WASHINGTON -- Lacking viable ideas on how to stimulate growth and jobs, the White House seems to be intent on killing both by raising tax rates on upper-income earners, investors and small businesses in a weak economy.
Over the weekend, President Obama and his advisers were still desperately peddling two invidious economic myths, namely that lower tax rates -- and not overspending -- produce budget deficits because they reduce government revenues, and, conversely, that higher taxes will not harm the economy.
But when tax rates were cut in the 1960s (under the Kennedy tax cuts) and in the 1980s (the Reagan tax cuts), the economy improved and as a result, overall federal tax revenues climbed.
The Kennedy tax cuts led to stronger economic growth and the higher revenues from that growth produced a budget surplus in 1969, despite forecasts that just the opposite would happen.
The Reagan tax cuts pulled the country out of the worst recession since the Great Depression with robust economic growth that at its peak, led to job creation numbers of more than 300,000 jobs per month. Deficits resulted in part because of the steep two-year recession that flattened tax receipts and Reagan's push to rebuild the military to defeat the "Evil Empire." But economic recovery and declining unemployment eventually pushed total government revenues to over $1 trillion for the first time in history.
Similarly, the 2001-2003 Bush tax cuts helped the U.S. economy recover after it went into a nosedive following the September 11 terrorist attacks. Federal spending rose in response to those attacks and a stepped up offensive against terrorism at home and abroad, among other things, pushed the deficit to $412 billion by 2004.
But the economy grew as a result of tax cuts and the higher federal tax revenues from it as well as higher job growth helped drive down the deficit to $161 billion in 2007, the last budget produced by the Republican Congress. That same year, the Dow shot up to over 14,000 (just before the 2008-09 recession), and the jobless rate was a low 4.6 percent.
Now President Obama is trying to sell us on the idea that the best medicine for an anemic, high-unemployment economy is to raise taxes on the people who invest in it, pay the lion's share of all federal-income taxes, and run most of the nation's small businesses, which produce many of our jobs.
Obama never really explains how raising the two top income tax rates and other taxes on dividends, capital gains, investors and employers is supposed to improve our economy and create jobs.
Pizza Industry Vows to Continue Fight Against Obamacare’s Onerous Menu Labeling Regulation | Leah Barkoukis