Bill Clinton: Bush Tax Cuts too Big!!!

(Funny video about the Democrats who love to blame Bush)

HALT: Halting Arkansas Liberals with Truth

Currently I am reading “My Life” by Bill Clinton, and I must say that I am really getting into it. I did take notice of page 870 since President Clinton was talking about the Bush Tax Cuts which currently were due to expire on December 31, 2010. The book “My Life” was finished in  2004, so President Clinton had the advantage of commenting on these tax cuts that were passed in 2001 and 2003. They were the same across the board tax cuts that the Republicans proposed to him all during his presidency and this is what he thought of them:

“I vetoed the Republican tax cut because it was “too big, too bloated,” and put too great a burden on America’s economy. Under the budget rules, the bill would have forced large cuts on education, health care, and environmental protection. It would have prevented us from extending the Social Security trust funds, & from adding a prescription drug benefit to Medicare. We were going to have a surplus this year of about $100 billion, but the proposed GOP tax cut would cost nearly $1 trillion over a decade.”

You got to give President Bill Clinton a lot of credit for taking the bull by the horns and working to find the middle ground with the Republicans after the 1994 elections. The result was three surplus budgets from 1998 to 2001.

Were the Bush Tax Cuts too big? Were they the cause of later budget deficits? Many liberal Democrats besides President Clinton have made this same assertion over and over.

NOTICE TO LIBERALS: The problem was run away federal spending  and not the Bush Tax Cuts. Take a look at the historical evidence and you will see that the revenue actually went up during the years in question.

I am responding to this assertion with a portion from an article published January 29, 2007 called, “Ten Myths About the Bush Tax Cuts” by Brian Riedl.

Myth #2: The Bush tax cuts substantially reduced 2006 revenues and expanded the budget deficit.
Fact: Nearly all of the 2006 budget deficit resulted from additional spending above the baseline.

Critics tirelessly contend that America’s swing from budget surpluses in 1998-2001 to a $247 billion budget deficit in 2006 resulted chiefly from the “irresponsible” Bush tax cuts. This argument ignores the historic spending increases that pushed federal spending up from 18.5 percent of GDP in 2001 to 20.2 percent in 2006.

The best way to measure the swing from surplus to deficit is by comparing the pre-tax cut budget baseline of the Congressional Budget Office (CBO) with what actually happened. While the January 2000 baseline projected a 2006 budget surplus of $325 billion, the final 2006 numbers showed a $247 billion deficit-a net drop of $572 billion. This drop occurred because spending was $514 billion above projected levels, and revenues were $58 billion below (even after $188 billion in tax cuts). In other words, 90 percent of the swing from surplus to deficit resulted from higher-than-projected spending, and only 10 percent resulted from lower-than-projected revenues.

Furthermore, tax revenues in 2006 were actually above the levels projected before the 2003 tax cuts. Immediately before the 2003 tax cuts, the CBO projected a 2006 budget deficit of $57 billion, yet the final 2006 budget deficit was $247 billion. The $190 billion deficit increase resulted from federal spending that was $237 billion more than projected. Revenues were actually $47 billion above the projection, even after $75 billion in tax cuts enacted after the baseline was calculated. By that standard, new spending was responsible for 125 percent of the higher 2006 budget deficit, and expanding revenues actually offset 25 percent of the new spending.
The 2006 tax revenues were not substantially far from levels projected before the Bush tax cuts. Despite estimates that the tax cuts would reduce 2006 revenues by $188 billion, they came in just $58 billion below the pre-tax cut revenue level projected in January 2000.
The difference is even more dramatic with the pro-growth 2003 tax cuts. The CBO calculated that the post-March 2003 tax cuts would lower 2006 revenues by $75 billion, yet 2006 revenues came in $47 billion above the pre-tax cut baseline released in March 2003. This is not a coincidence. Tax cuts clearly played a significant role in the economy’s performing better than expected and recovering much of the lost revenue.
December 16, 2010 – 4:17 am Categories: Bill Clinton, Taxes | Post a comment

Dumas: Bush Tax cuts are tilted towards the Rich

HALT: Halting Arkansas Liberals with Truth

Ernest Dumas in his article “A Broken System,” (Arkansas Times, December 9) asserts that the Bush tax cuts favored the richest Americans and businesses. Dumas contends that the 2001 and 2003 Bush tax cuts have brought massive deficits and stymic economic growth.

