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Better fat than fascist

~ Considerations into the failures of over goverance & the successes of freedom

Category Archives: American Resurgence

Tax Cuts Should Take Backseat to Spending Cuts, Reforms

08 Saturday Mar 2014

Posted by BetterFatThanFascist.com in American Resurgence, Domestic Policy

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Clinton, debt, Democrats, Laffur, Republicans, spending cuts, tax cuts

By Greg Smith

This is boring. This is dull. This is important.

For many years the standard Republican template for economic growth has been cutting taxes, but with an enormous national debt it is time to recognize tax cuts without spending cuts, tax and regulatory reform are almost meaningless. Today, whether you tax or borrow the money from the private sector the effects will be nearly the same.

In years past one of the favorite descriptions Republicans pinned on Democrats was “tax and spend.” Democrats wanted bigger government and were willing to raise taxes to pay for it. President Reagan’s massive tax cuts passed in 1981 were very sensible and when you look at the 33% increase in federal tax revenue in constant dollars from 1981 to 1990 the tax cuts more than paid for themselves. Military and social spending went up considerably, which was why the national debt increased in the 1980s.

Post-Reagan GOP

Comparing the Republican Congress of 1995-99 with the Bush administration, which enjoyed Republican control of Congress from 2001-07, show a considerably different agenda and outcome.

The elections of 1994 were such an enormous victory for Republicans that President Clinton was actually forced to explain why he was still even relevant. The Republican-controlled Congresses from 1995 through 1999 among other initiatives reformed welfare and farm subsidies while controlling spending increases, resulting in government much friendlier to economic growth and employment. Clinton was pretty much forced to go along. When he takes credit for the balanced budget toward the end of his term, he is taking credit for Republican plans he fought tooth and nail.

These were serious reforms with serious consequences: By 1999 the country was at four percent unemployment, which economists consider to be full employment. National debt actually began to be retired. Quite a contrast to the predictions made by detractors in 1995.

President Bush took office in 2001 and Republicans held both houses of Congress until 2007. Bush was never a conservative and was not much of an ideologue when it came to tightening the purse strings. While both the defense budget and social spending increased, Republicans stuck to the idea of lower taxes because it worked under Reagan, but when Reagan took office tax rates were much higher and a greater impediment to growth, so his cuts had the potential to unleash much more growth.

One of the basic arguments for Reagan’s tax cuts was the Laffer Curve, which argues government would collect zero tax revenue with tax rates of 0% or 100%. In the latter case no one would bother working on the books. Government would actually collect more money with 50% tax rates than at 90% tax rates because of the greater incentive to work. The truth of this is elemental.

But if tax rates continue to decline at some point government begins to collect less revenue. Where this point sits is an open question, but it explains tax cuts today – while they should still increase revenue and are justifiable on other grounds – are not going to produce the same increase in revenue as under Reagan because marginal tax rates are already much lower than in 1981. Tax cuts should produce slightly greater revenue, but tax cuts by themselves will not solve our debt problem. We cannot grow our way out of our debt without cutting regulation, waste and simplifying the tax code.

Continuing to spend as we are now requires borrowing, and borrowing money causes the same outcome as taxing: wealth is destroyed because it is taken from economically useful activities – the private sector which exists on its own merits – and given to the public sector in which only a fraction of the money is spent in a way that indirectly generates wealth-producing jobs.

Today, tax cuts without spending cuts are almost meaningless because whether you tax or borrow the money out of the economy matters very little, you still remove it from the private sector. The GOP should look at the successes of Congress from 1995-99 – reform, cut and simplify government bureaucracy and programs, and then consider tax cuts. Republicans fail to claim the success of this strategy at their electoral peril.  ©

Greg Smith is a freelance writer and political consultant who lives in Bantam, CT. His blog is found at www.betterfatthanfascist.com.

