Once again, the conservative view that lower taxes and decreased spending increases revenue is proving factual yet again:
The new figure is considerably smaller than original estimates. In February, the White House predicted that this year's deficit would be $244 billion because of stronger-than-expected revenue collections. The deficit hit a peak of $413 billion in 2004 and was $248 billion last year.
At least President Bush got half of the equation correct -- he forgot the reduced spending portion that usually goes along with it. Conservative are rightly upset with the outsized spending bills the Congress submitted and the president signed.
It's been proven time and again, when John F. Kennedy came to office, he sought reduced taxes for everyone -- including the rich -- almost immediately (although the actual cuts were not implemented until after he died.) And that action led the country into an economic boom. Jimmy Carter raised taxes when he took office and the nation plunged into a recession that featured high unemployment, stratospheric inflation and enormous interest rates. Once Reagan was inaugurated, he pushed through massive tax cuts and the nation prospered throughout his two-terms.
Bill Clinton did raise taxes but was smart enough to shun his base and insist on welfare reform that reduced the massive entitlement spending. That, in conjunction with the dot com boom led to an economy that hummed until the dot com bubble burst and the regressive tax increases remained in place.
When Bush 43 signed the tax cuts, it quickly brought us out of the recession left by Clinton and enabled the country to prosper in spite of the emotional and economic hit we took from the 9/11 attacks. Unemployment is at historic lows, interest rates are as well and inflation is in check. While an outsized trade deficit with China is of concern, overall the economy is moving quite nicely. Another factor to keep in mind is the price of fuel and corn that could increase inflation if not held in check.
Should a Democrat win the presidency in 2008, they would be smart to look at the monetary policy set forth that encourages economic growth instead of regressive policies such as tax increases that inhibit expansion and inevitably lead to recessions.
Reader Comments ( Page 1 of 1)
1. I agree with you that federal tax reduction can lead to economic boom times. Will it work also for a state?
Steve Bonomo at 6:10PM on Jul 11th 2007
2. I am not sure what planet you are from. But logic and reason don't exist there. Reagan left a huge defict in which 22% of your current tax dollars goes to pay off. Dubba has repeated the same mistakes and is costing us a fortune. DEFICTS ARE BAD AND HAVE NEVER IN THE COURSE OF HUMAN HISTORY RESULTED IN GOOD THINGS FOR ANY GOVERNMENT OR ECONOMY. The belief that deficts are good is a false one. Your headline is also a misleading lie. The defict has not been reduced only the increase to the defict has been reduced to 240 Billion in the red. So the government only added to the defict to the tune of 240 billion instead of 400 billion yippee. It gonna take half a trillion in our taxes to pay for that defict addon. Defict spending is very bad. You have to pay double for nothing. You got 500 dollars this year but you have to pay 1000 next year to cover it. Thats doesn't make any sense. Also the entitlement attack is again a big fat lie. 100% of all entitlements are paid for by social security Tax. Just look at the back of your 1040. Entitlements have absolutly zero to do with the defict and your federal taxes. Again you look like a sheep who brought the big lie. Worse you are propergating the lies in your articles. Before you or any idiots say anything stupid. I am a registered republican the difference between me and you is I use my head for something more than just resting my hat on. The current administration has messed up severely and defending them only hurts your country, children and the republican party. I only mention that last part becuase that is all you seem to care about. The country and your children future obviously means nothing to you. As you are willing to punish your children with a huge tax burden just so you can get a measly 500 dollars back. 10 noble prize winning economists wrote to President bush saying his tax cut was bad for the future of the country. Even the study the white house commisioned said the tax cut at best would do nothing at worst a defict would be a drag on the economy.
The point I am trying to make is defict spending is very bad. You need to hold your representatives feet to the fire and make sure if the have the guts to spend. They better have the guts to pay for it and not leave the mess to future generations who will be paying most of thier tax dollars to China.
Kurt
Kurt at 7:00PM on Jul 11th 2007
3. First off Kurt Buddy, if you use your head and I don't, how come you spelled "deficit" wrong five separate times. Once is a typo, five is a trend.
As for my children and d-e-f-i-c-i-t-s, I was 12 when Reagan took office, I was a kid, I don't ever remember it adversely affecting me that we had deficits. Do I like them? No. Will they destroy the economy as you say? Again, no. The deficit has in fact been reduced, reduced from previous estimates and you'd know that if took a second to read and comprehend.
Scott at 9:02PM on Jul 11th 2007
4. High taxes are the last vestiges of tyranny. All liberty is based upon private property. The percentage of your private treasure and WILL that is NOT allocated to the COLLECTIVE is the sum of your personal freedom.
There are taxes in all societies, because there are a few (note few) things that require collective effort. National Defense, being primary, Interstate Commerce, and such being secondary. The problem arises when the public looses its self directed will and calls on BIG GOVERNMENT to supply ALL effort to its own betterment. High taxes, tyranny, and in the end sloth is all that remains of a decent once free nation.
High taxes are not only destructive to the economy, but also to the National spirit. They turn a once decent hard working society into either overly burdened serfs or dependent children looking for something for nothing.
A deficit, should always be looked upon as a percentage of National output, not as a dollar based sum. A reasonable debt is required for money creation, and innovation. The difficulty arises when the debt, is used for non essential,non-productive and public pandering. This is money simply stolen from one group and given as some trophy to another.
With low taxes and high output the deficit will shrink ordinarily as the return on investment is realized.. This is what is happening. This is the BUSH/REGAN example. This is why there is a lower unemployment rate than was the average between the 60's-90's. This is why if left alone,the deficit will rise and fall within the confines of regular business cycles. The only thing that can foul this economic model, is the politician, again promising something for nothing, or endless fiat money creation to support political pandering.
War, should by classic reasoning, decrease the national treasure, and increase the deficit. What is happening now is the opposite...I just hope we are not just printing more money to support it. Forget about Ron Pauls fringe thinking, and see some of his writings on sound money.. This is perhaps his most logical thought.
Inflation is the most hidden of all taxes. The only reason we are not seeing high inflation currently, is that the rest of the world is trading goods to us for discounted rates, collecting as it were, our debt, supporting our endless spending. If that money were ever to come home to roost, our tax rate (including inflation) would soar. This is the price we pay for political pandering and government spending your future to buy your vote. The crime is that they know what they are doing.
joem at 9:22AM on Jul 14th 2007