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Trivia Tidbit Of The Day: Part 490 - "Normal" Tax Rates.

Deviant Economics-

To hear Obama (and Clinton) talk about the Bush tax cuts, they were some bizarre anomaly in an otherwise steady pattern that guided America through its history. And, by golly, if we elect the Democrats, they'll swiftly return us back to where things ought to be.

No.

The out of the ordinary time in our recent history was in the second term of the Clinton administration:

For most of recent history, the U.S. share was about equal to that of the OECD generally. It did deviate wildly at one point--in the second term of President Clinton, when the U.S. was collecting a markedly higher percentage of its GDP in income-tax revenue than were its fellow OECD members. But the Bush tax cuts returned us to normalcy.

But, although individual income tax collections are roughly in line with the post-industrial world, our corporate taxes are making us American businesses less competitive in an increasingly competitive world economy:

By standing still, the United States can expect to see reduced inflows of foreign capital and investment because the United States will be a less attractive place in which to invest, innovate and grow. U.S. firms will face a higher cost of capital than foreign firms, making it more difficult to compete in foreign markets. In the near-term, this would translate into slower economic growth, a slower advance in labor productivity, and less employment.

So, on the one hand, we have Obama, who wants to eliminate the Bush tax cuts and raise personal income taxes, implement trade isolationism, and vastly increase domestic spending on auto-pilot growth entitlement programs. On the other hand, there's McCain, who is for free trade, wants to slow government's growth, and keep individual taxes lower, while specifically reducing corporate tax rates.

How is Obama pulling more than 25.7% (ahem, West Virginia) nationally with these kinds of ideas? Is the GOP brand really that tarnished? It's almost as if we're back to a time (basically throughout the entire 20th century) in the Republican Party where, because there's so little hope for Congress, we've got to put everything into winning the White House. Yet, I am not sure Republicans quite yet understand that we're possibly back in that time. It may take a true disaster of an election to snap people out of their funk.

If Democrats pick up seats in Congress, getting more than 60 seats in the Senate (which is still a relative longshot at this point), and win the White House, we're looking at a politics-policy-politics feedback loop that just might make the Republican Party the minority party for decades to come.

The politics of a unified party government would allow Democrats to pass legislation that will actually create more Democrats for the future. Government expansion is sinister because it perpetuates itself, politically. Every new government job, every new government program, every regulatory and taxation action Democrats are currently proposing to take, creates people with vested interests in seeing Democrats win and who will vote and donate and otherwise participate with great regularity.

That's the politics-policy-politics feedback loop. It's not inevitable. It's not always unbroken. But I am ever more convinced that this election, if Republicans remain as inactive and unenergized as they were in 2006, might become a realignment of our entire political system for a generation. And that's even more unfortunate, given that if Republicans had passed personal accounts in Social Security and major tax reform and a few other items (conservative ideas on energy, trade, health care, etc.) on the conservative agenda when they were ostensibly in charge of the government, the politics-policy-politics feedback loop just may have worked the other direction, and we may have been talking about Republicans dominating elections for a generation.

This is why John McCain needs to win, even if he is squishy on green issues or campaign finance. Although the 2010 Census reapportionment will help Republicans in 2012, and although it is highly likely that Democrats-- as in 1993 to 1994, when they last controlled the entire federal government-- may overreach and produce a backlash to their Eurosocialism, realistically there's very little chance for Republicans to take back Congress in 2008 or 2010.

Therefore, John McCain must win this election. America's competitiveness and long-term prosperity are at stake.

Previous Trivia Tidbit: Opportunity Cities.

Posted by Will Franklin · 14 May 2008 01:36 PM

Comments

Posted by: JGsez at May 15, 2008 05:07 AM