Now that we’re talking about taxing the rich more and face the specter of all the Bush tax cuts being eliminated, I thought I’d look up some figures from the 1980s to see what happened when Ronald Reagan lowered the tax rates. How did this affect revenue? An article from the Cato Institute provides the numbers. The author of the article, Richard Rahn, notes that most of the Reagan tax cuts were applied to those in the middle- and lower-income brackets, which is something that may surprise some readers who are used to being told Republicans only give tax breaks to the rich.

According to the Congressional Budget Office (CBO), total tax revenues in the 1980s did fall as a portion of the Gross Domestic Product (GDP), but the reason that percentage went down is because the economy grew at an astounding rate. In real terms, it grew 34.3% from 1982 to 1989, “much faster than the 24.3% rate expected even by economists within the Reagan administration. Thus, by the time President Reagan left office, the economy was generating more tax revenue at a maximum 28% rate than many on the left forecast it to generate at a maximum 70% rate.”

In other words, there is a point at which higher tax rates are counterproductive. More revenue can be obtained with moderate rates than with high ones. Rahn concludes, “The Reagan tax-rate reductions did, in fact, pay for themselves—but it took about seven years.”

When Obama says he will only increase taxes on the rich, he’s talking about those who make more than $200,000 per year. Yet many small businesses fall in that category, and they are the ones who create most of the new jobs and fund new investment. In effect, the president will be declaring war on small businesses, and in the process putting more people in the unemployment lines.

In my opinion, that might be what he wants to do. The more people who are dependent on the government for their sustenance, the more loyalty he will generate for himself and his administration. His ideology is Marxist at its core, and he doesn’t really care to create prosperity via the private sector. He would rather see it shrink and watch the government grow more powerful.

Some may protest: surely he wouldn’t want us to follow the same path as other bankrupt nations, would he? I’m not so sure. An ideologue is an ideologue—it’s what motivates him.

We see the same thing happening in some states. California is a prime example. Gov. Jerry Brown is leading the state into increased spending and higher taxes while the state veers toward insolvency. Fortunately, the damage within a state can be contained, and people have the option to go elsewhere, to states that still grasp the basics of how free enterprise works.

So don’t be fooled by the rhetoric of “fairness.” In the end, if Obama and the Democrats get their way, we all will be worse off.

Let’s return to fiscal news today. Are you aware that the Bush tax cuts—you know, those awful tax breaks that benefit only the wealthy—are due to end in January? If that happens, we will all find out soon enough that they actually were a benefit for everyone. Democrats play politics with this, seeking to extend them only for the “non-rich.” That posture is intended to portray them as for the middle class. What they don’t tell you is that the “rich” include about 900,000 small businesses who, if these cuts aren’t extended, will have to lay off workers. Now, who is this really going to hurt? Republicans, on the other hand, are calling for the cuts to remain in effect for everyone. Trying to get this through Congress, though, will never happen as long as Harry Reid and his gang control the Senate:

Democrats are attempting to woo the moderate Republicans to their side on this plan, but thus far Republicans are holding firm—for good reason:

One thing to keep in mind, however, is that these tax cuts can’t apply to almost half the population. Why?

It’s the producers in society who are being targeted:

And presiding over all this is a man who has expressed hostility toward those producers and has no grasp of how an economy works:

I’ve always enjoyed good oxymorons. Here are some appropriate ones for today:

Over Christmas, I took the opportunity to read former President Bush’s new book Decision Points. I did so for two reasons: first, I really wanted to “hear” what he had to say; second, as an American historian, I need to be up to speed on how this former president defends his actions.

Let me begin with what I consider to be its strengths.

The first strength is Bush’s informal writing style. You get the impression this is exactly how he would express himself if you were sitting across the table from him, asking him questions. There is a personableness in the writing that is attractive. You connect with the man.

Second, I appreciate his unapologetic appeal to his Christian faith as his motivation for not only his policies but for all of his life. He does not artificially separate faith from action, personal or governmental.

Third, I highly recommend his chapters dealing with the 9/11 attacks and the subsequent War on Terror. He takes the reader through that awful day in American history as seen through the eyes of the one most responsible for an American response. One understands how difficult it was for him to know what he should do next, yet he explains clearly why he came to his decisions on how to deal with terrorism. The title of the book is appropriate. He does focus on key decisions.

Probably the most significant decision for his presidency was whether to go forward into Iraq. This chapter is a step-by-step analysis of all the twists and turns of the diplomatic thrust to avoid war, and then the rationale for finally giving the go-ahead. Bush is particularly effective in detailing the actions of Saddam and the manner in which he thumbed his nose at international law and his manifold violations of the conditions he had agreed to at the end of the Gulf War.

Bush also clearly explains why he thought WMDs existed within Iraq. He goes to great pains to document the intelligence regarding WMDs, and just as great pains to show that nearly all congressional Democrats at the time agreed with this conclusion. He includes vote tallies on the congressional resolutions that gave him permission to use the military and identifies key Democrats who favored this action—the very ones who later accused him of lying.

So, as a primer on the rationale for how to conduct a War on Terror, this book is invaluable. I highly recommend these chapters. Even some of Bush’s most vociferous critics have had to come to grips with the necessity of his policies.

