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  • It’s Time for a Pro-Growth Economic Policy

    Is President Obama’s economic policy preventing the economy from recovering? The Wall Street Journal thinks so. Tuesday’s editorial notes,

    After five weeks in office, it’s become clear that Mr. Obama’s policies are slowing, if not stopping, what would otherwise be the normal process of economic recovery. From punishing business to squandering scarce national public resources, Team Obama is creating more uncertainty and less confidence — and thus a longer period of recession or subpar growth.”

    This observation is not unique. In his March 2nd op-ed, Congressman Paul Ryan (R-WI) wrote:

    After two months of drastic interventions, has hope replaced fear, and confidence pushed aside uncertainty? Hardly.”

    With the market in freefall – the Dow Jones plummeting an astounding 1223 points since inauguration day – it is beginning to become apparent that the current policy isn’t working.

    The question then becomes, if the Obama policy is amiss, what is the preferable alternative? Congressman Ryan thinks he has the plan. Among the highlights:

    Implement a pro-growth tax policy. Instead of raising taxes, he would lower taxes to 25% for the top marginal income tax rate, and combine all the other brackets to a 10% tax rate on the first $100,000 for couples. He would also lower the top corporate tax rate, and eliminate the capital gains tax. This would increase, rather than suppress, the incentives to work, save, and invest.

    Fix the entitlement crisis. Congressman Ryan has a bold Roadmap for America’s Future which would put Social Security, Medicare, and Medicaid on an affordable path without raising taxes. Even before the impact of the economic crisis is taken into account the debt-to-GDP ratio will rise from 40.8 percent today to more than 290 percent in 2050 if no action is taken. Any successful economic recovery plan must not ignore the long-term budgetary issues.

    Prior to inauguration day President Obama indicated he would take the entitlement crisis seriously, and true to his word he recently hosted a Fiscal Responsibility Summit at the White House. However, the question remains, does this represent the first steps along the path toward reform, or just another politically motivated photo-op?

    The Dow Jones has now fallen 30% since Election Day. Think it’s time for a change?

    Posted in Economics [slideshow_deploy]

    23 Responses to It’s Time for a Pro-Growth Economic Policy

    1. Steve Newman says:

      I just read another story about Obama reducing the mortgage interest for "financially troubled" people to 2%. Where does the welfare for the worthless among us stop? Why do those of us who work hard, succeed, employ people, try to save for retirement and for the education of our children continue to allow ourselves to be treated this way by the veery government we own. The last time I checked 90% stake in anything was ownership. If his tax policy goes through, me and the other 10% carrying 90% of the load, continue to get hurt. We can't keep carrying the load. It is not sustainable. At some point, we must force the 90% of welfare recipients to get out of the cart and push a little. I can't believe we are going to stand for this much longer. We need a tax revolution in this country. If we (the 10%) are going to have to continue "footing the bill" then we should be the only ones with a say in elections. What is happening today with all of this socialist, collectivist junk, is exactly why the founders only gave voting rights to the propertied (those that have an actual stake in the policies). Tell me where to sign up for the revolution. Everyone who is going to get a tax hike needs to think about taking it back from those who elected this guy. Thank you for the chance to vent.

      • bambi says:

        Yeah! Kill corporate welfare! Kill bush tax cuts! Kill home mortgage interest deductions! Kill tax credits for employer health insurance! Kill rental property tax credits! You of course know that these items alone cost the country 10 times more than any other "welfare" programs. Steve, you are in on the scam too. Everyone is on the subsidy bandwagon. The leeches are everywhere. By the way your taxes are the lowest in almost 50 years. Get over yourself, you selfish prick. Kind Regards!

    2. Tom Beebe, St Louis says:

      What's wrong with this plan for growth ?

      1. All persons residing in the U.S. shall come together in units known as "households" for the purpose of reporting all income from any source, each item to be identified by payer's and payee's tax number. Members of a "household" need not be related, need not reside together, and a household may consist of as few as one person. Persons may belong to only one “household’.

      2. Each year congress shall set by legislation a "minimum wage" and a "tax rate".

      3. The following income shall not be subject to taxation:

      • An amount equal to a year's earnings (arbitrarily set at 2000 hours) at the minimum wage rate, for each member of the household.

      • All payments for what is classified as necessary health care for all members of the household including medical care, pharmaceuticals prescribed by a recognized health care professional, vision and hearing aids, and membership fees for health-enhancing entities such as gyms or other exercise facilities. Health care insurance premiums may be deducted but not health care expense paid for by such insurance.

