Governments don’t make money; they just print money. It’s people who make money. In other words, if government will stop being so greedy and let people keep their money, people will, in turn, make more money resulting in, yes, I’m gonna say it — more tax revenue. This is so obvious, and yet the NY Times still manages to be surprised:
An unexpectedly steep rise in tax revenues from corporations and the wealthy is driving down the projected budget deficit this year, even though spending has climbed sharply because of the war in Iraq and the cost of hurricane relief.
On Tuesday, White House officials are expected to announce that the tax receipts will be about $250 billion above last year’s levels and that the deficit will be about $100 billion less than what they projected six months ago. The rising tide in tax payments has been building for months, but the increased scale is surprising even seasoned budget analysts and making it easier for both the administration and Congress to finesse the big run-up in spending over the past year.
Tax revenues are climbing twice as fast as the administration predicted in February, so fast that the budget deficit could actually decline this year.
The main reason is a big spike in corporate tax receipts, which have nearly tripled since 2003, as well as what appears to be a big increase in individual taxes on stock market profits and executive bonuses.
While the NY Times found the obvious surprising, I, personally, am completely unsurprised by the fact that the NY Times is still pessimistic:
One reason the run-up in taxes looks good is because the past five years looked so bad. Revenues are up, but they have lagged well behind economic growth.
The surge could also evaporate as quickly as it appeared. Over the past decade, tax revenues have become much more volatile, alternately soaring and plunging in the wake of swings in the stock market and repeatedly defying government projections.
When Pres. Bush gives you lemonades, suck lemons, right?
On the subject of government spending and such-like, I’ve been thinking for the past several days about Franklin Delano Roosevelt’s initiatives in the first 100 days of his presidency. He entered the White House at the peak of the depression, assuring people that the only thing they had to fear was fear itself. He then successfully pushed through Congress an alphabet soup of federal spending programs. The ones that most of us remember, which put money into people’s pockets, were the Civilian Conservation Corp (CCC) and the Works Progress Administration (WPA). Many of those linger in memory as welfare programs. In fact, though, they were work programs. Under their aegis, people were paid to build roads, build dams, clear forests, build huge buildings, etc. In other words, Roosevelt used these programs to build (or re-build) the American infrastructure. You can call it “make work” but it wasn’t really: people worked hard for the money and produced legitimate products. Indeed, although some say it reeked of socialism, in retrospect it has more the smell of the government entering the marketplace, and rather successfully too.
Government no longer works this way. Entitlement is such that we cannot demand that people produce in exchange for government handouts. Whenever government steps out of its legitimate infrastructure functions, it depresses the market and, ultimately, decreases its own revenue. As always, rather than make a lengthy (and probably incoherent) argument here to prove my point, let me only point to the hopelessly stagnant European economies, which are subject to intense government control and high taxes (the French student riots spring to my mind here).
A book I once read describes conservatives as futilely harking back to a halycon past based on their belief that modern times are hopelessly corrupt. And it is true that self-styled conservatives do hark back to a past before the era of multiculturalism, political correctness, and moral relativism. I always think that most of us look back on the 1950s as a pretty good example of a well-functioning society — although I doubt any of us are stupid enough to deny the huge stain of Jim Crow.
American conservatives aren’t the only ones who look back, though. We’re all aware that, on the issues of national security and race, liberals are stuck in the 1960s. Based on what I’ve written above, I would add that, when it comes to economics, they’re also stuck in a perverted vision of the 1930s. Where Roosevelt instituted hard work programs aimed at stimulating growth in a paralyzed economy, they’ve translated that into a socialized vision of unlimited government handouts.