Somewhere along the way in the past few decades, politics and economic policy got confused. Democrats somehow have been led to believe that to eschew smart economic and tax policy is somehow the key to social enlightenment. Republicans think the same in reverse. They want to see the Democrats wreck the economy so they can win office.
Think on it people. The smart thing to do in regards to the tax cuts about to expire at the end of this year is not only extend them but to target more tax cuts to stimulate the economy. Unless Congress and the President act, taxes will go up on January 1st for each and every American, including those who invest. Playing politics with such is dangerous to the country and flat stupid.
Liberals, in their desire for so called social justice have tied their beliefs in things like gay rights and abortion to tax policy. Such is done is stark ignorance. But, it causes Democrats to believe the fallacy that we can tax our way to economic prosperity and balanced budgets. Frankly put, that can not and will not happen. Hoover, a Republican, tried that course in the late 1920s, to disaster.
The only way to balance the federal budget is through economic growth. The only way at this time to grow the economy is to cut taxes. Forget the social issues and the hot button issues that make people lockstep in their agendas. People have to have money in their pockets to spend and invest in the free market.
Let's start with capital gains tax, the taxes people pay for daring to invest or for inheriting something like their parents home and then selling it. Nothing punishes entrepreneurial spirit like the capital gains tax. Letting such a tax dramatically increase is bad enough. But, what ought to be done is an elimination of it. People should be rewarded with no tax burden for investing in American business at this time. Giving people that incentive will work to create businesses, jobs and a way out of this economic mess we are in.
But, alas, it seems we are not to have that. The Democrats have illogically tied their social agenda to tax policy and seem ignorant of the consequences. The Republicans, with no real leadership, seem to just list and be happy to see the Democrats fail. Fair enough.
But, someone needs to tell the truth about things. So, we will try to. Throughout the world, the long history of capitalism has proven one thing: a government can not cut its spending and increase its taxes and hope for economic prosperity. The numbers are there. They are telling. Forget the social agendas. Look at reality. Taxes have to not only be kept at current levels, but the capital gains tax must be eliminated. We compete in the world market now. That is how people who are serious about competing reward investment. That is how success is done in this world.
Of course, there is another tract. The President of the United States and Democrats in Congress can allow a huge tax increase on all Americans, including those who invest in business, and then sit and watch the American economy go the way of Brazil. Again, deciding to not do such is not a repudiation of the social agenda of the Democratic party, it instead would be something to enable it to go forward. All the ideas that Obama and his like have in mind can not come to pass without revenue, and the way to big revenue is economic development paid for by tax decreases, not increases.
Reagan knew that. Both Roosevelts knew it. John F. Kennedy knew that. But, odds are Barack Obama and the people around him probably don't have an idea of what in the Hell we are talking about. They are going to thump their chest at letting the "George W. Bush" tax cuts expire. So be it. But, their partisanship clouds their judgment about what ought to be done. So much for smart people running things. We seem to have political hacks who could not even pass Econ 101.