      • All educational expenses including day care for young children or legally incompetent persons, that portion of state and local taxes identified as spent on education, that portion of parochial school tuition, fees and other expenses identified as going for non-sectarian education, tuition, fees and educational materials for private school education at any level, and a per-diem allowance for students traveling more than 50 miles from primary residence for education.

      • All income saved into an identified account from which investments may be made.

      4. The "tax rate" shall be applied to any income over and above the deductions listed above, regardless of amount.

      5. There shall be no federal tax on corporations or other business entities.

      6. The Office of Management and Budget shall compute revenues to be expected using the newly set tax rate and minimum wage, applied to the previous year's reported incomes. No expenses in excess of that amount may be authorized or made by the federal government without approval by 75% of each house of Congress.

      7. At the request, by legislation duly enacted by any state or municipality having greater than 100,000 inhabitants, a surtax may be imposed on citizens of that state or municipality which shall be applied in a manner exactly as applied for the Federal tax.

      8. For households whose deductions exceed total income, the Federal Government shall make payment equal to the tax rate multiplied by the shortfall in income, as shall states and municipalities.

      With equality as the primary goal, this act established "households" as the taxed unit, so that all persons, whether related or not, are taxed equally. It seeks the elusive concept of fairness by taxing at the same rate all "disposable" income. It sets the Federal budget to produce a surplus in times of economic expansion and a deficit in times of contraction, to promote economic stability. It encourages growth of the tax base, thus growth of the government's ability to pay for its responsibilities, by fostering health care, education and investment, all of which contribute to growth of income. It encourages savings to aid the elderly. It recognizes disparity in cost of living among various locations. It facilitates sufficient revenue for states and municipalities. It provides limited income assistance for needy households.

    3. J.C. Hughes, Texas says:

      I've said it a number of times in these blogs, repeal the U.S. Constitution's 16th amendment and replace it with a Fair Tax. Unfortunately, personal income tax has been so ingrained into unconscious thought that it's basically a case of Stockholm Syndrome.

    4. tropicgirl, palm bea says:

      What the dumass rich don't realize is if the regular people don't have jobs they can't scoop off their subsidies and profits. We will just stop buying, like we are doing.

      Where's that gonna getcha? All the car dealerships, fast food stores, retail outlets, cheap, worthless stocks and condos in the WORLD can't re-stimulate the over-growth and over-development we have had to endure by you, the cancerous, mob-driven corporate world. We are tapped out. Finished. Done. Not interested so much anymore.

      All you can do now is get your bailouts and tax breaks and when that is over, let's talk again. We'll be the only people left with real money. Our taxes.

    5. Spiritof76, New Hamp says:

      Federal government is the problem. They alone created the sub-prime bubble and enforced issuing of worthless mortgage and debt. Couple that with half the population on the government dole, you can not stop the spreading of poverty. All those people that despise the rich, by taxing them to oblivion, there won't be any jobs. We are the Venezuela of north.

    6. Steve Newman says:

      Dear Tropicgirl, You need to take a course in reality. Where do you get your information? Based on what you said, you don't even pay taxes. Again, only those who actually pay taxes should have a say in the policies. Have a nice day. Sit back and enjoy then…you're about to be given a free house, free gas, free healthcare, etc. etc. You won't need to buy anything. All I ask is a thank you card in the mail to each of the 10%, since we are going to be forced to pay for it.

    7. Barb -mn says:

      What people like tropicgirl don't understand is that the rich are the ones that supply the jobs with their own money! unlike government jobs that steal from the taxpayers to employ dumasses that won't do for themselves. Where the government jobs are no more then frivolous, temporary if it's infrastructure but most jobs, non-productive to all Americans equally.

    8. Mike Foil, Payson, A says:

      The 9/11 Commission told us our enemies were at war with us but we were not at war with them. I believe that this is the case, again. The Liberals have been at war with us for decades but we have failed to recognize the serious of the situation or attack. We have not responded with the same level of attention that they have and now we find ourselves behind and trying to recover some level of common sense from our government. Our capitalist system, liberty, rights, freedoms, prosperity and futures are all under attack. We must respond and declare war on this mindset before it has gone too far to recover from. This is a war! Our country is being taken down from within, without a shot being fired. Time to attack and save our great nation.

