One of the most bizarre aspects of this primary season has been the tendency of conservatives to repudiate politicians for holding historically conservative positions. For example, there once was a species of Republicans that advocated for limited government and fiscal prudence. These "deficit hawks", as they were called, are all but extinct now so most of us younger conservatives don’t recognize them when we see them. A prime example is John McCain.
There are numerous reasons why conservative voters should be wary of McCain. But his fiscally prudent position on tax cuts is not one of them.
Here, for instance, is his defense for his old-fashioned (read: conservative) position on the Bush tax cuts :
Rich Lowry: If you don't mind, I want to ask you a domestic policy question, a straight talk question, if you will. In retrospect, was it a mistake for you to vote against the Bush tax cuts?
MCCAIN: No, because I had significant tax cuts, and there was restraint of spending included in my proposal. I saw no restraint in spending. We presided over the greatest increase in the size of government since the Great Society. Spending went completely out of control. It's still out of control. Wasteful earmark spending is a disgrace, and it caused us to alienate our Republican base.
Patrick Ruffini expressed a typical reaction by conservatives to the statement:
Real fiscal conservatives understand that tax relief is a good in and of itself, generating economic growth and keeping the government's grubby hands off more of our money. John McCain doesn't. Spending is a real problem, but to tie spending to tax cuts is nothing more than a liberal ploy to keep taxes high.
Tying spending to tax cuts is a "liberal ploy"? Tell that to Alan Greenspan.
I don’t want to pick on Ruffini but he has adopted a disturbing tactic that has become all too frequent among my fellow Republicans: instead of presenting an argument, simply dismiss a policy/politician by applying the label "liberal."
Contrary to what some might claim to be a "real fiscal conservative" requires adherence to fiscal disciple and recognition of economic realties. Almost all conservatives pay lip service to the first, yet many today seem to ignore the latter. To my mind, there appear to be only three reasons not to tie tax cuts to spending reductions--and all appear to defy reality.
The first is the "starve the beast" strategy, which was adopted by Milton Friedman:
Peter Robinson: Only if Congress doesn’t have the money can it be prevented from spending it?
Friedman: Right. That’s why for a long time now I have been in favor of any tax cut, under any circumstances, in any way, in any form whatsoever.
Robinson: On any pretext.
Friedman: On any pretext because that’s the only way to keep down government spending.
I suspect Friedman was being facetious. No one, especially such a brilliant economist, could look at government spending over the past 50 years and say that Congress won't spend money it doesn't have. And without a balanced-budget amendment, this will never be a reality.
The second reason is a modified version of the first: conservatives believe that we can take the tax cut now and force spending reductions in the future. While history has shown the "starve the beast" strategy to be nonsensical, the "Cut now, Spend less later" is plausible, though politically untenable.
Many serious conservatives rationalized supporting the Bush tax cuts because they believed this strategy was obtainable. While it hasn’t proven true (at least not yet) serious conservatives should at least recognize that this is an essential component of cutting taxes. As Edwin J. Feulner, president of the Heritage Foundation, points out , "Unless Congress gets spending under control, these tax cuts -- and the economic growth we now take for granted -- will vanish."
The third and most common reason people think tax cuts and spending reductions can be untethered is because they have a faulty understanding of supply-side theory. Rather than supply-side theory, some conservatives believe in supply-side magic: Cut taxes and you'll get more tax revenue than before! This, of course, is nonsense, as any supply-side economist will admit. Yet even President Bush seems to have a poor grasp on the concept:
One of the interesting things that I hope you realize when it comes to cutting taxes is this tax relief not only has helped our economy, but it's helped the federal budget. In 2004, tax revenues to the Treasury grew about 5.5 percent. That's kind of counter-intuitive, isn't it? At least it is for some in Washington. You cut taxes and the tax revenues increase.
At best, this is misleading. According to supply-siders, the beneficial effect of lowering tax rates is that it expands the tax base. The more people paying taxes or more people moving up into a higher tax rate, the more the revenue lost from the tax cut will be offset. But rarely--if ever--does a tax cut pay for itself. That is why it is essential to reduce spending.