NOTICE TO LIBERALS: The rich are now paying even more of the tax load than they did before this tax cuts were enacted and a tremendous increase in federal spending has been the cause of these massive deficits.

I am responding to these liberal assertions with a portion from an article published January 29, 2007 called, “Ten Myths About the Bush Tax Cuts” by Brian Riedl.He has discussed budget policy on NBC, CBS, PBS, CNN, FOX News, MSNBC, and C-SPAN.  He also participates in the bipartisan “Fiscal Wake-Up Tour,” which holds town hall meetings across America focusing on the looming crisis in Social Security, Medicare, and Medicaid.

Myth #10: The Bush tax cuts were tilted toward the rich.
Fact: The rich are now shouldering even more of the income tax burden.

Popular mythology also suggests that the 2001 and 2003 tax cuts shifted more of the tax burden toward the poor. While high-income households did save more in actual dollars than low-income households, they did so because low-income households pay so little in income taxes in the first place. The same 1 percent tax cut will save more dollars for a millionaire than it will for a middle-class worker simply because the millionaire paid more taxes before the tax cut.

In 2000, the top 60 percent of taxpayers paid 100 percent of all income taxes. The bottom 40 percent collectively paid no income taxes. Lawmakers writing the 2001 tax cuts faced quite a challenge in giving the bulk of the income tax savings to a population that was already paying no income taxes.

Rather than exclude these Americans, lawmakers used the tax code to subsidize them. (Some economists would say this made that group’s collective tax burden negative.)First, lawmakers lowered the initial tax brackets from 15 percent to 10 percent and then expanded the refundable child tax credit, which, along with the refundable earned income tax credit (EITC), reduced the typical low-income tax burden to well below zero. As a result, the U.S. Treasury now mails tax “refunds” to a large proportion of these Americans that exceed the amounts of tax that they actually paid. All in all, the number of tax filers with zero or negative income tax liability rose from 30 million to 40 million, or about 30 percent of all tax filers. The remaining 70 percent of tax filers received lower income tax rates, lower investment taxes, and lower estate taxes from the 2001 legislation.

Consequently, from 2000 to 2004, the share of all individual income taxes paid by the bottom 40 percent dropped from zero percent to –4 percent, meaning that the average family in those quintiles received a subsidy from the IRS. By contrast, the share paid by the top quintile of households (by income) increased from 81 percent to 85 percent.

Expanding the data to include all federal taxes, the share paid by the top quintile edged up from 66.6 percent in 2000 to 67.1 percent in 2004, while the bottom 40 percent’s share dipped from 5.9 percent to 5.4 percent. Clearly, the tax cuts have led to the rich shouldering more of the income tax burden and the poor shouldering less.

In 2008 the first of 77 million baby boomers received their first Social Security checks. The subsequent avalanche of Social Security, Medicare, and Medicaid costs for these baby boomers will be the greatest economic challenge of this era.

How to slow down this huge increase in federal spending should be the budgetary focus of  Congress rather than repealing Bush tax cuts or allowing them to expire. Repealing the tax cuts would not significantly increase revenues. It would, however, decrease investment, reduce work incentives, stifle entrepreneurialism, and reduce economic growth. Lawmakers should remember that America cannot tax itself to prosperity.

Above you will see a clip by Ron Paul that makes it clear that spending is the problem not the lack of taxes. Ron Paul is a favorite of the Tea Party movement and that because he is very good at defending liberty. When government tries to take over more power in our lives, then liberty suffers.

