristics by the Democrat Speaker of the House.

The media loves to talk about rightwing fearmongering.

I’d like to say a little more about leftwing fearmongering.

How about the one that we need to pass health care reform in order to get our economy out of the toilet?

A smattering of various Obama “warnings” fearmongering health care:

– “We must lay a new foundation for future growth and prosperity, and a key pillar of a new foundation is health insurance reform.”

Obama cast retooling the U.S. health-care system as crucial to the nation’s economic success. Reform would help rein in the national deficit and rebuild the economy, he argued, in a way that would help middle-class workers, whose wages have stagnated in recent years largely because of spiraling health-care costs.

– WASHINGTON: President Barack Obama warned on Thursday that the United States would not rebuild its economy unless political leaders joined him immediately on a perilous political drive for healthcare reform.

President Obama warned Wednesday night that health-care reform is central to rebuilding the economy “stronger than before,” and without congressional action on health-care reform, “We’re guaranteed to see Medicare and Medicaid basically break the federal budget.”

And our last Obama “warning”:

“The country has to reform its health care system or else not only are you going to continue to have people really going through a hard time, we’re also going see a continuing escalation of our budget problems that can’t get under control,” Obama told Moran. “I think America has to win it here.”

In the dialogue surrounding health care, Obama warned against “scare tactics,” which he said are fostering anxiety and serving to distract Americans from the plan’s principles.

What’s nice about the last one is that it includes fearmongering on the one hand with warning against “scare tactics” on the other.  Obama tells us one the one hand that our economy will plummet unless we implement ObamaCare, and then demonizes everyone who has a different fearmongering message.

It doesn’t matter that Obama’s urgings that we pass health care “reform” will lower our costs and boost are economy are entirely false:

Under questioning by members of the Senate Budget Committee, Douglas Elmendorf, director of the nonpartisan Congressional Budget Office, said bills crafted by House leaders and the Senate health committee do not propose “the sort of fundamental changes” necessary to rein in the skyrocketing cost of government health programs, particularly Medicare. On the contrary, Elmendorf said, the measures would pile on an expensive new program to cover the uninsured.

Though President Obama and Democratic leaders have repeatedly pledged to alter the soaring trajectory — or cost curve — of federal health spending, the proposals so far would not meet that goal, Elmendorf said, noting, “The curve is being raised.” His remarks suggested that rather than averting a looming fiscal crisis, the measures could make the nation’s bleak budget outlook even worse.

It also doesn’t seem to matter that, given that the “reforms” Obama is seeking wouldn’t take effect until at least 2013, there is little reason to rush headlong into anything other than opportunistic partisan demagoguery.  And yet Barack Obama was out there rushing “reform” and calling August 1st “the people’s deadline” even as polls showed “the people” overwhelmingly wanting Congress to take time crafting health care legislation.

Interestingly, these tricks of fearmongering health care “reform” in the name of averting economic calamity and trying to rush the process through have been tried before.  Think Bill Clinton, First Inaugural Address, 1993:

But all of our efforts to strengthen the economy will fail—let me say this again; I feel so strongly about this—all of our efforts to strengthen the economy will fail unless we also take this year, not next year, not 5 years from now but this year, bold steps to reform our health care system.

In 1992, we spent 14 percent of our income on health care, more than 30 percent more than any other country in the world, and yet we were the only advanced nation that did not provide a basic package of health care benefits to all of its citizens. Unless we change the present pattern, 50 percent of the growth in the deficit between now and the year 2000 will be in health care costs. By the year 2000 almost 20 percent of our income will be in health care. Our families will never be secure, our businesses will never be strong, and our Government will never again be fully solvent until we tackle the health care crisis. We must do it this year.

The combination of the rising cost of care and the lack of care and the fear of losing care are endangering the security and the very lives of millions of our people. And they are weakening our economy every day. Reducing health care costs can liberate literally hundreds of billions of dollars for new investment in growth and jobs. Bringing health costs in line with inflation would do more for the private sector in this country than any tax cut we could give and any spending program we could promote. Reforming health care over the long run is critically essential to reducing not only our deficit but to expanding investment in America.