This should be obvious to anyone who gives it a moment's reflection. Consider an example on the microeconomic level: Imagine you make $100 a week and are in credit card debt. You decide that you can't live on such a measly salary and so continuously borrow $1 a week from your credit card. Are you better off financially? Maybe in the short run, since you have an extra dollar to spend or invest. Eventually, though, you have to pay back the dollar (plus interest) that you borrowed. You are penalizing your future self to improve your present condition.
The same concept holds true for the federal government. As Feulner says,
Here's the problem: The federal government is about 33 percent larger today than it was in 2001 and spends some $22,000 per household. And regardless of how this spending is financed, either with taxes or borrowing, the economy will suffer since resources will be transferred from the productive sector to the government.
Conservatives often forget that every dollar spent by the government is a dollar that has been spent. It's gone, and as Feulner says, was transferred away from the productive sector. This gives the illusion of being beneficial in the short-term but has no real significant effect.
Also, the dollar will eventually have to be paid out of a citizen's taxes. By not taking it out of our taxes now we merely shift the burden onto a future generation. When I was growing up, we Reagan-era Gen-Xers used to fume about getting stuck with that debt. Now that we're adults, we Reagan Republicans don’t worry so much since it will be our great-grandchildren that will pay for the excessive spending during the Reagan era. We'll need to keep the "Reagan coalition" together for centuries just to keep this Ponzi scheme going.
Once upon a time we conservatives used to think such irresponsible economic policies were antithetical to conservatism. Nowadays, if you refuse to adopt such fiscal foolishness you'll be called a "liberal."
Joe, I think you, and maybe others, have missed the whole point, setting up a false position then proceeding to argue against it. For example:
"I suspect Friedman was being facetious. No one, especially such a brilliant economist, could look at government spending over the past 50 years and say that Congress won't spend money it doesn't have. And without a balanced-budget amendment, this will never be a reality."
This statement is pure supposition on your part flying in the face of Occam's Razor which argues that what he said is what he meant. However difficult you might think it to be that Congress would cut spending if the funding is not available I defy you to justify, let alone prove, that the opposite is more than wishful thinking. Does anyone really think Congress or the Executive Office is more likely to cut spending if money is available than if it is not.
I do agree that folks who proclaim fiscal conservatism but do not address both sides of the equation are misguided, but starting with cutting taxes is IMNSHO the better way. As I've said before I believe President Bush to be only half conservative on fiscal matters. He got the tax cut part right, but missed on not following through with corresponding spending reductions.
p.s. If "Cheap Talk" McCain really thought that cutting spending was the right place to start then I would have expected the imposition of tax cuts to increase his efforts to cut spending because it would be even more urgent and important. I've seen no evidence of that. What has McCain done to try to put his supposed cut-first theories into action over the last 6-8 years ?
Joe:
I was asking myself what exactly your point was, so I reread your article. I read your last paragraph to get the punchline and realized that wasn't really the punchline. The real reason behind the article is that you want us to PAY MORE TAXES--right?
I think this line from the second to last paragraph is the real thrust of your article:
Also, the dollar will eventually have to be paid out of a citizen's taxes. By not taking it out of our taxes now we merely shift the burden onto a future generation.
Say it ain't so, Joe. You are advocating that we pay more taxes. If you aren't saying that, then what exactly is the point of the article?
I don't see where Friedman is wrong. The only way to keep Congress from spending is to starve the beast. Just because Congress hasn't been able to restrain itself, doesn't mean he was wrong. His point is that ultimately, there is nothing else we can do.
Additionally, we have only ourselves to blame. Are we not the people who are demanding it? We are responsible for voting in people who have no notion of fiscal restraint. We are responsible for people like Clinton, Obama and Edwards whose only solution to everything is to spend more dollars. They are pandering to the most ignorant among us in the worst possible way--take from the rich and give to every possible envy group out there.
Now I get it. This a way to show that the true conservative (Huckabee) can be in favor of raising taxes. You are a tricky one, Joe.
Joe - Great post. You're a real example to bloggers everywhere that you don't have be an acolyte to a particular candidate or cause.
Kevin - What has McCain done to try to put his supposed cut-first theories into action over the last 6-8 years ?
- Scrutinized wasteful defense spending by contractors
- Opposed the Medicare Prescription Drug Plan on the basis of cost.
I'm sure with some research - I could go on and on; but that's the best I could come up with in 10 seconds.
