by Daniel Gardner
Who's your daddy? Far too many people in America depend on Washington for support.
Mississippi receives $2 for every $1 they send to Washington. That's why so many progressives (in both parties) wince at voices calling for smaller government. Mississippians have a great thing going, as do many other poor states!
Too many join these debates with nothing more in their arsenals than personal attacks and blame games demonstrating a complete lack of shame. So, let's blame all the politicians and cut to the chase.
Washington needs to keep tax rates low and cut spending to reduce deficits and debt. Will "cutting taxes on rich people and greedy corporations" necessarily decrease revenue as progressives have insisted? No. Consider what Presidents Coolidge, Kennedy, and Reagan did.
Coolidge cut the top tax rate from 70% to 25% and revenues grew from $719 million in 1921 to $1.164 billion by 1927. Even Kennedy's modest cuts from 90% to 70% increased revenues from $94 billion in 1961 to $153 billion by 1968. President Kennedy justified his cuts saying, "the soundest way to raise revenues in the long run is to cut the [income tax] rates now."
After the economically disastrous Carter years, America's GDP (Gross Domestic Product) was flat and inflation was raging. Reagan cut the top tax rate from 70% to 28% and revenues jumped from $517 billion in 1980 to more than $1 Trillion by 1990. Moreover, real growth in our economy leaped 7.5% in 1983 and 5.5% in 1984, and shot down soaring inflation rates from double digits to low single numbers.
Letting rich people and corporations "keep" some of the money they have EARNED provides an incentive for them to INVEST in profitable enterprises. Raising taxes precipitously on rich people and corporations is a disincentive for them to invest. Remember, we're talking about them investing their own dollars in enterprises that produce jobs in the private sector.
When rich people and corporations are punished with heavy taxes, they invest money where the IRS can't touch it. Thus, our revenues have rarely risen above 19% of GDP regardless of tax rates. To raise revenue, we need to raise GDP. Government spending doesn't raise GDP in real terms. In fact, higher government spending has historically impeded GDP.
The past four years Washington has tried to spend our way out of the economic mess. As a result, we've nearly doubled our national debt and created a new norm for unemployment. If government spending were the answer, we would be rolling in jobs and enjoying a surging GDP.
Those who insist we should continue to spend extravagantly while seeing the same results are not only proving Einstein's definition of insanity, but also downgrading America to mediocrity or worse.
Washington Republicans want to cut spending by $61 billion. The White House has met them "halfway" by offering to cut $6 billion from a $1.65 Trillion deficit this year. Under similar circumstances any operation other than Washington would be characterized as grossly incompetent and probably illegal.