Thursday, September 02, 2010

Does the Obama Administration Even Want a Strong Economy?

It seems a preposterous question, of course they do, right? I really wonder. The role of taxes in our economy has always been a political issue and it shouldn't be. It is a fiscal issue and using the tax issue as a manipulative tool for or against certain groups is fiscal malfeasance and frankly it's immoral.

The overblown rhetoric on both sides of the political isle about massive deficits and spending our children's childrens money is often at the center of tax debate. As hard as it is to grasp the truth is that taxes are not a funding source for monetarily-sovereign governments like the United States. The Federal government is not out of money, all interest payments and so-called debt on domestically-denominated government securities can and will, and have always been paid. This will always be the case whatever the amount, whatever their size in relation to the government budget. Taxes are just the braking system for a speeding economy. Simply put raising taxes reduces the purchasing power of the private sector so that more resources can be allocated to the government without leading to inflation.

Ronald Reagan once said, originally or not, that if you want less of something then tax it, if you want more of something then subsidize it. Certainly not rocket science, but true nonetheless. Republicans are famous for saying that lowering taxes helps spur economic growth and it has worked every time it's been tried. For the most part that seems to be true, but oddly every time rapid growth is followed by an inflationary period or an economic bubble in one segment of the economy or another followed by a recession. So just lowering taxes isn't going to ensure prosperity forever, there is definitely a balancing act that needs to be performed.

Democrats use the tax issue as a bludgeon in their endless pursuit of government domination of the economy and society. Class envy and some nebulous sentiment they call "fairness" are their tools. Raising taxes to slow down an over-heated economy is one thing, but to do it out of hatred for capitalism or the "evil" rich is not economics, instead it is some form of vodoo they call social justice (might as well be called cosmic justice for all the logic they employ).

That leads us back to today. Right now we have next to zero inflation, 10-20% unemployment, an economy that is growing barely if at all in the wake of the housing market bubble. Clearly the economy is not a runaway locomotive that needs the brakes applied. Why then would the Adminstration and the Congressional Democrats support ANY increase in taxes. By letting the Bush tax cuts expire it is the equivalent of raising taxes. If low taxes lead to more economic growth (as proved) then raising taxes slows it down - so we ask what does the current regime want?

What it says to me is they either want slow or no economic growth or they don't really understand the role of taxes in our monetary system. The answer is probably both. Honestly I think the Obama/Pelosi regime is internationalist in vision and they are convinced that American global economic dominance is a detriment to eventual (inevitable) global government. In other words the U.S. has to be brought down first before the next steps can be taken. Sounds all so conspiratorial, but why else would they be doing what they are doing?



Timothy Birdnow said...

Agreed! It's all about cloward and Piven; overwhelm the system. What this gang wants is to expand government by placing financial pressure on everybody. It has worked every time it's been tried (except for bumbling Jimmy Carter who actually wanted to fix the economy but couldn't figure out how.)