Thanks for this, Joe. I've been trying for a while to explain that although voting against Bush's tax cuts was the biggest mistake McCain has made in recent years, it wasn't nearly as big a mistake as many of my fellow Republicans make it out to be. I think I'm finally getting hints that they're being fed this information from talk radio; I don't listen, so I wondered why they all seemed to come up with the same point all at once!
Your commenters, too, seem to have drunk the kool-aid, the extra-sweet flavor that causes them to forget the beginning of an article by the beginning. McCain was proposing an alternative plan that involved both tax cuts and spending cuts. Sure, his rhetoric also involved some populism, but on a purely economic basis, I don't think it has been demonstrated whether his populism was right or wrong.
People forget Reagan quickly. Reagan actually raised taxes in his second term, so ardently did he despise deficit spending. Most Republicans today don't see deficit spending as a problem, or think that it's all attributable to the war. In fact, even without the war, the Bush administration has increased spending by record rates.
Anyway, thanks for this. I'll forward it around a bit. :-)
This is a serious question, but why should there be any politics involved in setting tax policy at all? Why doesn't the fed use the Laffer curve to set the most efficient level of taxation? Economics is a science, so there should be an empirical method to determine the most efficient point on the curve where the tax rate should be pegged to. Who could argue with that?
Bill Clinton also raised taxes in his first term, and contrary to Republican fearmongering of the day it didn't result in a devastated economy. The economy boomed throughout Clinton's tenure, and we had a budget surplus when he left office.
Republicans have become addicted to performance enhancing policies, namely unpaid for tax cuts and "stimulus" packages. Taxes and spending have to be managed together if we're to return to financial stability.
If we don't pay for our spending with taxes, we'll pay for it with a weak dollar and inflation. Take your pick.
Hey Joe:
I'm a Huckabee guy and would vote for McCain over the others but I think you are misunderstanding the supply side argument and your analogy to borrowing from your credit card seems somewhat inapt.
The supply side argument goes something like this: if income was taxed at a rate of 100% tax revenues would be zero, people wouldn't work if all they earned went to the government. If income was taxed at a rate of 0% tax revenues would also obviously be zero. Somewhere between those two zeroes is the tax rate which will produce maximum tax revenue for the government.
So if the current tax rate is above the point of maximum revenue and taxes are cut revenues will go up in spite of the tax cut. If the current tax rate is at or above the point of maximum revenue tax revenues will go down even though taxes are raised. So yes, supply siders are saying if you cut taxes revenue can go up but only up to a point.
Here's my take on McCain, He was faithful to America and now he should reap that faithfulness.
Greg Marquez
goyomarquez@earthlink.net
I enjoyed the comment about your fellow conservatives employing the label "liberal" as a substitute for reasoned argument--as if that was a new phenomenon!
Joe, I think you're having a Rip van Winkle moment. If you are a conservative, you loathe government, love the military, hate taxes and think tax cuts are the solution for every economic problem. It's YOUR money, not God's, for heaven's sake. Makes it easy for you (or a robot) to represent folks in any elective office cause you don't have to think anymore. Black and white. Up and down. Right and left. Conservative and liberal.
All the bases are covered!
Good post Joe
The second reason is a modified version of the first: conservatives believe that we can take the tax cut now and force spending reductions in the future. While history has shown the "starve the beast" strategy to be nonsensical, the "Cut now, Spend less later" is plausible, though politically untenable.
Indeed, what usually happens is after the tax cut conservatives say "look we have a deficit now and the world isn't blowing up."
jd
I don't see where Friedman is wrong. The only way to keep Congress from spending is to starve the beast. Just because Congress hasn't been able to restrain itself, doesn't mean he was wrong. His point is that ultimately, there is nothing else we can do.
Of course you don't see where Friedman is wrong. You've kept your eyes closed for the last 25 years now so why would you see it?
Your problem is you're attached to what I call the "ATM Theory of Gov't Spending". You go to the ATM and take out $40. You see your available balance is $100 more than you thought so you shrug and take out another $40. This is not how gov't spending works. There's no "available balance" that you begin with and then spending is decided. The bulk of spending is on autopilot and the remainder that isn't is set more or less independent of how taxes are set.
Additionally, we have only ourselves to blame. Are we not the people who are demanding it? We are responsible for voting in people who have no notion of fiscal restraint.
