published Tuesday, September 6th, 2011

Tax increases, more 'stimulus' won't work

It's odd to hear President Barack Obama and his Democrat allies in Congress continue calling for tax increases as the way out of the United States' economic crisis.

For one thing, raising taxes during bad economic times is dangerous at best, because it further suppresses whatever limited private investment is taking place.

But the other issue is, what exactly does Washington plan to do with any new tax revenue that it gets? Supporters of tax increases say the money could stimulate the economy and create jobs if it were spent by Congress on road, bridge and other infrastructure projects around the country.

But we tried that with the first "stimulus," and it failed. Nationwide, the counties that got the most road work money per capita from the $862 billion stimulus created no more jobs for construction workers than counties that got no stimulus money.

Other spending from the stimulus has been equally non-stimulating.

But even if you think additional stimulus spending is a good idea, it's just not likely to happen. Even if somehow the Republican-run U.S. House of Representatives went along with the Democrat-controlled Senate and approved tax increases, the failure of the last stimulus makes it almost impossible that the House would approve yet another stimulus to eat up the new tax revenue.

That's not to say Congress wouldn't find some way to spend extra money. It always does -- and then some. But if the stimulus -- whose direct purpose was to create jobs -- didn't boost employment, how likely is it that more government spending on other things is going to get Americans working again?

The thing that small businesses -- which provide most of our nation's jobs -- need right now is some economic certainty. They need assurance that Congress is not about to raise their taxes and undercut whatever investment they make in expanding operations and hiring workers.

They also need relief from the increasing regulations and coming penalties of ObamaCare. Unfortunately, whether businesses will get relief from ObamaCare's rules is unclear. Even if a repeal of the law made it through Congress, the president would veto it. A majority of the states have sued to have ObamaCare overturned. But it could take years before the lawsuits work their way through the federal courts, and a favorable ruling is far from guaranteed.

So one of the few things that Washington can do in the short term to enhance prospects for economic growth is to declare firmly that it will not raise taxes.

Ironically, and sadly, that is the very thing that the president and Democrats in Congress are most unwilling to promise.

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dfclapp said...

It is unfortunate that one side of this seemingly unbridgeable political chasm talks about individuals, individual rights, and corporations as individuals, and the other side is given full control over the ideal of community and shared sacrifice for the community good.

The point of the proposed taxes now is sharing the pain for the good of all rather that putting all the new pain on the most vulnerable among us. Is the argument that some individuals are more more important than others? I hope not, as that is a very ugly road to travel and has been used to excuse many crimes against humanity in the past.

The point is, if there is a serious desire to address the deficit, cuts alone will have to be draconian and injurious to cover what could be covered in part by a revised tax code that did away with special subsidies and tax breaks for wealthy individuals and businesses. The poor and the disabled are not the only individuals getting a government handout. The take-it-all-from-them and don't-dare-take-anything-more-from-me philosophy is a sad and ugly campaign platform. What is at stake is whether or not the fix to our problem will be shared sacrifice or not.

September 6, 2011 at 5:29 a.m.
Livn4life said...

dfclapp and all other dreamers regarding the tax situation in this country; reality check people, the only way the deficit can really be addressed is for draconian and injurious cuts to take place. But with the spendaholic out of control leaders we have in Washington, that is not happening. So we continue to hear all the blaming of anyone but ourselves and the class warfare divides us more and more. The funny thing is the people who claim shared sacrifice is the answer are the ones who will share little to none of the sacrifice. As long as our government gives handouts like a church(which the state claims is separate)we will continue to have problems. As long as many of the "most vulnerable" among us can live irresponsible and immoral lives and be given a free ride, we will continue to have problems. All the talk I hear, more from the left than the right, about fixing the economy is a bunch of liberal blather which has been tried and failed in other places and some even in our states. So keep on taxing and stimulusing us and see where it leads. The record keeps going round and round and round playing the same song while nothing of substance gets done...except maybe more government spending calling for more shared sacrifice leading to less and less jobs.

September 6, 2011 at 7:35 a.m.
dfclapp said...

Libertarians4Freedom, please point out your tax-free modern developed nations so we can see which one of us is living in a dreamworld. Perhaps you would point to some oil rich state in the Middle East, but not at any place dependent on a robust diversified economy. The plain truth is that civilization and taxation have gone together since the first cities. The ability to pool resources enabled culture to prosper.

September 6, 2011 at 11:28 a.m.
CharlesMartel said...

Lib4Freedom, by the way, the government owns 100% of the land in Hong Kong, and finances a large portion of government services from the lease of the land.

September 6, 2011 at 2:07 p.m.
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