Reagan, Kennedy and the Laffer Curve

Last week, House Speaker John Boehner stated that President Barack Obama’s newest tax proposal of $1.4 trillion in tax increases cannot pass the House and Senate. So far, neither side has come to an agreement in spite of several phone calls and meetings between Boehner and Obama.

Pamela Seley is a regular contributor to The Brenner Brief.

Pamela Seley is a regular contributor to The Brenner Brief.

Boehner has come under intense criticism, first for purging fiscal conservatives, and second for agreeing to tax increases of $800 billion. Now with taxes to higher income earners back on the table this past weekend, Boehner has led Republicans further left-of-center on fiscal matters.

Does raising taxes create more revenue for the government?

Team Obama and progressives would have you believe raising taxes on the rich will bring in more revenue, but UCLA Professor and author of Left Turn — Dr. Tim Groseclose — says differently. He debunks the liberal myth and illustrates — using the Laffer Curve — there is a tipping point where the percent of tax rate actually lowers government revenue.

Worth noting are two presidents in history from the Republican and Democrat parties who both make the case to cut taxes: Ronald Reagan and John F Kennedy.

Before the Laffer Curve study proving that tax rates above 33 percent decrease revenue, President Ronald Reagan’s policy of Reaganomics was to cut government spending and taxes, along with deregulation. Reagan has been criticized by progressives as having raised taxes, but on closer examination, not all taxes are the same. Reagan reformed the tax code and was able to raise government revenue.

John F. Kennedy advocated to cut taxes to expand “private expenditures,” not “public expenditures”. In John F Kennedy’s own words: “. . . an economy hampered by restrictive tax rates will never produce enough revenues to balance our budget, just as it will never produce enough jobs or enough profits. . . . And the soundest way to raise the revenues in the long run is to cut the rates now.”

Rush Limbaugh says that if John F Kennedy were alive today there would be no room for him in the Democrat Party because the party’s view has changed over the decades. Limbaugh was the first major media outlet to dig up from the archives John F Kennedy’s 1962 speech on advocating tax cuts.

There is a philosophical difference between John F Kennedy, a Democrat of 50 years ago, and the Democrats of today. Team Obama doesn’t want to expand private expenditures, but rather, Team Obama wants to increase public expenditures — entitlement programs that grow government ever larger. Obama doesn’t see the value in free markets because he views capitalism as an evil that must be destroyed. His friend, Bill Ayers, agrees and said, “I get up every morning thinking today I’m going to end capitalism.”

Perhaps Obama and his cronies believe the real experiment in communism hasn’t been done yet. The Democratic Party was successful this last election of getting the message out to the people they can live off the government at the expense of the rich who need to pay their fair share. In real terms, the rich already pays more than their fair share (70% of tax revenue), and to tax the rich like Obama wants to, would run the government for only another 8 days.

Obama harshly criticizes the Republicans saying that the economy is not working because of the GOP’s “you’re on your own economics” – this after he’s been in office for 3 1/2 years.

So far, Team Obama’s economy is not working. We have over $16 trillion in debt, 47+ million Americans on food stamps, and Obama refuses to cut government spending, wants to raise taxes, and we’ll be even poorer with more debt.Although Obama’s $1.4 trillion in tax increase may be off the table for now, will Boehner consider agreeing to more tax increases if Obama agrees to spending cuts?

It’s important to point out the distinction of what Washington means by “cuts” as opposed to what the average American, such as you and I, think are cuts.

Most Americans think of a budget cut means you spend less money. Not so in Washington. To those in Washington, and in many state and local governments, a budget cut means the amount spent doesn’t grow next year, but stays the same. A budget cut can also mean that the increase in spending is less than originally budgeted. Budget increases are built in to the entitlement programs, so they are always growing. If the Republicans, and Boehner, don’t put a stop to Obama, they will be assisting him on taking us on a trajectory of growing government and debt.

If taxes become so high that Americans lose the incentive to work because it will not pay to work, then we’ve gone off the “fiscal cliff” and hit rock bottom. The real danger is big government. Entitlement programs don’t work to make people self-sufficient, but serve to further enslave them in their dependence on government.

 

 

 

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