Actually we have only people like YOU to blame. Let's recall where the Bush tax cuts originated from. They originated because the gov't was running a surplus and that was sold as bad because....well one story was we were 'giving money' to rich bond holders. Yes, yes, look at that guy down the street with the wonderful credit rating. What a sucker he is, paying down his debt! The other reason was, and I more or less quote, "we never told gov't to keep the change".
Justin
- Scrutinized wasteful defense spending by contractors
- Opposed the Medicare Prescription Drug Plan on the basis of cost.
Who can object to scrutinizing wasteful contracts but here's a fact, the Medicare Prescription increase is incredibly popular and appears to have been wise spending since drugs today are doing the work that operations and other medical procedures did in the past. That is probably not going to be undone and probably shouldn't be undone. Given that we are spending more we are going to be taxing more. Couple that with the fact that it is getting harder and harder to maintain the standard Republican answer of "borrow and spend"....how much credit can Uncle Mao really keep extending us, and you're going to get tax increases not tax cuts. Just about the entire GOP slate is unrealistic this year.
oclarki
This is a serious question, but why should there be any politics involved in setting tax policy at all? Why doesn't the fed use the Laffer curve to set the most efficient level of taxation?
The highest point on the Laffer curve is almost certainly greater than today's rates. If it's 45% do you want a Fed to just set it at that level? Even if you did the tax rate is a gross simplification of a very complicated question. There's no wise 'council of elders' who can just give us all the right answers. I think it is unavoidable that taxes and spending will firmly rest as political questions.
Joe,
You are out of your mind! Taxes indeed pay for themselves, because taxes create incentives (positive or negative) that change human behavior. Lower taxes create the incentive to work and invest, which in turn grows the economy, which in turn generates more revenue. This is kindergarten stuff.
What is the current GDP compared to what it was when Ronald Reagan cut marginal tax rates from 70% to 28%? I don't know, but the economy has got to be six, seven, 10 times bigger? I read that GDP last year was over $13 trillion. I would wager that that national debt in 1981 relative to GDP was not all that different to now, maybe even higher, maybe lower. And I've been hearing for over 25 years that the deficit and debt is going to destroy our economy. Hello! I think we can say that theory is wrong, most importantly at the levels we are discussing (of course there is a point when a truly crushing debt burden would mess up the economy).
The reason Bill Clinton left office with a surplus was because of a Republican Congress that really believed and fought for limiting spending (of course they were reviled by liberals for wanting to starve children by slowing the GROWTH of some school lunch program). Then Republicans got fat and happy and partnered with spendthrift liberals to grow spending, and were rightly thrown out of majority status as traitors to the cause. Compassionate conservative Bush never claimed to be a limited government guy, so he never vetoed any spending, that is until Democrats took over.
I'll compare the Bush economy of this decade to the Clinton economy of the 90s any day. The Bush tax cuts were the right thing to do, and McCain was wrong then and still is now.
Thank you Joe. This was a needed article. I'm wondering if you've read James Surowiecki's New Yorker article "Tax Evasion" subtitled "The Great Lie of Supply-Side Economics." It's a really good look at what you're saying here. The link is here:
http://www.newyorker.com/online/2007/10/29/071029on_onlineonly_surowiecki
I'll compare the Bush economy of this decade to the Clinton economy of the 90s any day. The Bush tax cuts were the right thing to do, and McCain was wrong then and still is now.
From http://www.bea.gov/national/xls/gdplev.xls
GDP
1993 6,657.4
2000 9,817.0
7 years an cummulative increase of 47.4599%
2006 13,194.7
From 2000-2006 an increase of 34.4066% To equal Clinton's growth rate, 2007 will have to be $14,476.13B. Likewise unemployment in the early 90's peaked at nearly 7% dropped steadily under Clinton until it hit about 4% in 2000 only to start rising back up to nearly 6% under Bush (see graph on http://en.wikipedia.org/wiki/Image:Us_unemployment_rates_1950_2005.png).
We could go on but it's clear that some people have an almost perfect immunity to the facts.
two quotes from boonton:
Your problem is you're attached to what I call the "ATM Theory of Gov't Spending". You go to the ATM and take out $40. You see your available balance is $100 more than you thought so you shrug and take out another $40. This is not how gov't spending works. There's no "available balance" that you begin with and then spending is decided. The bulk of spending is on autopilot and the remainder that isn't is set more or less independent of how taxes are set.