    9. JLSims, Lexington, K says:

      When are we going to hear the last of the fallacy that the rich are the ones who provide jobs in this country? It hasn't been true for 50 years and won't be true in the future, no matter who far down the road we are talking. Those who say that raising taxes on the top wealth earners will stifle job growth are fools of the first magnitude and they need to wake up and realize that they are simply spouting the idiot-nomics that Reagan handed us without taking the time to accurately assess its truth. Trickle-down economic theory stopped being effective after the top three levels of corporate management. After that, it was hardly even a trickle, not even in the wildest dreams of the most foolish conservative. The result? The ultra-wealthy continued to put more and more distance between themselves and the poor and the dream of creating better-paying jobs was sublimated to the desires of the rich to be even richer. Corporate greed has all but eliminated the middle class thanks to Reagan's elitist stupidity. His breaking of the unions' strength was the death knell for the middle class. Corporations, no longer constrained by a strong union, were now free to send not just low-paying jobs, but also middle-class jobs out of the country for pennies on the dollar.

      Thanks to Reagan, we no longer have a middle class strong enough to spend us out of economic recessions.

      Knowing how worshipful this site is of Reagan, I have probably wasted my breath in trying to post this. But, someone has to try and show you the unvarnished truth and lord knows you aren't going to hear it from the sheeple known as conservatives these days.

    10. Paul, UK says:

      We really expect Obama's plan, or anyone else's, to fix things in two months? I confess it took Bush 8 years to only wipe half as much off the Dow Jones, but this seems a little premature just yet.

    11. Bronson, CA says:

      Obama sat in on Wright's racist sermons for 20 years, and told us he's dosen't share his ideas –So I don't think Obama sitting in on a fiscal responsibility summit for a few hours is going to be life altering for him.

    12. J.C. Hughes, Texas says:

      JL Sims, you're soooo correct. Your misinformed hateful rhetoric is just that. Here's a tip: Government consumes the goods private industry produces. If government completely took over banking, manufacturing, and consumer services, as the old saying goes, you won't have a pot to piss in among the corrupt elitist social order that would follow. What you need is a basic history lesson to deliver you from the leftist propaganda you've bought into.

    13. Steve, Michigan says:

      While I don't subscribe to Ayn Rand's "objectivism" philosophy, we are heading toward the point at which the productive members of our society will go on strike, leaving everyone in the lurch, including government employees. Where do they think their salaries, benefits and pensions will come from if not from a productive private sector? If you want current examples of what can happen, take a look at Zimbabwe (used to be a vibrant economy until private capitalism was hobbled), Venezuela (collapsing as we write), Russia (reinstalling statist controls), Mexico (gangster controlled) and most of Africa (where gangster governments control everything). Free up the private sectors and install a system of laws and you see wealth, innovation and the growth of middle classes, see China, Hong Kong, Eastern Europe. If we really want a recovery, the lower tax plan is the only way forward. If the 25% tax plan was adopted with elimination of corporate taxes, we would see so much capital flow here that we would hardly know what to do with it all and, to boot, government revenues would skyrocket.

    14. Steve, Michigan says:

      Mr. Sims: Your ad hominem attacks on those who espouse "Reganomics" may be emotionally satisfying, but they are bereft of historical accuracy. Even Obama admits that the vast number of jobs created in the last 25 years have come from small companies created by, guess who, those who are capable of taking the risk to create them. My company is a good example: We started with ten employees in 1988 and currently have 35 employees, full time, with benefits. Government didn't make that happen; my personal guarantee and those of my partners made it happen. Do you really think that we'd do it again if the federal government promised to take 50% of our earnings? Not a chance! What do you think will happen to my employees if we decide to call it quits? I also serve on the boards of one church and two non-profit social agencies who are reliant upon "rich" donors to do their good works. What do you think will happen if my ability to contribute is stripped away by big government? I drive a 2005 Saturn Ion and live in a 2,200 square foot house in a modest subdivision. Am I raping the middle class? The facts are that the top 20% of earners pay over 80% of the taxes. Do you really think that is too little? If the middle class has really been eliminated, how can you explain the explosion of suburban and exurban expansion over the past 25 years? Last time I looked, there were lots of people living there (though that may not last long if Obama gets what he seems to want).

      I can agree that some of the hyper rich may not deserve their pay, but you really have to reexamine your overall perspective and get some reality, before we collectively drive out the remaining productive people and leave nothing but picked over federal "programs".

