We have to stay on point, stay focused. The time has passed when the average American family can be civil and or laid back about what is happening in society. The Neoconservatives are blindly working for big capitalism to drive down wages, reduce the average equity or net worth of Americans, and control all of American politics. In short, they want the power to run your life.
The current issue on which we must fight is taxes and government spending. And the reason we must stay focused is that many of us, Americans, are ignorant, many–like the Tea Party members–seem to be very stupid (even dogs do not go back to a place where they’ve been burned before) and many seem confused about the facts.
They are probably confused about the facts because they receive more than 1000 and perhaps as many as 3,000 media impressions per day. Of the messages they hear about politics on a daily basis, most are conservative messages, messages which tell you that tax cuts are good and increase government revenues despite the fact that, in 1980–before we began cutting taxes to the bone (lowest by far in the world) we had less than a trillion dollars debt and now we have $14 trillion.
The truth is that despite claims by Stuart Varney (Fox Business Channel), Charles Krauthammer (Washington Post), Sean Hannity (Fox News), Mary Matalin (George Bush campaign manager) and the “always reliable” Glenn (I never saw a fact I didn’t ignore) Beck, tax cuts do not spur the economy. They just cost money.
In 2003, the independent Congressional Budget Office tested the theory under George W. Bush’s CBO director Douglas Holtz-Eakin. The report described the findings on whether a ten percent tax cut would pay for itself in additional revenues. The theory was that cutting taxes would put more money into the pockets of consumers. Consumers would spend more, the economy would grow faster and the investment in a lower tax rate would not only have the benefit of ongoing reduced taxes for citizens but it would be a good way to increase government revenues if it worked. It sounds great. Like eating ice cream and losing weight.
It didn’t work. The study showed that when you cut taxes by ten percent, the most that the revenues would recoup in subsequent years was a low of 1% of the cost of the tax cut to a high of 21% of the tax cut within 5 years and within ten years the low was 5% of the amount lost and the high was 32% of the lost revenues.
So, to be clear, if the tax cuts cost $1 trillion over ten years, the most the country could hope to return to the Treasury in the form of increased revenues was between $10 billion and a max of $320 billion. So our Treasury would lose from between $990 billion down to only $680 billion. We never get the money back. And so, we did that about 4 times over the Reagan-Bush-Bush Administrations and we now have a $14 trillion debt.
So why do people think that tax cuts actually increase tax revenues? Because the Great Reagan Myth (for “myth” read “lie.”) that Arthur Laffer propounded—tax cuts actually raise revenues—became the hue and cry of the very loud Republican propaganda machine. So long as Republicans can fool the Hicks and Helots, they can continue to win elections. So, to hell with the country say the Republicans, let’s fool the people and win.
The fact is that tax cuts have raised some tax revenues. In the Kennedy and Mellon tax cuts the rich actually did pay more. But overall revenues did not grow. In the case of the Bush tax cuts of 2001 and 2003 barely raised revenues by 2% over the 2001-2007 period. In other recoveries after recessions, the rate of growth in revenues averaged 12%!
Under Reagan’s tax cuts, it is true that revenues did not go down. After all, the country continues to grow by tens of millions of people each year. But overall the economy with the gigantic Reagan tax cuts created just 1.5% growth in revenues while in the 8 years of Clinton, with tax increases, the economy grew at 3.5%.
The point is not that tax hikes increase revenues, even though that has historically happened, but that taxes have little effect on economic conditions that increase or decrease government revenues. All we know is that if we tax you another $100 dollars, the government revenues are increased by that amount.
Why do we care what the Republicans say about the economy anyway? Since 1981, they have brought the economy to its knees three times. It is a fact that the only Democratic Presidential administration created more jobs than all three Republican administrations—combined! Furthermore, the last Republican administration, with arguably the dumbest, least efficient President in history, left us with a near-Depression and with 15 million people unemployed and a massive addition of $8 trillion onto the debt.
So why should anyone care what Mitch McConnell wants? He’s too dumb for public service. He voted for every tax cut for the rich, every war, every oil company tax break and for privatizing Social Security. Why should anyone listen to John McCain? He finished third from last in his graduating class at Annapolis. Why should we care what John Boehner says? He has spent his entire Congessional career working as a legislator-lobbyist for the oil companies, the tobacco companies and the health care industry. He fought against restricting tobacco sales that kill 500,000 Americans every year. He brought cigarettes into the House of Representative and handed them out like some carnival barker.
