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February 07, 2006

Tax Cuts Do Not Cause Deficits

As you can see here, revenue to the federal treasury in fiscal year 2006 is projected to increase by 29% since the 2003 Bush tax cuts (for those who practice Rubinomics, this is real-world empircal data to support supply-side economics; President Kennedy and President Reagan provided empirical data to support it as well).

The inevitable entitlement calamity is now so close at hand that, if the next President serves 2 terms, he (or she) will face entitlement costs that alone exceed this year's entire federal budget, leaving little room for anything else like defense or education. Runaway spending is the true cause of deficits, and Ford's & GM's retirement cost-driven woes are a peek into the future of what awaits the federal government if entitlements are not reformed. Recall that Democrats applauded themselves at the State of the Union speech for obstructing any debate over reforms, much less action.

As you can see from the chart, not only have tax cuts been followed by continued growth in revenue, but spending is the real problem. To raise taxes in order to shrink the deficit would only lead to politicians having more of our money to spend irresponsibly.

Click graph for a bigger version.

E.J. Dionne is typical of liberals who are either lying or ignorant. He even has to stretch and twist time itself to make history fit his flawed view of the world.

When Clinton's tax increases went through in 1993, not a single Republican -- not even one of those so-called moderates -- voted for them. And because the benefits of the 1993 tax increases did not start kicking in until later in the decade, the Democrats were routed in the 1994 midterm elections.

This is laughable. Interest rates began their secular decline the very day Republicans took over Congress in 1994. That, combined with the capital gains tax cut that spurred investment and the massive productivity gains of the client-server and Web architecture leaps in technology drove the fabled economic growth of the late 90's. Dionne ought to take an economics course one day.

Posted by Jonathan R. on February 7, 2006 07:42 AM

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Comments

Our government has made a promise to our citizens, and that promise has not been repealed by the voters. The tax cuts make it much more difficult for the government to meet the demands that will inevidibly have to be met. While we are spending hundreds of billions of dollars on Iraq we will need to spend that much on health care for our citizens. The lie that tax cuts are a magic panacea for the economy is a lie. We had high taxes in the past and the economy grew wonderfully, just look at the time from 1940 to 1973. The idea that Reagan's tax cuts made the economy grow is a joke. A large part of the boom in the late 1980's and all through the 1990's was the drop in oil prices, and then the innovation, in large part driven by government funding and research, that created the internet.

Posted by: thor_of_the_north at February 7, 2006 05:02 PM