[Winona Online Democracy]
By
David Strom
I used to think that liberals were mistaken, but well-intentioned.
Now, I am not so sure.
Of course I still believe that most liberals I meet are genuinely good
people, not nefarious plotters out to line their own pockets and accumulate as
much power as humanly possible. But I cant get past the idea that liberals in
the public policy world, who are presumably smart and well-informed have
ulterior motives.
Why? Its pretty simple, really. So many things that liberals argue about
economics are simply and demonstrably wrong. But even when you prove beyond the
shadow of a doubt that they are wrong, the liberals keep mouthing the same
basic untruths.
A great example of this is the recent report put out by the Congressional
Budget Office on the effect of President Bushs Capital Gains Tax cuts of 2003.
At the time Bush proposed cutting capital gains taxes, the Joint Committee on
Taxation came out with an estimate of how much doing so would cost the
Treasury. You see, Congress still uses economic assumptions that changes in the
tax rates have no economic impact, so every tax cut brings less money in, and
every tax increase adds to governments bottom line.
Liberals have used this ridiculous assumption to argue against capital gains
tax cuts as tax cuts for the rich, as if reducing the governments take on
investment profits is somehow a plan to redistribute income from the poor to
the wealthy. How many times have we heard the canard that Bush is a toady for a
wealthy cabal trying to rape and pillage the economy while they can?
Well, the latest numbers released by the Congressional Budget Office put the
lie to that notion. Since the 2003 tax cuts were passed, actual capital gains
taxes collected outstripped the estimates by a cumulative $133 billion, or 68%
more than was estimated originally. In the past 2 years the estimates were off
even more dramaticallyby over 100%. Those rich people Bush was supposedly
selling out to are actually paying much more in taxes than they were before.
How is that possible that the estimates were so dramatically wrong? Its not
like we are talking about estimates many years outthe forecast was made in
January 2004, and it was off by over 100% by 2006. Two years, 100% over
forecast. Pretty spectacular!
The truth is that every reasonable economist could have told you that the
Joint Committee on Taxation was going to be very, very wrong, because tax
policy affects economic activity. Lowering the capital gains rate stimulates
economic growth, and by extension increases tax revenue for the government.
Capital gains tax collections go up as economic activity grows, and of course
income taxes rise as incomes get bigger.
Lowering capital gains taxes increases wealth for everybody. As economic
growth jumped from under 2% before the tax cuts to over 3%, unemployment
dropped and the stock market began to soar. Those tax cuts for the rich made
everybody in America better off.
Which gets me back to my original point: weve seen this movie before, and
know the ending. Reducing taxes on income and capital helps to stimulate the
economy. The tax cuts from Reagan onward explain why the American economy over
the past 25 years has so outperformed our European competitors. When Ronald
Reagan was elected, the top marginal tax rate was 70%; today it stands at 35%.
And since Reagans election our economy has outperformed Europes by a large
margin.
The evidence is so clear it can be said to be irrefutable. Yet liberals still
advocate the false idea that wealth distribution, not wealth creation should be
the most important goal of government tax policies. They argue that Europe, not
America, has discovered the key to economic success.
Why?
I can only conclude that liberals continue to promote the false belief that
the economy is a zero-sum game of the people vs. the powerful because it
benefits them. The false notion that some cabal of wealthy people is raping the
American working man helps liberals gain and keep economic and political power.
Thats why I can no longer believe that the smart and informed liberals are
simply mistaken: they cant be, because the evidence is so clear that tax cuts
for the rich benefit the entire country. Liberals arent well-intentioned but
mistaken; they are cynically promoting falsehoods in order to gain money and
power.
All the while claiming that conservatives are selfish and liberals are
selfless. 1984, anyone?
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