Donald Lambro

Sure, uncontrolled and wasteful government spending is the driving factor behind unprecedented budget deficits, but a recession- leaning economy that isn't working comes in a strong second.

It is important to understand a few simple rules about what fosters stronger economic growth, and the difference between healthy growth levels and a merely mediocre rate of growth in a precipitously declining economy.

No. 1, you don't raise taxes in a high unemployment, slowing economy. There's no economic school of thought that says you can draw more capital out of a very sluggish economy through higher tax rates without weakening its ability to recover.

President Obama's denials to the contrary, we're in the fourth year of a still sluggish economy. Fed Chairman Ben Bernanke told the New York Economic Club last week that the economy's growth rate has averaged a puny 2 percent since the recession ended in the middle of 2009.

"By contrast, the average growth rate of post-World War II recoveries at a similar stage is almost 4.5 percent," says economics analyst Robert J. Samuelson. This means, he writes, that "the economy is producing about $1.4 trillion less of everything from Big Macs to cars, than it would if we'd had an average recovery."

We should be well into a full blown recovery by now, if it were not for Obama's impotent "stimulus" programs, and a hostile, anti- business rhetoric that has given us an anemic growth rate throughout the first term of his presidency.

He says the economy hasn't improved as much as he would like but still blames his predecessor for all of its ills, Yet previous presidents have faced severer recessions and succeeded in nursing the economy back to health.

President Reagan cut income tax rates across the board and the economy came roaring back in the third year of his first term. When he ran for re-election in 1984, the 10 percent jobless rate had dropped to 7 percent and the U.S. economic growth rate was nearly 6 percent.

We are nearing the end of the fourth year of the Obama economy that crept along at a 2 percent growth rate in the first quarter, further slowed in the second quarter, and was running at a dismal 2 percent growth rate in the third.

That brings us to rule No. 2: When an economic strategy isn't producing the desired results, chief executives switch to a new strategy. But Obama's doubling down on his core agenda to sharply raise taxes on the top income brackets who include 750,000 small business employers who file as individual taxpayers -- the people responsible for creating much of the jobs in our country.

Small business firms employ "about half of all private employees" and have "generated 65 percent of net new jobs over the past 17 years," according to the Small Business Administration.

House Speaker John Boehner has made it pretty clear to the White House that he and his fellow Republicans are not going to sock job producers by pushing the 28 percent tax bracket to 36 percent and the 35 percent rate to 39.6 percent, as Obama is demanding.

What they will agree to do is raise higher revenues by scrubbing a federal tax code that is riddled with special interest exemptions, credits, deductions, loopholes and other corporate welfare. That would broaden the tax base which would permit lowering the tax rates for businesses and individuals alike, boosting economic growth, jobs and capital investment.

The ball is now in Barack Obama's court.


Donald Lambro

Donald Lambro is chief political correspondent for The Washington Times.



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