December 15, 2010 – 8:34 pm Categories: Taxes | Post a comment

Mark Pryor supported Failed Stimulus

HALT: Halting Arkansas Liberals with Truth

(Paul Ryan outlines what has happened since the stimulus has been passed)

Will Rogers has a great quote that I love. He noted, “Lord, the money we do spend on Government and it’s not one bit better than the government we got for one-third the money twenty years ago”(Paula McSpadden Love, The Will Rogers Book, (1972) p. 20.)

Senator Mark Pryor voted for the American Recovery and Reinvestment Act of 2009 which was signed into law by President Obama on February 17, 2009. Both Pryor and Obama thought the economy could be jump started by more government spending. On January 10, 2009 President Obama claimed that the Stimulus would bring unemployment under 8% and create 4.1 million jobs.

NOTICE TO LIBERALS: Did the economy get stimulated by the Stimulus Bill? The verdict came in with the unemployment figures. Unemployment had gone from 8.1% (Feb 2009) to 9.8% (Nov 2010). The stimulus had failed just like every other stimulus that had ever been attempted by any government anywhere.

It is my view that the stimulus bill did nothing to stimulate the economy. Also how can President Obama claim that economists on “the right” approve of the stimulus when not one Republican voted for it? In 2009 The Cato Institute ran an ad in leading newspapers through out the country that seems to contradict this very claim and had it signed by 300 leading economists (several Nobel Prize Winners included) : “Notwithstanding reports that all economists are now Keynesians and that we all support a big increase in the burden of government, we do not believe that more government spending is a way to improve economic performance. More government spending by Hoover and Roosevelt did not pull the United States economy out of the Great Depression in the 1930s. As such, it is a triumph of hope over experience to believe that more government spending will help the U.S. today. To improve the economy, policy makers should focus on reforms that remove impediments to work, saving, investment and production. Lower tax rates and a reduction in the burden of government are the best ways of using fiscal policy to boost growth.”
Now that the Democrats have lost their large majorities we have an opportunity  to duplicate the same political environment that existed the last three years of the Clinton presidency when we actually had three balanced budgets in his last three years (surplus of 69 billion in 98, 76 billion in 99, 46 billion in 2000). The Tea Party Republicans should help in that regard too.  Futhermore, President Obama faces real problems with China who is balking at buying up American currency and Treasury bonds at the pace it takes to sustain the current deficit of 1.35 trillion.
Deep down President Obama really does believe that more government is the answer. Back in 1980 I read a book called FREE TO CHOOSE by Milton Friedman and in it he said, “We’ve become increasing dependent on government. We’ve surrendered power to government, nobody has taken it from us. It’s our doing. The results, monumental government spending. Much of it wasted, little of it going to the people whom we would like to see helped. Burdensome taxes, high inflation, a welfare system under which neither those who receive help nor those who pay for it are satisfied. Trying to do good with other people’s money simply has not worked.” (The Free to Choose Film Series can be viewed at http://miltonfriedman.blogspot.com/ ).

I believe in returning social programs to private charities and churches where they would be privately funded. We can longer afford to allow government to interfere in our lives. Just imagine the expansion of private business and investment that will occur when our taxes are reduced dramatically because over half of our budget expenditures have been eliminated.

Politicians like Mark Pryor and President Obama need to realize that only jobs created by the private sector will stimulate the economy, and taking resources out of the private economy and putting them into temporary government jobs will only cause the debt to go up along with eventually our interest rates and inflation. Milton Friedman said it best: “There is no free lunch!!!”

December 15, 2010 – 1:07 pm Categories: Milton Friedman, President Obama | Post a comment

Dumas: Unemployment Benefits will help stimulate Economy

HALT: Halting Arkansas Liberals with Truth

The Republicans have been made out to be the Grinch that stole Christmas because they did not want to extend unemployment benefits again. In fact, we have been told by the Democrats that unemployment benefits will help stimulate the economy, and we should not be trying to help the millionaires while the unemployed could help stimulate the economy so much faster.

