It's the spending, stupid

We saw a showdown of sorts recently. Obama and the Democrats wanted the debt ceiling raised. The Republicans refused unless a cut in spending was part of the package. Then Obama pivoted to a "balanced" approach. That meant he wanted revenue, a euphemism for tax increase, in addition to spending cuts. Naturally the taxes come right away, the cuts some time in the future, if ever.
Do raising taxes really give the government the revenue it expects?  Not really.  Read this : http://townhall.com/columnists/walterewilliams/2011/04/13/eat_the_rich/page/full/      When government taxes profits, corporations report fewer profits and greater costs. When individuals face higher income taxes, they report less income, buy tax shelters and hide their money. It's not just rich people who try to avoid taxes, but all of us -- liberals, conservatives and libertarians. 
What's the evidence? Federal tax collections have been between 15 and 20 percent of the nation's Gross Domestic Product every year since 1960. However, between 1960 and today, the top marginal tax rate has varied between 91 percent and 35 percent. That means whether taxes are high or low, people make adjustments in their economic behavior so as to keep the government tax take at 15 to 20 percent of the GDP. Differences in tax rates have a far greater impact on economic growth than federal revenues.
The logical conclusion from the above is...a better game plan is to cut taxes to stimulate growth, and cut spending.  Dr. Kengor lays it out so even I can understand.  It's the spending, stupid. : http://townhall.com/columnists/paulkengor/2011/08/24/its_the_spending,_stupid_a_crucial_historical_look_at_federal-government_spending/page/full/

Does "tax the rich" really work ?

Liberals/Progressives  love to play the class warfare game. It may fool an ignorant electorate, their principal voting bloc, but what are the practical consequences of these "tax the rich" schemes. Invariably the middle class and the poor pay the price in lost jobs or higher price of goods or services.
This is what happens :  http://blog.heartland.org/2011/07/economically-illiterate-obama-re-corporate-jets/
Dr. Walter Williams throws some light on the subject :  http://townhall.com/columnists/walterewilliams/2011/08/10/ignorance,_stupidity_or_connivance/page/full/

Alan Reynolds, the author of "Income and Wealth" writes :  "The intelligentsia of the Democratic Party is growing increasingly enthusiastic about raising the highest federal income tax rates to 70% or more. Former Labor Secretary Robert Reich took the lead in February, proposing on his blog "a 70 percent marginal tax rate on the rich." After all, he noted, "between the late 1940s and 1980 America's highest marginal rate averaged above 70 percent. Under Republican President Dwight Eisenhower it was 91 percent. Not until the 1980s did Ronald Reagan slash it to 28 percent."

Liberal Democrats like Reich and Obama, really believe the myth that if you increase taxes "on the rich" you will get increased revenues. These same guys get a hissy fit if you talk of "flattening" the marginal rates, lowering them, and closing all loopholes.

If you look closely at the math in this article for the WSJ by Reynolds, you understand why "tax the rich" does not get you the revenue you think you are going to get.  http://online.wsj.com/article/SB10001424052702304259304576375951025762400.html

The classic rebuttal from Liberals is " But Clinton raised taxes, and the economy grew, and we ended up with a surplus". That is the story line. To separate fact from myth read this :  http://www.cato.org/pub_display.php?pub_id=5656     Excerpt :
And 1993 -- the year of the giant Clinton tax hike -- was not the turning point in the deficit wars, either. In fact, in 1995, two years after that tax hike, the budget baseline submitted by the president's own Office of Management and Budget and the nonpartisan Congressional Budget Office predicted $200 billion deficits for as far as the eye could see. The figure shows the Clinton deficit baseline.
What changed this bleak outlook? Newt Gingrich and company -- for all their faults -- have received virtually no credit for balancing the budget. Yet today's surplus is, in part, a byproduct of the GOP's single-minded crusade to end 30 years of red ink. Arguably, Gingrich's finest hour as Speaker came in March 1995 when he rallied the entire Republican House caucus behind the idea of eliminating the deficit within seven years.
It was Bill Clinton who, during the big budget fight in 1995, had to submit not one, not two, but five budgets until he begrudgingly matched the GOP's balanced-budget plan. In fact, during the height of the budget wars in the summer of 1995, the Clinton administration admitted that "balancing the budget is not one of our top priorities."

Read on. It was a combination of a balanced budget plan that Gingrich and the Republican Congress insisted on, plus a cut in Capital Gains, plus cuts in spending, that gave us the "Clinton surplus". The MSM made sure to give Clinton all the credit.

