Apparently, the White House and Democratic leaders in Congress are going to get serious about the possibility of an impending recession. UPI reports that President Bush and Treasury Secretary Henry Paulson conference called congressional leaders to discuss plans "to boost the economy". Speaker of the House Nancy Pelosi hailed these opening negotiations, saying, "we are hopeful that we will agree on legislation that provides timely, targeted and temporary assistance to America's middle class."
OK! Now let's get serious. The economics have been proven time and again: Bush in '01, Bush the Elder in '90, Reagan in the '80's, Kennedy in '63. Raising taxes will only slow the economy, since higher taxes mean less money in the hands of the people who actually make the economy run -- ie. the private sector.
Any doubt? Consider the following:
JFK, in 1963, pushed for tax cuts to boost the economy. With his assassination, Congress and LBJ passed his proposed tax cuts. The economy blossomed, despite the fact that the Viet Nam War was heating up.
Ronald Reagan, following on the heels of the disastrous Nixon and Carter administration (Gerald Ford really didn't do all that much) cut tax rates and created one of the longest periods of economic growth in American history. In fact, the case can be make that this growth survived both Bush the Elder and the Clinton administration.
Bush the Elder was fired after one term. His famous promise, "Read my lips...", broken, he signed tax hikes into law. Besides losing his Conservative base, his tax hike succeeded in creating a brief recession, which the Liberal Legacy Media dutifully exaggerated to allow Bill Clinton (today, by the way, marks the tenth anniversary of the infamous "blue dress") to be elected with a plurality. It was only weeks after the election that the Legacy Media admitted that they were wrong about the recession, and that Bush the Elder was telling the truth all along that the economy was rebounding.
Bill Clinton, breaking his campaign promise for a middle class tax cut, promptly hiked taxes, starting at incomes of $20,000, and, worse, made them retroactive to the beginning of 1993. However, so strong was the economy bequeathed upon succeeding administrations by Reagan, the rebound of late 1992 continued through to the election of Republican majorities in Congress. At the time, the Republicans were serious about Conservative values, so they held the line on government spending, allowing the economy some breathing room. Unfortunately, that didn't stop the Clinton/Gore recession of 2000.
President Bush came into office a little late, thanks to Al Gore's ridiculous and petty lawsuits trying to overturn the election. But he jumped on the economy, cutting tax rates across the boards and, in a deliberate jab at the Left, made them retroactive. Along came 9/11, and a tremendous slam on America's financial center. Yet the American people, with more of their hard earned cash in their hands, proved far more resilient. Larry Kudlow calls the Bush economy "the greatest story never told". For the last seven years, every bit of good economic news has been reported in the Legacy Media as "surprising", "despite fears to the contrary", or, more to the point, simply ignored.
Now, apparently, the economy seems to be headed into another recession. So what are the White House and Congressional leaders talking about? Compromise.
There's a very big problem with compromising with Liberals and Democrats. It seems that they never have to give up any of their Liberal principals, while Conservative principals are left by the wayside. This story in the UPI is a point in case. They write:
"Congressional leaders of both parties have indicated a willingness to compromise. To move discussions of the stimulus package along, Democrats have decided to pursue their "pay as you go" rules, while Republicans shelved their plans to make Bush's 2001 tax cuts permanent."
Now, the Democrats were touting their "pay as you go" rules for several years, so they aren't really giving anything up. But the Republicans are going to let the Bush tax cuts lapse? Isn't that the same thing as a tax hike? And this as we allegedly move into a recession?
Read back up to the history of taxes and economic growth. I want to know just how a tax hike makes the economy grow.
Ah! But it isn't all about hiking taxes! Oh, no! We're going to get one time tax rebates! That's right, folks! Although your taxes will go back up to Clintonian heights, you will get a check for a few hundred dollars, just this once!
There is a reason some people call such a plan "helicopter money". It's like some fanciful rich guy flying over your neighborhood, throwing hands full of cash out the window. It might even boost the economy for a little while, as all the grateful peons spend their sudden, albeit small windfall. But then? What happens next?
"Helicopter money" is nothing but a bribe, trying to buy our votes with our own money. It only has a very limited effect and does nothing to improve the dynamics of the economy. It will create no new jobs, no new businesses, no new innovations. Any gains will be small and short lived. In fact, it is worse than leaving the economy alone to find its own feet again.
The "compromise" will also probably contain new government spending, in the form of increased unemployment benefits. And they might also nickle-n-dime the deductions for some types of insurance. Be still my beating heart!
So, in effect, we have Republicans, who having already lost their majority for going native and spending like drunken Democrats, are caving even further by abandoning the lessons of history and, essentially, giving the Democrats everything they want.
And this is a good idea why?
Copyright Jan. 18th, 2008