Now that the latest batch of elections are over, delivering knockout blows to incumbents, we return to the debate. What will be the main topic? Until Israel tires of our ongoing appeasement of Iran’s nuclear weapons program and takes action, the economy remains the focus. We’ll continue to watch the troubles in Greece, the other “PIIGS”, the Euro and the implications for America-and they are significant.
Some recent columns dovetail perfectly on the budget issues. I will demonstrate. There’s got to be a reason to spend time on this blog, right? 😉
During the 2008 elections, and seemingly ever since, the left has insisted they offer the alternative to the “failed policies of George Bush”. I’ve asked many of the Bush bashers what specifically they mean. (Like many free-market, fiscal conservatives, I have my own issues with GW). The common reply: “Tax cuts for the rich.” This is laughable. I assume they are referring to the deficit. That theory is debunked here:
In this column Brian Riedl refers to tax revenue as a percent of the economy (referring to GDP) and how it always tops out short of the 20% mark. David Ranson covered this very topic one day earlier in the Wall Street Journal:
This is yet another real life graphic representation of the “Laffer Curve”. I’ve posted some links to explain the Laffer theory here:
The “Readers Digest” version here:
A deeper explanation here:
A full video series for those deeply interested here:
Economist Art Laffer was not the first to point out how the laws of economics apply here, and he doesn’t claim to be. All you need to do is ask yourself this question: If the government announced they were going to seize 100% of your paycheck would you go to work tomorrow? How about 90%? 70%?
You get the idea. Higher tax rates do not necessarily deliver higher revenue. This is a far cry from “tax cuts always pay for themselves”. Add this to the list of other things supply siders do not claim but that big government liberals say they do. Like “trickle-down economics” these are deceptions and straw men constructed by the left to avoid real debate.
For those who argue that Soviet Russia basically took 100% and people still went to work I will remind them that in Russia they had no choice. For now we do. This would more accurately be described as a form of slavery, something Walter Williams dares to assert here.
The bottom line is that there is only so much tax revenue the government can suck out of the private sector. All this talk of “corporate greed” and “obscene profits” ignores the fact that without our profitable businesses the government does not have a dime for social programs or entitlements. There is nothing to redistribute. Private industry is the golden goose. It is the lifeblood of our economy and if we try to draw too much we will kill it.
If we can’t raise more revenue-and layering tax upon tax will not yield more revenue-we must cut spending. Our current Congress lacks the courage and common sense necessary. New leadership is essential. Let’s hope the next Congress takes their job, and their oath of office seriously.