Education dilemma

We have a huge education bubble building. Students graduating from college with degrees in hand, and no job in sight.  Students came out in large numbers to support Obama's message of "hope"  and "change". Now the realization is setting in, Obama looked young and cool, but he had no viable plan to improve the economy.
The brilliant Dr. Tom Sowell sounds the warning :  http://townhall.com/columnists/thomassowell/2011/05/10/the_education_mantra/page/full/

Ugly truth about the stimulus

The fantasy on the left is, government spending can stimulate growth.  The problem is, where does the government get the money from ? It may borrow the money from China, or print the money, but eventually we the people pay. Brian Riedl explains in this nice piece, why government spending of our money does not  produce the economic growth it expects to get :  http://www.heritage.org/research/reports/2010/01/why-government-spending-does-not-stimulate-economic-growth-answering-the-critics

During the 1930s, New Deal lawmakers doubled federal spending--yet unemployment remained above 20 percent until World War II.

Japan responded to a 1990 recession by passing 10 stimulus spending bills over 8 years (building the largest national debt in the industrialized world)--yet its economy remained stagnant.

In 2001, President Bush responded to a recession by "injecting" tax rebates into the economy. The economy did not respond until two years later, when tax rate reductions were implemented.

In 2008, President Bush tried to head off the current recession with another round of tax rebates. The recession continued to worsen.

Now, the most recent $787 billion stimulus bill was intended to keep the unemployment rate from exceeding 8 percent. In November, it topped 10 percent.

Despite the evidence to the contrary, and a failure of the $850 billion first stimulus to keep unemployment below 8 %,  Obama wants to try $400+ billion more. Stimulus is a bad word, so he calls it a jobs bill. Victor Hanson begs to differ :  http://www.investors.com/NewsAndAnalysis/Article/582835/201108251901/Still-Seduced-By-A-Fallacy-We-Havent-Spent-Enough.aspx

Are we there yet ??

Sadly we are on a course that will end badly. The path to Socialism started with FDR. When he finished with "tax the rich" the top tax rate was 90%. He started Fannie Mae. The next boost to big government came from LBJ and his "Great Society" expansion of government. He was going to war on poverty and end it in America.  Carter expanded government, started Freddie Mac, and started the  CRA or Housing and Community Development Act of 1977  Obama used the sub prime melt down to expand government  like his idol, FDR. He has completed the transformation of America from a nation of makers to a nation of takers.  http://online.wsj.com/article/SB10001424052748704050204576219073867182108.html 

We have now reached the tipping point.  http://www.investors.com/NewsAndAnalysis/Article/583404/201108311836/Ratio-Of-Takers-To-Givers-Reaches-A-Tipping-Point.aspx

We have a big government nanny state policy. A policy that breeds poverty : http://www.investors.com/NewsAndAnalysis/Article/547573/201009171141/Policy-Of-Poverty.aspx

It's the economy stupid

To understand why small business is not hiring :  http://finance.townhall.com/columnists/politicalcalculations/2011/09/09/why_small_business_isnt_creating_jobs/page/full/

More info on small business freeze :  http://online.wsj.com/article/SB10001424052748703806304576243262500419774.html

What about the big corporations ?  $1 trillion abroad. $2.2 trillion on the books. So what gives ? Read this :  http://voluntaryxchange.typepad.com/voluntaryxchange/2011/04/are-corporations-hoarding-cash.html

The problem ?  http://townhall.com/columnists/jdthorpe/2011/09/08/john_galts_advice_to_obama/page/full/

The solution ?   Growth stupid  !!!  Growth gets you revenues for the government. How do you get it ?
1.) Lower corporate taxes down to zero.  Corporations are bricks and mortar. It is the people who run them who pay the "taxes". Raise their taxes and they pass it down to the cunsumer. That is us.
2.)  The tax code is too complex, and has too many loopholes. It is 72,536 pages long. Get rid of the loopholes, and lower the marginal rates.  Widen the base. 47% of Americans pay no Federal tax. They have no skin in the game. Everyone making over FPL (Federal poverty level) should pay a token amount. Even if it is 0.005 % or $30 whichever is lower. Read this : http://www.cato.org/pub_display.php?pub_id=3063
3.)  It is the over-regulations stupid.
4.)  Kill Obama care. Go for real reform.  Government to care ONLY for the poor and disabled.
5.) Kill Dodd Frank and SarbOx.
6. ) In a capitalist economy if you fail you fail. No more bailouts.  You take the risk, you pay the price.
7.) Government to get out of Education, Amtrak, and Post Office.  All failing and losing money.

That is it for starters.