Front and Center

Politics, society, and other random randomness

Monthly Archives: May 2011

Where Does Tax Rhetoric Meet Reality?

There has been a lot of talk lately about taxes.  George W. Bush lowered tax rates twice while in office.  Democrats portray those cuts as “tax cuts for the rich” as though no one else benefitted–not even the large number of folks who were removed completely from the tax rolls due to the minimum taxable amount being increased.  Democrats also complain about the cost of the cut for the richest folks, constantly ignoring that the cost of the cut for the other brackets was 3 times as much.  Obama then extended those cuts, much to the chagrin of the Dems.

Now, as talk of deficit reduction and debt reduction heats up, there is much hand wringing going on regarding what to cut and where to get more revenue.  Democrats, of course, say raise taxes.  Republicans say no.

Republicans are playing hardball in terms of tax policy, saying no tax increases will be on the table.  In a way, I can agree, as the more important thing is to lower spending.  Not only that, but the government has a pattern in place:  every time more money comes in, they find a way to spend it.  Without going into detail, the fact that by law, surplus Social Security money is put into the general fund for spending purposes is a prime example.  Anyway, Republicans have their own tax mantra that they will say over and over and over again:

Tax cuts spur economic growth.  But tax increases destroy the economy and destroy jobs!

Having heard this so many times, I finally wondered how much truth there is to this.  Nevermind that I personally believe that taxes can be increased with with no devastating effect to the economy.  I wanted to know what history has shown.  Was there any conclusive proof that showed where tax increases had really hurt the economy?

From what I knew already, I knew that there were examples where tax rate cuts had at least helped spur the economy.  Higher taxes helped fund World War II.  JFK also decreased taxes, which led to economic growth.  Even under G.W. Bush, the economy grew after his tax rate cuts, though in a very tepid fashion.  But what about tax increases?

I was skeptical that I would find evidence and was convinced that the notion was simply a Republican talking point, but there is indeed proof.

  • President Herbert Hoover signed a major tax increase in 1932.  The top marginal rate was increased from 25% to 63%, among other rate increases.  Tax revenues in 1933 were 42% of what they were just two years prior.  Unemployment rose to nearly 25%.  Slowly, though, the economy recovered until…
  • In 1937, Roosevelt signed into law new tax increases.  The result was that the economy went back into recession and didn’t come back until during WWII.  Truman actually cut taxes during that time and by the end of the decade there were budget surpluses.
  • Reagan signed a major tax rate cut in 1981.  Many Republicans like to point this out about Reagan and say that those cuts are why the economy grew during the Reagan years.  But that leaves out part of the story.  Reagan signed a number of tax increases starting in 1982.  Tax loopholes were closed and Social Security was overhauled.  Businesses ended up paying more taxes as a result.  Despite this, there was still economic growth.
  • During the 90s, Clinton raised taxes.  The country was coming out of a recession, and even with the tax increases, the economy grew.  Clinton did, however, also lower taxes on capital gains in the mid-90s.  Many say it was actually the tax cut and not the increase that provided the huge boost in revenue to the government.

So, what is the outcome of my info hunt?  Well, as usual, both sides will make declarations without telling the entire story.  But right now, Republicans are most guilty of cherry picking.  While it’s true that some tax increases did real damage, both Reagan and Clinton showed tax increases can be done and they NOT throw the economy into chaos.  I will also point out that they are especially guilty of ignoring Reagan’s tax increases (yes plural) when talking about how his cuts grew the economy.

Bottom line, rolling tax rates back to pre-Bush levels will not damage the economy.  Just like before, businesses will still find a way to survive and eventually thrive, the economy will grow, and there will be jobs.

Dems Want to End Oil Company Subsidies. Another Fight Over Chump Change

Oil companies, aka “Big Oil,” have been a constant target of the Left for as long as I can remember.  Oil companies don’t control the price of oil, and only make a couple of pennies off the sale of gas, but one would never know that from listening to the constant berating they receive.  Since most of us drive to get from A to B, we have to buy gas.  When oil prices go up, so do gas prices.  When this happens, SOMEBODY has to be the boogeyman.  Why not those mean, nasty Big Oil companies?  Any report of high profits must be attacked–in spite of the fact that the profit margins of the same oil companies tend to stay the same.  Not only that, but they don’t even rank in the top 10 in terms of profit margins, yet companies with far greater margins don’t get nearly the attention.  Its as though cheap gas is some type of right, not just a commodity.

