With the national deficit hitting the $16 trillion mark, the debate over tax rates and the Bush Tax Cuts has resurfaced. The Democratic National Convention ignored the mounting debt as they wallowed in irrelevant and extraneous non-issues. Obama of course needs to make voters forget about his failed promise of slashing the deficit in half by the end of his first term. The man who called President George W. Bush “irresponsible and unpatriotic “for adding $4 trillion to the deficit in 8 years has added $5.4 trillion in 3.5 years. President Obama’s lackluster record on spending control is certainly something he will hide from in the 2012 campaign. However, when he does bring up the issue of the debt, he will only offer one solution: Tax, tax, tax.
While Paul Ryan and his fellow Congressional Republicans have endorsed concrete spending cuts, the President refuses to even look at entitlements for expense saving. He only wishes to raise taxes. However, an expiration of the Bush Tax Cuts will lead to a reduction of already anemic economic growth, and even less tax revenues for the Fed. President Reagan’s chief economic adviser Art Laffer outlined this theory with his genius “Laffer Curve.” The Laffer Curve states that high tax rates would generate the same amount of revenue as a 0% tax rate. This is because the more government taxes, the less incentive there is to work, make economic ventures, and pay existing taxes. Lower tax rates will discourage people from hiding their income, and cause them to spend and create economic growth. Ronald Reagan proved that lower tax rates are healthier for economic growth and federal revenue with his tax policy.
When President Reagan took office in 1981, the top marginal tax rates were 70%. By 1986, after the second year of his second term, he had cut those rates to 28%. Liberals would like to believe that the huge reduction in rates would mean substantially lower revenue for the government. But in fact, the government’s revenue actually increased! Here are the figures:
In Fiscal Year 1980, with the top tax rate being 70%, the federal government’s total direct tax revenue was $885.8 Billion. Six years later, after the Reagan recovery began and the top tax rates were dropped to 28%, the total direct tax revenue was $1,439.3 billion. In other words, the top marginal rates were cut by 42%, but revenues actually increased by 62%! Not to mention the other aspects of the Reagan’s recovery, like the reduction of the unemployment rate to 5.3% and the economy growing by a third.
The common sense economic policies of the Reagan administration would be of great use to our country’s economy today. Because the Democrats are not serious about touching entitlements, the only method of dealing with the national debt will be the raising of taxes. However, this will only lead to less revenue! With raised tax rates, people will only dodge taxes and spend less, and this will lead to an even weaker economy. Taking more of people’s hard earned money will not incite job creation, it will not spawn economic growth, and it will not deal with our national deficit. The only way to grow the economy, create jobs, and cut the debt is to cut taxes. To quote the creator of the late 20th century economic boom: “Government is the problem, not the solution.”
Colin Snell | Burlington College | @SnellColin
Unfortunately it is becoming clear Obama prefers wealth redistribution over Reaganomics.
G-dBlessTheUSA: And your point is what? What is the definition of Reaganomics and what would it do for us today? Do you advocate cutting taxes? If so, by how much? How much more deficit are you prepared to tolerate to sanctify Reaganomics? Or, do you advocate increasing taxes as the Reagan Administration did between 1981 and 1986? Your comment is pretty shallow and really makes little sense.
Colin: Talk about drinking the Kool-Aid WOW! I think Chelle has it about right. But, I will address your juvenile comments one by one: (1) Yes, I was probably somewhat better off in 1988 than 1980 because the economy had finally somewhat stabilized, NOT because the top tax rate had been lowered from 70%. Neither I nor most people ever paid anything near the 70% rate. Only the super-rich were subject to such a rate. (2) President Obama did propose a tax deal to Speaker Boehner which would have reduced some spending ALONG with some tax increases. Speaker Boehner eventually said no….because he could not get enough Republican votes to increase taxes. The TEA-PARTY wing of the Republican party will not agree to ANY tax increases for any reason…period. Former Senator, Allan Simpson (Simpson-Bowles)has publicly stated (on 60 Minutes & other places)that the Republican anti-tax ideology is insane. (3) As far as Arther Laffer is concerned..his so-called Laffer-Curve is really nothing new to anyone who knows anything about economics. However, it is only valid when tax rates are “too-high” so as to promote tax avoidance. The problem is…today taxes (income) are not too high so any further cuts would do NOTHING but cost the Feds further revenue even though they MAY have yielded additional revenue when cut from 70%. No responsible economist will go on record and say FURTHER income tax cuts will generate additional revenue. All is not constant along the curve. You may want to take an economics course. (Only MAJOR tax increases and MAJOR spending cuts will maintain a civil society and bring down the deficit. You may want to read “The Benefit & The Burden” by Bruce Bartlett. He has advised many Republican Congresspeople as well as President Bush. (4) What’s this celebrity President shit? Typical college student smart mouth…all dick and no balls!
Thats funny, Erskine Bowles of Simpson Bowls had this to say about Paul Ryan:
“I’m telling you, this guy is amazing. I always thought I was OK with arithmetic. This guy can run circles around me,” Bowles tells a class of students at the University of North Carolina at Chapel Hill.
“He is honest, he is straightforward, he is sincere. And the budget he came forward with is just like Paul Ryan. It is a sensible, straightforward, honest, serious budget and it cut the budget deficit just like we did by four trillion dollars.”
