Senator McCain's Economic Policies Will Fail -- Big Time

Once again, we're hearing economic la-la land from the Republican candidate. As usual, we're hearing the great canard -- there is a free lunch, you can have something for nothing and you can cut taxes and increase revenue. Let's go over the facts AGAIN for those of you playing at home.

Let's look at the data.

Kennedy cut taxes in the early 1960s. What happened? There was a spike in revenue in the late 1960s.

Maybe that means the Laffer curve is correct?

Reagan cut taxes in the 1980s. But there was no spike in revenue. Maybe tax cuts don't pay for themselves. But, let's try that experiment again.

Bush cut taxes twice (not once) in the early 2000s. Notice that after the first tax cut revenues dropped. But then tax revenues spiked -- so they must work! Actually, no. Remember this is a year over year chart. That means the spikes in the later 2000s are being compared to the dropping revenue is the early 2000s. In other words -- the tax cuts didn't pay for themselves (again).

The chart is very clear. Kennedy's cuts worked to a point, but they weren't the greatest thing since sliced bread. Reagan's and Bush's didn't work as advertised. Thanks to both Reagan and Bush's cuts we are now mired in a boat load of debt.

For those of you playing at home, total federal debt under Reagan increased from a little over 30% of GDP to over 60% of GDP. Under Bush it has increased from 57% of GDP to 64% of GDP.

Can we stop this crap now?

Comments

[MourningDude]

No year-over-year federal outlay chart? Why am I not surprised?

[olephart]

Dude, here's how you calculate the outlays under a Republican Administration. Take the revenues and add the deficit and you have the outlays. Under a Democratic Administration you take the revenues and subtract the surplus. QED

[cla62]

That's funny. Hearing a democrat talking about something for nothing. Coming from the free cheese party!! If it wasn't for free cheese, 70% and upwards of Americans would vote Republican!!

[not one of the sheep]

Once again, figures don't lie, but liars can figure.

[Erdgeist]

The burgeoning National Debt is the result of free trade policies. When an American company abandons its country to go to another where the cost of manufacturing, including wages, is significantly lower it is irrational to believe that this will benefit both the American worker and increase revenues to run the Federal government. Yet, this is precisely what is going on with the current free trade policy.

The alternative is to return to using tariffs on imported goods as a source of revenue for the government, primarily to bring the debt under control. In addition, tariffs indirectly serve to keep American companies from abandoning their responsibilities by keeping them here because they will have no advantage by outsourcing. Such a policy doesn't hurt exports--in fact it increases exports. An historical fact, the more manufacturing at home, the greater the exports. Right now the U.S. imports more than it exports. So what has the free trade policy accomplished? Nothing except debt. Free trade is beneficial only to 10 to 15 percent of the population and hugely detrimental to some 30 to 50 percent..

[MourningDude]

No, the alternative is to stop punishing domestic companies with taxes on corporate profits which put them at a disadvantage with their overseas competitors.

Abolish all domestic corporate taxes and implement a national sales tax to make up the difference. Then we get to tax both domestic companies AND their foreign competitors equally.

[olephart]

Dude! Back with a new handle and the same inverse logic. Only you could turn the sales tax upside down and say that corporations pay it. Tell me where you shop and the store pays the tax! Dude, welcome back, love the new name.

[JadedAggie]

You haven't even gotten to the tip of the iceberg.

His stance on internet and cell phone taxes infringes on the rights of states to apply sales tax to services.

His stance on a gas tax "vacation" provides very little relief to consumers, a good amount to businesses (but not for long enough for that to push down prices), and leaves a large gap in revenue for the highway trust fund.

His health care tax credits obviously show no understanding of how tax code works. If you are in the lower brackets you are getting less than $1000(per family) in exchange for you buying your own families health insurance. Seriously does he have any clue how much health insurance premiums are?
Of course it is going to benefit businesses, but middle class and blue collar families would be suffering enormous increases to their expenses that are barely even dented by the tax credit.

Then you arrive at this idea of streamlining the tax system into 2 tax rates. We all wish the tax system was easier, but the truth is we have a progressive scale for a reason. People that make $30k a year can't afford the same tax rate as those making $200k. The income disparity is so vastly different and exponentially based that you can't realistically apply 2 rates.

[drkazmd65]

Of course McCain has no idea what insurance premiums are for working class and lower class families.

Between his military pension & benefits (I assume he has or at least had those), the fantastic single-payer health care plan that Senators get, and the fact that he is married to a multi-millionarie - he has never had to actually 'pay' for a plan in my lifetime (born 1965).

