The barrage of tax increases proposed in President Barack Obama’s budget could, if enacted by Congress, kill any chance of an early and sustained recovery.
Historians and economists who’ve studied the 1930s conclude that the tax increases passed during that decade derailed the recovery and slowed the decline in unemployment. That was true of the 1935 tax on corporate earnings and of the 1937 introduction of the payroll tax. Japan did the same destructive thing by raising its value-added tax rate in 1997.
And this from the Financial Times:
[blockquote]“That warning from Moody’s focused on the exploding healthcare and Social Security costs that threaten to engulf the federal government in debt over coming decades. The facts show we’re in even worse shape now, and there are signs that confidence in America’s ability to control its finances is eroding. Prices have risen on credit default insurance on US government bonds, meaning it costs investors more to protect their investment in Treasury bonds against default than before the crisis hit. It even, briefly, cost more to buy protection on US government debt than on debt issued by McDonald’s. Another warning sign has come from across the Pacific, where the Chinese premier and the head of the People’s Bank of China have expressed concern about America’s longer-term credit worthiness and the value of the dollar.â€[/blockquote]
Dr. Spendenstein’s monster is loose, and we’re all going to pay dearly for his “pragmatism.”
To tax is to be is the prime mantra of the party in power. Though one must admit that to regulate is to be is a very close contender for prime mantra of the party in power. As an independent voting for 36 years, I merely note the historically verifiable and true.
This should come as no surprise to anyone.
I am not sure which is worse; a party that taxes and spends like mad, or a party that just spends like mad but doesn’t tax. The GOP got us into this mess. But Obama seems bent on making it worse.
One thing is clear. The deficits we are running are unsustainable. Given various realities (we are still fighting two wars among other things) common sense would seem to dictate that we can not balance the budget through spending cuts alone. That said we could certainly go a long ways in that direction before recourse to increased taxation. I am not absolutely opposed to taxes. I am absolutely opposed to debt. But increased taxes should be the last step, not the first.
Christ is risen!
John
Taxes…and rising oil and commodity prices, influencing and being influenced by inflation, and the potential re-restriction of credit as creditors default because of all of the above. Lots of stuff to watch, like at a three-ring circus.
well, this is clearly controversial. Some would argue that it is actually the fact that people did NOT spend.
Jefferson offers a quote that actually seems to indicate we should raise even more taxes. That is, if we want to have insurance, security, or any kind of social net to help the downtrodden, the poor, the unlucky.
We could clearly balance the budget, but few people are willing to look at the largest recipient of largesse: the military.
Then Bush’s tax cuts should have . . .
[blockquote]Jefferson offers a quote that actually seems to indicate we should raise even more taxes. That is, if we want to have insurance, security, or any kind of social net to help the downtrodden, the poor, the unlucky. [/blockquote]
LOL…I somehow knew you’d see this as the usual Rorschach ink blot, John, and prescribe the usual hard-left nostrum of statist plunder and spend. Of course, actually cutting the programs that are driving us into bankruptcy is never contemplated as it would mean a loss of political power for the port side of the spectrum.
I’d agree that the military could use a spending haircut, but even reducing their budget to zero wouldn’t come close to balancing the budget. And, let’s remember, defense is actually a Constitutionally-authorized function of the federal government. Transfer payments are not.
Megan McArdle has a good post on this today: [url=http://meganmcardle.theatlantic.com/archives/2009/05/medicare_is_going_to_bankrupt.php]Medicare is going to bankrupt us, which is why we need universal health care[/url]:
[blockquote]Perhaps predictibly, someone showed up in the comments to my post on Medicare and Social Security to argue that liberal analysts have very serious plans to cut Medicare’s costs, which is why we need universal coverage, so that we can implement those very serious plans.
[b]I hear this argument quite often, and it’s gibberish in a prom dress.[/b] Any cost savings you want to wring out of Medicare can be wrung out of Medicare right now: the program is large and powerful enough, and costly enough, that they are worth doing without adding a single new person to the mix. Conversely, if there is some political or institutional barrier which is preventing you from controlling Medicare cost inflation, than that barrier probably is not going away merely because the program covers more people. Indeed, to the extent that seniors themselves are the people blocking change (as they often are), adding more users makes it harder, not easier, to get things done.
I suppose there’s some possible argument that only with universal health care can we prevent providers and consumers from realizing there’s an alternative they prefer to the status quo . . . but that implies a Canadian style system that outlaws private care, which is not what anyone’s proposing, not what anyone’s going to get out of the American political system if they do propose it, and not just a little bit disturbingly totalitarian.
Otherwise, people who want to reform Medicare to make it more cost effective should go ahead and propose the changes to Medicare they can get passed. I am not going to buy a pig in a poke on the slim chance that the pig might be able to get me 20% off an echocardiogram.[/blockquote]
Re # 8
Actually national health insurance does not necessarily mean the end of private medical care as in Canada. Many countries, such as Costa Rica whose health system has consistently been rated higher than the United States” for decades, has a two tier system with both state run and private medical facilities. Same with insurance. Two tier insurance is a very realistic alternative to a state run only system.
Christ is risen!
John
Indeed He is risen!
Obama uses the “Trickle up Poverty” economic model. We are all slaves to the government now. We do not OWN anything. If you don’t believe me, stop paying your taxes. It’s all about control of your LIFE. The currnet admin wants control not recovery. With recovery comes independence.
This country is already bankrupt. Heard today that China NO LONGER needs the US for its imports, we constitute only 5% of their GDP. If the Chinese stop buying our bonds we’re dead in the water.
John316,
Bush’s tax cuts would have been successful if (IF) they were coupled with reduced spending. That did not happen, and the same conservative pundits who are chastising the Obama Administration for the trillions of dollars of new spending/debt, also assailed the Bush Admin for the increased spending.
Strangely, however, the liberal pundits who demonized Bush’s spending are now lauding the hyper spending of Obama’s administration as the salvation of our economy.
Strange.
Jim Elliott
Florida