Friday, July 23, 2010

The Fight over the Economy

Today there's a curious column from economist Paul Krugman sneering at the Republican call for a return to Bush era economic policies. He's evidently against the extension of the Bush era tax-rate cuts.

In recent weeks, G.O.P. leaders have come out for a complete return to the Bush agenda, including tax breaks for the rich and financial deregulation.

Meanwhile Larry Kramer is calling for corporate income tax-rate cuts as the sure way to ignite a very sluggish economic recovery.

Think of all the economic obstacles of spending, taxing, and regulating coming out of Washington. What should be done to spur growth? Keep tax rates down. And stop passing massive regulatory bills, like the bank reform Obama just signed into law.

By the way, if Bush passed "tax breaks for the rich" how come the income tax share paid by the rich went up in the Bush era? Here are the numbers from the IRS for the federal income tax paid in the Bush years for the top income brackets.

Share of Federal Income Tax Paid by The Rich
YearTotalTop 0.1%Top 1%

Notice that the only years in which the tax share of the rich went down was prior to the implementation of the Bush tax cuts (OK, the recession had something to do with it).

So. With the Bush tax cuts the share of income tax paid by the rich went up--substantially. I just don't understand how you get to "tax breaks for the rich" from this data.

We are going through a period where the American people are going to experience, first hand, the claim of Keynesian economics, that you get out of recessions with government stimulus spending.

The record of the decade when the US was stuck on stupid suggests that stimulus spending and business-bashing don't work.

Already, key Democratic senators are getting nervous. They are worried that the expiration of the Bush tax cuts will abort the recovery and endanger their political futures.

The fact is that government spending is too high. Government tax rates are too high. Government borrowing is too high. Government regulation is too high.

This is the year when all the rhetoric from the liberal elite on the wonders of government power is going to break down.

If only the American people could be saved from the hardships ahead.

No comments:

Post a Comment