Lie To Me

Believe. Regardless of what the facts are, believe.

Have you heard about the Democratic tax increase? Or, maybe they called it the Obama tax increase.

What, exactly, are they talking about? They are talking about George W. Bush’s tax increase. Bush’s? How can that be?

Bush said that, as a result of the downturn attributed to 9-11, we needed to stimulate the economy; create more jobs.

His solution? Tax cuts. Surprise. Surprise.

When Bush and his Republican Senate and House passed the tax cut they knew that there would be a tax increase on January 1^st of 2011. That makes it their tax increase, no one else’s.

Probably the most offensive aspect of the effort to extend Bush’s tax cuts is the hypocrisy of its supporters. Many congressmen are claiming that the reason they voted against an extension of unemployment benefits is because the bill contained no budget cuts to offset the cost. What were the costs? About $30 billion.

Sure, $30 billion is a lot of money but the human costs of cutting the lifeline of the unemployed is impossible to tally. Well, surely these fiscal conservatives also want budget cuts to offset the loss of revenue. I’m sorry. They don’t. After all, the tax cuts will only come to about $1.7 trillion by 2014. You probably should also include interest payments. That puts the costs at about $2 trillion. Of course, there is no guarantee that the tax cuts would end in 2014.

I’ve said this before and I will continue saying it until everyone understands: there are no such things as tax cuts if they create debt. They are merely deferments. They shift the burden to others. Because of interest, they cost more than stated, as in the last paragraph.

The consensus among economists is that there are far more effective ways to stimulate the economy. So, Bush said we will give the significant cuts to the top two percent. Why? Because everyone knows that they are the ones who create jobs. I’m sorry. For some reason I got left out of that “everyone.” I think the reason for my absence can be attributed to my familiarity with the facts.

Stimulating the economy is most effective when the funds are targeted at the areas most in need of attention and where the return is greatest. Where did those $250 refunds go from the last stimulus? The biggest slice went to paying down credit card debt. Paying down your debt is commendable but hardly stimulative. Most the the rest did go for consumption. Admittedly, that helped stimulate the economy. The problem is that the economy that was most stimulated was China’s.

The aspects of the tax cuts that are the points of contention are the marginal tax rates in the two top brackets: over $209,250 and over $373,650. At the point of the first, the rate would be 3% for everything between those two amounts. Above the later, the increase would be 3.6%. Those increases are only on taxable income. No one pays tax on their entire income. The wealthier you are, the greater the likelihood of being able to take advantage of a mass of deductions.

In fact, the reality is that few making as little as half a million a year will pay as much as $5,000, if any in extra taxes. In terms of what those congressmen consider wealthy you need to be considerably above that piddling amount. Just being in the top two percent doesn’t make you attractive enough to be a real friend.

Eighty percent of stock is owned by the top one percent. That makes you attractive.

If giving the plutocrats a tax break at your expense doesn’t benefit you by stimulating the economy, why would you support it? Because they tell you it creates jobs? It doesn’t.

Yeah, I know. Outgoing Senator Kay Bailey Hutchison and others told a big enough lie that many believed it. The numbers they put out differed but Kay’s claim was that it created 8.1 million jobs. Maybe in China, but not here.

Even with the supposed jobs resulting from the tax cut, Bush, according to the Wall Street Journal, only managed about 3 million jobs created during his first 7 years. The number was 23 million during Clinton’s 8 years, without a stimulating tax cut. Bush’s final year saw an actual loss. The mess he left caused a loss of 8 million jobs over the last months of his administration and the first year of his successor.

But, you say, I’ve always heard that the wealthy are the ones who create jobs and the more money they have the more jobs they create. It sounds nice, doesn’t it? It seems to make sense, doesn’t it? Only if you think the economy is that simple and every wealthy person’s every waking moment is how to benefit those less financially fortunate.

No president since Herbert Hoover has created so few jobs as Junior while everyone since WWII has done it with higher tax rates on the top end. If a low tax rate on the wealthy is the key, how did presidents out-perform Bush when his top rate was 36% and theirs was 91%? In several comparisons, the higher the top marginal tax rate the greater the job creation. I don’t care if that is counter to the received truth that Junior read on those stone tablets or not.

Put the tax rates in perspective. Allowing the increases called for in Bush’s tax bill will put them back to where they were during the Clinton administration. They will still be less than they were under Reagan. Show me any proof that reducing taxes on the uber-wealthy creates jobs and I will let you borrow the Holy Grail that I possess. The Holy Grail may exist. I don’t know. But, I know the other doesn’t.

It may be a shock to some that, if you reduce revenue while you are in debt and running a deficit, you will have a larger debt. Look at this chart.

Okay, class. What do we see? The presidents responsible for the largest increases in our debt gave us the largest tax cuts deferments. They also created the fewest jobs.

Let’s review the claims of the fiscal conservatives. They say tax cuts for the wealthy creates jobs. Wrong. They say tax cuts generate more revenue than they cut. They say that tax cuts more than pay for themselves. Wrong. Not only do they not pay for themselves, they don’t even pay for the increased interest on the debt.

Do you remember David Stockman? He was Reagan’s economic guru. Remember Supply-side economics? Remember Trickle-down? Did you read David’s book – the one he wrote after he left the White House? He admitted that he and the other advisers knew at the time that it was all a sham. I think we have more than sufficient data now to support his contention.

The question is not why the fiscal conservatives continue to spout such nonsense. They are just trying to serve their masters. The real question is why is so much of the public still so gullible?

I have some partial answers. First, they don’t understand the issues. They think they do. But, that’s not quite the same. They say that it’s the philosophy on which this country was founded. Emphatically not true. They say it works. I’m going to tear out my hair. They think those saying it are telling the truth and share their values. I’m going to tear out your hair. No. No. No. No.

They lied. They are lying. They will continue to lie. It’s their job.

Do they care about you? You don’t have to be unemployed to grasp that they routinely vote against your interest. You just have to know the facts. Facts to them are like sunshine to a vampire. They are far more closely related to Kim Jong Il than to you and me.

.

Tagged as: 9-11, bush, china, clinton, conservative, credit card, david stockman, debt, deficit, economy, herbert hoover, holy grail, house, interest, jobs, kim jong il, obama, plutocrats, reagan, senate, stimulus, supply side, tax cut, tax increase, unemployment, wall street