Ernest Dumas in his article “Politics, tax policy converge,” (Arkansas Times) stated that “taxes on people of great wealth do not stunt demand like they do for the middle class, which spends, not saves, when taxes are cut.”

In his article “A Broken System,” (Arkansas Times, December 9), concerning the recent deal between the Republicans and President Obama, Dumas noted, “The compromise–sellout is a better description–includes some marginally hopeful parts. Obama won an extention of unemployment benefits and another stimulus benefit, a one-year reduction in payroll taxes that will give people another $120 billion to spend next year to see if it will stimulate demand.”

NOTICE TO LIBERALS: Government spending does not stimulate the economy because government must first tax or borrow that money out of the private economy which defeats the purpose in the first place.

Have you learned yet? Look at the stimulus that was supported (by Democrats only)when President Obama first came into office and the predictions made then. Did any of those predictions come true? Actually unemployment increased by almost two points!!!

I am responding to these liberal assertions with a portion from an article published January 29, 2007 called, “Ten Myths About the Bush Tax Cuts” by Brian Riedl. Riedl is the Grover Hermann Fellow in Federal Budgetary Affairs at the Heritage Foundation and Riedl’s budget research has been featured in front-page stories and editorials in The New York Times, The Wall Street Journal, The Washington Post and The Los Angeles Times. 

Myth #8: Tax cuts help the economy by “putting money in people’s pockets.”
Fact: Pro-growth tax cuts support incentives for productive behavior.

Government spending does not “pump new money into the economy” because government must first tax or borrow that money out of the economy. Claims that tax cuts benefit the economy by “putting money in people’s pockets” represent the flip side of the pump-priming fallacy. Instead, the right tax cuts help the economy by reducing government’s influence on economic decisions and allowing people to respond more to market mechanisms, thereby encouraging more productive behavior.

The Keynesian fallacy is that government spending injects new money into the economy, but the money that government spends must come from somewhere. Government must first tax or borrow that money out of the economy, so all the new spending just redistributes existing income. Similarly, the money for tax rebates—which are also touted as a way to inject money into the economy—must also come from somewhere, with government either spending less or borrowing more. In both cases, no new spending is added to the economy. Rather, the government has just transferred it from one group (e.g., investors) in the economy to another (e.g., consumers).

Some argue that certain tax cuts, such as tax rebates, can transfer money from savers to spenders and therefore increase demand. This argument assumes that the savers have been storing their savings in their mattresses, thereby removing it from the economy. In reality, nearly all Americans either invest their savings, thereby financing businesses investment, or deposit the money in banks, which quickly lend it to others to spend or invest. Therefore, the money is spent by someone whether it is initially consumed or saved. Thus, tax rebates create no additional economic activity and cannot “prime the pump.”

This does not mean tax policy cannot affect economic growth. The right tax cuts can add substantially to the economy’s supply side of productive resources: capital and labor. Economic growth requires that businesses efficiently produce increasing amounts of goods and services, and increased production requires consistent business investment and a motivated, productive workforce. Yet high marginal tax rates—defined as the tax on the next dollar earned—serve as a disincentive to engage in such activities. Reducing marginal tax rates on businesses and workers increases the return on working, saving, and investing, thereby creating more business investment and a more productive workforce, both of which add to the economy’s long-term capacity for growth.

Yet some propose demand-side tax cuts to “put money in people’s pockets” and “get people to spend money.” The 2001 tax rebates serve as an example: Washington borrowed billions from investors and then mailed that money to families in the form of $600 checks. Predictably, this simple transfer of existing wealth caused a temporary increase in consumer spending and a corresponding decrease in investment but led to no new economic growth. No new wealth was created because the tax rebate was unrelated to productive behavior. No one had to work, save, or invest more to receive a rebate. Simply redistributing existing wealth does not create new wealth.

