Liberals versus Conservatives

 It is interesting how the liberals only hear what they want to hear, disregard the reasonable arguments to the contrary and continue to reiterate the half-truths and lies.

Let me start with the needless war. Have we forgotten Saddam Hussein and his weapons of mass destruction? Granted they didn’t find any WMD but given Saddam’s history and predilection for violence against his own people could we afford to take a chance especially after 9/11. I think not.

The tax cuts… generally tax cuts stimulate economic activity and increase the total revenue to the government as happened under Reagan. After 9/11 the effect on our economy could not be predicted but with the tax cuts, revenue to the government rebounded to year 2000 levels by 2006.

Rather than being caused by the lax regulation, the economic collapse was principally caused by the government intervention in the free market with the Affordable Housing Act 1990. This forced banks to lend money in areas and to people who they might not otherwise lend. In order not to end up with that bad loan they sold it to Fannie Mae or Freddie Mac. Then they invented Mortgage Backed Securities to further insulate themselves from the government demanded risk. Many people used the freer credit to refinance their mortgages to pay off credit card debt and many people got interest only or low or no-dock mortgages. When these risky loans began to default, the whole house of cards came crashing down.

Reagan presided over 11 tax increases for a cumulative total of $132.7 Billion. He also presided over 4 tax cuts for a cumulative total of $275.3 Billion. Net effect?  More revenue.  And to be fair some of the tax increases he agreed to were in conjunction to the Congress agreeing to spending cuts which they reniged on.   Historically tax revenues have been steady at 18% of GDP since 1960 even during Jimmy Carter’s presidency when marginal rates were 71%. As the tax rates increase, people change their behavior and tax revenue stays relatively the same. The solution is increased economic activity.

If it comes down to liberalism, belief  in government action to achieve equal results or conservatism, belief in personal responsibility, limited government, free markets, individual liberty, traditional American values and a strong national defense, I’ll take conservatism every time.

Spending is Taxing

As the presidential election heats up we hear continually the Democrats cry "fair share" and "tax cuts for the rich" and the Republican cry "cut spending" "cut taxes". Since all spending is a form of taxing I will take the high road. Cut the size of government and you need fewer taxes on the rich or anyone else for that matter. Art Laffer has been instrumental in helping explain via the "Laffer Curve" that increasing taxes "on the rich" actually decreses revenue. President Obama chalks this up to a fairness issue but the fact is "the rich", the top 10% pay 70% of all personal income taxes.
Leaving taxes aside for a second, let's talk revenue. The total revenue to the US Government is estimated to be 5.1 Trillion dollars in 2012. My vote would be to make Congress (and the President) keep spending within that estimate. Part of our problem has been and continues to be baseline budgeting which assumes baseline at last years spending and allows an increase over that number supposedly for inflation. This is how we get the GSA scandal and other reckless spending. No one looks at how they can reduce spending. They just see additional revenue in their budget each year and figure out ways to spend it. Baseline budgeting goes back to the Congressional Budget Act of 1974 and presently assumes a 6% growth rate. That is why whenever Congress talks about a "cut" it is never a reduction in spending but a reduction in the built in growth of spending. This growth in spending which is automatic has forced continual growth in taxing to keep up.
Government spends too much and therfore we are all taxed too much. By increasing spending when revenues were decreasing due to the recession we have built up a debt we cannot pay. Stop the madness. We need to get back to 0 based budgeting. Every department in the government should have to justify their spending for budgetary approval and Congress should not increase ANY spending until that happens.
This Presidential Election will be about big ideas. This is the biggest one and the most important one. Let us hope and pray that the smart people who want to be President can see that.