Merely allowing Bush tax cuts to expire is cause for joy?
Not based on history, especially including the past 24 months.
Originally published by Mike “gamecock” DeVine as Legal Editor for The Minority Report
One of the factors restraining investors since 2006 and even before the Fannie Mae housing/credit crunch bubble burst, has been their knowledge that income from any investments would be subject to higher tax rates after 2010.
Hear the breathless, panting Drive-By media:
Obama is said to be reconsidering one key campaign pledge – his proposal to repeal the Bush tax cuts for the wealthiest Americans. Several people familiar with the discussions told The New York Times that he instead might let those tax cuts expire as scheduled in 2011, effectively delaying any tax increase while he gives his stimulus plan a chance to work.
So we are supposed to jump up and down that the same Democrat policy that helped gring the economy to a halt since they took power in 2007 will continue?
Filibuster threats from the Senate Democratic Party minority prior to their return to the majority in 2006 blocked GOP attempts to making the 2001 and 2003 Bush tax rate cuts permanent. Those are the tax cuts that prevented a recession after 911 and which fueled economic growth from 2002-2006 that exceed GDP averages of the 70s, 80s and 90s.
What is it about economic growth that Democrats don’t like?
One of the other main factors that has caused investors to go on strike over the course of the permanent Obama campaign has been the prospect that he or another tax raising Democrat would win, coupled with the prospect that Obama would accelerate the tax hike.
Yet, we are supposed to swoon at his feet if he merely doesn’t accelerate? McClatchy’s James Rosen catches his breath enough to report:
Some Republicans might be won over [to the Keynesian stimulus package] should Obama decide not to repeal the Bush tax cuts for those making more than $250,000. By letting the cuts expire after 2010, as the law provides, Obama would in effect delay the tax increase that high-income taxpayers would have faced in the next year or two under his original plan.
That could have both economic and political benefits. Obama would not be open to the charge from Republicans and other critics that he is raising taxes in a recession, which many believe is counterproductive.
The press is treating the prospect that Obama would not raise taxes sooner as action, while unwittingly conceding the obvious fact that tax hikes hurt the economy.
Let’s take this one step further. What America needs are tax rate cuts, especially on capital and corporations. The whole Paulson bailout plan was made necessary due to a lack of capital available for loans. And America’s corporate tax rate is one of the highest in the world.
Moreover, while I have no objection to a stimulus bill in theory, the fact is that government spending of that kind doesn’t change investor behavior like supply side tax cuts, unless it is on a war-like scale, and even then it usually is accompanied by inflation and can’t be sustained for long wars.
The evidence is in. Witness GDP from 1929-1940 vs. the early 60s and 1983-2006.
Too bad most Democrats and the press know so much that isn’t so, like:
By letting the tax cuts expire, Obama would get the benefit of higher revenues in 2011 and beyond to help finance his promised health care plans without having to propose raising taxes on the affluent, and without the Democratic majorities in Congress having to take a vote on a tax increase.
Such ignorance. Lower tax rates increased tax revenues following JFK (pictured rocking above just before delivering tax cut speech) , Reagan and Bush 43′s tax rate cuts. The whole news article reeks of political maneuvering, as opposed to sober economic analysis.
The GOP needs to hammer these facts home. They must not accept scraps from the President-Elect’s tax table. Demand the main course. Obama professes to admire JFK and Reagan.
Let’s remind him why he should and demand tax cuts now, rather than being content to settle for delays in tax hikes. Let’s put him in a rocker like JFK’s if we have to.
“One man with courage makes a majority.” – Andrew Jackson