Actually we have only people like YOU to blame. Let's recall where the Bush tax cuts originated from. They originated because the gov't was running a surplus and that was sold as bad because....well one story was we were 'giving money' to rich bond holders. Yes, yes, look at that guy down the street with the wonderful credit rating. What a sucker he is, paying down his debt! The other reason was, and I more or less quote, "we never told gov't to keep the change".
Neither quote is in any way a reply to what I actually wrote. They have as much to do with what I wrote as Boonton has to do with reality. May the force be with you, Boonton.
jd,
I didn't say you wrote those points, I said people like you made them. I addressed what you actually wrote at the beginning of post 11.
Mr. Boonton,
You happen to be a smartass, but that's ok. I know it's only you who have the knowledge in insight to know what facts are and how to interpret them. I am humbled by your massive intelligence.
In my very humble opinion then, you have two very different scenarios and since I am a conservative Republican my interpretation will probably not square with yours, Mr. Facts. Bill Clinton inherited an economy that was growing, even though he and his campaign lied repeatedly about how it was the "worst economy since the great depression" (the same lie Democrats told about Bush the younger in the last presidential election--imagine that, Clinton lies. Who would have ever guessed!). The average unemployment rate during Clinton's term was around 5% average.
Clinton left Bush an economy that was going into recession. Even after the tech bubble, corporate scandals and 9/11, Bush's policies quickly got us out of the recession. And, Mr. Facts, the average unemployment rate was about the same as Clinton's. You distort the unemployment record because Clinton's your guy. That's ok, but at least admit it. Oh that's right, only we conservative republicans have a "perfect immunity to the facts." (See, I can be a smartass too!)
Boonton wrote:
I didn't say you wrote those points, I said people like you made them. I addressed what you actually wrote at the beginning of post 11.
Next time when you address something to jd, I'll assume you're talking to people like me but not me.
I can see why you get confused. You often comment as if people had addressed you and want to carry on a dialogue with you when that was not their intention.
Let me assure you now, Boonton, that we would appreciate it if you didn't reply at all unless someone mentions you by name. That's a good sign that someone wants you to participate in the conversation. Otherwise you can assume your comments are simply noted and logged in as "against" whatever it is we had said. We might not know exactly what you'll say, but we'll manage to live with that and simply acknowledge that you're "against it" no matter what. You could even go back to your day job, whatever that is.
I can't believe people are arguing against this post's point.
I also find it annoying when people invoke "Occam's Razor" as if saying it automatically makes one correct, and then proceed to make a simplistic point that reveals ignorance rather than insight.
Spending needs to be cut. One can't simply keep cutting taxes while govt spending skyrockets and expect the economy to grow fast enough to offset the spending. The govt can spend money faster than the current economy can grow. The huge deficit certainly doesn't help either. I thought this was somewhat obvious.
Mr. Carter:
You missed the point of Rich Lowry's questions. McCain is giving a different justification now for his vote than he did then. Now he says he opposed the cuts because they weren't accompanied by spending cuts. Back then, however, he opposed the tax cuts "because they were tilted toward the wealthy."
Those who pay more taxes are always going to realize more benefit from any reduction in tax rates. What rankles about McCain is that he used Democrat talking points to criticize his party's leadership. This is the wearisome habit of McCain. He believes he is honorable and thus if you disagree with him you are dishonorable. This is his approach on EVERY issue.
Federal Debt at End of Year: 1940-2009, including as percentages of GDP from gpoaccess.gov
The argument here isn't against tax cuts per se. The argument is against tax cuts without cuts in spending and indeed with large growths in spending. I agree with the Bush tax cuts, but they didn't include the spending cuts they should have. According to the quote, that was why McCain voted against the tax cuts...
So I don't see the problem (on that particular issue).
Lloyd:
Now he says he opposed the cuts because they weren't accompanied by spending cuts. Back then, however, he opposed the tax cuts "because they were tilted toward the wealthy."
Now THAT is a good reason to criticize McCain, not the idea that spending cuts should accompany tax cuts..
giggling writes:
Lloyd:
Now he says he opposed the cuts because they weren't accompanied by spending cuts. Back then, however, he opposed the tax cuts "because they were tilted toward the wealthy."
