DEBUNKING THE “TAX-CUTS CREATE GROWTH & REVENUE” MYTH

Here’s an article from The Wall Street Journal that, once again, claims higher tax rates on the wealthy are not good for the country. Essentially the WSJ article makes this standard Republican-Conservative claim: Tax cuts for the rich will spur economic growth, enhance tax revenue, and lead to balanced budgets.

Nothing could be further from the truth. Here’s what’s NOT happening, and why we're in dire straits today ...

... THE REVENUE ARENA

BALANCED BUDGETS? When Supply-Side economics arrived on the political scene with Ronald Reagan in 1980, our country owed approximately $979 billion (with a “B”). Today, after almost 20 years of tax cuts for the rich, America now owes $9.4 trillion (with a “T”). This, my friends, helps to explain the dollar’s collapse, and why prices are climbing. As an aside, the only time we started balancing budgets was under President Clinton, who raised taxes on the rich.

ECONOMIC GROWTH? Do tax cuts on the rich increase economic growth? Check this out. With the exception of five years, federal tax receipts have increased every year since 1962. Did Bush’s tax cuts (or supply-side economics) have an influence on the economy starting in 1962 that we don’t know about?

INCREASED REVENUE/CORPORATE INCOME: A 2007 Congressional Budget Office report makes it clear that increased tax revenue after 2003 is due primarily to an “increase in corporate profits” and other policy measures that disallowed certain write-offs. Read the report. Tax policy plays a minimal role.

... IN THE AREA OF ECONOMIC GROWTH

THE BUBBLE ECONOMY: The vast majority of growth that occurred during the Bush administration was driven by low interest rates and the subsequent housing bubble. As the value of homes increased, homeowners took out equity lines and used their homes to purchase cars, boats, vacations, etc.

DEBT FINANCED PURCHASES, I: If more money was put into the pockets of ordinary Americans it’s not because of higher wages or the jobs created by new investments (effectively zero in both areas). It’s because the Bush administration borrowed money to send to American tax payers. A monkey could have borrowed money and sent out checks. Tax cuts were a political Trojan Horse designed appeal to unsophisticated voters. But they worked politically.

DEBT FINANCED PURCHASES, II: Americans went further into debt to finance consumption. This helped create the illusion of prosperity. Credit card and personal debt are at all time highs.

That's it. Debt, demographics, and bubbles. This explains the Republican-led spending and debt binge since 1980.

My friends, the argument that tax cuts for the rich creates growth is, at best, misleading. More probably, it’s a lie. At the end of the day we need to build bridges, roads, and schools. Someone has to pay for this. Contrary to the ideas pushed by Republicans, there are no Infrastructure Fairies out there. Oh, and did I mention that we now need to pay down trillions in debt caused by the Republican's tax cut jijad? No? Well, we do.

Borrow and Spend is not an economic policy we should continue to follow. That almost one-half of America can't see this says alot about the state of this nation.

- Mark

LOVE IS BEING THERE ...

I don't usually post on topics like this, but I wanted to share this "smell the roses" moment ...

This past Tuesday when my ex came to pick up the kids, my 10 year old daughter Monica informed me that her school's last recital and choir for the year was that evening at 7:00 pm. It was 5:30 pm.

After going through the usual routine of "Why didn't you tell me about this earlier, I have plans, and I need to teach class tonight ...", I told Monica that I might not make it. As she went off to her Mom's car my feelings went from consternation to guilt. I changed my plans.

When I walked into the auditorium, I saw an open seat in the middle isle. As I made my way toward the seat I spotted my daughter playing the clarinet. She saw me and seemed surprised. But her eyes lit up in a way that always let's me know that she has a smile in her heart. And just like that my guilt was gone.

The next day I asked Monica about her look of surprise. She responded, "I wasn't surprised Daddy. I knew you'd be there. You're always there ... because you love me."

- Mark

THE BLIND LEADING THE BLIND?

The blind leading the blind? Nope, it's worse than that.

First we had White House spokesperson, Dana Perino, doing her best Sgt. Schultz impersonation and admitting that she knew nothing about the Cuban Missile Crisis (she apparently doesn’t know much about the Bay of Pigs either).

