Deficit and Tax Policy
It’s been more than a week since President Obama made his big
plea speech to Congress on how he wants the government to help create jobs. As one would expect, the announcement of the President’s “American Jobs Act” has been met with a mix of opinions.
While there are many proposed policies in the jobs act, the $240 billion payroll tax cut is the biggest component and deserves a deeper look.
U.S. economic growth is staggering toward a second recession because of unsound political ideas and shortsighted implementation of ideological policies. While there are those that insist that our economic problems stem from rising taxes, ever-growing regulations, and mounting uncertainty, the real fundamental problem is lack of demand.
It’s not a tax issue. While the top marginal income tax rate was lower between 1988 and 1992 than it is today, since 1950 top tax rates have been lower less than 10% of the time. And, since 1960, the effective tax rate for highest income earners is either the lowest, or very close to the lowest, due to the capital gains tax rate and other deductions.
More concerning is that the tax cuts for the wealthy and corporations, which Bush enacted and Obama continued, have shown no positive effect. In fact, the Congressional Research Service found that by "almost any economic indicator, the economy performed better in the period before the tax cuts than after the tax cuts were enacted.
It’s not a regulation issue. According to the Bureau of Labor Statistics’ Mass Layoff Statistics, a program that collects reports on mass layoff actions, layoffs caused by regulation has been insignificant and has actually been lessening under the Obama administration.
By Deroy Murdock
This blogpost originally appeared on NATIONAL REVIEW ONLINE, January 16, 2012.
Manchester, N.H. — Newt Gingrich’s fourth-place finish in the New Hampshire primary showcased a first-rate idea.
While addressing a hotel ballroom full of his forlorn supporters in the Radisson’s Center of New Hampshire here, the former House speaker praised a new Granite State budget procedure that is so commonsensical, it is startling that it deserves applause.
The New Hampshire State House of Representatives, “actually had the Ways and Means Committee report first,” Gingrich explained in his election-night remarks. “It indicated how much money they would have, and they then actually adopted a budget to fit their income, which is the opposite of every other state I know of in the country which writes a budget and then tries to go find more of your money to fill in what they think they need. The result was a very courageous and a very serious effort in which they cut 11 percent out of spending, which is a remarkable achievement. If it were accomplished in Washington, it would begin to move us back on the right track.”
By Charles Kadlec
This blogpost originally appeared on Forbes.com, February 20, 2012.
The federal budget is a dense document totaling hundreds of pages of numbers. Yet, for all of the digital precision, the use of various “base line” budgets, numbers that span 11-year time frames and other arcana known only to Washington insiders and budget mavens obscure more than they reveal about what the federal government is up to.
To cut through the haze and spin, I chose to focus on President Obama’s “Proposed Budget”, and to compare all projections with actual 2011 levels. I came away with four observations:
Oh, temporary tax breaks, music to the ears of their beneficiaries and the bane of CBO Director Douglas Elmendorf who must make budget projections accounting for them.
If it weren’t for the recent explosion in the number of tax breaks, they wouldn’t be such pesky pieces of economic policy. In 1998, there were only nine temporary tax breaks. By 2009, there were 73; meaning that in more than 10 years the number of temporary tax breaks built into the tax code has increased by 711%.
When explaining the dangers of America’s ballooning national debt, fiscal conservatives unwittingly sabotage their cause by invoking “the children.” They should spend lots more time discussing how federal red ink harms adults today.
Tying debt reduction to future generations causes two problems:
First, if America’s children will pay off the national debt, why sweat it now? Washington’s spendaholics will clutch at any available excuse to keep federal spending grinding forward. If the debt only will vex America’s kids, it clearly needs no attention for another decade, maybe two. So, until then, PARTY!
As the entire country (except for that area known as Washington, D.C.) works to get out of this financial rut, we are starting to see the same economic problems on the local level as we have seen on the national level.
Last week California Gov. Jerry Brown announced that the Golden State has a projected deficit of $15.7 billion. At least it wasn’t the same as our national deficit of $1.3 trillion.
By Richard Callahan
Job creation almost nil, unemployment increasing, the left is angry, the right is up in arms and the center is grumbling. What is wrong with this great experiment that promised so much?
Almost 4 years ago an eloquent, energetic, charismatic political outsider, Barack Hussein Obama, burst upon the scene. He arrived at a time of great economic turmoil and dissatisfaction with the regime in power and promised sweeping change. He promised change from an economic downturn gripping the country. He promised new, forceful leadership in which all citizens of the country would be united as one and prosperity and economic vibrancy would once again be restored. He promised American international leadership and the restoration of the American dream. Sadly, his promises have proven to be empty rhetoric and his policies have wreaked destruction on the unity of America, it's economy and the hope of so many Americans who believed his false prophecy.
"Today I am pledging to cut the deficit in half by the end of my first term in office,” President Obama boldly declared on February 23, 2009. He added that this “means taking responsibility right now, this administration, for getting our spending under control.”
Among Obama’s parade of disappointments, this vehicle may be the most dangerous.
Get The Facts
"An Inferior Tax Cut"
"Would Another Repatriation Tax Holiday Create Jobs?"
"10 Graphs that Prove that the U.S. is a Low-Tax Country"
"The Moment of Truth"
ENGAGING WITH OTHERS
October 22, 2012
Cody, on Huffington Post
October 16, 2012
Moss, on KCCI
October 10, 2012
Moss, on Forbes
October 17, 2012
Bill, on Huffington Post
September 11, 2012
Collin, on US News