Leaders Needs To Learn From Past Mistakes
July 28, 2016 at 4:25 p.m.
By Gary [email protected]
But axioms are axioms for a reason. They're true. A stitch in time saves nine. A penny saved is a penny earned. Who could argue?
So why are our leaders - Republicans and Democrats alike - so averse to learning from mistakes of the past?
Especially when it comes to matters of tax policy. I hammer on this all the time because it seems so simple to me, yet it eludes some of the brightest minds in Washington.
The government is functionally broke. It doesn't have enough money to sustain itself. It spends more than it takes in in tax revenue. That's deficit spending.
The only way it can pay its bills is to sell U.S. treasury bills, which devalues the dollars and increases the debt. The government has to pay interest on its debt. Those interest payments add to the deficit. It's quite a viscous cycle.
One would think a prudent plan would be one where you increased tax revenues and decreased spending so you could chip away at the debt.
But now comes President Barack Obama ...
(OK, here's the deal. I am relenting. I will no longer call President Barack Obama O. For seven years I called President George W. Bush "W" and I never heard a peep. Well, there was one peep, but it was a mild one from someone who was a big George W. Bush supporter. He said he wasn't offended by it or anything, but was worried that it might give the wrong impression. But with the new president, things are different. There has been a cascade of comment in all forms - mail, e-mail, telephone calls. I have been accused of being a KKK member. People have demanded that I be fired. That's right. They want me to be unemployed. They want to financially burden my family because I dared to call President Obama "O". I give. I give. They win. I'll just use President Obama from now on - and President Bush.)
Anyway, comes now President Obama and his stimulus and his 2010 budget and he gets it just absolutely the wrong way around.
He's going to increase spending and enact tax policies that - if history is any teacher - will likely reduce revenue.
Allow me to bore you with some numbers.
Part of the plan is for President Bush's (not W's) tax cuts to expire on schedule at the end of 2010. The higher tax rates will take affect in 2011 and, with the exception to changes in withholding, will be most apparent when taxpayers file their 2011 tax returns in the spring of 2012.
So let's see what happened after the Bush tax cuts were enacted in 2003.
The first number is federal receipts - how much the government collected in tax revenues. The second number is federal outlays - how much the government spent. The third number is the difference - a deficit. Everything is in trillions of dollars, of course.
'03 1.78 2.16 -.378
'04 1.88 2.29 -.413
'05 2.15 2.47 -.318
'06 2.41 2.65 -.248
'07 2.57 2.73 -.162
Federal receipts - the money the government collected in taxes - set a record in 2005. It was the most tax revenue ever collected by the government. And, as you can see, that record was broken each subsequent year through 2007. And in 2007, the economy was soft.
This is the same President Bush tax policy that President Obama calls a dismal failure. I just don't get that. How was it a failure?
Spending was the problem.
Spending was the problem.
I just can't say that enough.
Spending was the problem.
Spending was the problem.
The tax policy generated record amounts of revenue. Why not leave it alone? Why not extend it?
But no.
President Obama, in order to fund his ginormous $3.5 to $3.8 trillion budget, needs more revenue. He wants to increase spending on health care, education, energy and pretty much everything else despite that fact that government already is broke.
His plan to raise revenue is to end the President Bush tax policies and raise taxes on rich people.
Somewhere around 1.5 million senior citizens with incomes of $170,000 and above will see cuts in their Medicare benefits.
If you make more than $250,000, you're going to see tighter caps on itemized deductions - mortgage interest, charitable contributions, etc. (This has charities shuddering.)
And remember, their taxes will rise automatically as the President Bush tax cuts expire.
Here are some more numbers. (These are 2006 figures, cited in a July 2008 Congressional report.) This shows how the income tax burden is distributed by income class.
Top 1% $388,806 39.89%
Top 5 % $153,542 60.14%
Top 10% $108,904 70.79%
Top 25% $64,702 86.27%
Top 50% $31,987 97.01%
Btm 50% < $31,987 2.99%
As you can see, people who make $250,000 a year already are shouldering somewhere in the neighborhood of 50 percent of the tax burden.
So what? They're rich. They can afford it. Pile it on them.
Problem is, lots of these "rich people" are people who own small businesses. What do you suppose these people will do when their portion of the tax burden rises?
Invest? Capitalize? Add jobs? Take risks? Not so much. More likely they will lay people off, downsize and shelter income.
I can virtually guarantee that President Obama's plan to raise revenue will result in lower revenues. Taxing the rich has been tried before. It simply doesn't work.
The answer is to cut taxes. Leave money in the economy. Shrink government. Smaller government demands fewer tax dollars. Maybe we could even start chipping away at the $10 trillion in debt we've run up.
Instead, President Obama is proposing spending roughly $1 trillion more than President Bush did in 2007 and he's likely going to take in significantly less tax revenue.
Ouch.
