Good News??

Lets hope for once the White House sticks to their guns and fights on this:

Follow behind the fold for some facts...

Altogether, the Bush tax cuts have had no discernible positive impact on the economy. In fact, the Bush tax cuts have been in place during the worst American economic decade since 1930. While it may be true that other factors were a greater drag in effect on the economy than was any positive effect of the tax cuts, it is also true that nothing has been done to mitigate the other negative factors, e.g., trade deficits and anti labor policies and wars. If there is a net positive from tax cuts, failure to remedy the counterweights on economic growth puts us on a treadmill of deeper and deeper cuts in order to keep the economy going day by day. This will not lead to any good result, because eventually we will run out of taxes to cut. At that point we will more resemble Somalia than Reagan's "shining city."

In theory, even tax cuts for the middle class don't work to grow the economy. Since taxes are not removed from economy but are immediately spent by government, the only significant effect of taxation on the middle class is to change the way the money in question is to be spent. Government might buy a 100 new textbooks instead of a used jet ski.

Taxes on the rich are an entirely different issue. As little as 10 percent of a tax cut for the rich is returned to the economy either by spending or investing. This runs contrary to the antiquated model of business school lectures which insists that all capital is participating in the economy as some form of active investment. This may have been true in 1792 when New York Stock & Exchange Board set up in rented rooms on 11th and Wall Street, but the Dow/Jones communications empire authored a change to all that more than a century ago. These last decades' doubling of financial activity as component of GDP is made up mostly of unproductive speculation and hedging. Capital formation has lost most of its utility to the economy because there is simply so much capital laying around already that there isn't enough activity in the global economy make use of it all. The rich are the richest they have ever been at any time in history. There is literally nothing they can invest in that will make money other than gambling on things as precarious to the world as the viability of the full faith and credit of the United States of America.

In fact now, the most beneficial use of all that accumulated capital to the country, and the world, would be to use it to retire the U. S. national debt. And as the national debt is almost entirely made up of corporate welfare and profits by the exact military industrial complex of which Eisenhower warned, capped by a bailout of Wall Street in 2008, it is perfectly fair and fitting to make them pay it back for breach of promise. And if you recall, the promise was Trickle Down.

We are barking up the wrong tree entirely by imagining that lower taxes will help the economy. Taxes are not the drain and 3 percent higher taxes are a nuance compared to war, trade deficits and debt service. Every tax dollar and then some is recycled into the economy with those three practical exceptions. What will help the economy most, other than further economic stimulus, is to cut down the debt, stop the wars and achieve energy and cheap labor independence.

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