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White House Doubletalk On Bush Tax Cuts

By Da King Published: November 9, 2010

President Obama once said "words matter." However, when it comes to discussions of extending the Bush tax cuts, the White House seems to believe doubletalk matters. We keep hearing from the White House how extending the Bush tax cuts will "cost" the government so much money. Nonsense. Extending the Bush tax cuts won't "cost" the government anything, it will only keep tax rates exactly the same as they have been for a decade. If we use the White House's definition of the word "cost," then all of us taxpayers are "costing" the government tons of money by not handing over 100% of our wages to the government. If we all stepped up and became part of the deal, to paraphrase VP Joe Biden, and coughed up all our earnings, we could surely balance the federal budget. Unfortunately, none of us would be able to feed, house, and clothe ourselves.

Obama and his Superfriends are confused about "cost." Tax cuts don't "cost" anybody anything. The government itself is the cost.

Secondly, the discussion about the extending the Bush tax cuts is not even about tax cuts. There will be no new tax cuts no matter what Congress decides to do. This discussion is about whether or not to raise taxes during a recession. That has never worked out well in the past, because tax increases negatively impact economic growth, which is generally held to be most unwise in an economic downturn.

Let's look at the Great Depression for instruction. It is acknowledged that the Smoot-Hawley tariffs enacted by President Hoover made the Depression worse by impeding the trade of goods. Today, liberal groups want to impose similar tariffs on free trade. Guess what ? The results will be similar.

What is less acknowledged is that FDR's tax increases also hampered economic recovery, despite massive amounts of Keynesian stimulus spending undertaken by FDR. Here's what FDR did with taxation:

FDR tripled taxes during the Great Depression, from $1.6 billion in 1933 to $5.3 billion in 1940.6 Federal taxes as a percentage of the gross national product jumped from 3.5 percent in 1933 to 6.9 percent in 1940, and taxes skyrocketed during World War II.7 FDR increased the tax burden with higher personal income taxes, higher corporate income taxes, higher excise taxes, higher estate taxes, and higher gift taxes. He introduced the undistributed profits tax. Ordinary people were hit with higher liquor taxes and Social Security payroll taxes. All these taxes meant there was less capital for businesses to create jobs, and people had less money in their pockets.

The proof is in the pudding. After six-seven years of FDR policies, the unemployment rate was still nearly 19% in 1938 and over 17% in 1939. The mean unemployment rate from 1934-1940 was 17.2%. Unemployment during the 1930's never fell below 14%. During the previous decade, known as The Roaring Twenties, unemployment was in the 3% range. Most people don't even know there was a depression in 1920-21 when unemployment rose to over 20%. We don't know about it because it ended so quickly, due to our country following precisely the opposite of FDR's big government prescriptions. If Hoover and FDR's tax increase policies were such a spectacular success, then why is that period known as THE GREAT DEPRESSION, and why did it not end until World War II forced it to end ??? We should not be attempting to duplicate the longest economic downturn in this country's history. FDR's policies did have an initial positive impact on the economy, but it was temporary (like Cash For Clunkers). The government can't spend it's way out of a recession. Like Obama's stimulus package, such spending provides only a temporary bump. Later, that spending must be paid for, and every dollar that was spent previously comes right back out of the economy later, providing an offsetting negative bump to the former positive bump. Here's an explanation, courtesy of the Von Mises Institute:

"Every dollar of government spending must be raised through a dollar of taxation," Hazlitt emphasized. If the WPA builds a $10 million dollar bridge, for example, "the bridge has to be paid out of taxes… Therefore," Hazlitt observed, "for every public job created by the bridge project a private job has been destroyed somewhere else… All that has happened, at best, is that there has been a diversion of jobs because of the project."

There was a 1939 poll about FDR's anti-business policies:

In March 1939, for example, AIPO [American Institute of Public Opinion] asked a national sample, "Do you think the attitude of the Roosevelt administration toward business is delaying business recovery?" More than twice as many respondents said "yes" as said "no."

Unless we're counting on a World War III to save us this time, we are on the wrong economic path. Ironically, during FDR's time, it was only after FDR stopped concerning himself with economic matters and turned his complete attention to war matters that our economy actually did recover. Assuming we don't wish to engage in worldwide war to fix our problems this time around, our alternate path is to work with the business sector to create jobs and foster economic growth. That is the ONLY way out of this.

Here's a Cato Institute video that destroys the White House's doubletalk rhetoric about extending the Bush tax cuts:

Look at the $700 billion that the White House claims the Bush tax cuts for the rich will "cost" over ten years. It is less than Obama's $800+ billion stimulus plan cost over two years, and a pittance when compared to the $1.1 trillion annual increase in federal spending the Democrats have given us since they took over Congress in 2007. If federal spending was held at it's current level for the next ten years, the increases the Democratic Congress has already instituted since '07 would still cost us nearly $11 trillion. That is the real cost to Americans, not the Bush tax cuts.

The Democrats are engaged in a massive effort at doubletalk and misdirection, hopng to mislead the American citizens into buying into their tax-and-spendathon that is gradually bankrupting this country. They didn't fool the voters last tuesday. Don't let them fool you now. The problem has been and still is the explosion of GOVERNMENT SPENDING, and nothing else.



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