But it is clear to most economists now that tax cuts do not raise revenues. You lose revenues. In other words, you have, let’s say a million in revenues this year. You cut taxes next year by one hundred thousand. So now you’ve go nine hundred thousand in revenue. The following year revenues do go up. That’s what the Republicans who are promoting this are saying. But here’s the catch. They go up by only between 1 and 20% of what it cost. So if the revenues go from nine hundred thousand to nine hundred and ten thousand, you’ve only gained ten percent on your way back to where you were—one million. You had a revenue increase of ten percent, but your deficit is still ninety thousand dollars.
That’s what happened under Reagan. Tax revenues eventually started to go back up, but the amounts were much smaller than the original losses from the tax cuts. So we kept losing money, creating a larger and larger national debt every year.
But under Clinton, we raise taxes. So what happens when you raise taxes. If you hold the line on spending, as Clinton did, and raise taxes by, let’s say 10% again, look what happens. Instead of that one million going to nine hundred thousand, it goes to one point one million, then the next year one point two million then one point three and so on. So if you now have one million three hundred thousand and your budget was a million, you have a surplus and you can buy down some of that debt, which is exactly what Clinton did.
We need to raise revenues, do what Clinton did. Who is it going to hurt? No one. It won’t hurt millionaires. Many of the richest men in this country, by the way, have now said…come out publicly and said…tax me if it will help the country out of this mess.
So why doesn’t Congress enact that kind of legislation? Because it would help the economy. And Mitch McConnell doesn’t want the economy to grow, having promised the bigots in his party…remember where the Republican red states are: Alabama, Tennessee, Georgia, North Carolina, South Carolina, Florida, Mississippi, Texas ….on and on…slave states…that Barack Obama would be a one-term President.
So the real economists no longer hide the fact that tax cuts do not grow the economy. Martin Feldstein, Reagans’s chief economist does not defend it. Greg Mankiw head of economic advisors in the Bush Administration not only says: no, they don’t work, but says the Reagan economic advisors who promoted this were bunch of crooks and fools. The Secretary of the Treasury under Bush II resigned over more tax cuts. Cheney wanted to push tax cuts for political purposes. Paul O’Neill was not a politician but an economist and a great businessman. Cheney got more tax cuts and more deficits. O’Neill resigned.
The facts are clear. The Republicans have ruined this economy. From Arthur Laffer to Bill Thomas and Jim Nussle, greedy, slimy rotten politicians getting their greasy hands on money, spending it in every direction to enrich their military contractor lobbyist pals, and oil company pals and health industry pals…greed, greed, greed.
And now they want to talk about austerity…about cutting Social Security and Medicare? Are they crazy? First put back some of the money you stole for your rich friends. Then we’ll talk about austerity.
Here’s how we can do it without touching a dollar or a cent of entitlements.
1. Put a very small tax on stock transfers. It will not affect anyone or anything except the organizations, not the individuals, that trade stocks every day. You would be surprised at how much this will raise.
2. Close down corporate tax havens. If you own a U.S. company, pay your taxes. Or become a foreign company and pay taxes without all the rights of a U.S. corporation.
3. Incomes have skyrocketed but tax rates have not kept up. If you make $350,000 or $1,000,000 you pay the same. But there are a huge number of people now, believe it or not, who make $1,000,000 a year in taxable income. Raise those rates commensurately.
4. Finally, tax billionaires at a rate higher than millionaires. We have over 400 billionaires in this country who would still keep $500 million a year of every billion if we taxed them at 50% (which is not even the proposal). If you live on only…only a bare existence…$10,000,000 a year, it would still take you 50 years to spend 1 year’s after-tax income.
These four measures could raise $400 billion a year and take us out of our mess. If we did one more thing—cut a mere $200 billion from the military budget and created, which $200 billion would, 5 million jobs, we could jump start this economy, convert those jobs to private industry in two years and have budget surpluses for the next 50 years while we reorganized all these things that the Pew Commission recommended.
But we won’t. We wont for the same reason that Rush Limbaugh and Sean Hannity and Mitch McConnell and Jim DeMint and Eric Kantor and Sarah Palin and Michelle Bachman keep saying that tax cuts raise revenues when they know that it is a lie.
Big corporations and billionaires are paying them more to lie than to respect their country and their fellow man. We call these kinds of people, who line up with big corporation, the military and corrupt federal government officials…these kinds of ideologues…Fascists.
That’s what they are and that is the fight we’re in for the soul of this country.