Written by: Frank

“…High taxes, we are told, are somehow good for us, as if, when the government spends our money it isn’t inflationary, but when we spend it – it is…”

“…When I talk of tax cuts, I am reminded of that every major tax cut in this century has strengthened the economy, generated renewed productivity and ended up yielding new revenues for the government by creating new investment, new jobs and more commerce among our people…”

--Ronald Wilson Reagan, 40^th President of the United States

            First Inaugural Address to the Nation - 1981

“…There are a number of ways by which the federal government can meet its responsibilities to aid economic growth…But the most direct and significant kind of federal action adding economic growth is to make possible an increase in private consumption and investment demand – to cut the fetters which hold back private spending…If the government is to retain the confidence of the people, it must not spend more than can be justified on grounds of national need or spent with maximum efficiency…The final and best means of strengthening demand among consumers and business is to reduce the burden on private income and the deterrents to private initiative which are imposed by our present tax system – and this administration pledged itself last summer to an across-the-board, top-to-bottom cut in personal and corporate income taxes to be enacted…”

“I’m not talking about a “quickie” or a temporary tax cut…Nor am I talking about giving the economy a mere shot in the arm, to ease some temporary complaint.  I am talking about the accumulated evidence of the last five years that our present tax system, developed as it was, in good part, during World War II to restrain growth, experts too have a drag on growth in peace time; that it siphons out of the private economy too large a share of personal and business purchasing power; that it reduces the financial incentives for personal effort, investment, and risk-taking.  In short, to increase demand and lift the economy, the federal government’s most useful role is not to rush into a program of excessive increases in public expenditures, but to expand the incentives and opportunities for private expenditures…”

--John Fitzgerald Kennedy, 35^th President of the United States

New York Economic Club – 1962

President Kennedy, President Reagan, former President George W. Bush, and former GOP candidate [and who should have been president] Governor Mitt Romney, have all witnessed and seen the results of what happens to a stagnate economy, that is either bordering and/or heavily into a recession when taxes and tax rates are lowered!  As the above bipartisan words suggest, each and every time throughout our history, when government removes, eliminates and/or lessens the tax burdens on businesses and the American people – the economic engine known as “free enterprise,” which truly drives the entrepreneurial spirit of the private sector, coupled with people taking risks each and every day with their hard earned money in the marketplace of ideas, will always undoubtedly continue mightily if unbridled.  As always, government will continue to reap the economic benefit!   What am I talking about you ask?    Tax cuts!   Yes, I said tax cuts!

As a board member for “unitethegop.com,” I recently wrote for their website that it is my opinion that this idea came to fruition on or about December 16, 1773, when a courageous band of early colonists, (who were probably the very first conservative Republicans without even knowing it) decided that large quantities of English tea brewed better when unceremoniously dumped in the Boston Harbor.  (I am still somewhat curious how the current liberal educational establishment will or have “spun” the factual reason[s] for this civil unrest and disobedience.)

Fast forward to another famous example which was echoed by the late Daniel Webster when he argued before the U.S. Supreme Court in the case of McCulloch v Maryland (1819) in which he said, “…An unlimited power to tax involves, necessarily, a power to destroy…”  (17 U.S. 327 (1819).   In his decision, Chief Justice Marshall wrote the following, “…That the power to tax involves the power to destroy…[is] not to be denied…” [page 431] 

We have all learned at one time or another, (while some on the left have apparently forgotten) the early history of this country as it applies to individual liberties. [Speaking of which, ask a high school and/or college graduate who “Nathan Hale” was.  Then be prepared to reach for the Maalox.]   Historians have marveled at the thought and love to remind us that history has a tendency of repeating itself.  Then surely if that statement is factual to any degree, then wouldn’t it be wise and/or prudent to give credence to that notion???  Do we have any cyclical economic model[s] from recent history or decades past, to substantiate how higher taxation from the federal level, whether in the form of higher tax rates and/or percentages, brings about an end to a stagnate economy or a mild to deep recession???  Do we have any empirical evidence to suggest that when the federal government attempts to tinker with the free markets and the private sector it causes economic chaos???  The answer to these questions is a resounding – YES!

From the 1920’s, 1960’s, and 1980’s, were all decades that experienced major economic downturns and recession or depression.  In the 1920’s, under then Secretary of the Treasury Andrew Mellon, tax rates during the Harding and Coolidge Administrations were slashed considerably from pre-World War I rates.  The “Revenue Acts of 1921, 1924, and 1926” reduced the top rate from 73% down to 25%.   The economy then grew and expanded dramatically.  In real numbers, the economy grew approximately 59% between 1921 and 1929, with economic growth averaging around 6%. 