Now THAT is a good reason to criticize McCain, not the idea that spending cuts should accompany tax cuts..
They are both good reasons, not mutually exclusive; take your pick, or use both. :/
jd
Next time when you address something to jd, I'll assume you're talking to people like me but not me.
No need to make assumptions, especially since you seem to have lots of problems in that department. Just read what is written. I responded to you then I quoted something else you wrote ("we have only ourselves to blame..."). In that new paragraph I said we have people like you to blame. Then I said "Let's recall where the Bush tax cuts originated from..." Only then did I go into the nonsense that was used to peddle the taxcuts. At no time did I say you were either George Bush or a member of his administration.
Mike
You happen to be a smartass, but that's ok. I know it's only you who have the knowledge in insight to know what facts are and how to interpret them.
Actually it's 80% wikipedia and 20% google. But I notice you do the same thing....except for actually getting the facts. Unemployment clearly tracked downwards during Clinton's years and then upwards during Bush's. GDP growth was likewise unimpressive. I gave you the numbers, I gave you the graph. You can say Clinton was just riding on the policies of Bush I but what policies? Bush I's only notable economic policy was a tax increase. You claim Bush II's policies got us out of a recession. How? But enacting the exact opposite policies that Bush I used to give Clinton a booming economy???
In reality Clinton inherited an economy that was on the verge of a credit crunch (a bit like today's). Banks were looking at a massive impolosion because the Fed had allowed them to count their holding of Treasury bonds as risk free, the growing deficit though had threatened to cause the value of bonds to fall rapidly. By addressing the deficit Clinton was able to get the Fed to lower interest rates. Instead of falling bonds boomed and banks took their windfall profits and started investing them in the economy spurring a boom.
I'm happy to admit a lot of distortion goes on. Yes yes "worse economy since the Great Depression" no doubt used some highly cherry picked metrics. I'll play fair with you, 1991 was nowhere near as 1932.
Boonton,
You are simply wrong about the unemployment figures. Under Bush, using government figures the rate went up, then trended down, until the last couple months it's trended up again. If you average out the 8 years of Clinton and the Bush years the average rate of unemployment are pretty much the same. That is a FACT.
My problem with liberals lionizing the 90's as if it were some economic nirvana is that they weren't. Everybody wants to use "the facts" to demonize the other guy. The Clinton years were great, and the Bush years haven't been so bad either. But remember, that 4% unemployment rate in 2000 was built on what we know was the tech bubble. Much as some of the good times this decade were built on the housing bubble. Our arguments are often over very small differences to defend our ideological assumptions. I'm guilty too!
No doubt presidents and their policies, and the Congress which has the power of the purse, have some impact on the economy, but the greatness and dynamism of this country and its people often makes the claim of credit or blame pure hubris. We often write and talk as if we can prove a direct correlation between this policy or this event and what happens in a $14 trillion dollar economy, and now more than ever a global economy worth order of magnitudes more.
I believe that lower taxes, and yes less government spending, on the whole are better for our economy. Bush did great on the former and terrible on the latter. But he had lots of help from both Democrats and Republican in Congress. You may believe that higher taxes and more government spending our better. God bless you, but I think you are out to lunch. Facts are facts, yet we have Hillary Clinton in a recent debate saying Reagan's policies didn't work and were bad for the country. Of course she is on drugs, but she's a lefty, a liberal who hates everything about conservatism. She's clearly got the facts wrong, but oh well, she'll keep shouting them from the rooftop. Ideology almost always trumps facts, especially when the comparisons are a percent this way or that.
I'll leave you with this: tax cuts good, tax hikes bad. Smaller government good, big government bad. More freedom good, less freedom bad. Just so you know where I stand.
Joe,
The only true conservative who can win in a general election is Gov. Huckabee. The article (link's below) by Rep. John Linder, R-Georgia, who has served in the House of Representatives since 1992, was written in the "Gwinnett Daily Post" two days ago and explains why he is endorsing Gov. Huckabee and why Gov. Huckabee is our only chance to beat the democrats. The article is a must read.
http://www.gwinnettdailypost.com/main.asp?Search=1&ArticleID=10019&SectionID=17&SubSectionID=116&S=1
-Paul
I was just reading Human Events-they say McCain is too liberal, so he must be wrong on tax cuts.