Recent world events have sent the price of oil to major highs.  Subsequently, some of the larger oil companies had record profits to report.  Right on time, members of the Left were quick to start yelling about record profits, as well as government subsidies that oil companies receive.

Just to be clear (thank you, Pres. Obama.  I love that phrase!), in a time of high deficits, I’m in favor of major cuts in corporate subsidies.  We shouldn’t be borrowing money to fund ethanol (proven to be a waste of time), fund farms, ect.  If there is an argument to be made, argue for getting rid of all of them.

But that is not the argument being made.  Democrats in Congress are rallying to end corporate subsidies for the major oil companies.  They basically say the companies don’t need it, and the money can be used to lower the deficit.  I want to say amen but I find myself laughing at this.  Why?  Because just like with the budget negotiations, we have politicians making a huge deal over a relatively small amount of money.  The projected savings from ending just those subsidies is $21 billion over 10 years.  Yes, my fellow Americans, with trillion dollar deficits projected over that same time period, Democrats are yelling about what amounts to an average of $2.1 billion per year.

Is it a lot of money?  To us, yes.  As part of a multi-trillion dollar budget?  No.  This is nothing but a political ploy.  A game.  An attempt to lash out at those mean nasty oil companies.  Someone let me know when the games end and folks get serious.

Thoughts on Bin Laden: Credit, Sea Burials, and Other Randomness

Just some thoughts on the dispatching of Osama:

ATTABOY AWARDS

Let’s start by making sure credit for this is given to all the parties that deserve it.  First, I hope they make a movie about the SEAL team that got to go in and execute the plan.  It has all the parts of a good movie:  overall plot (kill the terrorist mastermind), buildup (years of searching and intelligence), suspense (one chopper lost on the ingress), action (fast roping on the roof, gunfight), and a happy ending.

Kudos also to everyone from top to bottom that was involved in the search.  that includes folks under Bush as well as the current folks under Obama.  The president was very classy in mentioning that the effort started under Bush, and also in calling him to let him know OBL was dead.

And yes, credit to Obama.  Though I give more credit to the folks below him, he gets credit not only for being the final go-no go decision maker, but for keeping good folks working for him in order to get this done.

LET’S NOT GIVE HIM A CAPE JUST YET

I’ve noticed that many of Obama’s supporters have gone beyond the simple idea of giving him credit for getting OBL.  Many are already running the victory lap for the 2012 election.  My friends, slow your roll.  There is a lot of time between now and election day.  And with gas prices going up, unemployment still around 10%, and other issues going on, getting rid of OBL is not enough to punch his ticket into term #2.

If all else fails, look at Bush I.  He had the whole world behind him as the US and its allies went in and kicked Saddam out of Kuwait and back to Baghdad.  But on inauguration day in 1993, the person sworn in was named Clinton, not Bush.

OBL BURIED AT SEA

Evidently, the body of Osama was buried at sea.  Per Muslim tradition, a person must be buried within 24 hours of death.  So nice of the US to go ahead and adhere to such.  The reasoning behind the move makes sense.  Finding a country to take OBL’s remains may have been tough, and on top of that, burying him at sea preventing OBL supporters from creating a shrine.

But lets just count how long it takes before the conspiracy theorists take this and run.  Was it faked?  Why not show everyone the actual body?  Is he really dead?

INTERESTING BITS OF INFO EMERGING

–OBL was given a chance to surrender.  He opted not to.  He caught a bullet in the left eye as a result.  In the left eye.  that’s some impressive shooting.

–Is someone going to try and convince me that authorities in Pakistan didn’t know OBL was living in the city in a massive mansion?  !t was located within sptting distance of the Pakistan Military Academy.  Yeah, right! 

–There was a plan to bomb the compound in March.  They were going to use two B-2 stealth bombers to drop a bunch of bombs on it.  But Obama didn’t sign off because there wouldn’t have been enough left to confirm OBL was dead.
Bottom line:  Osama Bin Laden is taking a dirt nap.  Good riddance.