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Channeling Churchill on the Tea Party

06 Thursday Mar 2014

Posted by BetterFatThanFascist.com in American Resurgence, Personal Freedom

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Churchill, debt, deficit, fairness, GDP, Green Eggs and Ham, independent voters, small government, Tea Party

By Greg Smith

Independent voters in America have overwhelmingly negative opinions of the Tea Party. Considering the general beliefs of these two groups this view is caused to a large extent by poor presentation and communication by Tea Party members. If the Tea Party wants to remain relevant in elections it needs to begin giving basic, dispassionate explanations of why smaller government matters.

Their phone went to voicemail so let me take a crack at it.

For me, there is now one overriding domestic policy issue, the deficit and debt. Governments must carry debt, but in 2008 the ratio of the national debt to gross domestic product was 64.8%, which was already too high. This is a basic measurement of how far we are in hock compared to annual income. By 2013 that ratio had shot up to 101.6%. Here’s a hint: When this ratio could be a station on the FM dial, the country is being quite irresponsible.

There are many who will start to lay the blame at the feet of Barack Obama or George Bush. Save it, those arguments are not going to put my kid through college. In politics, when spending priorities are debated there is considerable talk about ‘fairness.’ Where is the fairness in elected officials in the White House and Congress borrowing trillions of dollars, which they then hand out to groups based on whose support they need to get re-elected, then hand the bill to the next generation? They obviously have no plan to pay it back.

A wonderful little boy is in taking a nap on his bed. His biggest concerns are his sippy cup, access to as many cars – toy and real — as possible and when he’ll see another school bus. Buses are his big thing now. Cute. Little does that boy realize most of the political establishment is okay with borrowing as much as they need to keep their jobs and stick that little boy and the rest of his generation with the bill.

Open a credit card account in Tennessee Democrat Rep. Steve Cohen’s name – according to Townhall.com the biggest Congressional spender of 2013 – buy a plasma TV and a Playstation, and get locked up. He can try to spend about $70 billion in borrowed money, and probably get re-elected. Fairness?

Someone may argue we’re spending that borrowed money to shore up the economy and create jobs, which will then benefit the next generation. Save your breath, I’m not stupid, and isn’t that the despised ‘trickle-down’ economics? Apparently it doesn’t work from rich to poor but it works from generation to generation. If that argument held water we would not, considering the trillions borrowed and spent, be facing a true unemployment rate of 13%.

Texas Sen. Ted Cruz and his colleagues may come off poorly. He certainly should have known better than to amateurishly read Green Eggs and Ham during his Senate filibuster last year because news outlets are going to seize on what’s interesting rather than what is important. But I don’t see anyone else telling Americans the hard truth: Actually living within our means would help the economy, but the better reason is it’s the right thing to do. If you disagree, just try explaining the fairness involved to a child.

Winston Churchill famously said, “Democracy is the worst form of government except all the others.” The same can be extrapolated to the Tea Party.   ©

Greg Smith is not a member of the Tea Party, but is a freelance writer and political consultant who lives in Bantam, CT. His blog is found at www.betterfatthanfascist.com.

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It Is Always Morning in America

24 Monday Feb 2014

Posted by BetterFatThanFascist.com in American Resurgence

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debt, freedom, government, Morning in America, prosperity

By Greg Smith

“Well the eagle’s been flyin’ slow, and the flag’s been flyin’ low, and a lot of people sayin’ that America’s fixin’ to fall.” – Charlie Daniels, “In America”, May 1980.

Concerned about America’s future? It is high time for some positive thinking and strategizing for the country we want in a decade and beyond. This nation has faced great problems since its inception. Examining the nation’s history provides perspective into the American capacity for growth and development when properly governed. Fact is, we can overcome. We always have.

Through history most societies changed little over seven generations. Even when there was progression instead of regression, advances were generally minimal and marginal. A time traveler from nearly any period of human history going back 140 years usually would have noticed little difference. But even with industrialization factored in, considering the metamorphosis of 1803 to 1945 should make any American confident we can face any challenge, solve any problem.

