There is a mantra from the political right that raising taxes will destroy the United States economy and cutting taxes will create a growth so spectacular that we will all be living in an economic paradise in no time.
They are full of it. But they keep trotting out that some old canard whenever there is an election or when they want to fiddle with the tax codes to make taxation even more unfair than it already is. It is also disheartening to read the mainstream press regurgitate the GOP talking points as if they are Gospel Truth and refusing to accept arguments that disprove the GOP's lies.
Kevin Hassett, director for economic policy studies at the conservative American Enterprise Institute and adviser to the to-be Republican presidential nominee, John McCain, has said, "What really happens is that the economy grows more vigorously when you lower tax rates. It is beyond the reach of economic science to explain precisely why that happens, but it does."
But it doesn't. And that is the secret behind lies, propaganda, scams of all sorts; the rhetoric must always be more palatable than reality.
Let us examine how taxes and economic activity relate to each other.
After Ronald Reagan went into office in 1981, he engineered massive tax cuts through a conservative House and Republican Senate which was followed by the worst economic recession since the Great Depression. Unemployment hit 10.8 percent the highest since 1940, when the world was still in the Depression.
(Brief aside: It must be noted that the tax write-offs and credits Jimmy Carter obtained to seek alternative sources of energy and get the nation off imported oil were immediately killed by Reagan. Look how that "foresight" benefits Americans now.)
Reagan raised taxes in 1983, especially the payroll tax paid by the workers of America, and eliminated many tax write-offs; and the economic growth that followed was dubbed by the right as the "Reagan Miracle," and Reagan is portrayed by the right as an economic genius.
When the Reagan Miracle ran out of steam and we drifted into recession under George Bush the Daddy and deficits exploded, we raised taxes to address the deficit and the economy began a slow expansion.
Bill Clinton took over and found a budgetary mess worse than anticipated, so sought and got tax hikes out of Congress. We then went on the greatest economic expansion of America or any nation in history and it lasted until beginning to slow in 2000.
George Bush the Infantile took over in 2001 when growth was slowing to a crawl, but still positive, so he obtained tax cuts from a doctrinaire-but-economically-illiterate Congress as an economic cure-all. We went into another recession and we were officially in a recession by September 1, 2001, before the 9/11 attacks the right claim caused our economic problems.
This short history shows that after every tax cut since 1980, the economy fell into recession, and after every tax increase, the economy rallied; the exact opposite of what the right claims would happen and shows that Hassett knows nothing about what he is talking about and shouldn't advise anyone on anything.
Now we examine how the conservative economics philosophy shifts to match the times.
After Reagan got us into the 1981 recession the standard line from the right was that presidents don't have any influence on the nation's economic performances, the economy will experience grow and retractions purely on its own due to the "business cycle."
When the Reagan Miracle was steaming ahead, Ronnie was hailed by conservatives as a master economic wizard, which can only be interpreted to mean presidents have great control over the economy.
Bush the Daddy had no influence on the economy during his recession, the right said, but was an acceptable steward of the economy when recovery began.
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Thomas Bonsell is a former newspaper editor (in Oregon, New York and Colorado) United States Air Force cryptanalyst and National Security Agency intelligence agent. He became one of American journalism's leading constitutional experts through years of study at Georgetown University Graduate School of Government in Washington, D.C., and tries (without much success) to be patient with people who argue endlessly on subjects they have never studied. He is the author of "The Un-Americans: Trashing of the United States Constitution in the American Press", a critique of the mainstream media for ignorance of, or disdain for, our constitutional principles of self-government. He left newspaper work years ago, disgusted at the direction the Fourth Estate ~ under the mismanagement of ineffectual, out-of-touch, can't-do executives ~ was taking away from honest responsible journalism and the observation that there was no place in the mainstream media for a progressive, or liberal, constitutional "expert". Bonsell is an honors graduate of Woodbury College (Los Angeles, California) with a bachelor of business administration degree. He is profiled in Marquis Who's Who in America. (Self-portrait, above, was handled to make author/artist appear prettier than he actually is.)
Personal motto: Have brain; will use.
The problem with Ron Paul is that he wants to eliminate all federal taxes so the government won't have money to pay for anything. He wants anarchy. I do believe the payroll tax and self employment taxes need to be eliminated. However corporate profits need to be taxed at a much higher rate and the loopholes that enable corporations to get away with not paying any taxes need to be eliminated. Capital gains taxes for big investors need to be increased also. Ron Paul is right about one thing though. The Federal Reserve needs to be eliminated along with the fractional reserve banking system.
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Ty (0 articles, 0 quicklinks, 0 diaries, 703 comments)
on Saturday, March 29, 2008 at 3:10:02 PM
Don't really have a problem with the Federal Reserve system other than it be designed to assist the commoners of the nation rather than the corporations. I worked my way through college with a job at the Los Angeles branch of the San Francisco Federal Reserve so know its function is far more reaching and important than economic regulation.
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tabonsell (28 articles, 0 quicklinks, 22 diaries, 250 comments)
on Saturday, March 29, 2008 at 3:46:26 PM
