Conservative News & Commentary

Nov 14, 2012 — by: A. Smith
Categories: Economics, Government

Barack-obamaPresident Obama just announced he wants to solve the "fiscal cliff" by raising taxes on Americans (and American businesses) that earn over $250,000 annually. Mr. Obama estimates this will create $1.6 trillion in revenue over the next ten years. However, as with most Left of center politicians, he is wrong in thinking that raising tax rates will lead to the same kind of increase in Treasury revenue. His error is thinking that Americans will behave the same way before and after a tax increase. Americans rarely do. Most Americans, when faced with an expense change behaviors to avoid that expense or to lessen its impact. "Rich people" are notorious for this, and are rich because they are smart money managers. 

Changing behaviors can also be seen on the other side of the fence. When tax rates have been lowered, private savings and investment has boomed, causing an economic surge. Why? Because Americans and American businesses have more money, and most Americans change their behavior and do something good with that money. Money in private hands is always more efficient than in public hands. And that efficiency leads to productivity and productivity to growth. 

However, the main problem with the President's solution is that he has misdiagnosed the problem. The Federal Government's problem is not that Washington does not have enough money. The problem is that Federal Government is spending too much. In other words, the Federal Government has a spending problem. Tax increases do nothing to fix that. Nothing. 

If passed, the President's plan will do two things to send our economy into another nose dive:

  1. Tax increases always slow an economy. Today's economy is just above water at a little above 1% growth. Any tug in the wrong direction and we head into another recession (or worse).
  2. More revenue to the Treasury doesn't necessarily mean a smaller deficit. If a politician sees more money, what do they do? They spend more. This is the nature of politicians, spending, and giving them more money and telling them not to spend it is like pouring a drink for an alcoholic and telling them not to drink it. More spending (wasteful and inefficient spending) only makes our debt worse, not better.

Conservatives need to expose the President's foolishness and the dangers behind his idea. Conservatives have several good and common sense ideas to solve our problems and it has nothing to do with sending more money to Washington.

1 Comment

  1. Finnious T. Fogbottom ~ Nov. 16, 2012 @ 4:03 pm

    I guess the problem I have with accepting and understanding all of the president's wordsyzerdsy stuff arises from my antiquated reliance on “old morality and math”; which among other things is pretty darned discouraging. For one thing in cold calculatingly unflinching terms it tells me that if we (as a comparative example) were go out into the future one trillion minutes that would put us 32,000 years ahead. Since we are carrying a national debt of about sixteen trillion my discouragement starts becoming a bit conservatively petulant. Then when I consider that the combined income of the USA is running around nine trillion and the government spends about four and a half trillion each year of which about 40% is borrowed, well I have to admit that I start feeling a little bit depressed as well. The more we get behind, the worse it gets! From a personal standpoint none of this has been too great for my health or sanity so I’ve been thinking that I’ll just throw off those inconvenient ethics and realities and at least try to clutch the leftist logic of the NUDE, sorry, that should be “new political Chicago style math”. Na, really I just can’t do that. Because when you honestly think about it, "it" suffers big time from regular conceptipation. Besides, neither the current emperor or hIS top intelligence minions seem to have any ethically or mathematically symbolic clothes to speak of, and, well, the winter cliff is well on its way. But heck now I’m now thinking that maybe the portended mega human capitalism caused global warming disaster will remove the need for clothing and energy or food (we can live sustainably on brotherly love) and then maybe we can tap our ruby slips together and things will all just sort of work themselves out? Na, the truth is that they are trying to generally betraeus on that and every other NUDE political math issue and arena as well. Guess I’ll just move to America. Woops, Finnious #

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