In the 1960’s, the Kennedy Administration proposed a top down rate from the confiscatory rates of 91% in 1963, to 70% by 1965.  Between 1961 and 1968, tax revenues grew strongly rising to approximately 62%, or adjusting to inflation, rose by one-third.  In fact, President Kennedy made the following pitch:

                                    “…Our true choice is not between tax reduction, on the

                                    one hand, and the avoidance of large federal deficits on

                                    the other.  It is increasingly clear that no matter what party

                                    is in power, so long as our national security needs keep

                                    rising, an economy hampered with restrictive tax rates will

                                    never produce enough revenues to balance our budget just

                                    as it will never produce enough jobs or enough profits…In

                                    short, it is a paradoxical truth that tax rates are too high

                                    today and tax revenues are too low and the soundest way

                                    to raise the revenues in the long run is to cut the rates now…”

Finally, 1980’s.   But before I address this decade, there are so many similar parallels to our current predicament and the 1980’s.  “…This is the worst [economic] recession since the great depression…” President Obama coolly advised the nation at his first night-time press conference. However, he was factually wrong.  It took this country to endure four years of the Carter Administration to bring us eight wonderful years of Reagan.  Ronald Reagan inherited a “misery index” (defined as the rate of inflation added together with the rate of unemployment) from Jimmy Carter of around 20%.  The Ford Administration left Carter with a “misery index” around 12%.  Inflation averaged 12-13%.  Interest rates were above 21%.  Unemployment ran about 10% at the  end of the Carter presidency.  Democrats also controlled both Houses of the Congress and the White House then as they currently do now.  The economic era at the conclusion of the Carter presidency was by far, more serious and costly to the private sector and the free markets than at anytime during this current economic downturn and this current recession.   Reagan instinctively followed what worked in the Harding, Coolidge, and Kennedy administrations.  Slash and reduce the top tax rate from 70% to 28% by 1988.  The tax cuts implemented by Reagan ushered in a period of record peacetime economic growth and for the next 7 years, economic growth averaged approximately 4%, and revenues to the treasury doubled. 

Late in 1999, during the last years of the Clinton administration, democrats decided it was time to tinker with the free markets when it comes to housing.  Fannie Mae and Freddie Mac to be exact.  Democrats such as Barney Frank, Christopher Dodd, the chief executive officer of Fannie Mae, Mr. Franklin Raines,  Mr. Raines predecessor, Mr.  Jim Johnson, and Ms. Jamie Gorelick decided that:

 “…under increase pressure from the Clinton administration to expand

mortgage loans among low and moderate income people and felt pressure

 from stock holders to maintain its phenomenal growth in profits…These

 borrowers whose incomes, credit ratings and savings are not good enough

 to qualify for conventional loans, can only get loans from finance companies

 that charge a higher interest rates – anywhere from three to four percent-

age points higher than conventional loans…”  (Source:  September 30, 1999

New York Times Article – Mr. Steven A. Holmes – Fannie Mae Eases Credit

To Aid Mortgage Lending)   [The New York Times – a “conservative” publication?]

Unfortunately, democrats took the proverbial “ostrich in the sand” position when it came to confronting Fannie Mae and Freddie Mac for further regulation and oversight.  Furthermore, Congressional hearings were held in the Congress where GOP members attempted to bring regulators for Freddie Mae and Fannie Mac. [See  link: http://www.wikio.com/video/466386 ]

Also from Mr. Holmes New York Times article September 30, 1999:

            “…In moving, even tentatively, into this new area of lending, Fannie Mae

 is taking on significantly more risk, which may not pose any difficulties

 during flush economic times.  But the government-subsidized corporation

 may run into trouble in an economic downturn, prompting a government

 rescue similar to that of the savings and loan industry of the 1980’s…If

 they fail, the government will have to step up and bail them out the way it

 stepped up and bailed out the thrift industry…”

We were fore-warned about this fiasco in 1999.   Just as history and I would like to fore-warn Mr. Obama about his current economic fiasco – the $800 billion stimulus bill that his administration is planning on passing and implementing.   Yes, the stakes are high, but unfortunately, no one is listening now, or listening then.  Even Obama’s vice president, Joe Biden said there “…is a 30% chance we could get it wrong…”  Senator Charles Schumer of New York said recently about the “porkulus” items in this bill:

            “…And let me say this to all of those chattering class that so much focuses

            On those little, tiny – yes, - porky amendments:  the American people don’t care!”

On the contrary, Senator Schumer, at least 48% of the American people do care, since they did not support or vote for Senator Obama and his socialist agenda.  It is my opinion that the Republican Party erred in selecting our presidential nominee in 2008.  When we as a party continuously nominate the “so-called moderates and/or liberals,” or even “mavericks,”  we will consistently loose the general election.  It was apparent that we fell on our own sword throughout the campaign on several occasions, and never had a true conservative belief.  The Laura Ingrahams, Ann Coulter’s, Sean Hannity’s, Mark Levin, and Rush Limbaugh’s were right on the money.  Had we conservatives united behind one individual at the outset [Mitt Romney] that had the foresight of Reagan and/or Bush on the key issues of defense, foreign policy, and national security, and at the same time, being able to display the intellectual capability of understanding and articulating tax policies, free markets, and what honestly makes them work in a bull and bear market could have had a pivotal impact during the last 2 months of the 2008 campaign.  While I believe that illegal immigration, the war in Iraq/Afghanistan, oil/gasoline prices, and banning partial birth abortions, although extremely important, were not the overriding issues during the last 2 months of this presidential campaign.  Senator McCain by his own admission, stated that economic policy and his ability to articulate it was not his strong suit.  

Finally, we republicans had better find our way back home that brought about the Reagan landslides of 1980 and 1984 and the Gringrich revolution of 1994.  All had a positive and simple message to all Americans.  If we digress from those principles of less government, lower taxes, and regulations on businesses, and continue to act and govern as democrats, [Senators Specter, Collins, and Snowe] then we will continue to loose the American electorate and rightfully so.  If this trend continues, to paraphrase the late actress Bette Davis, “…Hold on to your wallet – it’s going to be a bumpy ride!”  for the next several years to come.