Gloom and Doom: 39% Now Believe the Economy is in "Permanent Decline"

According to a CBS-New York Times poll, 39% of Americans now believe the US economy is in permanent decline.  That means they don't believe we will ever get back our lost prosperity.

They may be right.  Not because it is impossible to recover, but because Americans still haven't clearly linked poverty to its ultimate cause, i.e. liberalism.  Per the poll:

"Forty-two percent said the government should spend to create jobs, even if it has to borrow money to do so. Three in four Republicans said no, while three in five Democrats said yes."

The response to this question reveals widespread ignorance of how an economy works.  Government cannot create private sector jobs, and more government spending will simply poison any recovery.

The belief in "government spending" as a spur to job growth is analogous to the belief in prior centuries of the benefits of bloodletting.  If someone was really sick, doctors opened a vein and drained blood out of the patient, foolishly believing that this was beneficial.  What bloodletting did instead was to further weaken the patient, reducing his chances for recovery.

Liberalism is the modern equivalent of bloodletting.  Americans must stop voting for it if they want any kind of economic future.

Here's Barack Obama's theme song for the 2012 elections:  Brother, Can You Spare a Dime?

Senate Shelves Sappy Spite Budget

The lame ducks in the Senate have abandoned their pork-laden spite budget as Republican support is withdrawn.  Bloomberg has the story:

A $1.2 trillion “omnibus” spending bill loaded with thousands of lawmakers’ pet projects known as earmarks is dead in the U.S. Senate after the chamber’s top Democrat conceded that he didn’t have the votes to overcome Republican opposition.

Senate Majority Leader Harry Reid of Nevada said yesterday that he was abandoning the measure after several Republicans he had been counting on withdrew their support of the plan to fund the government through Sept. 30, 2011. He said he would work with Republicans to write a shorter-term funding bill, known as a continuing resolution, in its place.

Can the Senators go home now, Harry?  It's Christmas, you old Grinch!

Will Tax Hikes Undermine Economic Recovery?

There's been a lot of debate in Congress over the Bush Tax Cuts that are scheduled to expire on December 31, 2010.  The Democrats are adamant that the tax cuts be allowed to expire, whereas the Republicans want them extended or made permanent.

The Democrats claim that the resulting tax hike is needed to pay down the deficit.  The Democrats have spent a lot of money since Obama came to power, running up the national debt to historic levels.  Now they want the taxpayers to pay for their reckless spending, spending that was largely for pork projects and junk that no one really needed or wanted.

Democrats remind me of my first wife.  She had manic depression, but we didn't know it.  The main thing that made her feel better was spending money.  Though we were young and broke, she ran up charge accounts for clothes and other goodies that she didn't really need.  I realized that she was out of control and that I couldn't stop her.  While I tried to keep our small ship afloat, my wife was below decks drilling holes in the hull.  We were divorced and it took me several years to pay off her debts.

So I don't really care if the Democrats want more tax revenue.  As far as I'm concerned, they can't have it.  They can instead slash spending to the bone.  But my opposition to a tax hike is more than just revenge against Democrats, who seem to have a psychological need to bleed the private sector white.  It is because my gut tells me that higher taxes suppress economic growth, resulting in fewer jobs and less prosperity, not only for the hated "rich," but for all Americans.

Some years ago a policy wonk named Arthur Laffer described the relationship of tax rates to tax revenues.  He drew a graph that has become known as "the Laffer Curve."  Basically, the curve shows that when tax revenues are raised beyond a certain point, tax revenues fall rather than increase.  Put another way, when tax rates are too high, a tax increase will cause tax revenues to fall.

Democrats, on the other hand, do not seem to understand this.  They seem to believe that the economy is unaffected by tax rates.  Therefore if you double the tax rates, you double the tax revenues.  Not so.  An increase in the tax rate to 100% would not increase tax revenues; it would eliminate them, as no one would work.  (The former tax payers would be too busy marching on the Capitol Dome with torches and pitchforks.)

Government has a strong duty to run itself as efficiently and cost-effectively as possible.  Our government couldn't care less about such things.  They just want to spend money without any restraint, and have us pay for it.  Furthermore, giving more money to Democrats is like giving more dope to an addict.  They won't pay down the deficit, they will just spend the additional money (if there is any) on new pork, secure in the knowledge that they can continue to raise taxes to fund their folly.  If we are to draw a line in the sand, let us draw it right here, right now.  No means no, NO, NO, NO!