Hey, you know what? I could be wrong about all this, but I'll bet you a candy bar I'm right.[[In-content Ad]]
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But axioms are axioms for a reason. They're true. A stitch in time saves nine. A penny saved is a penny earned. Who could argue?
So why are our leaders - Republicans and Democrats alike - so averse to learning from mistakes of the past?
Especially when it comes to matters of tax policy. I hammer on this all the time because it seems so simple to me, yet it eludes some of the brightest minds in Washington.
The government is functionally broke. It doesn't have enough money to sustain itself. It spends more than it takes in in tax revenue. That's deficit spending.
The only way it can pay its bills is to sell U.S. treasury bills, which devalues the dollars and increases the debt. The government has to pay interest on its debt. Those interest payments add to the deficit. It's quite a viscous cycle.
One would think a prudent plan would be one where you increased tax revenues and decreased spending so you could chip away at the debt.
But now comes President Barack Obama ...
(OK, here's the deal. I am relenting. I will no longer call President Barack Obama O. For seven years I called President George W. Bush "W" and I never heard a peep. Well, there was one peep, but it was a mild one from someone who was a big George W. Bush supporter. He said he wasn't offended by it or anything, but was worried that it might give the wrong impression. But with the new president, things are different. There has been a cascade of comment in all forms - mail, e-mail, telephone calls. I have been accused of being a KKK member. People have demanded that I be fired. That's right. They want me to be unemployed. They want to financially burden my family because I dared to call President Obama "O". I give. I give. They win. I'll just use President Obama from now on - and President Bush.)
Anyway, comes now President Obama and his stimulus and his 2010 budget and he gets it just absolutely the wrong way around.
He's going to increase spending and enact tax policies that - if history is any teacher - will likely reduce revenue.
Allow me to bore you with some numbers.
Part of the plan is for President Bush's (not W's) tax cuts to expire on schedule at the end of 2010. The higher tax rates will take affect in 2011 and, with the exception to changes in withholding, will be most apparent when taxpayers file their 2011 tax returns in the spring of 2012.
So let's see what happened after the Bush tax cuts were enacted in 2003.
The first number is federal receipts - how much the government collected in tax revenues. The second number is federal outlays - how much the government spent. The third number is the difference - a deficit. Everything is in trillions of dollars, of course.
'03 1.78 2.16 -.378
'04 1.88 2.29 -.413
'05 2.15 2.47 -.318
'06 2.41 2.65 -.248
'07 2.57 2.73 -.162
Federal receipts - the money the government collected in taxes - set a record in 2005. It was the most tax revenue ever collected by the government. And, as you can see, that record was broken each subsequent year through 2007. And in 2007, the economy was soft.
This is the same President Bush tax policy that President Obama calls a dismal failure. I just don't get that. How was it a failure?
Spending was the problem.
Spending was the problem.
I just can't say that enough.
Spending was the problem.
Spending was the problem.
The tax policy generated record amounts of revenue. Why not leave it alone? Why not extend it?
But no.
President Obama, in order to fund his ginormous $3.5 to $3.8 trillion budget, needs more revenue. He wants to increase spending on health care, education, energy and pretty much everything else despite that fact that government already is broke.
His plan to raise revenue is to end the President Bush tax policies and raise taxes on rich people.
Somewhere around 1.5 million senior citizens with incomes of $170,000 and above will see cuts in their Medicare benefits.
If you make more than $250,000, you're going to see tighter caps on itemized deductions - mortgage interest, charitable contributions, etc. (This has charities shuddering.)
And remember, their taxes will rise automatically as the President Bush tax cuts expire.
Here are some more numbers. (These are 2006 figures, cited in a July 2008 Congressional report.) This shows how the income tax burden is distributed by income class.
Top 1% $388,806 39.89%
Top 5 % $153,542 60.14%
Top 10% $108,904 70.79%
Top 25% $64,702 86.27%
Top 50% $31,987 97.01%
Btm 50% < $31,987 2.99%
As you can see, people who make $250,000 a year already are shouldering somewhere in the neighborhood of 50 percent of the tax burden.
So what? They're rich. They can afford it. Pile it on them.
Problem is, lots of these "rich people" are people who own small businesses. What do you suppose these people will do when their portion of the tax burden rises?
Invest? Capitalize? Add jobs? Take risks? Not so much. More likely they will lay people off, downsize and shelter income.
I can virtually guarantee that President Obama's plan to raise revenue will result in lower revenues. Taxing the rich has been tried before. It simply doesn't work.
The answer is to cut taxes. Leave money in the economy. Shrink government. Smaller government demands fewer tax dollars. Maybe we could even start chipping away at the $10 trillion in debt we've run up.
Instead, President Obama is proposing spending roughly $1 trillion more than President Bush did in 2007 and he's likely going to take in significantly less tax revenue.
Ouch.
Hey, you know what? I could be wrong about all this, but I'll bet you a candy bar I'm right.[[In-content Ad]]
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