To continue...

More on taxes...

To follow my last thought, Reagan raised taxes in four times in his last six years in office.  His only "lowering of taxes" was in 1981.  Yet revenues for the Fed went up each year he was in office.  Today, we are told this is due to his understanding of the Laffer Curve, but I'm beginning to question that.

I don't question the premise of the curve... it is simply common sense and mathematically proven beyond question... but simply saying that lowering taxes always increases revenue is NOT showing any understanding of the curve.  By making the same argument over and over again ("lower taxes means more revenue") we are ignoring the "curve" and instead making the case that it is nothing more than a rising vector... which it is not.

History shows us this is, indeed, the case.  Bush Sr. needed to better understand this "curve" so he could have avoided the "read my lips" gaff... he did increase taxes, revenues continued to climb through every one of his years in office, and they continued to climb through the next two administrations, as well... with even higher rates.

The long and short of it is, even if Obama got what he wanted... taxes to return to pre-Bush (Jr.) levels (meaning Clinton era levels), they would still be lower then they were in 1988, when Reagan left office.  Reagan's rates in '88 were between 21% and 22%... through Clinton's eight years, they averaged less than 20%. (Source HERE)  We can talk about the point at which the revenues for the Fed start to fall off on the Curve all day long... they might be 68% (under LBJ) or 75% (under FDR) or 50% (under Carter)... but they are all far higher than what we were paying prior to 2002 (39% top rate) and the economy was booming like it had never done before.

The difference, in my opinion, wasn't TAXES... it was the way in which the Government spent money.  The GOP Congress in 1994 brought into effect the Pay as You Go Act... and nothing turned the US economy around like a government that had spending under control.  Yes, that is what I am saying happened.  If the bill trying to be made into law couldn't pay for itself, then it didn't pass the House and Senate floors.  Today, that is seen as potentially dozens of small tax hikes spread over a four year time frame... it doesn't even seem to be what the GOP wants, let alone the Dems... but history shows us that it works.

Frankly, I simply do not see how we can reduce or eliminate the deficit without a tax hike in our future.  I'm not saying that we need Carter-era rates simply to maintain the rate of spending today... but reduced spending coupled with small, limited tax increases will do for us what they did for Reagan in 1988.  His plan was for every $1 in tax rate increases, there would be a $3 reduction in spending.  Why wouldn't THAT work now?  Why isn't THAT the Reagan model we are shooting for?

We really need to stop calling Obama the "tax and spend" President... his rates for the first term are far lower than the President that the GOP touts as the "yardstick" of fiscal conservatism.  We're probably pretty lucky THAT has not been a focus of Democratic campaign headlines, right?