In Matthew Green’s latest column, he mentions that any challengers should write a response to his arguement (Get real about the economy, 02/23/2010). This is mine.
The deficit obviously did rise substantially under President George W. Bush. But Bush was correct in so much as tax revenues rose substantially while he was president — potentially because reduced tax rates led to higher growth (Laffer curve mentality). The deficit rose substantially, but mainly on account of war spending (whether or not this was warranted is arguable) and reckless increases in federal spending — mainly under a Republican Congress. Point: Bush tax cuts did not in and of themselves lead to higher deficits — poor government spending choices did.
President Barack Obama’s $787 billion stimulus package “saved” or created 2.4 million jobs. This is the first time we’ve ever counted “saved” jobs — a difficult metric to quantify and certainly purely political play. Additionally, $787 billion divided by 2.4 million equals $327,916 per job. And that’s with the bloated jobs figures (The Associated Press released a report in October showing that the jobs created number was inflated.) Considering that most of these jobs are not high-paying, $328,000 per job is a horrendous waste of taxpayer money. Perhaps congressmen had their own jobs in mind rather than those of the nation they were pretending to help. A tax holiday would have had the same stimulus impact, but in that case the private sector surely would have created jobs at a lower cost than $328,000 per job.
I’d agree that taxes need to go up. But you must consider the following: After about a three year dip following the Bush tax cuts, under Bush the top 5 percent of income earners paid about 60 percent of all federal taxes (The top 1 percent paid almost 40 percent of taxes while the bottom 50 percent paid approximately 5 percent, according to the Internal Revenue Service.) Taxes do need to rise, but they need to rise on the middle and even the lower class. As it stands, the top 10 percent pays around 70 percent of taxes. This needs to be changed. And this does not take into consideration corporate taxes or inflation, which are implicit taxes on capital and therefore more often taxes on the rich.
Far more important than tax increases, however, is cutting off run-away government spending. Consider that the U.S. government receives more in tax revenue than any institution in the history of the world, and yet Congress outspends these massive revenues by a huge sum almost every year. Politicians on both sides of the aisle demonstrate that people — be they conservative or liberal — are typically quite lavish with other people’s money.
Conclusion: smaller government = better life.