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The Left like these stimulus bills because they get to use big government to allocate massive sums of money to their favorite projects and interest groups. But this approach never improves the economy, because the underlying economics are wrong. Runaway government spending, record deficits, unsustainable federal debt, and hundreds of billions in increased welfare spending will not renew the economic boom. Trickle-down bureaucracy does not create wealth. Obama's stimulus simply borrowed close to $1 trillion from the private economy to pour a trillion back in through increased government spending, producing no net economic gain.

This policy has failed time and time again. The economy grows not through ever greater spending, but through policies that create jobs, starting and expanding businesses, and entrepreneurship.

The chief economist for Vice President Biden, who is overseeing the stimulus, calls this sort of thinking "terrible economics" and "pretty heartless." He says, "When the economy is significantly underperforming, stimulus funding is not redistributive at all. It's about growth."

At best, the Obama stimulus has failed to jump start the economy as promised. However, there is increasing evidence that President Obama's policies are actually making it harder for the economy to recover.

The recession officially began in December 2007, according to the National Bureau of Economic Research. The average recession since World War II has lasted ten months, with the longest spanning 16 months. But the Bush-Obama recession lasted almost two years thanks to the outdated policies adopted by both presidents. Moreover, the weak rebound violates a historic rule: the deeper the recession, the stronger the recovery. Based on the severity of the past recession, real growth over 2010 should be 6% to 8%."

This lack of a strong recovery poses the unlikely but still worrying possibility that America may be headed for a so-called "double-dip recession," in which the economy begins to recover but then falls back into negative economic growth. Consider:

-Remember the dismal private-sector job creation numbers. Of the 431,000 net new jobs created in May, only 41,000 were created in the private sector. The rest were temporary census jobs.

-Meanwhile, 322,000 people gave up looking for employment altogether. Unemployment claims increased in the second week of June.

-Corporations are hoarding a record amount of cash - $1.8 trillion - out of fears caused by the global debt crisis and deflation concerns.

-In May, sales of existing homes fell after the homebuyer tax credit expired on April 30 while foreclosures have kept a torrid pace, leading to high inventory levels, which will suppress housing values.

-Worse, there are a number of tax hikes that will begin in 2011. The highest personal income tax rate will rise from 35% to 39.6% (the expiration of the Bush tax cuts), the highest federal dividend tax rate will jump from 15% to 39.6%, and the capital gains tax will rise from 15% to 20%. In addition, the estate tax, which temporarily dropped to zero in 2010, kicks back in at a whopping 55%.

-These expected tax increases may actually be inflating economic activity this year as companies and investors shift profits they would normally take in 2011 to 2010. That means 2011 may be even tougher for job creation.


To be clear, these worrying trends may simply be signs of a faltering recovery rather than a coming economic contraction. However, with another weak jobs report expected for June, there will inevitably be calls for action from Congress.

We have had three straight stimulus bill failures. The $150 billion Bush-Pelosi stimulus bill failed. The Bush-Pelosi housing stimulus bill failed. And now, the evidence is clear that the Obama stimulus bill has failed.

So the question before us is simple. Will we enact a fourth big government stimulus? Or will we learn the lessons of history and pass an economic growth bill modeled after the Kennedy-Reagan tax rate cuts that created unprecedented economic booms?

Fortunately, there is a bill before Congress based directly on that Kennedy-Reagan tradition. It is the Economic Freedom Act (HR5029), sponsored by Congressmen Jim Jordan (R-Ohio) and Jason Chaffetz (R-Utah). The centerpiece of this bill is five bold tax cuts. These bold changes to our tax system would provide small businesses with immediate liquidity and change the underlying tax structure of America to set the stage for long term economic growth. They include:

Reducing the payroll tax by half for 2010 to provide immediate liquidity for companies and employees;
Eliminating the capital gains tax to encourage investment in new companies;
Reducing the corporate tax rate to 12.5% to make us competitive globally;
Permanently eliminating the death tax so small businesses and family farms can continue creating jobs for future generations;
Providing immediate business expensing so American workers have the best equipment and are the most productive.

Contact your representatives in Congress and ask them to support HR 5029. The choice before us is clear.

Will we enact more of the same failed stimulus bills that rely on government bureaucrats to distribute our money as they see fit?

Or pass HR 5029 to provide permanent tax relief that will free up entrepreneurs and businesses to make investments that will lead to an explosion of new jobs and productivity?

You might even say that HR 5029 would be change we could believe in.

168 billion dollars in the hole in July alone.....change to believe in!

Change to believe in?

Here's what I believe in:

We are still paying for the ridiculous escapades of the RONALD REAGAN administration. His policies and programs quadrupled the national debt.

