Here are two brief videos explaining why Congress needs to extend all the Bush tax cuts that are set to expire at the end of this year rather than fall for President Obama’s proposed scheme of targeted tax credits for businesses.
First, Charles Krauthammer explains why a broad tax cut (or in this case preventing the largest tax increase in US history) is better than government giving tax credits to some businesses for a specific purpose.
A broad tax cut let’s each small business owner decide how to best use the money freed up by the government. Obama’s proposals assume that the federal government knows better than individuals how to best invest a company’s earnings.
Outside the military, when has government ever been particularly competent in allocating resources? By wasting an $800 billion stimulus plan with nothing to show for it, the Obama administration certainly has not demonstrated the ability to make wise investment decisions.
An ABC News video explains that letting the Bush tax cuts for the top income tax brackets expire would raise the taxes of almost a million small businesses:
Don’t expect President Obama suddenly to have an attack of common sense. It is highly unlikely that he will support extending the Bush tax cuts. Republicans should agree to nothing less and either wait for the Democrats to panic prior to the November election or Republicans can pass an extension of the tax cuts retroactively after taking control of Congress. If Obama then has the audacity to veto such a bill, he has effectively committed political suicide and it will be that much easier to get rid of him in 2012.
Update: Mary Matalin, another succinct voice of reason on taxes:
Radio talk show host Hugh Hewitt on Fox News comments about the failure of Obamanomics.
In the second half of the video below Hewitt emphasizes the failure of the Congressional Budget Office (CBO) to estimate the dynamic impact of tax cuts. The CBO takes a tax cut and increases the deficit by the amount of taxes cut. What it fails to do is account for the positive impact of the additional money in the economy which leads to investments, jobs and economic growth. All this increases taxes collected by the government which over time can more than make up for the initial drop in tax collections.
If Congress doesn’t act, in about 130 days the biggest tax increase in American history will occur when the Bush tax cuts expire. Again, the CBO and Democrats look at the additional taxes brought in without taking into account changes in behavior by businesses and individuals which could easily take us into a second recession or worse.
On Friday the government published another dismal report on the lack of job creation. Even more depressing than the monthly reports is a comparison of job growth over the past year and a half with what President Obama promised. The Heritage Foundation provides this comparison:
This data confirms once again that the $862 billion Obama stimulus legislation—as well as all the subsequent budget-busting legislation Congress has enacted under the rubric of “jobs” bills—has failed, as expected.
The weak jobs data also mean the Obama jobs deficit—the difference between current employment and the jobs Obama promised to create by the end of 2010—now stands at 7.6 million workers. That’s 7.6 million fellow citizens who were promised jobs if Obama was elected and his economic program instituted and are still out of work. Unfortunately, continued weakness in the economy indicates they will continue to be out of work for months to come, perhaps as long as Obama adheres to his ideology rather than opting for proven solutions.
With less than three months before the November election, the Obama administration and Democrats in Congress are in a panic. House Speaker Nancy Pelosi is bringing back the House from recess to vote on a $26 billion package to aid states so that they won’t have to lay off more government employees. Predictably the focus of House Democrats is on government jobs, not removing uncertainty for private employers. The special House session is designed to pass a bribe to get government workers to vote for Democrats in November.
There have been rumors for the past week that the Obama administration plans an “August surprise” by ordering “government-controlled lenders Fannie Mae and Freddie Mac to forgive a portion of the mortgage debt of millions of Americans who owe more than what their homes are worth.”
Meanwhile, Democrats are not willing to stop the biggest tax hike in US history by refusing to extend the Bush tax cuts.
As the November election approaches and Democrats face historic losses and a Republican-controlled Congress, expect panic and a lot of lies, but nothing that will assure American businesses about the future. Positive change and a more predictable business climate can only come when the new Congress is sworn in January, 2011. Over the next three months, Americans need to motivate all like-minded voters to show up at the polls in November and defeat Obama’s socialist vision for America.
Join the pro-growth, limited government movement and sign the Winning in November pledge now and do your part in bringing America back.
The Bush tax cuts expire at the end of this year. In effect, if Congress does nothing Americans will have a tax increase in 2011. Republicans have argued that not extending the lower Bush tax rates would be a foolish thing to do and could harm the fragile recovery.
Deutsche compared the situation to Japan in the 1990s, when the government let tax cuts expire and cut stimulus, leading to another leg down in the recession and ensuring the nation’s “lost decade” of no economic growth.
The left loves to use the conservative argument that we need to address Obama’s record deficits as a reason for raising taxes. Chris Matthews did just this on MSNBC this evening.
When we talk about federal deficits and debt, it is important to emphasize that the underlying cause is too much spending, not insufficient taxes. While it is politically difficult to cut spending enough to eliminate the deficit overnight, it is possible to reduce spending and, at the same time, increase tax revenues by promoting pro-growth policies including permanent lowering of tax rates and eliminating the threat of ever more government intrusion in private enterprise. Rep. Paul Ryan’s Roadmap for America’s Future is one example of a long-term plan to return our federal government to fiscal sanity.
In the late 1990s, it was economic growth, not tax increases that raised revenue from federal taxes to the point where we had a few years of surpluses.
Today President Obama and his allies in Congress pursue the opposite course. Every issue is used to justify increasing government spending. The resulting record deficits are then used to justify tax increases except that, in this case, they don’t talk about raising taxes, but rather about “ending the Bush tax cuts.”
Interesting enough, Democrats now support keeping some of the Bush tax cuts and only letting the lower rates expire for incomes above $200,000 or $250,000. Funny, according to Democrat propaganda over the past decade, all of Bush’ tax cuts where just giveaways to “the rich.” Now Democrats emphasize that they would keep most of the cuts which they now admit go to middle and lower income earners.
The argument that raising the taxes on people making more than $200,000 won’t harm the economy is contradicted by economic analysts such as those at Deutsche Bank. Many people in this income bracket are small business owners who do not separate their personal income from their business income. Reducing their incomes will decrease their reinvestment in their business which, for the average American, means less jobs, lower pay and less economic growth. This is just one practical argument against increasing taxes on whoever the Democrats consider rich.
Extending the Bush tax cuts beyond 2010 should now be the highest priority item before Congress.
Paul Ryan analyzes the current economic situation and presents his plan for returning America to prosperity at a speech to the US Chamber of Commerce. It is 23 minutes long, but well worth watching. Share and Enjoy:
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