Monday, November 28, 2005

Doing the peoples (of the future) business, congress should heed history.

Knowing that a couple of my readers have libertarian conservative views on the issues, lately I have posted with an eye to showing how traditional conservatives and Democrats might agree about the current administrations disastrous governance. Unfortunately, this is where I hop off the gravy train kiddies. For this post has to do with taxes.

First let me ask those who may be reading this post, whom did you vote for in the last two presidential campaigns? If the answer is Bush, let me now ask, is it fair for you to vote for someone who carries forth policies that you and those who agree with you expect future generations to pay for? (If the answer was Gore or Kerry, we already agree, so you probably don't need the edification provided by this post.)

I full well understand that one of George Bush's major campaign promises was to lower taxes. But that was hardly the sole proposition upon which Bush based his campaign. He also promised to forgo nation building, (nation building is a very expensive endeavor), maintain a balanced budget, (the word maintain is applicable, we all know Clinton left years of balanced budget in his wake) and to generally be a good fiscal steward for the budget. So when Bush deviates from his promises, and starts racking up huge budget deficits, is it really fair to future generations that the one promise he keeps is to cut taxes, (which tax cuts overall benefited the wealthiest amongst us) while running up huge deficits?

We would be well advised to heed history when it comes to the issue of taxation. The founding principle of trickle down economics is that when the wealthiest benefit from lower taxation, they spend that additional income in such a way as to create more jobs and opportunity for the middle and lower class. But we should remember that Reganomics lead to an expansion of the economy only paired with an enormous increase in budgetary outlay, leading to enormous deficits. This conundrum also applies to the expansion under Bush II. When then candidate Reagan was campaigning for the Republican nomination for president in 1980, George H.W. Bush famously termed supply side economics "voodoo economics", and that moniker is apt.

It is obvious that any dimwit could engineer an economic expansion given unfettered access to hot checks. In the two examples of economic expansion under voodoo economics, what we are actually witnessing are the funding of the administrations initiatives by future generations, while letting the wealthy of the generation who enjoy the initiative, recieve tax cuts. Never in human history have we actually seen a tax cut in time of war. We are funding a disasterous war on the backs of the future. This truly is a doubly vexing wrong.

In recent history we have had two examples of administrations who have followed the trickle down philosophy of governance (Reagan & Bush II), and both have resulted in burgeoning budgetary deficits. We have one example of fiscal responsibility, (Clinton) and a balanced budget. In all three examples, we have had an economic expansion (Bush II's started a bit late but it is expanding). Yet there has never been an expansion on the scale we saw under Clintons stewardship. The turnaround in budgetary responsibility came with the passage of the 1993 Clinton budget, without a single vote from the Republicans in congress. It is highly educational to consider what they had to say when that budget was being debated.

""Clearly, this is a job-killer in the short-run. The impact on job creation is going to be devastating."
Rep. Dick Armey, (Republican, Texas)

"The tax increase will...lead to a recession...and will actually increase the deficit."
Rep. Newt Gingrich (Republican, Georgia)

"I will make you this bet. I am willing to risk the mortgage on it...the deficit will be up; unemployment will be up; in my judgment, inflation will be up."
Sen. Robert Packwood (Republican, Oregon)

[Hindsight and judgement when it comes to Sen. Packwood... How ironic!]

"The deficit four years from today will be higher than it is today, not lower."
Sen. Phil Gramm (Republican, Texas)
These people believed in supply side economics and were convinced that the passage of the Clinton budget in 93 would result in economic ruination. So there you have it. Supply siders rely upon future generations wealth to fund the initiatives they like, where as the Clinton model proves that economic prosperity and budgetary sanity can be accomplished concurrently, despite the howls of protest from the supply siders.

It is well understood that campaigning on the promise to raise taxes is akin to removing your name from the ballot in the red states. So instead Democratic candidates should run on history. We have seen the results of the two competing theories, and for anyone to argue that the budget mess wrought by the Republican leadership we have in Washington D.C. has left us in better standing than when president Clinton left office is simply not credible.

And in case you couldn't guess, yes I am a BIG Clinton fan. That said, let me finish this post with his statement, which I have attempted to justify with this post, on ABC News This Week from Nov. 26:
I think it's very important that Americans understand, you know, tax cuts are always popular, but about half of these tax cuts since 2001 have gone to people in my income group, the top 1 percent. I've gotten four tax cuts.

They're responsible for this big structural deficit, and they're not going away, the deficits aren't. Now, what Americans need to understand is that that means every single day of the year, our government goes into the market and borrows money from other countries to finance Iraq, Afghanistan, Katrina and our tax cuts. We have never done this before. Never in the history of our republic have we ever financed a conflict, military conflict, by borrowing money from somewhere else.

STEPHANOPOULOS: The president is not going to move. What do Democrats do?

CLINTON: They should continue to oppose it, and they should make it an issue in the 2006 election, and they should make it an issue in the 2008 election. And they should hope, to goodness, for the sake of our country, that the cows don't come home before we have time to rectify it.

Comments:
I am for a balanced budget...also for a flat graduated tax system with no loopholes...these ideas are probably folly...
 
