Tuesday, October 16, 2012

Romney's budget plan, Obama's non-plan, and JFK's paradox

Recently, I've seen a political joke at Romneytaxplan.com in which the website invites the websurfer to click on a button that will lead them to the specifics of Romney's tax plan -- and the button runs away from your mouse cursor.  This allows people to visualize something that perhaps Obama hasn't driven home yet, hard as he's tried -- that Romney is all smoke and mirrors. I've written elsewhere what I think of this canard.

There is a link at this practical joke (and they don't make the link all that noticeable) that leads to an article where Team Obama try to apply the arithmetic that Bill Clinton alluded to at the Democratic Convention.

Let's skip ahead momentarily to Obama's economic plan:  Keep throwing money at desperate voters (even if it is stagnating the economy as did the progressive policies of the Great Depression) while charging it to the Great American Credit Card, and pouring money into green energy enterprises that is so unlikely to pay off that they don't attract a lot of wealthy investors.  And something new being emphasized:  Soak the rich!  (Has this become Obama's one-point plan?)  He did say in the last debate curiously that he would leave the corporate tax alone, ostensibly to help our economy.  So... why isn't the money "lost" in not raising corporate taxes not counted as trillions of dollars lost, in the same sort of zero-sum logic that is applied to Romney???

Remember:  In Obamalogic, letting people keep their money is an expenditure.  All that filthy money that people rake in from filthy success (like publishing Dreams From My Father) is going to waste without government confiscating it to pay the interest on all this stimulus debt.

Capitalist excuses for corporate taxes, but no lassez-faire for capital gains policy though, even though it is arguably as important for growing an economy.  Hitting capital gains favors the already Über-rich over the up-and-comers, the new guys with the new ideas that threaten to give the old guys a run for their money, and Obama has a lot of Über-rich pals that helped him into office, even though he'd like you to think that only Republicans get funded by the wealthy.

No, but let's stick to the leftwing narrative:  Obama is all about the little guy(?) and Romney is the one (Obama says so) that is all about hurting everyone but the 1%.  Yet for all the rhetoric about "a different set of rules," Romney keeps pitching ideas that give breaks to the poor and middle class that aren't given to the so-called 1%.  But Obama is sticking to his story that Romney has a "one-point plan" even though there is good reason to think that it is his policies that hurt the middle class and small businesses.  As Thomas Sowell and Walter Williams point out, Obama offers the Left's tired old "gesture of taxing the rich."

While we are talking arithmetic, let's look at a history of budget.  In the graph below
you can see the revenue increases of the 80s and 90s as well as the surplus with Newt Gingrich's budget.  A mild recession in W. Bush's years followed by a quick recovery.  The budget gets close to being balanced once again (wait, how did that happen with the same two wars and tax cuts that made it impossible for Obama to balance the budget?) until the effects of the new Democrat Congress start to be felt.  Then a huge gap follows that with TARP and bailouts along with the fall in revenue cause by loss of jobs and loss of business – much fewer taxpayers making less income to be taxed.  Obama comes in with his Democratic Congress, forgets his promise to reduce this gap by half and declares this gap the New Normal.  Yes, that's right, he congratulates himself for not making the deficit much worse than the initial disastrous bailout year – as he averages trillion-dollar deficits each year.
From taxfoundation.org's treatment of Romney's tax plan:
People need to be aware that each dollar of federal spending costs them several dollars in lost wages and income from saving due to the economic damage from the taxes imposed. In the case of the Romney tax plan, each $1 of lost government revenue would raise incomes by nearly $8. Would the public be willing to trade a $1 reduction in government spending for an additional $8 in personal income? Some elements of the Romney plan yield even higher benefits to the public, raising incomes and employment with no cost, and some benefit, to the federal budget, and actually help to pay for the other tax reductions.
Follow the link above for the arithmetic, but I am savoring their point:  Taxes have costs on the economy.  The presence or absence has an effect on employment, venture capital, creation of new jobs and new technology, the movement of capital from tax shelters into employment opportunities, etc.  This is John F. Kennedy's paradoxical truth:
“It is a paradoxical truth that tax rates are too high and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now … Cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus.” – Nov. 20, 1962, president’s news conference
But Obama has no regard for JFK's (or Reagan's or Woodrow Wilson's) "trickle down snake oil."  The Clinton-Obama math largely assumes that raising taxes generates revenue without any negative effects on revenue and that lower taxes lower revenue without any concurrent positive effects on revenue.  Thus it relies on public ignorance.

Growing an economy produces revenue in the same way this kind of recession drops revenue.  Look at the chart again.  Why does revenue fall in 2008-2009 when taxes weren't lowered?  This means that revenue can increase without raising taxes!!! With a healthy economy and a tax plan and healthcare plan that is business-friendly, our revenue would be at $3 trillion.  Without occupying foreign countries, our expenditures should be no more than $2.5 trillion.  As the Libertarians remind us, it should actually be much less, but even the most modest sense of thrift shouldn't require more.  We need a surplus that can actually reduce the debt (it didn't go down in the Clinton years) and we need something better than a Ponzi scheme for our (so-called) social security.

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