“Those who cannot learn from history are doomed to repeat it.”—(George Santayana, 1906)
We are doomed then! The average American adult reads less than one book per year…sad but true.
We are going to lay out a few reasons why raising taxes 1) in a recession is a terrible idea (Hoover tried in 1930 and look where that got him….and our parents and grandparents!); 2) doesn’t raise the ‘projected’ tax revenues expected or hoped for; and 3) is not really a viable solution to solve all of our long-term spending problems. Our spending problem is that we are spending too much money, plain and simple, and it has to be stopped, now.
I. “Raising Taxes is a No-NO! in a Recession”
One of the cardinal rules you learn about our nation’s fiscal policy when you sit in on hundreds of economic/financial related committees in Congress is that you NEVER, EVER, EVER raise taxes in a recession!
No one I ever heard in any congressional budget, banking or Joint Economic hearing over 22 years ever encouraged Congress to raise taxes during a recession. No one! No liberal economist. No conservative economist. It was one thing they all agreed upon.
Apparently, no one in the White House or who is currently in control of Congress has listened to any of their testimony.
President Hoover and Congress at the time committed the double sins of raising taxes and cutting federal spending at the onset of the Depression. (see "Hoover") They then passed the 1930 Hawley-Smoot tariff act which helped turn the ‘Great Recession At The Time’ into the Great Depression....that lasted for 10 years.
Obama, Pelosi and Reid took a little too many notes about the lessons of priming the federal fiscal pump from Hoover….they are even better at it than the Bush/Congress people who ruled the land from 2001-2006! But they apparently forgot the ‘not-raising taxes’ part; that is just plain dumb and goes against every lesson we have learned from history, here in America and around the globe.
Raising taxes in a recession is a bad idea whose time has never come….and certainly not today as proposed in Washington for the largest expansion of federal programs ever, the Obama health care plan. We are already spending more than enough on health care across the entire system; it just needs to be reallocated and re-oriented to best effect.
Tax-raising politicians who want to ‘tax the wealthy’ do it so they can: 1) stay in office and 2) take credit for appearing to provide for everyone citizens’ needs, wants and desires.
That is the bottom line in all this folks: plain and simple political self-preservation sprinkled with a tad bit of public service altruism thrown in for good measure.
We at Telemachus strongly believe the long-term economic health of the nation is better served by forcing our elected leaders to make the choice between raising taxes or cutting spending, one or the other. We prefer spending reductions because we know from experience that holding the line of federal spending is the only way out of this fiscal mess we are now in. We will never be able to raise enough tax revenue from anywhere to pay off $12 trillion of current debt, and growing, or $57 trillion in the net present value of obligations we have built up in entitlement programs.
We like it when one side has the guts to produce a list of all the tax increases they want to hike to pay for their program expansions. We like it when the other side has the guts to produce a list of all the spending reductions and reforms they want to make and lay it all out on the table for everyone to see. And let the best arguments win.
But no more debt please; that is the coward’s way out.
We abhor and strongly object to continuous reliance on unbridled, ever-increasing public sector debt loads that have been building now for the past 10 years at exponential rates. We know of no nation or republic in known history that has continued to borrow exorbitant amounts of debt forever and survived for any extended length of time.
Just act like Santayana and read some history, any sort of history in any language from the modern era or antiquity. Show us one case where a nation has borrowed money forever and survived for any length of time, like more than 100 years, and we will post a retraction.