It’s on the domestic side of his decisions where I have more fundamental disagreements. He does a fine job of explaining the need for tax cuts and often advocates the vitality of the free market. Yet he then goes on to offer an apologetic for why he had to interfere with the market, especially with the big bailout at the end of his presidency. He says he did it to save the market ultimately, but I don’t find his logic persuasive. I believe he allowed some of his advisors to pull him away from fundamental principles.

Neither does Bush have a great appreciation or commitment to federalism. He sees a need and wants to get the federal goverment involved to solve the problem: No Child Left Behind and the prescription drug bill added onto Medicare are two of the most egregious examples. While I’m sure he is fond of the Constitution, I wish he had been more devoted to following it.

So, yes, I do have criticisms of some of his decisions. Yet one can’t read this book without coming away with a sense of the basic decency of the man. That comes across repeatedly.

George Bush is coming to my university this March as part of our National Leadership Forum. I plan to be there to hear him speak, along with his former Secretary of State Condoleeza Rice. I will do so with sincere gratitude for his prosecution of a war on terror that is essential to the future of this nation. I will also do so out of respect for a Christian brother who tried to do his best in a very trying time.

I love all those year-in-review segments on the news channels. Sometimes they are interesting; other times, they are rather humorous. For example, in dissecting why the November elections turned out as they did, you might hear something like this:

The answers are not all that difficult to discern. Yet the media continues to portray political developments in the best light possible for the administration:

There’s also a lot of talk about President Obama veering to the center of the political spectrum. I’m not yet convinced. In fact, I think the following perspective is closer to the truth:

If I’m wrong, and he does attempt to govern from the center, I know it will be for political expediency only, and not because he has changed his views. The next task will then be to enlighten the general public on that point, so that the media won’t be allowed to frame the issue in its own way.

Unfortunately, it’s almost as if we desire to be fooled at times. Maintaining our liberty requires that we pay close attention to what is really happening.

The proposed tax deal is still the talk of the political world. First, there’s the substance, which is good with respect to maintaining the Bush tax cuts, but not so good on unemployment benefits and the estate tax. Second, there’s the politics of it all. That’s where the president fell down on the job completely.

His own party is hopping mad at him, primarily because he didn’t include them in the negotiations. This is not a man who knows how to work well with others; he seems to think he can handle things himself. Now he’s getting some grief over that approach. The threat is real:

Now that’s scary.

To remedy his oversight, he’s brought in Bill Clinton to make the case for him. It was a little surreal last week when he introduced Clinton at a White House press conference and then turned it over to him totally. Some people had nightmares of the return of the Clinton era. Just what can the former president teach the current one?

But of course, he still has his ace in the hole:

Not very original, to be sure. Is this really his only tactic? Stay tuned and we’ll see how prophetic this is.

There’s been a lot of hostage talk this week. It started with President Obama and has become the mantra in Democrat talking points. I don’t get to listen to Rush Limbaugh often, but I did hear this week his revealing litany of audio clips of numerous Democrats saying almost the same thing—and always using the word “hostage” in reference to the Republicans and the continuance of the Bush tax cuts. Supposedly, we’re to believe it’s the Republicans who don’t want those tax cuts to remain in effect. Cartoonists have picked up on this “hostage” theme, but not in the way Obama intended:

I think that illustration explains what’s really been taken hostage through the Obama policies. Remember that ditch analogy he likes to use?

Right.

Of course, as I noted in a previous post, there are reasons to be concerned about the new tax deal, such as the highly expensive extension of unemployment benefits.

Are those rotten apples? Unlimited unemployment benefits are certainly rotten for the economy. When will they ever end? There will always be pressure to extend—maybe permanently.

Perhaps we just don’t understand the Obama strategy.

Why didn’t we think of this earlier?

That tax deal I wrote about yesterday may be in trouble. The biggest potential obstacle resides in the outcry on the Left. They feel betrayed by “their” president. They can’t stomach the idea that no one making more than $250,000 will be penalized by higher taxes. In their Marxian worldview, this appears to be unfair. There is no guarantee that enough Democrats in Congress will support this deal.

On the Right, there are concerns as well. Sen. Jim DeMint is indicating he may filibuster against it because it extends unemployment benefits without any way to ensure they are paid for, meaning that this will drive us deeper in debt. Another point of heartburn is the revival of the inheritance/death tax. In this case, it would only affect those whose estates are worth more than $5 million, yet there is a principle at stake here: this is a penalty that falls on those who will inherit the estate, and it’s really a form of double taxation. Inheritance taxes in the past were so high at times that the inheritors had to sell the estates even to pay the taxes. Are we heading down that icy road again?

Those are legitimate concerns. In one sense, I wouldn’t mind the deal failing right now. The new Congress, populated with a higher percentage of constitutionally minded representatives, will undoubtedly come up with a better bill. Maybe that would be for the best.

At the same time, the commission that Obama set up to address the deficit has unveiled what it would like to do. It’s a grab bag of less spending and higher taxes. The first sounds good, but the second will work against economic growth. And the “solution” for items such as Social Security is no solution at all—just more of the same band aid approach that doesn’t fundamentally change anything. What about Obamacare? Untouched.

Well, this is such a complicated issue, you know—how is it possible to come to an easy solution for our deficit woes?

We have a tendency to make things harder than they really are, and it doesn’t take a doctorate to figure out the best way out of our sad situation. What we lack is the determination to do what’s right.