In contrast, marginal tax rates were reduced throughout the 1920s, 1960s, and 1980s. In all three decades, investment increased, and higher economic growth followed. Real GDP increased by 59 percent from 1921 to 1929, by 42 percent from 1961 to 1968, and by 31 percent from 1982 to 1989. More recently, the 2003 tax cuts helped to bring about strong economic growth for the past three years.

Policies which best support work, saving, and investment are much more effective at expanding the economy’s long-term capacity for growth than those that aim to put money in consumers’ pockets.

(Below Senator John Thune interviewed by Sean Hannity on Dec 9th)

December 15, 2010 – 4:08 am Categories: Taxes | Post a comment

Brantley, Lyons and Dumas: Blame Bush Tax Cuts for Deficit

HALT: Halting Arkansas Liberals with Truth

Big news on capital hill today is that President Obama has cut a deal with the Republicans concerning the extention of the Bush Tax Cuts and that has some liberals in Arkansas hopping mad.

In 1981 when I was in college, I got to hear the famous economist Arthur Laffer speak about the notorious Laffer Curve that Ronald Reagan had been touting leading up to the passage of his massive tax cuts of 1981. Simply put the Laffer curve is the curved graph that illustrates the theory that, if tax rates rise beyond a certain level, they discourage economic growth, thereby reducing government revenues.

It was exciting to me that the economic theory that ringed true to me because of the Kennedy Tax cuts in the 1960’s would be tested again with the 1981 Reagan Tax Cuts and now can be applied to the Bush Tax Cuts. We don’t have to argue about economic theory that has never been tested but we can simply look at history.

Max Brantley on Dec 6th posted these words from Paul Krugman of the NY Times: “America, however, cannot afford to make those (Bush Tax) cuts permanent. We’re talking about almost $4 trillion in lost revenue just over the next decade…”

Ernest Dumas in the article “Politics, Tax Policy Converge,” states, “What about the deficit, the horror that is driving voter rage this year? The Republican plan to extend all the tax cuts forever would add $4 trillion to the national debt over the next decade.”

Gene Lyons in his article “Sure, the Government is just like your Family,” (Nov 22), states, “The current deficit’s almost entirely a product of two things: the Bush tax cuts and the recession.”

NOTICE TO LIBERALS: The increase in spending has been the real problem the last ten years and will be the next ten years. Not the tax cuts.

I am responding to these assertions with a portion from an article published January 29, 2007 called, “Ten Myths About the Bush Tax Cuts” by Brian Riedl. Riedl is the Grover Hermann Fellow in Federal Budgetary Affairs at the Heritage Foundation and holds a bachelor’s degree in economics and political science from the University of Wisconsin, and a master’s degree in public affairs from Princeton University.

Myth #5: The Bush tax cuts are to blame for the projected long-term budget deficits.
Fact: Projections show that entitlement costs will dwarf the projected large revenue increases.

The unsustainability of America’s long-term budget path is well known. However, a common misperception blames the massive future budget deficits on the 2001 and 2003 tax cuts. In reality, revenues will continue to increase above the historical average yet be dwarfed by historic entitlement spending increases.

For the past half-century, tax revenues have generally stayed within 1 percentage point of 18 percent of GDP. The CBO projects that, even if all 2001 and 2003 tax cuts are made permanent, revenues will still increase from 18.4 percent of GDP today to 22.8 percent by 2050, not counting any feedback revenues from their positive economic impact. It is projected that repealing the Bush tax cuts would nudge 2050 revenues up to 23.7 percent of GDP, not counting any revenue losses from the negative economic impact of the tax hikes.

In effect, the Bush tax cut debate is whether revenues should increase by 4.4 percent or 5.3 percent of GDP.

Spending has remained around 20 percent of GDP for the past half-century. However, the coming retirement of the baby boomers will increase Social Security, Medicare, and Medicaid spending by a combined 10.5 percent of GDP. Assuming that this causes large budget deficits and increased net spending on interest, federal spending could surge to 38 percent of GDP and possibly much higher.

