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ENLARGE
Jim Clark
Dear President Obama: If you want to get re-elected in four years you gotta fix the economy. You have lots of smart advisers, at least some of whom have paid their taxes, but don’t listen to them — listen to me. Forget the stimulus plan. Government stimulus plans just don’t work.
President Franklin Roosevelt was elected in 1932 and embarked on a huge public works spending program to “get the economy moving again.” By 1938 unemployment was even higher than in 1932 and the stock market tanked all during the 1930s. It took World War II to get the economy moving again even though it brought rationing and price controls.
In 1964 President Lyndon Johnson simultaneously declared war on poverty and the Viet Cong. That huge spending binge led to the Nixon-Ford-Carter years characterized by price controls, gas lines, energy shortages, a flat stock market and, toward the end, a humongous inflation rate. Bank prime rates rose to 25 percent and affordable mortgages were unattainable.
Here’s what should be done and why. Adopt policies which encourage investment, expansion and risk taking. Entrepreneurs will then be motivated to hire the unemployed; the newly hired will increase their consumer spending which in turn will encourage more investment, expansion and risk taking. If you load taxes on to an activity you discourage or kill it; if you ease taxes you encourage it, so one helpful policy would be to lower taxes on investment, expansion and risk taking. Tax credits would help here too.
Don’t sweat the deficit. Historically total tax revenues have increased when taxes have been lowered because the improved economic activity produces more revenue for the IRS. Ten percent of $100 is more than 50 percent of $10. Got it?
Let’s look at some historic facts. Faced with a recession in 1962 President John F. Kennedy lowered tax rates. Actual tax revenues increased by an average of 8.6 percent in each of the next five years, unemployment went down from 7 percent to 3 percent and the stock market doubled.
President Ronald Reagan lowered taxes resulting in a drop in the inflation rate from 14 percent to zero and a reduction in the unemployment rate from 10 percent to 5 percent. Actual tax revenues increased by an average of 4.16 percent in each of the next six years and the stock market tripled.
President George W. Bush lowered taxes after the Sept. 11, attacks, and actual tax revenues increased by 4.95 percent in each of the next four years, unemployment went from 6 percent to 4.5 percent and the stock market rose by 145 percent. Granted we have problems now but that’s because of the failure of Federal National Mortgage Association and Federal Home Loan Mortgage Corporation. They’re still trying to pin the blame for that.
Nancy Pelosi and Harry Reid want you to shovel money at all the traditional Democratic special interest groups, calling their boondoggle a “jobs” bill. Why not just give all that money directly to the voters? Because you’d be back where you started when they spent it all. Nope. You need to leverage that money by encouraging enterprise.
Republican Steve Forbes predicts that the Obama administration will let the Bush tax cuts expire and pass Congressman Charlie Rangel’s “mother of all tax increases” bill. No one is going to invest if they’re convinced you’re going to kill the economy with crippling new taxes and profligate spending. Prove Forbes wrong! Lower taxes on investment, encourage enterprise with tax credits and veto the huge Reid-Pelosi spending bill.
Incline Village voters supported you, Mr. Obama. We know you’ll do the right thing.
Jim Clark is president of Republican Advocates, a vice chair of the Washoe County GOP and a member of the Nevada GOP Central Committee. He can be reached at tahoesbjc@aol.com.
President Franklin Roosevelt was elected in 1932 and embarked on a huge public works spending program to “get the economy moving again.” By 1938 unemployment was even higher than in 1932 and the stock market tanked all during the 1930s. It took World War II to get the economy moving again even though it brought rationing and price controls.
In 1964 President Lyndon Johnson simultaneously declared war on poverty and the Viet Cong. That huge spending binge led to the Nixon-Ford-Carter years characterized by price controls, gas lines, energy shortages, a flat stock market and, toward the end, a humongous inflation rate. Bank prime rates rose to 25 percent and affordable mortgages were unattainable.
Here’s what should be done and why. Adopt policies which encourage investment, expansion and risk taking. Entrepreneurs will then be motivated to hire the unemployed; the newly hired will increase their consumer spending which in turn will encourage more investment, expansion and risk taking. If you load taxes on to an activity you discourage or kill it; if you ease taxes you encourage it, so one helpful policy would be to lower taxes on investment, expansion and risk taking. Tax credits would help here too.
Don’t sweat the deficit. Historically total tax revenues have increased when taxes have been lowered because the improved economic activity produces more revenue for the IRS. Ten percent of $100 is more than 50 percent of $10. Got it?
Let’s look at some historic facts. Faced with a recession in 1962 President John F. Kennedy lowered tax rates. Actual tax revenues increased by an average of 8.6 percent in each of the next five years, unemployment went down from 7 percent to 3 percent and the stock market doubled.
President Ronald Reagan lowered taxes resulting in a drop in the inflation rate from 14 percent to zero and a reduction in the unemployment rate from 10 percent to 5 percent. Actual tax revenues increased by an average of 4.16 percent in each of the next six years and the stock market tripled.
President George W. Bush lowered taxes after the Sept. 11, attacks, and actual tax revenues increased by 4.95 percent in each of the next four years, unemployment went from 6 percent to 4.5 percent and the stock market rose by 145 percent. Granted we have problems now but that’s because of the failure of Federal National Mortgage Association and Federal Home Loan Mortgage Corporation. They’re still trying to pin the blame for that.
Nancy Pelosi and Harry Reid want you to shovel money at all the traditional Democratic special interest groups, calling their boondoggle a “jobs” bill. Why not just give all that money directly to the voters? Because you’d be back where you started when they spent it all. Nope. You need to leverage that money by encouraging enterprise.
Republican Steve Forbes predicts that the Obama administration will let the Bush tax cuts expire and pass Congressman Charlie Rangel’s “mother of all tax increases” bill. No one is going to invest if they’re convinced you’re going to kill the economy with crippling new taxes and profligate spending. Prove Forbes wrong! Lower taxes on investment, encourage enterprise with tax credits and veto the huge Reid-Pelosi spending bill.
Incline Village voters supported you, Mr. Obama. We know you’ll do the right thing.
Jim Clark is president of Republican Advocates, a vice chair of the Washoe County GOP and a member of the Nevada GOP Central Committee. He can be reached at tahoesbjc@aol.com.