"So when Bush deviates from his promises, and starts racking up huge budget deficits, is it really fair to future generations that the one promise he keeps is to cut taxes, (which tax cuts overall benefited the wealthiest amongst us) while running up huge deficits? -Bhfrik

The key here is continued and unabated deficits. I so agree on Bush being a deficit spender. The wild unchecked spending of the Bush administration puts all the Liberals to shame. The only problem that Far Left Democrats really have with Bush's spending addiction is that they want that money spent on Democrat interests instead. For the extreme left it's only a matter of jealousy and not principle.

"Tax and Spend Liberals" and "Borrow and Spend Republicans". It's like having to choose between death by burning or death by drowning.

What needs to be understood is that short term deficits are healthy in times of recession. The last recession started at the end of Clinton's administration. No, that was not Clinton's fault. It was partly cyclical and partly due to an overheated, overvalued, and over speculated stock market.

Bush inherited a rough ride. Again, not Clinton's fault. At the start of Bush II we NEEDED spending and a relaxed Monetary Policy(think Alan Greenspan & Interest Rates)to grow the economy. This is the part of Supply Side Economics that works. This makes money available and grows the economy. The problem is that this spending helps special interest groups and once politicians start helping their buddies, it's like an addict trying to drop heroin. This is what is happening now. Thank your stars that people are sounding the alarms over spending now before it is too late. Prolonged deficits will kill the economy because, the government won't be able to make debt payments and will have to make hard decisions that would have been easier long ago.

Democrat Taxation benefits the "Supply Side" of the Public Sector and the portions of the Private Sector that contract with the government or get grants/loans. This is superior in that it can get money to the poor faster. It is inferior in that government programs are rife with wasteful infrastructures and many of the poor no longer have a motivation to earn when they can get it on a silver platter. Problems arise when the money supply in the Public Sector becomes wasteful and new taxation to fuel even more programs damages the Private Sector by over taxing. The Private Sector then loses the motivation to earn when they just have to give it to the Govt. on a silver platter called taxation.

A word about the Clinton Economy: It did go well. The ending speculation and cyclical state of the economy takes nothing from that fact. Clinton benefitted from an economy recovering from Bush I and a global recession. He also benefitted greatly by corporations expanding over the globe and starting all this talk of a global economy. Greenspan was doing a great job managing Money Supply. Global expansion fueled a stellar rise in the stockmarket. Clinton's spending was kept in check by the Republican congress. That's why we Libertarians actually like gridlock! Nothing gets done means money isn't spent and the Republicans can't force us to watch the 700 Club! Likewise Democrats can't force me to attend therapy and be made to apologize for being born a man. Worse, born a white man.

A healthy balance,......wine and beer can be healthy in moderation. It can also kill you taken to excess. Our politicians need to likewise find a healthy balance in their governmental diets. Let's try to make them do just that.
 
I would rather drown...they say it is virtually painless after the drinking in of water...but I disgress...

Supply economics has been shown to be a "rich get richer" scheme...money doesn't necessary trickle down...

Heavy taxation doesn't occur...Our tax code has too many loopholes for the affluent to get past, the real tax burden is on the dwindling middle class and lower income citizens...politicans would not get elected if they fleeced money from the pockets that get them elected...

We are an oligarchy...

Do libertarians have a platform as of yet? I dig some libertarian ideals...staying out of peoples business...but is there a clear political movement yet?
 
" Supply economics has been shown to be a "rich get richer" scheme...money doesn't necessary trickle down..." -BigBuddhaPuppy

Yep! With "Supply Side" or "Reaganomics" the rich will get richer. When you cut the cost of building a new business or expanding an existing one....yea, those rich guys get richer. They also spend money to build. The building generates construction demand. That is potential new companies or added employees needed just to build. That's trickle down going to your industial construction crew. Without demand, the construction companies lose the incentive to make new hires or expand training. Newly created labor demand also leads to more competitive wages(which also get taxed).

That's just in construction. After the new buildings are made, people are hired for the business, the business pays for services etc. etc.

It will stimulate the economy and it will "Trickle Down". Just as Taxes raised and spent on programs will. If we raise taxes and spend it on bridges to nowhere in Alaska or $72 toilet lid seats for the military, somebody benefits! The rich STILL get richer. It's just different rich people. No, it might not make sense for Sen. Byrd W.VA.-D to have a Naval base built in a land locked state but, that's what Pork bill spending is all about! Somebody gets rich whether your Republican or Democrat.

Taxing earnings is a deterrent to growth and a deterrent to earn more. A friend of mine is trying to find a way to earn less than $30k. He spoke of calling in sick through the year to accomplish that. The idea is that he wants to qualify for the Earned Income Tax Credit. The same thing happens with the rich. They either find a loophole, hide their true income, or try to persuade their elected officials to create a loophole or send some pork spending their way. Personally I'd prefer a consumption tax similar to the Fair Tax or HR Bill 25.

"Do libertarians have a platform as of yet? I dig some libertarian ideals...staying out of peoples business...but is there a clear political movement yet?"
-BigBuddhaPuppy

There is a platform. The Libertarian Party has experienced quite a lot of growth. There's been more press than ever before. It is more successful in some areas than others. It does take quite a bit of work. I would refer you to our National site LP.org. From there you can also find your state and local party. In my area we're fairly organized and trying to run local candidates but, I can't vouch for where ever you might live......yet. It is easier to become a big fish in a little pond. Small growing parties do have their advantages. In addition, let's face it. The two established parties need some competition to keep them in line!
 
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