Why is it that Republicans can put up mega-millionares to run for office, who propose plans that make no sense for working class Americans but great sense for mega-millionares, keep getting votes from the working class?

What is the matter with KS,... or just about any midwestern red state anyway?

[JadedAggie]

Most people don't understand the way the tax code works and how to use it to figure out what savings you are actually getting. McCain gets to say he's given a $5000 tax credit, but in reality you are just subtracting $5000 from your gross income before you calculated your taxes. So even if you paid at a 40% rate you are getting $2000 instead of the $5000 he is stating.

[Overd0g]

Yeah who was it who started that big lie? Oh yeah, JFK.

[coolrepublica]

Anyone who doesn't want to raise my taxes is a friend of mine. I don't care who you are. What can I say? I like to hold on to my hard earned dollars.

[bdd]

are you one of the top 4 percent earners???
if the tax rates are put back to what they were in 2000, anyone not part of the top 4 percent are not affected. Bring it on please.

[indypete]

I don't like paying tax any more than you but we do need to face one or two thiings that should be glaringly obvious. When the fed'ral guvmint cuts taxes, they stop spending on stuff that they were helping out with at the state level so we either get higher state taxes or our roads, police, fire service, public schools, whatever start going to shit. Personally, I'd rather pay a bit extra in tax than have bridges fall down and roads develop potholes that are capable of eating Mack trucks without even spitting out the bones. Of course, we could always privatise the roads and pay a toll to leave our driveways. We could privatise the police and be told that the break-in at our house can not be investigated because we were late on our insurance premium. My parents lived on a nondescript street in a nondescript industrial town in Scotland where their taxes were admittedly higher than those we pay here in the US but once a week a fellow drove down the street in a sweeper and kept it clean. A small thing, yes, but an example of the purpose of taxes. Outside of gated communities, how many street sweepers do we see over here?

[MourningDude]

If you want a street sweeper, pass a property tax hike for your neighborhood and get one. Don't expect for me to pay for it.

[americanwhocares]

Then enjoy the recession coolrepublica. Hopefully you will not suffer too much.

[indalay]

So you don't mind if your children & grandchildren & great-grandchildren are stuck paying for the government you're supporting now?

[Armand451]

Just hold on to that thought as a bridge which is maintained with tax dollars collapses as you drive over it.

While everyone wants to be able to keep as much of their income as they can, there is a little word which Republicans always seem to say but never actually use. That word is "Responsib­ility." We are all part of our society and we all have a responsibility to help out with the upkeep.

[jumperpin]

Private and public debt have reached unmanageable proportions. Personal savings and median disposable personal income are at depression level lows. Brokering off our industrial and technological bases have removed any means of recovery.

McCain wants to lead one last toast from the upper deck of the Titanic

[Overd0g]

And you want to tax away any wealth that is left so the great white fathers in Washington can blow it.

[anelder]

Actually folks that's what it's all about. Much talk is made about the average voters know best and just let them have their say. Hear that all the time. All one has to do is look at what the average voter says and what he falls for and you see this isn't so. Takes a lot of research to figure out what is happening and most of us don't bother expending the energy.

Please just get us some leaders who know how to deliver the message and so not speak with forked tongue. But then we'll need to educate that common man to listen for what is so and not for what we wish to hear.

[dadw5boys]

Tax cuts have never worked but they say it a lot so people hope it works.

Social Security is on not crisis. If the Federal Reserve can print $ 2.9 trillion to bail out gamblers they can damn sure print up $ 290 Billion for Social Security. Who is the better investment these fly by night gamblers of wallstreet or the Americans who have built and paid for the country you enjoy doing business in ?

TIME TO REPAY THOSE I OWE U'S PUT IN THE SOCIAL SECURITY BY THE U.S. TREASURY!!!!!!!!!
WE WANT THAT DEPOSIT NOW FROM THE FEDERAL RESERVE!!!!!

[nomoredead]

I would say it is the duty of a patriotic american to pay his fair share of taxes, more so than just wearing a lapel pin.

[Annette]

Especially if they want to have a murderous war. Killing people for no gain on borrowed money.

[Overd0g]

That's called "leverage".

[Sciguy]

Ah, but you can't SEE people paying their taxes every day. Those lapel pins are so much easier - just attach one and become a True Patriot. Paying taxes hurts! Lapel pins don't hurt (unless you stick the pin into yourself). Keep in mind that we have become a nation of appearances rather than substance. We buy pretty, glitzy crap that looks so nice when we buy it - and we never seem to complain when the stuff falls apart after a week's use. Unless whatever we buy kills us (or our pets), we simply don't care any more.

