Arizona Senator Jon Kyl took to the Wall Street Journal the other day to promote a pro-growth agenda for America. We need one.
The classic Keynesian approach has failed.
What, then, encourages growth? For one, it turns out that savings, much-maligned by the president and the press, actually help our economy grow. Money saved is invested. Adam Smith, in his famed "Inquiry into the Nature and Causes of The Wealth of Nations," and later economists, including Jean-Baptiste Say and Friedrich Hayek, all noted that an economy grows through increased production, which is financed by capital (savings); increased consumption follows—it does not lead—economic growth.
The best way for us to encourage production is through pro-growth tax reform. And it just so happens that events are shaping up to achieve the kind of tax reform that could put our economy on a path of long-term growth.
Of course, if Democrats manage to escape electoral rout in November, we can kiss long-term growth and meaningful tax reform goodbye. Progressive notions of tax reform can be summed up in two words: more and higher.
President Obama wants higher taxes on upper-income Americans. He says he has "better ways to spend the money" than they do. Unfortunately we already know what kind of growth to expect if Obama gets to spend the money. There was that $787 billion stimulus of his that was supposed to keep unemployment under 8 percent, yet here we are at 9.6 and nobody expects it to go down anytime soon.
So, instead of letting Obama spend it, the better thing is to leave that money in the hands of high income taxpayers where it's almost guaranteed to be invested, even if only in savings accounts. The funny thing about money that's invested: somebody, somewhere eventually has to try to turn it into something productive in order for the investor and everybody else along the chain of the investment to get a return. More often than not that means growth and jobs. It means recovery.
If we let Obama spend the money, one thing is sure. First and foremost, it will be spent where it does the most for Obama's political benefit. By ending the Bush tax cuts for high income taxpayers Obama expects to collect another $700 billion, roughly, which represents a huge source of government largesse. As they had done with the stimulus, Obama and his allies in congress plan to dole out it to deserving constituents where it will have the same effect as the stimulus. We'll end up with an increasingly intrusive government controlling more and more of a struggling economy.
It's the strategy Bill Clinton was talking about last year when he addressed the Nutroots convention and promised a new era of progressive politics, assuming Democrats could play their cards right.
...he noted that President Barack Obama and the Democratic-controlled Congress needed the support of the online community to achieve their agenda.
“We have entered a new era of progressive politics which, if we do it right, can last 30 or 40 years,” Clinton said. “America has rapidly moved to another place on a lot of these issues.”
As we've discovered over the last couple of years, doing it right means imposing the progressive agenda. The financial crisis presented a small window of opportunity, and Obama didn't let it go to waste.
...he rammed Obamacare down the throats of Congress and the majority of the American people. He abused the legislative process, refusing to have the sweeping health care overhaul reconciled in conference committee. His administration engaged in open bribery and corruption to arm-twist key votes - the Louisiana Purchase, the Cornhusker Kickback, the offering of judgeships to brothers of congressmen. Most despicable of all, Mr. Obama lied. He vowed that government-run health care would curb costs and not add to the deficit. However, the huge entitlement will cost taxpayers at least $1 trillion over the next decade, if not much more.
All of that, by the way, is what we will validate this November 2nd if we fail to throw the bums out.
He has nationalized the automakers, the financial sector and the college student-loan industry. His regime has called for regulating the Internet. His allies in Congress want to muzzle conservative talk radio by passing the so-called Fairness Doctrine. He has appointed numerous policy "czars" with Cabinet-level powers, circumventing the normal Senate confirmation process. His Justice Department is suing Arizona for trying to protect its citizens from Mexican drug cartels and criminal illegal aliens. He has defunded NASA's manned space program, eviscerating America's strategic advantage in space. The only spending cuts have been to slash $100 billion from the Pentagon's budget - weakening our military readiness.
According to Obama, this legislative mess was engineered to promote American prosperity. As if. Bills hurriedly thrown together had a common theme -- to promote dependency and establish progressive political advantage through government control. Give him credit for boldness. Steamrolling his agenda into law was a big political gamble.
November will tell us if it's going to pay off. America is no longer in that place where Bill Clinton once thought she had moved. Americans now know they want policies that create jobs. But here's why we won't get them if Democrats keep the majority.
...the supposed stimulus from increasing government spending by a trillion dollars is offset by borrowing or taxing that trillion dollars out of the economy.
Indeed, because the government inefficiently allocates its spending based on politics, rather than efficiently as in a market, and because taxes discourage economic growth, the net result is a drag on the economy, rather than a stimulus, as the Obama experience shows once again for all the slow learners in that 45% still supporting him. This Keynesian economics failed thoroughly in the Great Depression, failed thoroughly in the 1970s, and failed just as thoroughly in Japan for the last 20 years, for just these reasons. Why it is an inevitable, illogical failure was explained for decades by such all time great economists as Friedrich Hayek, Ludwig Von Mises, and Milton Friedman.
So, we'll limp along with unemployment in the 9 to 10 percent range while Democrats revile the rich for being rich. But let's face it. Democrats just want the damned money. The progressive agenda calls for Democrats to stay in control by taking from the rich and giving to some other rich -- progressive special interests -- who are all too eager to share their tax payer funded stimuli with their Democratic benefactors. The cycle of laundering tax payer dollars through progressive constituencies and back into the Democratic party is right out in the open. It's what the GM/UAW bailout was all about.
The choice in a little over two weeks is this: Vote for the Republican pro-growth agenda that will put Americans back to work and begin to restore our economy. Or sit home and watch as the progressive agenda strangles America for no other reason than to fatten Democrats and keep them in Washington.
I've listened to the tax and spend mantra for over 40 years. It never works.
Posted by: jorod | October 15, 2010 at 08:16 PM
I second Jorod’s comment, although for me it has been a little longer than 40 years.
The spending and most kinds of regulation are out of control.
For example, we’ve had increased federal regulation of public education.
We got the largest new entitlement program in a generation.
There has been zero reform of government entitlements.
The enactment of TARP combined with a big government President that arrogantly announced that he was abandoning free-market principles in order to save the free-market.
Yes. What occurred from 2000-2008 must never be allowed to happen in the Republican Party again.
Posted by: MSmith | October 15, 2010 at 09:55 PM
Dr. Blake made an excellent point when he spoke to the crowd in Sturbridge. Socialism really does work -- for people who thirst for power over others. For the people, not so much.
Posted by: Tom Bowler | October 16, 2010 at 06:52 AM