Democrats Discover Economics...NOT!

The most frustrating thing about talking to a liberal is their apparent inability to grasp even the most basic elements of economics. Take taxes. No matter how many times cutting tax rates stimulates economic activity, both here and in the rest of the developed world, and no matter how many times it results in INCREASED revenues to government coffers, Democrats persist in talking about “paying” for tax cuts.

But there was at least a glimmer of understanding in Fed Chairman Ben Bernanke, who admitted that extending at least some of the tax cuts set to expire this year would help strengthen a U.S. economy still in need of stimulus. Unfortunately, he then urged “offsetting the move” with increased revenue – newsflash, Ben, reducing tax rates WILL increase revenues! And as if to underscore the point, having Bernanke just talking about tax cuts caused the struggling stock market to rebound dramatically.
Not surprisingly, rather than making all of the Bush tax cuts permanent, Democrats want to keep them only for the folks at the bottom who pay almost nothing as it is, while letting them expire for families earning over $250,000. Meanwhile, Republicans want to continue the cuts for high-income people as well, which would be the smart move – this group includes the millions of small businesses that are responsible for creating the majority of new jobs, an even bigger priority in the middle of a recession.

Ireland is an excellent example of what happens to a country that goes down the high tax road – and how it can be reversed. In the late ’80s, the Irish were in a virtual depression, with crushing taxation and and a massive welfare state with millions on the government dole. Even motion pictures that were filmed in Ireland had poverty and unemployment as a recurring background theme.

But unlike American Democrats, the Irish got smart. They realized that businesses are not the enemy – on the contrary, they are the foundation of any economy. They slashed taxes at every level, and just as important, cut spending, especially on social programs. The result? Ireland experienced a veritable boom in new business investment, with the result that millions got off the welfare roles and went back to work. And miracle of miracles, the government revenues went UP, not down. As they always do.

Yet time and time again, if you attempt to persuade a liberal Democrat that cutting tax rates (especially for those who are paying the most) is the way to increase economic activity and raise revenues, all you get are charges of “tax cuts for the rich.” What they fail (or refuse) to grasp is that the very best thing you could do for the poor is indeed to CUT TAXES ON THE RICH.

Because when taxes become too burdensome, those “rich” folks pack up their businesses and move them, either to another state, or even another country, costing yet more jobs. Just last year I ran into an old neighbor at the airport who was on his way to visit his U.S. company’s new plant…in Ireland. And when you remember that all those jobs should have been American jobs, thank the tax-obsessed, anti-business Democrats.

But Democrats will never accept responsibility for creating the very repressive tax and regulatory policies that result in companies “shipping jobs overseas” – they simply blame “greedy” corporations, Republicans, or both. And don’t look for any sanity from the current Congress – if they decide to retain any of the Bush tax cuts at all, it will only be for the lower income brackets, those who are already paying the least (including those who not only pay no income tax at all, but instead actually get a check from the government).

Because for liberal Democrats, it has never been about economic reality, or even doing what’s best for the country – it is about using the tax codes to redistribute wealth (and creating a permanent government-dependent underclass in the process), by stealing from those who produce and giving it to those who don’t.

Thus Obama’s Treasury Secretary Tim Geithner pretty much reflected the Administration’s socialist mindset when he opined that the middle class “needs” a tax cut more than “wealthy” Americans. “Need” should have nothing to do with tax policy, and besides, those so-called “rich” already pay vastly more of their income in taxes than the “poor” and the “middle class” combined – the top half of taxpayers pays 97% of all income taxes, while the bottom half pays only 3%.

Then again, like many liberal elites, Mr. Geithner’s has a history of not paying his own taxes, so his lack of concern for those of us who do should come as no surprise.

It’s just what Democrats do.

John Caile