There were TRILLIONS OF DOLLARS spent on Star Wars, military endeavors, aiding Contra rebels with weapons using our tax dollars (strictly forbidden by law, thanks for taking the heat Ollie!), and wholesale and enduring tax cuts to the extremely wealthy. On top of it all, Reagan had the same political credentials as Arnold Swartzeneger (a movie actor). What a joke he was.

I love when the conservative zealots slam Obama, yet Ronald Reagan remains the poster child, mouthpiece, and cartoon for irresponsible spending.

Why am I not surprised you don't know WTF you're talking about politically/economically either?
Some areas to consider:

HOW DID THE REAGAN TAX CUTS AFFECT THE U.S. TREASURY?
Many critics of reducing taxes claim that the Reagan tax cuts drained the U.S. Treasury. The reality is that federal revenues increased significantly between 1980 and 1990:

Total federal revenues doubled from just over $517 billion in 1980 to more than $1 trillion in 1990. In constant inflation-adjusted dollars, this was a 28 percent increase in revenue.

As a percentage of the gross domestic product (GDP), federal revenues declined only slightly from 18.9 percent in 1980 to 18 percent in 1990.

Revenues from individual income taxes climbed from just over $244 billion in 1980 to nearly $467 billion in 1990. In inflation-adjusted dollars, this amounts to a 25 percent increase.

HOW DID REAGAN'S POLICIES AFFECT FEDERAL SPENDING?
Although critics continue to focus on President Reagan's budget "cuts," federal spending rose significantly during the 1980s:

Federal spending more than doubled, growing from almost $591 billion in 1980 to $1.25 trillion in 1990. In constant inflation-adjusted dollars, this was an increase of 35.8 percent.

As a percentage of GDP, federal expenditures grew slightly from 21.6 percent in 1980 to 21.8 percent in 1990.

Contrary to popular myth, while inflation-adjusted defense spending increased by 50 percent between 1980 and 1989, it was curtailed when the Cold War ended and fell by 15 percent between 1989 and 1993. However, means-tested entitlements, which do not include Social Security or Medicare, rose by over 102 percent between 1980 and 1993, and they have continued climbing ever since.

Total spending on all national security programs never equaled domestic spending, even when Social Security, Medicare, and net interest are excluded from domestic totals. In addition, national security spending fell during the Administration of the senior President Bush, while domestic spending increased in both mandatory and discretionary accounts.


HOW DID REAGAN'S POLICIES AFFECT ECONOMIC GROWTH?
Despite the steep recession in 1982--brought on by tight money policies that were instituted to squeeze out the historic inflation level of the late 1970s--by 1983, the Reagan policies of reducing taxes, spending, regulation, and inflation were in place. The result was unprecedented economic growth:

This economic boom lasted 92 months without a recession, from November 1982 to July 1990, the longest period of sustained growth during peacetime and the second-longest period of sustained growth in U.S. history. The growth in the economy lasted more than twice as long as the average period of expansions since World War II.

The American economy grew by about one-third in real inflation-adjusted terms. This was the equivalent of adding the entire economy of East and West Germany or two-thirds of Japan's economy to the U.S. economy.

From 1950 to 1973, real economic growth in the U.S. economy averaged 3.6 percent per year. From 1973 to 1982, it averaged only 1.6 percent. The Reagan economic boom restored the more usual growth rate as the economy averaged 3.5 percent in real growth from the beginning of 1983 to the end of 1990.

HOW DID REAGAN'S POLICIES AFFECT THE FEDERAL TAX BURDEN?
Perhaps the greatest myth concerning the 1980s is that Ronald Reagan slashed taxes so dramatically for the rich that they no longer have paid their fair share. The flaw in this myth is that it mixes tax rates with taxes actually paid and ignores the real trend of taxation:

In 1991, after the Reagan rate cuts were well in place, the top 1 percent of taxpayers in income paid 25 percent of all income taxes; the top 5 percent paid 43 percent; and the bottom 50 percent paid only 5 percent. To suggest that this distribution is unfair because it is too easy on upper-income groups is nothing less than absurd.

The proportion of total income taxes paid by the top 1 percent rose sharply under President Reagan, from 18 percent in 1981 to 28 percent in 1988.

Average effective income tax rates were cut even more for lower-income groups than for higher-income groups. While the average effective tax rate for the top 1 percent fell by 30 percent between 1980 and 1992, and by 35 percent for the top 20 percent of income earners, it fell by 44 percent for the second-highest quintile, 46 percent for the middle quintile, 64 percent for the second-lowest quintile, and 263 percent for the bottom quintile.

