The left continues to resist any suggestion of spending cuts right now. In their view, a depressed economy is no time to slash spending; that would only further weaken demand. The successful austerity policies adopted in response to the downturn of 1920, however, offer a clear rebuttal to this notion. And this is not an isolated instance in the heap of economic history. Similar government restraint and cutbacks marshaled strong recoveries from the depressions of 1837 and 1893. In 1837, financial panic swept the country. According to economist Jim Powell, …
It has been 12 months since the American people spoke resoundingly at the polls against overtaxing, overspending, and overborrowing, but memories can be short in Washington. All it takes is for a couple of politicos and the so-called “mainstream” media to denigrate the Tea Party and the freshman congressional class–and urge compromise–and you have the spectacle of some Members of Congress hiding under the neutral-sounding “revenue raising” banner and urging the so-called “Super Committee” to raise taxes. Throw in some character assassination of those holding the line against spending and …
Evidence shows that “austerity” during a sharp downturn in 1920 coincided with quick economic recovery and robust growth throughout the rest of the decade. Nevertheless, there is a belief that the example of President Herbert Hoover from 1929–1933 was a failure of austerity, which pushed the economy into the Great Depression. It was not. Hoover never cut spending or slashed tax rates. In fact, Hoover doubled spending in real terms during his four years in office. When FDR arrived at the White House, according to Cato economist Steven Horowitz, FDR’s …
Remember the Great Depression of the 1920s? If not, that’s because it didn’t happen. The recession of the early ‘20s quickly ended after spending and taxes were cut dramatically. It provides a clear lesson in “austerity” that President Obama should heed. In 1920, newly elected President Warren Harding inherited a very sharp downturn from his predecessor, Woodrow Wilson. According to Cato economist Jim Powell, the downturn was “almost as severe, from peak to trough, as the Great Contraction from 1929 to 1933 that FDR would later inherit. The estimated gross …
The Republican members of the Senate Finance Committee recently submitted their recommendations for tax reform to the deficit reduction super committee. Their recommendations lay out the principles they’d like tax reform to adhere to: economic growth, fairness, simplicity, revenue neutrality, permanence, competitiveness, and savings and investment. Towards those ends, the Senate Finance Republicans offer several specific policies: An income tax rate for individuals and corporations that is no higher than 25 percent; Repeal of Obamacare and its tax increases; Full repeal of the Alternative Minimum Tax; Adoption of a territorial …
Today, the House Natural Resources Committee released its list of recommendations to the deficit reduction super committee. Their recommendations would go a long way to increase revenue for the federal government without raising taxes. The recommendations include increasing energy exploration and production both onshore and offshore, which would increase economic activity and generate revenue but also increase the money coming into the government through more royalties, lease sales, and rent fees. The committee also calls for increasing access to natural resources on federal lands and selling or transferring land away …
President Obama is fond of saying he hasn’t raised anyone’s taxes. How soon he forgets the $500 billion tax hike in his health care law. Obamacare raised 18 separate taxes and included a brand new 10 percent excise tax on tanning beds. The tanning bed tax started in July 2010. The Internal Revenue Service (IRS) should have little trouble collecting this ridiculous tax. It already collects several other excise taxes on things like alcohol, tobacco, and gas. And the federal government has collected excises since the beginning of the republic. …
Today marks the 1,000th day of Barack Obama’s presidency, and unfortunately for America, those days have been marked by deeper deficits, lost jobs, prolonged unemployment, and bigger government. Meanwhile, many of those charged with leading the federal government have all but abdicated their responsibilities. The national debt stands at $14.9 trillion–$4.2 trillion of which has been added since Obama took his oath of office. Fourteen million Americans are unemployed–that’s 9.1 percent of the workforce. The unemployment rate has been above nine percent for 840 of the 1000 days, and the average unemployed worker has …
In January 2011, newly elected Illinois governor Pat Quinn imposed a 67% income tax increase on citizens and a sharp increase in the corporate tax rate to satisfy missed and unpaid bills. A month later, the state issued $3.7 billion in bonds just to make payments to unfunded state pensions. Unfortunately, these measures do not seem to have inspired Moody’s confidence. The agency rated Illinois as the worst credit risk of any state in the union in August. Senator Mark Kirk (R-Ill) produced a report on Tuesday that makes some startling …
Various organizations and media outlets have attempted to refute the notion that government policy is creating uncertainty and hindering economic growth. However, when properly analyzed, the uncertainty argument is a legitimate one. Critics of the uncertainty narrative say that businesses cite poor sales – or lack of demand – not taxes or regulations, as the biggest hindrance to growth. A recent blog argued that the National Federation of Independent Business (NFIB)—the leading small business association—cited that over the past three years, a plurality of its members – 30 percent – …
