The Cold Hard Facts

I thought I would write a few thoughts about the new stimulus package as well as some comments made by Obama. I will try to make each point short and simple.

1) Smoke and mirrors:
Obama has recently called tax cuts the "failed theories of the past 8 years" yet he has yet to give an example of a time in history when a government spending spree has taken us out of a recession. The truth is the tax cuts were not responsible for the financial crisis. It was the sub-prime mortgage crisis. In fact, every time in US history when tax cuts were enacted it has been shown that it pulled the U.S. out of the recession.

2) Government spending:
Every time government has tried to spur the economic recovery by increasing spending, it only worsened the problem. Japan tried this in the 90's but per capita income fell and during the 1930's while the increased government spending did help a little, it ultimately hindered growth.

Why on earth would people want government in charge of everything like the banks and healthcare? I have no idea. Have you every went to the Social Security office or any other government agency? Imagine that kind of service at your doctor's office.

3) Recessions and Tax Cuts:
* In 1963, JFK cut taxes. He cut the top marginal personal income tax rate from 91% to 70%.
* In 1983, the Reagan tax cuts were implemented. They reduced the top marginal income tax rate from 70% to 50% and also cut the corporate income tax rate.
* In 2003, President George W. Bush cut the top personal rate from 38.1% to 35%, the dividend rate from 38.1% to 15% and the capital gains rate from 20% to 15%.

Every recession mentioned above was met with tax cuts and every single time the tax cuts were implemented, we were pulled out of the recession and GDP grew.

In this particular case, Obama is trying to confuse people who don't really follow history and the economy. A major part of Obama's campaign was that 95% of Americans will receive a tax cut. If it is a failed theory, why make it a central point of your campaign. He's trying to have it both ways. It's smoke and mirrors. He is trying to blame the tax cuts on the recession but history will prove him wrong.