Now, perhaps if those lapel pins had lead paint in them and sickened or killed the wearers, we might stop carping at folks who don't wear them. But all we see in the area of taxes is that the "gummint" is "gittin'" it all, and we need that dough to buy more pretty crap.

We can SEE Chinese trinkets. We can't SEE the almost-10-­trillion-d­ollar debt (not directly, anyway). It takes thought to understand that such a huge national debt is killing the country, but thinking, like paying taxes, hurts too many of us.

[Rescisco]

Failure seems not to hurt Republicans very much. I believe that is because it is easier to win when you just ignore the facts, which are too complex for the average citizen to understand, and appeal to the prejudices and fantasies of the uninformed voter. As these presentations show, the Republicans have been living in an "economic la-la land" for years. But this evidence never convicts them because the jury is ill equipped to render a verdict.

[aztecwarrior]

I think you need to see why the budget was in balance in the 1990s. There were some key factors that drove the revenues:

1. 1993 - the biggest tax hike in American history. Everyone took a hit and the percentage of Americans getting hit by the AMT started to spike.
2. THE INTERNET BOOM - Starting in 1995 or so, more and more people went online. This led to a TORRENT of investment activity between 1997 and 2000. People were making millions of dollars overnight, and hiring people as fast as the resumes came in. Couple this with number 1 above and you get a huge cumulative effect.
3. THE GROWTH IN HOUSING - In 1990, the housing market PEAKED, and in 1992/1993 it BURST, leaving cheap properly available and people running for cover. It was in this environment that people were find cheap houses, and using them for rental income which got taxed like everything else.
4. The growth in direct investment by ordinary people - as people got online, they could buy and sell stock rather than seeing it as something for old-money. I got my first brokerage account in 1998, and paid SIGNIFICANT TAXES on my gains.

It wasn't any magic of Bill Clinton. The Internet and housing bubbles burst, and the crazy taxes were repealed. When people think they can make money without being taxed into oblivion, they're more likely to take the risk associated with opening a new business or making an investment.

[Annette]

Taxed into oblivion?? The rest of the first world still exists and in countries where there are much higher tax rates people are thriving. Higher standard of living, living longer, greater economic growth. Schools with enough text books for every child, medical care for everyone, roads without huge potholes.

Republicans and their friends have bought into the myth that if the taxes were just lower, roads would pave themselves, bridges wouldn't need maintaining, the military could invade where ever they want and it wouldn't cost money, children without parents would just go to work at age 6 like they did in the 1800s. Doctors would take a bushel of potatoes to take out your appendix on the kitchen table. Grow up, pay taxes that are reasonable, quit waging war on countries that have done nothing to the US,

I also paid significant taxes on my capital gains in the 1990s. I sold stock about a year ago and I paid less, so what? I would rather live in a prosperous country than what is coming at us due to Bushie and the Republican borrow and spend congress.

[Overd0g]

They don't have a higher standard of living than I do.

[joebhed]

Tax cuts reduce the current revenues of the government.
This, we know will happen.
Whatever else might happen is the grist for economics wizards.
The federal government cannot afford whatever is discussed as a tax cut, but in reality is a reduction in current revenues to the government.
This would force the government to increase the national public debt and the debt service costs on that debt.. ALWAYS think debt service costs, not the nominal amount amount of the debt.
The status of the financial standing of the federal government right now is such that we are incapable of paying for the agreed undertakings of the government, and we have been so incapable for some years.
We aren’t paying our bills.
We’re borrowing.
This is the situation today without considering the tax cuts and the further decreasing of the nation's revenues.
Paying the debt service costs of the huge borrowings being undertaken is a long-term cost to the American taxpayer.
You can't tax cut your way out of that obligation to pay.
One undeniable result of any tax cut is to increase the obligations of all taxpayers to pay the debt service costs of the borrowing.
The total debt service cost of any government borrowing is going to be three times or more the amount of the debt.
By a margin of three to one, any tax cut that does not guarantee an increase in revenues ought not to be undertaken.

[BillZBubb]

I always love it when you post the revenue chart. Invariably some right winger pops in about how the graph shows revenues really did spike after the tax cuts. Unfortunately, they don't know much, much less how to read graphs. Yet there vote counts as much as someone who can understand a chart.

Now old man McCain is out trying to peddle the snake oil again. The problem you see, wasn't the tax cuts! It was the spending. Sure, McBush, that's it. Wonder when he'll tell us how he's going to cut $600 Billion/yr out of the budget to get back into balance? I won't hold my breath.