One of the things that haunts me about Barack Obama—and there are many—is his unwillingness to accept indisputable facts, evidently due to his unswerving adherence to leftist ideology. One example, which I have cited before, was from a debate between Obama and Hillary Clinton last April:
Moderator Charles Gibson: [I]n each instance, when the [captial gains] rate dropped, revenues from the tax increased. The government took in more money. And in the 1980s, when the tax was increased to 28 percent, the revenues went down. So why raise it at all, especially given the fact that 100 million people in this country own stock and would be affected?
Obama: Well, Charlie, what I’ve said is that I would look at raising the capital gains tax for purposes of fairness. We saw an article today which showed that the top 50 hedge fund managers made $29 billion last year—$29 billion for 50 individuals. And part of what has happened is that those who are able to work the stock market and amass huge fortunes on capital gains are paying a lower tax rate than their secretaries. That’s not fair.
So even before Barack Obama clinched the Democrat ticket, he was already admitting that despite the fact that capital gains tax cuts benefit the economy and ultimately increase tax revenue, he did not care. The leftist ideologue wants fairness (at least what he considers to be “fair”).
And now Obama is president. And his bass-ackward conception of taxes and the economy are about to wreak havoc on the entire country. Just this week at his press conferene, he said:
“We have tried that strategy time and time again … tax cuts for the wealthiest few Americans … It’s only helped lead us to the crisis we face right now.”
Again, Obama exhibits a disturbing ignorance of well-documented truth about taxes and the economy. The Bush tax cuts—which Obama is clearly referring to—did not ruin the economy. Nor did Reagan’s in the ‘80s or Kennedy’s in the ‘60s. The real failed strategy is over-taxation and over-regulation. And this is the plan Obama is going gung-ho into like Thelma and Louise driving off the cliff.
Is he oblivious to the truth, or does he really know the truth and just doesn’t want the rest of us to know it?
This said, I am sooo glad Investors Business Daily put out this article yesterday. It explains, much more eloquently and authoritatively than I, President Obama’s ideology problem and its destructive effects on this economy.
This is your history lesson of the day, folks. Read and learn:
Taxing The Truth
By INVESTOR’S BUSINESS DAILY | Posted Wednesday, February 11, 2009
Stimulus: President Obama, a smart man, says that tax cuts for the wealthy are the main reason we’re now in such economic trouble. Someone needs to tell him how utterly—and dangerously—wrong that is.
“We have tried that strategy time and time again,” the president said Monday of “tax cuts for the wealthiest few Americans,” and “it’s only helped lead us to the crisis we face right now.”
Well, he’s half-right: We have tried it again and again. But rather than create crises, economic growth has been restored. The evidence is pretty much beyond dispute.
Since World War I—the start of the modern financial era—we’ve suffered four major downturns. In three of them, the government cut tax rates. And each time an economic boom ensued.
In only one did the government respond by raising taxes, erecting trade barriers and enacting massive new spending programs to get out of the slump. Today, we call that time the Great Depression.
As noted in a recent study by UCLA economists Harold Cole and Lee Ohanian, President Roosevelt’s efforts at government direction of the economy likely extended the Depression by seven years.
As history shows, lower taxes, not more government, work best:
• The 1920s: When the income tax was established in 1913, the rate was 7%. But it quickly soared, especially for the rich, and by 1918 the top rate was 77%. Unfortunately, coming out of the war the economy was a mess, with prices falling, unemployment soaring and nominal GDP dropping by more than 15% in just one year.
From 1921 to 1925, under Presidents Harding and Coolidge, tax rates were slashed to 25%, and GDP rose at an annual rate of 3.4% in the four years after the tax cuts vs. 2% before. All told, GDP swelled more than 50% during the 1920s.
All this was undone, however, on a bipartisan basis—first by President Hoover, a Republican, then by the Democrat FDR. Hoover boosted the top income tax rate to 63%. Then, FDR took it to 79%, while also doubling the corporate tax to 24%, imposing a Social Security tax of 2% and raising taxes on stocks and dividends, estates, and “excess” profits. Is it any wonder the economy went nowhere in the 1930s?
• The 1960s: President Kennedy, a Democrat, believed strongly that lower taxes meant higher growth, and he was soon proven right. Before he was assassinated, JFK proposed cutting top tax rates from a punitive 91% to 70%. In 1965, his cuts were enacted under President Johnson by a Democratic Congress.
Once again, growth took off, along with private investment. Real GNP, which averaged just 2.4% from 1952 to 1960, expanded at 4.5% during the ‘60s. The expansion that began in 1961 and ended in 1970 was, at the time, the longest ever.
• The 1980s: President Reagan took over an economy with a 21% prime interest rate, double-digit unemployment and inflation, slowing productivity and flagging economic growth.
But he too was a big tax cutter. His 25% across-the-board rate cuts snapped the economy out of its funk, creating the longest peacetime expansion ever at the time. During Reagan’s two terms real GDP growth averaged 3.2% compared with 2.8% in the preceding eight years.
After stagnating through most of the 1970s, real median family income grew $4,000 under Reagan. Investment boomed, as did the stock market, business creation and innovation. Some 20 million new jobs were created, due to the increased incentives to work, save and invest resulting from lower tax rates.
We all want our new president to succeed. But to do so, he needs to drop the class-warfare rhetoric on taxes and cut them instead. Like Coolidge. Like Kennedy. Like Reagan.
Yup. That’s how it is. Try as they might, Democrats can’t rewrite history. Nor than they refute already tested theories of economics.
So if you think, like many liberals/Democrats, that Obama is the new Reagan or the new JFK, remember this article. If JFK and Reagan were still alive, I imagine they’d be the first in line to tell you you’re wrong.
P.S. If you want to read up on more Democrat history-rewriting wrt the economy, then do read this post from Michael Eden's Start Thinking Right blog tackles the lies of Nancy Pelosi, Barney Frank, and others.
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