Now we are treated to Right Wing nut job, Kevin James, railing against Barack Obama’s apparent appeasement in the Middle East because he's willing to talk to the enemy. Never mind that Bush the Elder's Secretary of State used and called for the same strategy.

For his effort, Keving James is then painfully embarrassed by Chris Matthews for not knowing what Neville Chamberlain did to forever earn the title of Hitler’s Appeaser.

Apart from demonstrating what a blowhard Kevin James is, the clip is actually pretty funny … until, of course, you realize that Perino and James are the same “people of influence” who like to use historical references to justify their positions.

No wonder everything’s messed up under Bush. History is not something to learn or draw lessons from. Team Bush sees history as something to be manipulated and used to prop up failed policies, or to adorn a bankrupt ideology.

This really puts another spin on former Treasury Secretary Paul O’Neill's description of President Bush approaching policy like a “blind man in a room full of deaf people.”

- Mark

EINSTEIN & RELIGION

From the NY Times ... A letter Albert Einstein wrote to philosopher Eric Gutkind in 1954 just sold for $404,000. In the letter Einstein described the Bible as “pretty childish” and scoffed at the notion that the Jews could be the “chosen people.”


This should help settle the issue for those who enjoy sending that annoying "Evil is the absence of God" chain-letter. The chain-letter is usually sent by true believers who (1) want to revel in the humiliation of an atheist teacher by Einstein when he was a schoolboy (which hardly seems Christian to me), or (2) seek to use Albert Einstein as a foundational source for Intelligent Design, which requires a stretch of imagination (like what you are asked to believe if you visit the Creationist Museum in Kentucky).

But, alas, the appearance of this letter probably won't settle anything. Evidence is a hard thing to accept when you're used to making things up.

- Mark

P.S. It should be noted that Einstein was an agnostic, and not an atheist. There's a difference. He believed that any understanding of God “is too vast for our limited minds.”

THE "REAL McCAIN"

BUSH FAILS IN OIL ... AGAIN

Everyone in America knows that George W. Bush was a failure as a businessman in the oil industry. Well, in spite of touting his oil credentials as a potential plus with OPEC members when he ran for the White House, it turns out that he's an abject failure at Oil Diplomacy too.

Here's a quick overview of President Bush's most recent efforts at "jawbone" diplomacy, which he claimed he would bring to the White House.

For the second time in two months, President Bush's efforts to "jawbone" his Saudi friends over the cost of oil fell on deaf ears. On Friday, oil surged to a record $127 after Bush's meeting with King Abdullah failed to secure a production increase beyond the meager 300,000 barrels the Saudis previously committed to on May 10th. In all, it was just the latest dismal failure for the jawbone of the Texas oilman who campaigned on his powers of persuasion when it came to OPEC ...

... For its part, OPEC brushed off Bush's feeble entreaties and rejected calls for an emergency meeting ahead of the cartel's next scheduled gathering in September. On Saturday, the Qatari oil minister put it simply, "The oil market is balanced...There is no threat to or crisis in supply."

There's no secret to what's happening here. OPEC members do not respect, nor trust, the capabilities of George W. Bush. And they're particularly not happy with the Bush administration's dollar policy (there is none). As Fadel Gheit, an oil analyst at Oppenheimer & Company in New York, put it: "It's really not surprising that they have ignored [Bush]" when you consider the collapsing value of the dollar.


Indeed, while Saudi King Abdullah has "shut down grandstanding talk from Venezuela's Hugo Chavez and Iran's Mahmoud Ahmadinejad" (which focused on moving OPEC away from the "worthless piece of paper" this past February) OPEC Secretary-General Abdullah al-Badri is still suggesting that the oil cartel might switch to euro-based pricing.

My guess is that this will become a real issue some time during the next administration. When this happens it will be yet another tattered feather in President Bush's lifelong headban of failure.

- Mark

OBAMA IN PORTLAND, OREGON

We've seen big turnouts for Barack Obama before, but this one is impressive. Here's Obama in Portland, Oregon. Official estimates for this rally are 75,000.




Check out these other Obama rally photos from Oregon.

- Mark

THE PATH TO PEACE?

I've been meaning to post this now since Sunday. Better late than never ...