The nerve of that guy-how could he suggest that if taxes were cut, spending should be cut. Everybody knows that when you cut taxes, you actually end up collecting more taxes because people have the opportunity to earn more money. And then you don't need to spend as much on social programs because all that wealth will be trickling down to the lower classes. Someone who is against cutting taxes is an advocate of class warfare....
Now McCain claims he opposed the tax cuts because they didn't include enough spending cuts. But that wasn't what he said at the time.
To the contrary, in 2001, McCain said he was voting against Bush's tax cuts based on the idiotic talking point of the Democrats. "I cannot in good conscience," McCain said, "support a tax cut in which so many of the benefits go to the most fortunate among us at the expense of middle-class Americans who need tax relief."
You are simply wrong about the unemployment figures. Under Bush, using government figures the rate went up, then trended down, until the last couple months it's trended up again. If you average out the 8 years of Clinton and the Bush years the average rate of unemployment are pretty much the same. That is a FACT.
True but average distorts the picture. If my scores on class tests are 50, 75, and 100 my average is 75. If your's are 100, 75, and 50 you too average 75. But I'm trending up and you're trending down. One story is of a student steadily improving and the other is one of a student starting out good and falling apart.
This leads to an incoherent story on your part. Bush 'saved' us from a recession by tax cuts. Yet Clinton supposedly was benefiting from tax increases?
The next line you push is that the prosperity of the 90's was caused by the tech bubble and then the housing bubble. I don't think this story pans out. While there was a tech bubble the fact is the number of people employed by tech companies (specifically dot-coms) probably did not grow all that much in the 90's. Yes Amazon.com, ebay, napster etc. grabbed lots of business headlines but they weren't like US Steel, Ford or GM in times past. Additionally, there was a real boom, we are undoubtably more 'teched' today than we were in the 90's. The housing bubble is more serious, I think, but still it was in fact real. There was a lot of house building and improvement during those years and our housing stock today is richer than it was 10, 20 years ago.
The reality you're trying to present seems to be that the 90's weren't real, they were resting on an artificial boom from tech and then housing. I think reality is more along the lines of the tech & housing bubbles were byproducts of a booming economy that could afford to throw money at "the next big idea". All in all I don't think you can spin a convincing story of how Clinton caused either bubble with his policies unless you're going to say he helped create an expansion which created bubbles as a byproduct.
All in all this debate does illustrate the folly of political supply siders. Political supply siders would have us believe tax cuts are the solution to all problems, tax increases are poisen. Yet reality appears much more complicated. We have examples of economic booms under tax increases and only moderate performance under large tax cuts. This was born out in the 80's too. As many here forget Reagan's tax cutting mode more or less ended halfway through his first term. Afterwards it was tax increases.
You may believe that higher taxes and more government spending our better. God bless you, but I think you are out to lunch.
I don't believe that but I do believe we have more or less the level of gov't spending we want (although many won't admit it). As I asked before, does anyone seriously believe the Medicare Drug act will be repealed? I don't and I wouldn't support such a bill to do so at this point. Pulling out of Iraq, if it can be done, will generate some savings but only a portion of the entire budget. I can't see any serious support out there for real, hard spending cuts. That being the case the question is not "less taxes, less spending" or "more taxes, more spending" but "more taxes, more spending" or "less taxes, even more spending (because of interest costs)".
Boonton,
I didn't say there was a housing bubble in the 90s. We're suffering now from the housing bubble of the last few years. I totally agree that a multiple trillion dollar economy is complicated. That's what I said! To prove direct correlations is all but impossible, and because you are toward the left side of the political spectrum you'll try to prove how great raising taxes is, and I will try to prove just the opposite. (btw, the trend in the Bush years after initially going up was down until the last few months.)
But for me I am philosophically opposed to higher taxes, because the more revenue the government takes in the more it spends. I don't care if this is federal, state or local. And in my opinion bigger government means less freedom. You are absolutely right that Americans today have just about the government spending they want. That is terribly unfortunate, but something for nothing is an easy sell. Until we have to pay the bill.
Boonton:
As many here forget Reagan's tax cutting mode more or less ended halfway through his first term. Afterwards it was tax increases.