These reductions for the lowest-income groups were so large because President Reagan doubled the personal exemption, increased the standard deduction, and tripled the earned income tax credit (EITC), which provides net cash for single-parent families with children at the lowest income levels. These changes eliminated income tax liability altogether for over 4 million lower-income families.
Critics often add in the Social Security payroll tax and argue that the total federal tax burden shifted more to lower-income groups and away from upper-income groups; but President Reagan's changes were in the income tax, not in the Social Security payroll tax. The payroll tax was imposed by proponents of big government over the past 50 years, and it is they, not Ronald Reagan, who should be held accountable for its distributional effects.

Nevertheless, even if one counts the Social Security payroll tax, the share of total federal taxes increased between 1980 and 1989 for the following groups:

For the top 1 percent of taxpayers, from 12.9 percent in 1980 to 15.4 percent in 1989;

For the top 5 percent of taxpayers, from 27.3 percent in 1980 to 30.4 percent in 1989; and

For the top 20 percent of taxpayers, from 56.1 percent in 1980 to 58.6 percent in 1989.
On the other hand, the share of total federal taxes, if one includes the Social Security payroll tax, declined for four groups:

For the second-highest 20 percent of taxpayers, from 22.2 percent in 1980 to 20.8 percent in 1989;

For the middle 20 percent of taxpayers, from 13.2 percent in 1980 to 12.5 percent in 1989;

For the second-lowest 20 percent of taxpayers, from 6.9 percent in 1980 to 6.4 percent in 1989; and

For the lowest 20 percent of taxpayers, from 1.6 percent in 1980 to 1.5 percent in 1989.

CONCLUSION
No matter how advocates of big government try to rewrite history, Ronald Reagan's record of fiscal responsibility continues to stand as the most successful economic policy of the 20th century. His tax reforms triggered an economic expansion. His investments in national security ended the Cold War and made possible the subsequent defense spending reductions that are largely responsible for federal surpluses that followed. His efforts to restrain the expansion of federal government helped to limit the growth of domestic spending.

If Reagan's critics had been willing to work with him to limit domestic spending even further and to control the growth of entitlements, the budget would have been balanced five to ten years sooner and without the massive tax increase imposed in 1993. Today, Members of Congress from across the political spectrum should stand on the evidence and defend the Reagan record.

Nice try, cutting and pasting from a zealot republican website. Cite me some real sources.

FACTS about the Reagan Administration...

8 years and many billions of dollars of wasteful, mindless spending on SDIs like Star Wars and B1 bombers

8 years of cutting federal assistance programs which set the middle and lower class country back to WWII poverty levels

8 years of gargantuan tax cuts to the most wealthy 5% of Americans

8 years of reprehensible, irresponsible cuts to federal programs that created a caste system in our nation the likes that we will never see again

8 years of unbelievable borrowing of money which resulted in an accumulation of national debt the likes of which we will never recover from in our lifetimes

8 years of Arnold Schwartzenegger-esque acting and full time BSing in office that would have made Gipper proud

8 years of hypocritically preaching "morals" and "family values" while being the product of a divorce himself due at leats in part to his own infidelity

8 years of impeachable behavior lying to the country about using our tax dollars to fund contra rebels while selling Ollie North down the river

8 years of incoherent, illogical, heartless reasoning for his programs

I truly believe that his Alzheimer's started halfway through his first term in office..."I can't recall" is all he could say about the contra weapon scandal.

Ronald Reagan was a total sellout to the bottom 95% of all wage earners in our country. Our great great graet great grandchildren's great grandchildren will be paying for the national debt he created through wasteful spending of money that did nothing to help 95% of the citizens in our country.

Don't forget about the peanut farmer who preceded RR. Do you remember gas rationing? 20 or more percent inflation rates? Cmon, VMAN! Crank it up! Brew us some TEA!

WPIAL~Titan wrote:. Cite me some real sources.

How about the Joint Economic Committee of the Congress of the United States:


The Reagan Tax Cuts: Lessons for Tax Reform

During the summer of 1981 the central focus of policy debate was on the Economic Recovery Tax Act (ERTA) of 1981, the Reagan tax cuts. The core of this proposal was a version of the Kemp-Roth bill providing a 25 percent across-the-board cut in personal marginal tax rates. By reducing marginal tax rates and improving economic incentives, ERTA would increase the flow of resources into production, boosting economic growth. Opponents used static revenue projections to argue that ERTA would be a giveaway to the rich because their tax payments would fall.

The criticism that the tax payments of the rich would fall under ERTA was based on a static conception of human behavior. As a 1982 JEC study pointed out, similar across-the-board tax cuts had been implemented in the 1920s as the Mellon tax cuts, and in the 1960s as the Kennedy tax cuts. In both cases the reduction of high marginal tax rates actually increased tax payments by "the rich," also increasing their share of total individual income taxes paid. Unfortunately, estimates of ERTA by the Democrat-controlled CBO continued to show falling tax payment by upper income taxpayers, even after actual IRS data had become available showing a surge of income tax payments by affluent taxpayers.

