Money, money, money
Bookworm on Jul 09 2006 at 8:36 pm | Filed under: Economics
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.
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Money, money, money
Objectivity from the NY Times is never met with an admission that they were ever wrong. Better to try and distract with the obvious prediciton of gloom. The failures of the left is a tough pill to swallow for those who bet the farm on its success.
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OUT OF CONTROL tax revenues causing the deficit to PLUMMET.
One big difference between 2006 and 1856, or 2006 and 1906, is that Americans who woke to breakfast in those earlier times concerned themselves with local matters around the table. Those American didn’t know or care what “they” in Washington, New York, Europe, or the Middle East thought. For them the concept of “they” had not been invented.
Today, “they” are ominipresent. Fashion, music (?!), education, business, but, more than that, media and government, revolve around “they.” Our lives are hugely dictated by “they.”
This centralization in our lives certainly flies against the dreams of our ancestors. Theirs was a common distrust of centralization of any type, and governmental control.
Although national matters (The Northwest Ordinance to The Great Depression) might require central government action, for instance; in general, the more diverse our communities, subject to local control, the better. We may have lost that vision.
One of my education textbooks found Indiana to be a symbol of this “backward” America. Small farming communities, sometimes fiercely inward-looking, perhaps self sufficient, were anathema to the textbook writer, who dreamed of a megapolis from sea to sea.
I don’t think the good old days were all that good. What they were were “undesperate”, so to speak. Good solutions and desperate solutions only come during bad times. Since this is the good times, decadence and decay has set in, making it seem like the good old days were actually better. However, their problems had better solutions because their problems were bigger and more deadly. It was a matter of survival.
Actually change “undesperate” to “desperate”.
It is “an inconvenient truth” to the NYT that if the government reduces taxes, tax revenues actually increase, due to increased economic activity. Liberals aren’t really that interested in raising revenue; raising revenue is merely a side effect to the real project: redistribution of wealth. The assumption is that wealth is zero sum game; concentrations of wealth are inherently evil, and the purpose of taxation is to take from the rich and give to the poor, or on approved social pursuits, such as saving caribou, distributing condoms, or funding the arts, via a large, unionized government bureaucracy that votes Democratic. The idea that the primary purpose of taxation is to put money in the Treasury, and not to implement social engineering schemes, and the idea that lesser tax rates might actually encourage creation of wealth, are quite cumbersome and border on heresy.
One of the many dirty little truths that don’t get published, (surprise, surprise) by the way, is that as a matter of historical economic fact FDR’s alphabet soup of programs did absolutely zilch to pull the country out of the Depression - World War II did that. The greatest and most successful public works program - by far - was the US Military.
But, as noted, he did create the entitlement mentality with which we will - apparently - have to live forever. The big accomplishment was inserting government into areas of life where it has absolutely no shred of constitutional legitimacy to be, and we’re stuck with it.
As to the NY Timees being surprised - hell, they were surprised when Saint JFDK cut the top rate from 70% in 1963 - and revenues went up (he was the first supply-sider); they were surprised when Reagan re-proved the thesis that cutting rates results in more revenue; and they’ve now been shocked and awed for two years running when GW Bush has proved it yet again.
When you cut rates you raise revenues!!! Period!!! How many times does it have to be proved before the Times gets it?
But we all know the answer to that one - the Times doesn’t wish to get it; so they never shall.
JJ: I did actually know that it was WWII that got the economic engine going. FDR’s welfare wasn’t an economic engine, but it was certainly different from and better than modern welfare. While the economy may not have gotten a jump start, people were getting much needed money (and I don’t think anyone doubts the need for cash infusions during the depression). The important thing, to my mind, was that this money wasn’t a handout — instead, they had to work for it and the government (i.e., the people), received something in return, in the form of those infrastructure improvements (especially those beautiful dams they built). Welfare, yes. But at least it wasn’t pure redistribution of wealth, in the something for nothing category.
You know what REALLY amazes me? The same people who scream and moan about “the government” (aka; the Bush Administration) are the same people who want the government to gain control of the nation’s economy, at which the government has long proven itself to be completely incompetent.
If they would actually spend ten minutes thinking about that paradox… well, never mind. Who expects them to think, come to think of it?
NYT: “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.”
Only people with their heads completely buried in the sand could possibly think that the last five years have been “bad”. We had a stable economy in spite of an attack that struck at the heart of Wall Street, two wars, and several major natural disasters in the country. 9/11 alone, according to information put out by CNN, ripped $3 trillion (yes, that’s trillion with a “t”) out of our economy in stock losses alone when the market opened again the following week.
The fact that we did NOT go into a major depression is GREAT news, not “bad”. But that would be giving too much credit to the idea of tax rate decreases. Can’t let all those rich people get too much money, you know! They might actually start hiring people, and where would the Welfare State be then?
The people who feel guilty that they have money and therefore seek to be redeemed by supporting laws that redistribute wealth, are people who themselves aren’t letting go of their money. So it is a double guilt, once guilty for being wealthy, second time guilty for not wanting to let that wealth go. Mohammed Atta and Co faced the same dilemma when they visited Los Vegas. Once sinned for being in America, twice sinned for liking being in America.
They’re willing to do a lot, and make you pay a lot, to expunge their guilt.
Funny thing about liberal guilt; it never gets expunged.
Of course it can’t be expunged, it is a perpetual motion device.