    15. J.C. Hughes, Texas says:

      Thanks Steve. I'd like to add that Ayn Rand's "objectivisim" is a little too self-serving for my tastes. Greed is greed regardless of its egotist source whether this be state, corporate or individual. Her extremist philosophy was formed by her severe living conditions under Soviet rule. On taxes, extorting people's personal earnings is just plain wrong. Going to a Fair Tax with rebates to low income earners is truly a stimulus plan that offers real "HOPE".

    16. Tim Az says:

      We should feel sorry for JL Sims. JL Sims has been succesfully dumbed down by Gvt. schooling. It Is much easier to claim victimhood and become a parasite on society than to be an achiever and contribute to society. Like a child JL Sims misdirects his or her anger at the achievers because he or she can't accept that the parent figure (govt.) intentionally keeps him down and waiting for meager handouts. In return JL Sims only need vote for liberal elitists to keep getting govt. cheese confiscated from societies achievers.

    17. James Raider says:

      Unfortunately Obama is showing the gap in his understanding of what drives America.


    18. Steve, Michigan says:

      JC: We are of one mind regarding Ayn Rand. It is a legitimate role of government to ameliorate pure self interest, contaminated as it is by what we used to call "sin." Our founders also recognized that government itself is contaminated in that way; hence checks and balances, our federal system and the Bill of Rights. I believe that charitable efforts are both more effective and better crafted when left to private intitiative rather than government programs, particularly federal programs, but that depends upon the citizenry having a charitable mindset, one that seems to be missing from the liberal side. I remember seeing one of Rembrandt's large works in Amsterdam showing a poor family being interviewed by a serious group of volunteer local officials responsible for local charity, and wondering why we have such an aversion to local responsibility in our day. I think it is the age old problem of people not wanting to be their brother's keeper. The liberal mindset translates that churlish attitude into a virtue by forcing others to pay and by keeping the needy at arms length by paying administrators to do the dirty work. I reject that. We should be able to take care of our poor without the heavy confiscatory hand of a distant government and I'm all for policies that will help encourage both localization of charity and personal responsibility among those able to help out.

    19. mike baker Dallas C says:

      Calling the current governmement's current efforts "less than productive" is extremely charitable. The current government's current efforts are killing the current economy.

    20. Steve Newman says:

      JL Sims obviously can't stop reading the comics long enough actually read and understand Adam Smith or F.A. Hayek. Those wasting their breath are those of us trying to speak reason, logic and common sense. Maybe a better way (JL can understand) would be to ask if he ever heard the story about killing the Golden Goose? Even JFK understood the fixes for a lagging econonmy. You know, the poster child for every liberal…JFK. Ironically, he not only espoused, but also implemented the same tax and growth policies of Ronald Reagan. Sure he tried to say it was about the ability for consumers to spend rather than the ability for business people to invest in labor, equipment, inventory, etc., but it was still lowering tax rates on the upper incomes. You guys always decry Reagan's policies without realizing that Kennedy did them first, and well I might add. Get a grip JL. Just like tropicgirl, you have nothing to fear, unless the rest of us find a way to stop footing the bill.

    21. Sheila Byrne, Sacram says:

      An item today in the Sacramento Bee–the best use of tax bucks yet: $200,000 for the repair of black skin that leaves white marks when a tattoo is removed. (No other shade of skin is mentioned.) The race tax, I guess.

    22. Mike, Elko, NV says:

      Steve, MI: I suggest there is an Adam Smith component to helping others — both parties benefit. Put a government bureaucrat in the middle the joy of giving is removed and the government reduces the size of the gift available to those in need. I think the argument for government intervention is that those with money are too stingy to help. Well it is there money after all. Adam Smith called this a resentment and these do not rise to the level requiring negative action to correct.

      Steve Newman: How about the method of exhaustion to answer the question of who creates jobs.

      Government: If government created jobs and wealth then it would have no need to tax others to get money to operate. Ergo, the government doesn't do it.

      Those other than the rich: Well if they were creating wealth and jobs the liberals among them wouldn't be asking the government to take money from someone else and provide for their needs.

      The rich: They are all that are left. I have a feeling that you and I are in about the same place. I'm certainly not rich, regardless of what Obama says. I now donate money and time to charity. I also keep a number of people employed. The rich, more precisely those who are productive and create goods and services others want to buy, create the jobs.

      Topicgirl: I think you've confused job creation with demand. Consumers create demand — not jobs or wealth. If consumers don't want what your business provides, well then you won't have a business. However, consumers do spend money and it is up to the merchants to find ways to separate the consumer from their money. That's called capitalism.

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