Weekly Opinion/Editorial

FISCAL ISSUES LOOM LARGE IN PREZ RACE!
by Steve Fair

Supply-side economics is better known to some as Reaganomics, or the "trickle-down" policy espoused by former U.S. president Ronald Reagan. He popularized the idea that greater tax cuts for investors and entrepreneurs provides incentives to save and invest and produce economic benefits that trickle down into the overall economy.

Reagan didn’t formulate the theory. Jean Baptiste Say, a French businessman and economist came up with the principle in the late 1700s. A central element of Say's Law was that prosperity was increased by stimulating production, not consumption. In Say's view, creation of more money simply resulted in inflation. More money demanding the same quantity of goods did not represent an increase in real demand. The only reason to have money, in Say's view, was to buy products. Say believed an economy should be viewed as a barter system.

In 1981, when Reagan, using Say’s principles, proposed cutting the personal income tax rate, critics said it would decrease the amount of revenue to operate government. In fact the opposite occurred. Receipts from individual income taxes rose to $446 billion in 1989 from just $286 billion in 1981 when Reagan was elected. Reagan wasn’t the first President to advocate supply side economics. President Kennedy cut taxes and the economy grew. Cutting taxes to stimulate the economy is a proven theory that has worked repeatedly in our country’s history.

In 2001 and 2003, President George W. Bush proposed and Congress passed a series of tax cuts to reinvigorate the economy and reduce the government’s burden on workers’ paychecks. Because of opposition to these measures from some in Congress, they were implemented as temporary tax cuts, all of which will expire by January 1, 2011. The uncertainty of their future has an effect on present-day spending by businesses and individuals, who know that they may have to pay higher taxes in the future.

Senator John McCain has proposed making the tax cuts permanent. McCain says, “I think it’s very important that we make the Bush tax cuts permanent. I voted to make them permanent twice already.… And if we don’t make the tax cuts permanent, then they will experience what amounts to a tax increase.” McCain has flip flopped on this issue and says he was wrong to vote against the Bush tax cuts initially.

Senator Barrack Obama is opposed to making the tax cuts permanent. On his web site, he states that he will reverse the Bush tax cuts for the wealthy and protect tax cuts for poor and middle class families. Under Obama’s and the Democrat’s plan, tax rates would increase by 3 percentage points for each of the 25 percent, 28 percent and 33 percent brackets. At present, the 25 percent bracket begins at $31,850 for individuals and $63,700 for married couples. That’s not exactly the super rich, so Obama’s tax increases will impact the average family dramatically.

Predictably, the articulate Senator doesn’t hesitate to state he’s against paying taxes. During an appearance on “The View”, Obama stated, “first of all, I don't want higher taxes, I have to pay taxes, and it's no fun. You know I think sometimes there's this presumption that Democrats, we just love taxing people. No, I would prefer to keep taxes as low as possible."

Obama’s track record on voting against tax increases is non-existent. During his brief stint in the US Senate, Obama has voted at least ninety-four times for higher taxes. Obama has voted for a tax increase approximately once every five days since he was elected. Simply stated- Obama is an old fashioned tax and spend liberal. Cutting taxes is half of the equation- the other half is getting spending under control.

Senator McCain is a fiscal conservative. He has never taken an earmark for his state during his long tenure in the Senate. Earmarks, commonly referred to as pork, are corrosive in two ways. First, they detract attention and resources from truly national concerns. Second, once a member of Congress has his local bridge, bus stop, or museum included in the bill, he is expected to vote for the overall appropriations bill, regardless of how bloated it becomes.

The Arizona Republic said in a July 7th editorial, McCain has been a ceaseless and useful public scold on pork, corporate welfare and spending not related to truly national priorities.” McCain has said, "Give me the pen, and I'll veto every single pork barrel bill Congress sends me."

Spending discipline can only be imposed through the executive branch. It’s clear that Obama lacks the discipline or the willpower to allow us to keep our own money or to stop pork barrel spending. Straight talking John McCain has the iron rail up the shirttail to cut taxes and get our spending under control.

Perhaps in no area are the two candidates for President so differing in their message and track record than in fiscal issues. The fiscal implications in this election loom large. We can ill afford a tax and spend liberal as President with an undisciplined, clueless, spend thrift Democratic Congress in the majority.