Overall, revenues are projected to increase from 18 percent of GDP to almost 23 percent. Spending is projected to increase from 20 percent of GDP to at least 38 percent. Even repealing all of the 2001 and 2003 cuts would merely shave the projected budget deficit of 15 percent of GDP by less than 1 percentage point, and that assumes no negative feedback from raising taxes. Clearly, the French-style spending increases, not tax policy, are the problem. Lawmakers should focus on getting entitlements under control.

December 14, 2010 – 1:27 pm Categories: Taxes | Post a comment

Max Brantley, Pat Lynch, Gene Lyons and other Liberals refuted here!

HALT: Halting Arkansas Liberals with Truth

Opening Post December 13, 2010 11:36 am

My name is Everette Hatcher III.  I am a businessman in Little Rock and have been living in Bryant since 1993. My wife Jill and I have four kids (Rett 24, Hunter 22, Murphey 16, and Wilson 14). I have been a Razorback season ticket holder since 1984 and I have attempting to take my son Wilson to see all the southeastern conference schools play football. He still has not seen Vandy, Kentucky and Alabama play. However, this year he got to knock Ole Miss off his list and last year Georgia and the year before Florida. He has seen LSU and Miss St play many times.

I have been a political junkie since 1972 when I watched my first Democratic and Republican National Conventions. I especially was captivated by the 1976 run by Ronald Reagan.

See for yourself what you can expect from this blog by reading my opening post below.

Do you ever find yourself looking through the local political news and you find a local liberal attacking principles that made this country great? Max Brantley, Pat Lynch, Gene Lyons and many other liberal commentators are constantly commenting on politics. Many of these liberals have comment sections on their blogs and they invite discussion. I want to provide at least a thought a day from the conservative perspective. Let me give you an example.

So many points brought up by liberals sound so good at first but really are easy to answer logically. Take the example below.

I remember like yesterday when I saw Milton Friedman on the Phil Donahue Show. Donahue had thrown up one of those liberal accusations against the free enterprise system. Below is the exchange that I saw that day:

Phil Donahue: When you see around the globe, the mal-distribution of wealth, a desperate plight of millions of people in underdeveloped countries. When you see so few “haves” and so many “have-nots.” When you see the greed and the concentration of power. Did you ever have a moment of doubt about capitalism and whether greed is a good idea to run on?

Milton Friedman: Well first of all tell me is there some society you know that doesn’t run on Greed? You think Russia doesn’t run on greed? You think China doesn’t run on greed? What is greed? Of course none of us are greedy, it’s only the other fellow who is greedy. The world runs on individuals pursuing their separate interests.

The great achievements of civilization have not come from government bureaus. Einstein didn’t construct his theory under order from a bureaucrat. Henry Ford didn’t revolutionize the automobile industry that way.

In the only cases in which the masses have escaped from the kind of grinding poverty you’re talking about – the only cases in recorded history – are where they have had capitalism and largely free trade.

If you want to know where the masses are worst off, it’s exactly in the kinds of societies that depart from that. So that the record of history is absolutely crystal clear that there is no alternative way so far discovered of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by a free enterprise system.

Donahue: But it seems to reward not virtue as much as ability to manipulate the system…

Friedman: And what does reward virtue? You think the Communist commissar rewarded virtue? You think a Hitler rewarded virtue? You think – excuse me – if you’ll pardon me – do you think American Presidents reward virtue ?

Do they choose their appointees on the basis of the virtue of the people appointed or on the basis of their political clout ?

Is it really true that political self-interest is nobler somehow than economic self-interest ? You know, I think you’re taking a lot of things for granted. Just tell me where in the world you find these angels who are going to organize society for us ? Well, I don’t even trust you to do that.

December 13, 2010 – 5:45 pm Categories: Milton Friedman | Comments (1)