I attended the Bakersfield Jazz Festival this past weekend and had blast. As I sat down to enjoy the Festival this Saturday our neighbors came up and offered cheese, crackers, sausage, strawberries, etc. With the wine flowing, I sat back and thought to myself, "If the world were one big jazz festival there would be no wars." The environment was simply awesome.

I know, I know ... my hypotheses is not going to help me develop a paper that will make into my discipline's top journals. But I was thinking it (the wine, I'm sure, helped).

I'm posting this because - and I'm embarrassed to say this - in the 14 years that I have lived and taught at CSUB I had never attended the Bakersfield Jazz Festival. I had gone to my office to work many times during the Festival, thinking that I would go after finishing my activities. But I always left. What a mistake.

In the process I learned something else. If there's a medal of Julian the Hospitaller, the Patron Saint of wandering musicians, Dr. Doug Davis deserves it. What an event. I'm going next year.

- Mark

THE ART OF WAR ... "IF I WAS A TERRORIST"

Over five years ago I wrote this article.

In the article I suggest we should consider that Osama bin Laden might NOT be some deranged lunatic, or an out of control fanatic. I ask, What if he believes destabilizing America only requires pushing the United States into a sustained wartime economic binge? Further, what if he understood that goading the United States into massive budget deficits, which shove trillions of dollars into the global economy, would eventually undermine the value of the U.S. dollar and threaten our economic stability?

This kind of thinking would impress Sun Tzu, author of The Art of War. In the book Sun Tzu argued true mastery of war involves "deception" and the capacity to break the enemy without seeking military battle.

Specifically, Sun Tzu wrote the "skillful leader subdues the enemy's troops without any fighting; he captures their cities without laying siege to them; he overthrows their kingdom without lengthy operations in the field."

If this was Osama bin Laden’s thinking, the events of 9/11 were a big score. Today we have record debt, the dollar is in free fall mode, inflation is a coming reality, and inattention to the nation’s economy because of President Bush’s Blundering Wars Project. This has to be pleasing to Osama bin Laden.

All of this helps make this clip – “If I was a Terrorist” – so interesting.



If 9/11 was designed to be the catalyst for a series of responses and events (which President Bush clearly fell into), Osama bin Laden might prove himself to be a Master Student of yet another Sun Tzu maxim: "The opportunity of defeating the enemy is provided by the enemy himself."

- Mark

PRESIDENT BUSH'S HIDDEN TAX

The Bush administration is taxing the hell out of America. And they’re doing it the same way medieval monarchs and petty tyrants have done it through the ages – by forcing you and I to cover their debts. Here’s how it happens.


Whenever you create or produce too much of anything its value goes down. Today America prints and spends more dollars than we can back with the goods we produce (or the gold we have on hand). Hence, the value of the dollar has gone down. This is how President Bush’s policies make this situation worse.

Since George W. Bush came into office we have added over $3.8 Trillion to the national debt. Today we owe roughly $9.4 Trillion (when Jimmy Carter left office we owed about $979 billion).

Every time President Bush spends money we do not have he's telling the American taxpayer "I'm irresponsible. But you still have to pay this back ... today and well into the future." This, my friends, is a hidden tax.

But it’s also the simple part of our hidden tax.

As the Bush administration continues to send dollars out to the rest of the world the value of the dollar declines. Over time people and countries, like our rich Arab friends, who use the dollar to purchase stuff eventually start looking around and say to themselves, “Hey, this Lexus costs me more in dollars.” But they can’t really complain because our Japanese friends are saying, “There are too many dollars out there. They are not worth as much today. Let’s raise the price of our Lexus.”

Our Arab friends, in turn, raise the price of their product (in this case, oil) so they will have more dollars to buy the Lexus they want. This helps to explain the surge in gas prices (and rising prices elsewhere).

The fact that Americans have to fork over more money – for petroleum and a Lexus (among others) – is a direct result of the falling value of the dollar. Simply put, rising prices (or inflation) constitutes a “hidden tax” on the American consumer.

The worst part? The hard-working American consumer is paying this hidden tax so President Bush can pursue his Blundering Wars Project and, incredibly enough, so he can cut taxes on his rich friends.

Nice.

John McCain, and the Bush administration, are banking on the fact that Americans won't figure this out.

- Mark