Obama’s Class Envy Vs Economic Reality (1)

President Obama’s reelection campaign is largely an effort to influence people who don’t pay much attention to politics.  If you visit sites like this one you are probably more interested and better informed than the Obama campaign’s target audience.

The President’s call for tax increases on high income earners is a good example.  It’s an obvious effort to exploit the unseemly human emotions of envy and resentment to promote his political objectives.  This chart showing revenue received by the government since implementation of the Bush tax cuts puts his rhetoric in perspective. [continued below the chart]The President’s standard campaign speech, already repeated to several audiences includes:

…we live in the real world, with real choices and real consequences. Right now, we’ve got significant deficits to close.  We’ve got serious investments to make to keep our economy growing.  And we can’t afford to keep spending more money on tax cuts for the wealthiest Americans who don’t need them and didn’t even ask for them.

Obama’s goal is to plant in the mind of his audience the perception that because of the Bush tax cuts the government is collecting less revenue than in the past and is deprived of the cash it needs to balance its budget and fund “investments.”  But as the chart shows government revenue increased dramatically after implementation of the current tax rates, usually called “the Bush tax cuts” in 2003.  Revenue went down when the recession hit in 2009 but higher tax rates during a severe recession would only impede recovery, not generate more revenue.  The Office of Management and Budget projects 2012 revenue will be about the same as 2007 and will continue to increase every year, even if all tax rates remain the same.

This was not the first time tax revenue went up following cuts in tax rates.  It happened in the 1920s.  It happened again in the 1960s when President Kennedy’s tax cut plan was implemented. [continued below the chart]

In the 1980s President Reagan enacted two sweeping cuts in income tax rates.  The first was phased in over three years during in a severe recession.  Income tax revenue increased after the recession ended.  The second round of tax cuts was coupled with elimination of loopholes and revenue soared. [continued below the chart]

If the economy continues to recover from recession tax revenue will increase every year without an increase in tax rates.  The real cause of the government’s enormous deficits, projected by the Obama budget to continue, literally forever even if his proposed tax increases are enacted,  is excessive spending, not lack of tax revenue.

4 Comments so far

  1. SenateStaff on April 16th, 2012

    Once again this amateur pundit shows his ignorance of basic logic. This “Boomerjeff” is ignorant of one of the basic rules of logic: correlation does not imply causation. Hes pushing his ideology by telling foolish followers that tax revenue went up because of tax cuts. This is absurd.

    This issue has been studied by several think tanks and by the Senate Joint Committee on Taxation. Jack Kemp, Newt Gingrich and the other gurus of voodoo economics were wrong. Tax cuts do not pay for themselves. Since The Bush tax cuts we’ve lost more than $2.2 trillion in giveaways to the top 2%. Those are the facts if anyone’s interested

  2. DianaRae on April 16th, 2012

    SenateStaff:
    What a fathead you are! Where’s your proof? Are the charts lying? If they are you should post the accurate figures. But you can’t do that because you’re just an internet blowhard.

  3. Drew on April 18th, 2012

    Dianeray is more gracious than me.

    Here’s the deal. Senate Staff is a troll, and has Obamas cork so far down his/ her throat that he/ she can’t see straight .

    Here’s a very inconvenient fact for SenateStaff. William Jefferson Clinton reduced the capital gains tax and set off a boom in investment. It’s a fact. Look at history .

    Obama wants to double the cap gains tax rate with the so called Buffet rule. It will be an economic disaster. One can only speculate as to whether Senate staff will be downing mouthwash or picking hairs from teeth when this absurd notion goes down (heh) to defeat.

  4. […] Obama’s Class Envy Vs Economic Reality (1) […]