In 1803 the U.S. population was about 6.5 million, mostly clustered on the East Coast. New York City, by far the largest city by population, still had less than 100,000 residents in 1810 — there were farms in Manhattan into the 20th Century. The amount of land in the U.S. that could have been considered ‘developed’ would have been measured in the hundreds of square miles against the 3.79 million square miles the nation would eventually encompass. And when President Jefferson completed the Louisiana Purchase he had to send a military expedition from 1804-1806 headed by Meriwether Louis and William Clark to explore the heart of the continent just to find out what lay west of the Mississippi River.

The ensuing 139 years included the burning of Washington in 1814, substantial contentions surrounding slavery and a brutal civil war, Indian wars, Southern Reconstruction, labor riots and robber barons, construction of the Panama Canal, several shorter and one Great Depression and the attack on Pearl Harbor. There were plenty of problems along the way.

By 1939, by choice, the U.S. was a nation with an army smaller than that of Rumania — yet still lacking for basic amounts of materiel. Six years later the United States was the world’s leading military power. Even while fielding massive armies of young men – workers – in the European and the Pacific theaters America’s economy fed and sustained its own and much of its allies’ militaries. The U.S. Navy was larger and considerably more powerful than the combined navies of the rest of the world. U.S. air forces had been supplied with thousands of the then highly sophisticated B-29, along with almost two hundred thousand other combat aircraft that eventually ruled the skies, plus nearly another ninety-five thousand support aircraft.

The U.S. was the only nation able to fight large, sustained campaigns in both hemispheres. And in 1945, the massive $2 billion investment in the Manhattan Project paid off making the U.S. the only atomic power.

An argument these were merely causes of industrialization ignores the fact all the other industrializing nations completely existed in 1800. The United States which by 1914 was producing over one-third of world industrial output – roughly equivalent to the next three nations of Germany, Britain and France combined – by and large did not exist at the beginning of the 19th Century. Americans overspread a continent creating new political entities and societies while almost simultaneously turning wilderness into an economic engine of unprecedented magnitude. The Census of 1890 was the first to find the American Frontier no longer existed. This was less than a decade before the U.S. Navy, using modern warships that were antecedents of the battleship, defeated the Spanish at Manila Bay.

If you need a slightly more recent example, consider the period of 1981 to 1991. In January 1981 Iran still held 52 American hostages. The U.S. military was considered a “hollow” force while the Soviet and other Warsaw Pact militaries enjoyed considerable advantages in size, especially in armor and artillery. Aside from air power American military technological advantages had eroded. Inflation and unemployment were rampant – the misery index reached 21.98% in mid-1980. Inflation from 1970 to 1981 was 112.4%. “Rust Belt” became a household word. The U.S. economy and international influence appeared in freefall.

Only a decade later, a U.S.-led coalition squashed the world’s fourth-largest military in the most lopsided fashion imaginable. Shortly thereafter America was left as the only superpower. The U.S. economy had long-since healed and was in the midst of a transformation focusing more on technology and services. In the ensuing years U.S. military and economic dominance caused some to label America a hyperpower and hegemon. Between the reforms and bold actions of the Republican Congress from 1995-99 and President Clinton’s willingness to work with them the budget was balanced and national debt actually began to be retired. Unemployment reached a low of four percent, considered to be full employment. In short, it was one hell of a turnaround.

This is not empty nationalism but facts that illustrate of what America – what any nation in which individual social, political and economic liberty prevails — is capable. Today the largest challenge we face is our debt and deficit. The federal debt-to-GDP ratio is now roughly 1-to-1. It actually reached 1.2-to-1 shortly after the end of World War Two. According to an article by Matt Phillips in The Atlantic, the U.S. was able to push the debt-to-GDP ratio down to pre-war level of about 0.43-to-1 by 1962.

The path back to long-term prosperity is simple: Less government, more personal and economic freedom. Cut regulation, slash the tax code, get out of the mortgage business – in essence stop trying to make the world perfect. Government has long since passed the point where its intervention causes more problems than it solves. History has provided the recipe for success, we need only follow it. ©

Greg Smith is a freelance writer and political consultant who lives in Bantam, CT. His blog is found at http://www.betterfatthanfascist.com.

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