And that the net effect of the Reagan years was a total tax burden similar to what was there when he started, only with a greater share of the overall burden placed on the working class.
small-l libertarian Friedman truly did support all tax cuts.
Which politician has actually been cutting ANY gov't programs?
The sad reality is that once a program (of 'free' money) gets started, it becomes popular and hard to cut.
Tax cuts, like all money, go for two purposes, investment and consumption. Rich folk invest more -- investment leads to more and higher paying jobs, and more mortgage money available. Non-rich folk consume more.
Gov't folk mostly consume ('entitlement'), but often do invest in infrastructure (tho New Orleans/ LA failed for many years).
Consumption now is good, now. Investment now is good for the future, increased production, increased consumption.
Bush failed to lead his Rep Congress towards any big spending cuts, but when facing a recession the gov't wasn't going to do spending cuts anyway, and shouldn't. The anti-recession tax cuts were good, so McCain was a bit wrong. The lack of spending cuts was bad -- and McCain and all Congress failed to suggest any in any Budget I heard of.
I don't care if this is federal, state or local. And in my opinion bigger government means less freedom. You are absolutely right that Americans today have just about the government spending they want. That is terribly unfortunate, but something for nothing is an easy sell. Until we have to pay the bill.
This actually would seem to incline you towards tax increases and against tax cuts even though you can't seem to bear the rhetoric. After all, the essential mantra of political supply siders if not "you can have plenty of spending and never have to pay the bill"?
Of course, those who now discover they like the idea of spending cuts could be nice enough to actually articulate what spending they are cutting. To date, the bulk of new spending appears to be coming from either the Medicare drug benefit, the war in Iraq, or perhaps the expansion of farm subsidies. No one has yet to run on the GOP (except maybe Ron Paul) on a platform of eliminating any of these. Needless to say there are few areas of old spending that can so easily be cut to achieve significant savings so I'm inclined to believe spending is going to, at best, hold its level for the near future.
A few points:
this might be hard to read as i'm on vacation and typing from a laptop that i'm not used to... hope it turns out well.
1) Joe, you're wrong. The reason it is referred to as a liberal ploy by patrick ruffini is because you'll never get a tax cut and spending cut put together. Has nothing at all to do with whether or not its the right thing. It's why, for example, republicans will put iraq war spending with other bills to get it passed easier, etc. So, if you are against tax cuts, you then demand something crazy when tax cuts are brought up that will never get a majority vote, like bundling it with spending reduction.
IE: Liberal ploy.
2) Boonton, talk about facts! Very funny. The way economies work.... Economy 101: After a recession -- expansion. Bill Clinton took office after a dip in the economy. President Bush took office at the peek (Expansion). So of course you can fool people with your "facts" if you don't put in the whole picture.
Nice for Bill Clinton though that he took over the economy at a bottom and then dumped it at the top while President Bush took over the economy at a top. The first year of his Presidency the economy was already getting negative numbers and then 9/11 happened.
with those facts, i'd say President Bush has been a pretty darn good steward of the economy.
Aren't you an economist or something like that? Kind of strange that you wouldn't know this sort of stuf.
Yes indeed expansions follow recessions. The recession in the 90's was remarkably short lived and light and the expansion was very strong. I'll have to check it out but I believe it even beats the expansion of the 80's.
Timing is a part of the equation but only a part. Policy matters too and there's a good argument the policies of the 90's both lessened the recessiona nd boosted the expansion.
One problem with this attempted defense of McCain, is that the candidate is, as on so many issues, lying.
He did NOT oppose the tax cuts on the basis that they were not combined with spending cuts. He opposed them, explicitly, because he claimed (in standard Liberal anti-tax-cut rhetoric) that they were "for the rich".
In this own words:
"I cannot in good conscience support a tax cut in which so many of the benefits go to the most fortunate among us" --John McCain
He has, now, reversed his position, and claims to be FOR the cuts...but he has also reversed his position on abortion, gay marriage, amnesty for illegals, torture, and many other issues, all right before he needed to secure the nomination.
This kind of flip-flopping is something we should leave to the Democrats.
Then again, THEY are the ones who nominated John McCain, a majority of Democrats and Liberals crossing over in open primaries voting for him, while a majority of Republicans voted against him.