Fellow Laderians, Dramatic change such as this usually takes upwards of 20 years to kick in for all of our society and by Bill Clinton's second term the economy boomed! We had technical full-employment, zero inflation, the stock market soared, pension plans were healthy, and peace broke out all over the world. Being handed a recession by his predecessor, the Clinton years started out slow, but ended up being the best all-around economic years of my adult lifetime, and Clinton turned over a $500 BILLION surplus to the George W. Bush Administration. Instead, over the protestations of multi-billionaires like Warren Buffet and Bill Gates who didn't want a tax cut, the first thing George W. Bush did was "give the money back to the taxpayers," the lion's share of which went to the top 2-3% of Americans. But the country already had a huge national debt and, assuming that money wouldn't be needed elsewhere, like educating our children (go figure) or fighting two new wars (the Iraq War of which was unjustified and immoral), the money belonged to our creditors.
Should Congress allow the tax cuts the Bush Administration gave the wealthiest Americans to expire at the end of this year, as was planned, or renew them?
Before I answer that, first a little history. When President Ronald Reagan went into office, the tax code was a mess. The country had experienced unprecedented inflation – 15 to 20% a year – under President Jimmy Carter and, in order for wage-earners to keep abreast of inflation, employers had to give large pay increases. I remember receiving annual pay increases of 15% to 18% which simply enabled me to stay even in this super-heated economy.
The Federal Tax Code had many brackets, escalating to 98% for the wealthiest Americans. The runaway inflation and offsetting pay raises drove people into higher and higher tax brackets. Middle American wage-earners were paying 50% of their taxable income to the Federal government and went on a spending binge for expensive items like high-line cars and home improvements because the interest on the corresponding loans was deductible. This spending further fueled inflation.
The Reagan Administration put some common sense in the Federal Tax Code by reducing it to three or four brackets, the highest being 35%, and eliminating many tax deductions (but not enough, IMHO). The Tax Code was tweaked a little during the George H. Bush and Bill Clinton Administrations to where the highest tax bracket was 39%. As result, most taxpayers, including the wealthiest, believed the Federal Tax Brackets were reasonably fair.
Everyone, including many of the nation's top economists, were actually talking about paying down the National Debt over 30 to 50 years, like a home mortgage. Clinton did his part, but much of this can be attributed to Reagan's bold common sense
The Republicans ran up the biggest deficits in the country's history under Reagan, Bush, and Bush and yet they act as if we don't have to pay off their debts. They use the term "tax and spend Democrats," but their spending under the three aforementioned Republican Administrations was obscene compared to anything the Democrats have ever spent.
And don't let them fool you, most of the new debt under President Barak Obama was to bail the country out of the horrible depression in which Bush left the country at the end of his horrendous eight-year nightmare. Ironically, Bush and the Republicans argued then – and incredibly still do now because this Big Lie works with the voters – that the tax cuts would spur economic growth, jobs, and – get this – wealth for everyone.
How's that drippy-down thingy workin' for ya guys?
The Bush tax cuts are set to expire at the end of this year, as the Bush plan called for, and President Obama is debating on whether or not to allow the generous tax cuts given to the wealthiest 2-3% of Americans expire while renewing the small tax cuts given to everyone else, mostly the middle class. The smart people are saying we should allow the tax cuts to wealthiest Americans expire and get some Reaganesque common sense back into the Tax Code.
So what's holding Obama up?
The Democrats know the Republicans are going to call this a tax increase to win back seats in the Congress and Senate during the mid-term election, but the truth is, the tax cuts were set to expire by law at the end of this year, so allowing them to expire for the wealthiest 2-3% of Americans while renewing those for everyone else could technically be called an Obama tax cut! And the beat goes on . . . and on . . . and on!
Jim Schmitt, Editor and Publisher