The Left Is Doing What They Do Best – Bankrupting the Nation

Posted by PITHOCRATES - October 16th, 2010

Ronald Reagan Knew How to End a Recession

The Left hates Ronald Reagan.  Perhaps hate is too weak of a word.  If the Left wasn’t so ‘separation of church and state’, a stronger and more accurate description of their sentiment would be to call Reagan their Antichrist.  In the last century or so, Reagan had to be Democrat enemy #1.  For he stood against what they hold most dear.  Big Government.  And big spending.

Reagan dared to say the unspeakable.  Government isn’t the answer; government is the problem.  The Left could not believe their ears.  This was heresy.  They must destroy this man.  They did everything within their power then.  And they continue to do so today.

Their favorite tactic is to lie.  Sure, the 1980s were prosperous, but at what cost?  An exploding deficit?  A mounting national debt?  That’s what they say.  They said his reckless defense spending and tax cuts impoverished our future generations.  But they left out one inconvenient truth.  Cuts in the tax rates INCREASED tax receipts.  And the Democrat controlled congress exploded non-defense spending.  (Okay, two inconvenient truths.)  The Republican in the White House brought more money into Washington with his fiscal policies.  But the Democrats in the House just spent more.  The deficit in Reagan’s last year?  About $150 billion.  And it was the apocalypse if you listened to the Democrats.

Jimmy Carter Knew How to Prolong a Recession

Well, that was then.  What about now?  Associated Press Writers Martin Crutsinger and Andrew Taylor note that the government reports the deficit for the just completed fiscal year at a staggering $1.3 trillion (see Government reports $1.3 trillion budget deficit on Yahoo! News).  That’s about a 750% increase from the apocalyptical Reagan deficit.  And what do the Democrats say?  It’s really not that bad.

Apparently, deficits are okay if Democrats are doing the spending.  A few bailouts/stimulus later, they’re still spending.  Why, it’s as if they have completely forgotten how they once excoriated Reagan for his measly little deficit of $150 billion.  Funny.  Their selective memory.  Crutsinger and Taylor note:

Outside of the bailout, the federal budget went up by 9 percent in the 2010 budget year to $3.5 trillion, the Congressional Budget Office reported last week. Food stamp payments rose 27 percent as record numbers of people took advantage of the programs, while unemployment benefits rose 34 percent as Congress extended benefits for the long-term jobless.

Even after all the ‘one-time’ expenditures to fix the worst recession since the Great Depression, they still increased the regular federal budget by 9%.  And if you count huge increases in food stamps and unemployment benefits as positive economic indicators, then their ‘fix’ fixed the worst recession since the Great Depression.  So then that money was money well spent.  So what if it will run up the national debt to record levels?

Leading officials with the National Association for Business Economics forecast this week that the 2011 deficit will total $1.2 trillion, only slightly better than the administration’s estimate. They cited excessive federal debt as their single greatest concern, even more so than high unemployment.

Oh, that’s what.  Servicing that debt could kill business.  Higher taxes.  Or, worse, monetization (i.e., printing money).  Either way the cost of business goes up.  Which means they can hire fewer people.  Which means more will be on unemployment.  Or collecting food stamps.  Humph.  This economic stuff is trickier than it seems.  So we’ll have to reduce that debt.  Simple.  We just cut spending.  Or raise taxes.  Well, we know what affect higher taxes will have on business (more people will be on unemployment and collecting food stamps).  So the answer seems clear.  We cut spending.

The recommendations of the commission need the backing of 14 of its 18 members to trigger a congressional vote. Building that level of consensus will be difficult. Republicans are strongly opposed to a plan that includes tax increases to chip away at the deficit. Democrats are less inclined to move a package that relies solely on spending cuts.

Well, maybe not so clear.  But we could keep the taxes at their current rates.  Extend the Bush tax cuts.  It may not help a lot, but it sure will prevent a lot of harm by avoiding a massive tax rate hike.  Surely we can agree to this.  Put aside partisan politics.  For the good of the people.  But no.  The Republicans want to extend them all.  The Democrats want to extend them only for those earning less than $250,000.  This will hurt small business, the largest job creator in America.  Yeah, $250,000 sounds like a lot, but it’s not when you’re running a business.  An increase in their tax rate may require that they lay off someone to afford those new taxes.  And it will be unlikely that they would be able to hire anyone anytime soon.  How can this NOT be clear?

The difference between the two parties amounts to $700 billion that would be added to projected deficits over the next decade if the tax cuts for the wealthy were extended along with the other tax cuts.

Oh, boy, here we go again.  Zero-sum Keynesian economics.  Economic activity is finite.  If businesses can keep more then the government must get less.  Right?  WRONG!  Lower taxes stimulate.  Entrepreneurs create wealth.  And jobs.  When Reagan cut the tax rates the amount of money the IRS collected almost doubled.   You’d think that if the Democrats were just spend-happy they’d put party politics aside.  But no.  The thought that government isn’t needed to make business hum is anathema to them.  They’d rather see the economy go into depression than admit that.  So, if they get their way, what’s likely to happen?

“If we get to 2013 and policymakers don’t look like they have a credible plan to deal with the deficit, then interest rates are likely to rise significantly and that will jeopardize the recovery we have under way at that time,” said Mark Zandi, chief economist at Moody’s Analytics.

High inflation and recession?  Egad, it’ll be like Jimmy Carter is back in office.  Stagflation.  Misery.  As bad as that may seem, and, trust me, that’s really bad (as anyone who lived during the Carter years can attest to), it’s worse.  As of now, there’s no Ronald Reagan out there to fix another Carter malaise. 

Woe is us.

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