What’s interesting about this is that liberals depict the Clinton years as the time when the streets were lined with gold and every child went to bed in a warm house with a full tummy.

So the point would obviously be, either Clinton was fearmongering health care in a way that did not turn out to be true at all, or the “glorious Clinton economy” is itself a fabrication.  Because somehow Bill Clinton had to flounder along with no health care reform.

We need to put some things into historic perspective: 1) Bill Clinton so mismanaged the country his first two years in office that it led to the largest political tsunami ever experienced in American history as Republicans took over in an unprecedented landslide 1994 election.  2) Many of the benefits that Bill Clinton has received credit for were actually enacted by the Republican Congress (example: welfare reform).  3) Bill Clinton benefited from an economy that was just recovering from a severe recession at the end of the Bush I administration as Clinton took over.  By contrast, George Bush II – like Barack Obama now – had a significant recession handed to him that will count against his average performance.  In President Bush’s case, that recession was compounded by the worst attack on American soil in nearly 200 years  in the 9/11 terror attack.  4) Bill Clinton changed the way unemployment figures were calculated back in 1994 – making comparisons to previous eras appear far more rosy than they really were.  5) The “Clinton Budget Surplus” is in reality a myth.  In actuality, Clinton created a smoke and mirror illusion by transferring “public debt” costs which are calculated as part of the budget over to “intergovernmental holdings” (eg., by borrowing from Social Security) which are not counted as part of the public debt.

I might also point out that Bill Clinton’s famous statement from his State of the Union Speech in January 1996 – “THE ERA OF BIG GOVERNMENT IS OVER” – tacitly recognized the new Republican era, and which in reality was the ultimate reason why the Clinton economy became ultimately successful.

Democrats were wiped out in 1994 as Republicans swept into power when Americans became fed up with Democrat incompetence and massive spending.  And Bill Clinton was wise enough to recognize the handwriting on the wall.  As a result, he transitioned into a fiscal moderate and avoided the fate of his party.

But now the man who recognized that “The era of big government is over” is back to his pre-1994 ways.  Bill Clinton has joined Barack Obama with the very same big spending, big government socialistic mindset that brought the Democrats to such historic disaster in 1994.

There are many things we can do to improve our health care system.  That goes without saying.  But the Democrat’s presentation that opposing their system is opposing “change” or “reform” is simply asinine.  If any change is better than our present course, than we should just nuke ourselves and be done with it: that would be “change,” after all.  We need to recognize that there is good reform and there is bad reform – and government-run health care is simply “bad” reform.

ObamaCare suffers from massive policy problems that go right to the heart of the greater debate surrounding the size of government, the size of Obama’s unprecedented deficits, and the unsustainable size of our debt.  Democrats have a real problem explaining how they are going to spend $1.6 trillion and yet bring down costs – especially given the CBO’s damning analysis.  They have a problem explaining how they’re going to take hundreds of millions out of Medicare and yet not affect the quality of care to Medicare beneficiaries.  And they have a problem explaining how they’re not going to end up transferring over a hundred million Americans out of their employee-based health care and into the “public option” when good analysis sees exactly that happening (and see also here).

The American people listened to Obama fearmonger his way to the gigantic stimulus package that will ultimately cost Americans $3.27 trillion.  The stimulus has been deemed by the American people as being so unsuccessful that fully 72% of Americans now say “returning the unused portion of the $787 billion dollar stimulus to taxpayers would do more to boost the economy than having the government spend it.”  People are turning against what they increasingly recognize as big government socialism.

Obama_Economy_Pork-debt

We need to STOP health care “reform” until it includes tort reform such as loser pays, until it includes an end to state and federal mandates, until it includes allowing our 1300 private insurance companies to compete across state lines.  And we need to STOP health care “reform” until it EXCLUDES giving full medical coverage to more than 12 million illegal immigrants, until it excludes “public options,” excludes “Co-Ops,” and excludes any other device that becomes a backdoor guarantee to government health care.