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Letters by a modern St. Ferdinand III about cults

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Plenty of cults exist - every cult has its 'religious dogma', its idols, its 'prophets', its 'science', its 'proof' and its intolerant liturgy of demands.  Cults everywhere:  Corona, 'The Science' or Scientism, Islam, the State, the cult of Gender Fascism, Marxism, Darwin and Evolution, Globaloneywarming, Changing Climate, Abortion...

Tempus Fugit Memento Mori - Time Flies Remember Death 

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Friday, July 15, 2005

US Revenues are up, deficit is down, but no media reports

If this was 1998, Clinton would be hailed as a genius

by StFerdIII

The left wing media and liberal press – meaning most of the major media outlets – not only falsify the news to fit their decidedly mordant post-modern ideals, but they refuse to publish facts unless they conform to the twisted world view that liberalism and big government are best. The US economy since 2001 has generated about 4 million jobs but nary a word is mentioned in the press – only screaming headlines that manufacturing, technology and assorted jobs are off-shored, or destroyed by infernal competition from China, India, Guatemala, or some other country with a per capita GDP 1/10 of US levels. The US was to be destroyed in the 80s by Japan, in the 90s through free trade with Mexico and now in 2005 from those nasty workers in Guangzhou or Guatemala City. Such are US headlines.

What the media never reports is that as trade integration with foreign nations has proceeded apace, the
US standard of living, on the back of an expanding GDP and productivity base, has also risen. The US has a 30% standard of living advantage over higher taxed socialist Canada, and this gap has increased since 1965. The employment rate is now the highest in US history and the unemployment rate of 5 % is close to a natural employment level. In other words the US economy, growing at a healthy 3-4 % per annum, is nearing in some sectors full employment capacity. So since 2001 what has generated this virtuous circle of economic and job growth, as the US fights the war on terror ?

It is the tax cuts stupid. As Bush predicted in 2001 and 2003, by lowering taxes, revenues would rise and the deficit would drop. Well guess what has happened. In 2005 the
US federal deficit is down by nearly $100 billion and as a share of GDP it is down to 2.7%, which is almost the historical mean average. This is because tax receipts have escalated by more than 14%. Tax receipts have gone up due to an increase in investments thanks to tax cuts on dividends, capital gains and income. No doubt the leftist’s and democrats are seething mad that the increase in taxation is not on payrolls or regulatory fees. Supply side economics works, and the US should make Bush’s tax cuts permanent and permanently reduce the level of confiscatory government.

The socialists bleat of course that supply side tax cuts only benefit the rich. First the so-called rich in the
US [those who earn U$350.000 and more], pay 80 % of all Federal taxes. Second, 55 % of Americans own stock. The tax cuts have an enormous boosting effect on the middle class, entrepreneurial class, and investor class, most of whom one would not classify as rich, but are trying to manage businesses, families and money pressures. Yes those with high incomes benefit from tax cuts but since they pay most of the taxes I would assume that this is only a rational outcome of trying to limit government private property theft.

But what is really galling about the lack of media attention on the positive aspects of
US economic growth, is their obvious hatred for anything ‘Conservative’. If Clinton or some other democrat was now in office they would be proclaimed by adoring media fans as geniuses, reforming the US in the fashion of ‘Clintonomics’ or some other ridiculous label. The democrats and socialists cry that the upsurge in US revenue in 2004-5 is due to investment gains. But during the mid 1990s, investment revenues reached historic heights as a share of GDP during the dot-com bubble. Of course during the 1990s the biggest winners were actually the wealthy, but apparently since the caring leftists were in power, this was okay. It is a double standard that is dangerous since it informs US political debate and sways voters.

US does have a budget problem but it has nothing to do with tax cuts. It is a government spending addiction issue, and it is especially acute in the off-balance sheet liabilities that politicians have promised to retirees in Social Security and Medicare. The Congressional Budget Office predicts that spending, as a share of US national output, based solely on current promises will rise from about 20% today, to 25% in 2025 and to 34% by 2040. This would be catastrophic for US finances mandating tax increases, government wage and price controls and other invasions of the private sphere by politicians eager to buy votes and appear emotionally attuned to the sufferings of the ‘working class’.

In fact if the
US does not get it’s spending under control, at some point you would see taxes rise astronomically. In order to balance the budget at the above stated spending totals, the US would have to double the highest income tax rate to 70%, raise payroll taxes to 30%, and the corporate income tax rate would rise to twice the average of U.S. trading partners. Conversely the US could try to borrow to finance all this spending, but its debt ratings would slip to junk bond status, according to Standard and Poor's. In other words without spending control the US is in big trouble.

So Bush has been right in reducing taxes but wrong in increasing spending on non-military items. The US $500 Billion Medicare plan spread over 10 or so years is another legacy of bad management. The
US needs less government, less spending and the creation of Bush’s ‘ownership society’. I buy into that ideal, but when Bush and friends for political reasons increase non-military spending by 10-15 % per annum, one has a right to be skeptical. This is the real story that the media does not report – tax cuts have stimulated investments, job growth and revenues – but spending excess poses a future health risk to the US economy. Do you really think the media would advocate less government ? Doubtful. ©

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