He also had this to say about the President and his laughable budget:
“The president came out with his own plan. And the president, as you remember, came out with a budget. And I don’t think anybody took that budget very seriously,” Bowles continues.
“The Senate voted against it 97 to nothing.”
In my opinion, Obama’as anti-fiscal sanity idealogy is insane.
Anyway, I’m not saying just cut taxes and thats the solution. I am saying simplify the tax code, get rid of all the confusing deductions and exemptions and in their place, just lower the rates. This will give families and job creators more certainity, and it will get the rich out of hiring IRS expert lawyers to find deductions and exemptions. I gaurantee this would have us seeing more revenues.
Celebrity President? I’ll tell you what I mean. The man who has time for David Letterman, Jay-Z, and Beyonce but doesnt have time for Benjamin Netanyahu. The President who goes on The View and parties with rappers who praise cop killers at the White House.
As for your last comment, I’m a little confused. I’m the typical college student? Your definition of the typical college student is an economic libertarian? By the way Mr. Prokop, I very much resent your arrogant tone. I bet you think I am a spoiled rich kid from the suburbs and my parents are paying for my college and buy me new cars and things. Well that is not the case at all. I was accepted to a couple four year schools out of high school, but i opted not to attend BECAUSE IT WAS TOO EXPENSIVE. Unlike most college kids, I took a fiscally sane route. I am now at Community College, paying for school on my own. I am a full time student and work 30+ hours a week. I was able to save enough money this summer to by myself a clunker with high mileage. I feel the burden everyday with Obama’s economy costing me almost $4 a gallon.
You must have lived off the government your whole life. Maybe you grew up in the 1960’s and got a little caught up in that failed movement. Maybe you would love to see a bigger government, but I aspire to make something of myself in this country, and that can’t be done with the government strangling the economy and economic growth. In the meantime, I hope you find something better to do with your life then to come on here and act like you know everything in the world. Disagree with me? Well then say a prayer for me next time you kneel at Obama’s alter.
Colon; Just for the record I did grow up on the 1960’s and 1970’s. I find it a little interesting that every time I take a part one of these so-called conservative blogs, I get a comment such as: “you must have lived off the government your whole life.” Just for the record, I have NEVER lived off the government other than to collect some unemployment compensation for a short period. I happen to have worked in private industry up until the last couple of years. Now in semi-retirement I do work part-time for a non-profit. I happen to have a PRIVATE pension and own substantial real-estate which I plan to use as a partial vehicle for my and my wife’s retirement.
Now I did graduate from a public university as well as go to public school.I left college debt free, but college was a hell of a lot cheaper then…and would be now if taxes were properly assessed. That’s about as close as I got to living off the government. And,by the way, my wife has worked for the state throughout her life and no she was not a teacher. She is now ready to retire. We will both soon be drawing Social Security. Have paid in ALL our lives.
And now, what about you smart guy. The fact that YOU write these blogs tells me something about how SMART you think you are. However, I do commend you for taking the fiscally sound route through college.I did the same. So have my kids. Be careful about attacking the messenger…it is the message (backed up with FACTS) that really counts.
Chelle,
1. If you are going to tell me that Americans were worse off in 1988 then they were in 1981, than you are crazy.
2. Maybe it wasn’t ALL Obama’s fault, but he doesnt have any guts to propose anything that deals with spending and entitlements, only tax increases! He is completely shying away from the Debt crisis and we need someone who is going to get in there and do something to help!
3. You’re right. After the Democrat’s historic defeat in 1994, Bill Clinton moved to the center and worked with Congressional Republicans to get Welfare Reform passed, and I commend him for doing so. Such presidential bi-partisanship does not exist under this celebrity President.
1) I’m just posting facts here. Prehaps if you had acknowledged that Reagan did raise taxes instead of trying to pass off that he didn’t, I wouldn’t of had too.
2) Oh yea, that $580 billion in cuts he proposed never happened. Except it did http://www.politifact.com/truth-o-meter/statements/2012/sep/07/barack-obama/obama-says-budget-plan-cut-deficits-4-trillion/
3) LOL, Clinton doing something Republicans love – limiting welfare – is the parties working together but Republicans blocking Democrat job bills is all Obama’s fault because he’s a “celebrity.” Hey, may be if Republicans sucked it up and stopped pouting because the majority of the country was tried of their party messing things up, bills that help people would get passed http://www.businessinsider.com/republicans-block-military-jobs-bill-2012-9
But I love how your definition of bipartisanship appears to be “Democrats doing what Republicans want.”
Um, no http://www.politifact.com/rhode-island/statements/2010/sep/05/john-loughlin/loughlin-says-reagans-1981-tax-cuts-led-exponentia/
Nor was it all Obama’s fault http://www.politifact.com/truth-o-meter/statements/2012/aug/28/chris-christie/chris-christie-says-there-has-been-5-trillion-debt/
It’s note worthy that the Welfare Reform Act happened under Clinton…a Democrat.
Thanks for providing those links, Chelle! I knew that Reagan had raised taxes, but I didn’t realize it was to THAT extent.
No prob!
Great article. Unfortunately Obama embraces far left ideology and as we saw with his Arab apology tour is out of touch with main street America