Shooting Themselves in the Feet

Here is something I will never understand.

Since the early sixties mainstream economists have accepted that fiscal stimulus doesn't do much to help in general economic downturns. Let's call it the rise of the age of monetarism. During the same period, it has also become generally accepted that (in large economic units... countries, states, etc.) raising taxes decreases government receipts.

However, also during the last forty years, Democrats have continued to try to make the case that raising taxes raises revenue.

Such a position has never made sense to me. If you are a Democrat, and your political life is based on having government largess to dole out to constituents, why not support any policy that will give you more resources to secure your political objectives? Why not lower taxes, attract high income voters, and still have the money to reward non-taxpayers?

I know what you will say. How do you convince the non-taxpayers that the "rich" are evil and corrupt if you don't punish them with higher taxes. Good point. But I would counter with this. Just pretend you are screwing the "rich", while continuing to create and economic environment where they will provide more money for you to buy votes.

Some might say that that is exactly what they are doing. And maybe "some" would be right to an extent. After all, the Democrats pretty much own Wall Street at this point, so clearly they have co-opted a good proportion of the "rich" vote.

But then you see stuff like this. Tax receipts have been clobbered in the recent downturn and any economist (except Paul Krugman... but that's another story) knows that the best policy now would be to lower taxes. But that is not what the Democrats are doing. They are piling new taxes (Cap and Trade), regulations and other economy killing costs on the country. And the result is predictably devastating on government receipts.

It seems bizarre to me that the Dems continue to force policies against their own political interests. But that they do, and we all suffer for their bizarre ideology.



1:13 PM

It's the old VMO-2 unwritten rule, where no good deal goes unpunished. The Dems can't stand to see anyone prosper - it must be unfair, of course - so they play scare-the-seniors, class-warfare rhetoric, all the while not seeing what could be...



Jeffrey Plumley

4:38 PM

You are spot on with this post. It comes down to what school of economic theory you come from. Are you a Keynesian disciple or does Milton Friedman get your pulse racing?

Friedman said "I am favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it's possible."

And you don't have to like it, but the natural order, or natural law, of things is that what starts high tickles down, other wise said Sh*t rolls down hill. Trickle down economics works and Reagan proved this when his policies brought us out of the recession of 1982, which was arguably worse then what we have now, but not for long if we continue the foolish policies of the collective brain trust in Washington.

I'm always for more freedom. Freedom from oppressive taxes on my hard work and efforts ranks at the top of the list...




7:04 PM

Thanks guys. Seems like I'm preaching to the converted. Feels good.

JP... got my hands on a dump truck today and drove around for a while. As Lyle my dirt guy said, I now have "dump truck in my blood". He says my life will change forever.

And by the way... JP, meet Jeff. Jeff lives somewhere around you, I think in that area where your smart cousins live. Maybe goes to their same church out near where you work. Not sure of any of that, but I kind of thought it was a possibility. Anyway Jeff, JP is a Marine buddy living around Atlanta. Young kids, great wife, all the right stuff.