Given the current interest in tax reform and tax relief, a review of the effects of the Reagan tax cuts on taxpayer behavior and tax burden provides useful information. During the 1980s ERTA had reduced personal tax rates by about 25 percent, while the Tax Reform Act of 1986 chopped them yet again.

Tax Rates and Tax Revenues

High marginal tax rates discourage work effort, saving, and investment, and promote tax avoidance and tax evasion. A reduction in high marginal tax rates would boost long term economic growth, and reduce the attractiveness of tax shelters and other forms of tax avoidance. The economic benefits of ERTA were summarized by President Clinton's Council of Economic Advisers in 1994: "It is undeniable that the sharp reduction in taxes in the early 1980s was a strong impetus to economic growth." Unfortunately, the Council could not bring itself to acknowledge the counterproductive effects high marginal tax rates can have upon taxpayer behavior and tax avoidance activities.

Since 1984 the JEC has provided factual information about the impact of the tax cuts of the 1980s. For example, for many years the JEC has published IRS data on federal tax payments of the top 1 percent, top 5 percent, top 10 percent, and other taxpayers. These data show that after the high marginal tax rates of 1981 were cut, tax payments and the share of the tax burden borne by the top 1 percent climbed sharply. For example, in 1981 the top 1 percent paid 17.6 percent of all personal income taxes, but by 1988 their share had jumped to 27.5 percent, a 10 percentage point increase.

The share of the income tax burden borne by the top 10 percent of taxpayers increased from 48.0 percent in 1981 to 57.2 percent in 1988. Meanwhile, the share of income taxes paid by the bottom 50 percent of taxpayers dropped from 7.5 percent in 1981 to 5.7 percent in 1988.

A middle class of taxpayers can be defined as those between the 50th percentile and the 95th percentile (those earning between $18,367 and $72,735 in 1988). Between 1981 and 1988, the income tax burden of the middle class declined from 57.5 percent in 1981 to 48.7 percent in 1988. This 8.8 percentage point decline in middle class tax burden is entirely accounted for by the increase borne by the top one percent.

Several conclusions follow from these data. First of all, reduction in high marginal tax rates can induce taxpayers to lessen their reliance on tax shelters and tax avoidance, and expose more of their income to taxation. The result in this case was a 51 percent increase in real tax payments by the top one percent. Meanwhile, the tax rate reduction reduced the tax payments of middle class and poor taxpayers. The net effect was a marked shift in the tax burden toward the top 1 percent amounting to about 10 percentage points. Lower top marginal tax rates had encouraged these taxpayers to generate more taxable income.

The 1993 Clinton tax increase had the opposite effect on the willingness of wealthy taxpayers to expose income to taxation. According to IRS data, the income generated by the top one percent of income earners actually declined in 1993. This decline is especially significant since the retroactivity of the Clinton tax increase in that year limited the ability of taxpayers to deploy tax avoidance strategies, temporarily resulting in an increase in their tax burden. Moreover, according to the FY 1997 Clinton budget submission, individual income tax revenues as a share of GDP will be lower during the first four years of the Clinton tax increase, which include the effects of the 1990 tax increase, than under the last four years of the Reagan tax changes (FY 1986-89). Furthermore, according to a study published by the National Bureau for Economic Research, the Clinton tax hike failed to collect over 40 percent of the projected revenue increases.

Incidentally, the claim that unrealistic supply side Reagan Administration revenue projections caused large budget deficits during the 1980s is false. Nonetheless, this false allegation is often used against current tax reform proposals. The official Reagan revenue projections immediately following enactment of ERTA did not assume huge revenue increases, and were actually quite close to the CBO revenue projections. Even the Democrat-controlled CBO projected that deficits would fall after the enactment of the Reagan tax cuts. The real problem was a recession that neither CBO nor OMB could foresee. Even so, individual income tax revenues rose from $244 billion in 1980 to $446 billion in 1989.


Conclusion

The Reagan tax cuts, like similar measures enacted in the 1920s and 1960s, showed that reducing excessive tax rates stimulates growth, reduces tax avoidance, and can increase the amount and share of tax payments generated by the rich. High top tax rates can induce counterproductive behavior and suppress revenues, factors that are usually missed or understated in government static revenue analysis. Furthermore, the key assumption of static revenue analysis that economic growth is not affected by tax changes is disproved by the experience of previous tax reduction programs. There is little reason to expect static revenue analysis to evaluate the economic or distributional effects of current tax reform proposals much better than it evaluated the Reagan tax program years ago.


Christopher Frenze
Chief Economist to the Vice-Chairman

Titan why don't you tell us how you really felt about Reagan?

Let's hear your 20 month assessment of Barry the Bomber. If Reagan busted the budget with spending what about Barry?