By Jerry McDonough / Chronicle contributor
April 07, 2008 03:17 pm
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If there is one thing that I have learned during my short life and the reading of history, it is that economies rise and economies fall in cycles of varying lengths. It would logically appear that, given this fact, the proper method of managing an economy would be to dampen these cycles as much as possible by moderating the high and low points of the cycles. History tells us that the depression of 1898 was directly caused by men such as J.P. Morgan attempting to corner the gold market; laws were then passed to prevent this from recurring.
History also tells us that the depression of 1929 was caused by bankers and their lending practices to Wall Street investors; laws were passed to prevent this from recurring. The most recent downturn – far from being a depression or a recession – was caused by bankers unscrupulously lending money in conjunction with a law passed in the Carter era and accented in the Clinton era which allowed the lending of money to anyone whether it was affordable or not — much as occurred 1929. Of course, each of these scenarios requires greed on both sides; bankers maximizing profits and borrowers using money they did not have and acquiring debt they could not afford.
Supply side economic practices have proven to be a tool kit for accomplishing the task of better managing the economy. One of the main tools in this kit has proven to be tax cuts, as is evidenced by the actions of John Kennedy, Ronald Reagan and George W. Bush, which were followed by eras of prosperity. If further proof is needed, one need only look at the former Soviet Union where its former client states have all joined the capitalist system and have done so mainly by reducing taxes. Russia itself is prospering under a 17 percent flat tax with no loop holes. It seems as though everyone but Congress and the social elites have figured out that socialism does not work, but rather the free market works every time it is used.
Now, here are a few results of the “Bush Tax Cuts” being allowed to expire. Foremost is the $2.4 trillion - 12 percent of today’s Gross National Product – immediate tax increase across the board resulting in an average $1,716 tax increase for 100 million Americans. The average tax increase of $2,034 will hit 17 million senior citizens. About 44 million married couples will be additionally affected by the re-instituted Marriage Tax – Marriage Penalty Tax - by an average of $1,480 per couple. And, by the way, Congress spent $29 billion in “pork-spending” in 2006 and plans to spend an additional $39 billion in “pork” this year.
Does that give you an idea as to why the socialist elite want the Bush Tax Cuts to expire? This is not even considering the budget proposed for this year, which would increase the budget ceiling yet again as Congress makes Arthur Daniels Midland richer through ridiculous farm subsidies, and the Alternative Minimum Tax is once again not dealt with and on and on.
Stumptalk is published weekly in the Crossville Chronicle. The opinions expressed in this column are not necessarily those of the Chronicle publisher, editor or staff. Phil Billington serves as coordinator of this column. He may be reached at 484-2766.
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