Economics, Part I

So I promised a big post – a magnum opus, if you will – on the economy. I have since scaled down my lofty ambitions to just go over a few items, expecially given the speech that President-elect Obama gave on Thursday announcing a large government-sponsored economic recovery plan. He touched an many aspects of the plan, a few of which caught my ear.

The first topic is one of my favorites, one that I really love and I know a lot of you do as well…taxes. Obama said that part of two bajillion-million (okay, $800 Billion) package is tax cuts. Woohoo! I mean, any chance to get back part of my hard-earned money from the government is a cause for celebration. Quite frankly, government (at all levels) takes way more than enough. However, there is more to this than meets the eye.

Obama stated that “95% of working families will receive a $1,000 tax cut – the first stage of a middle-class tax cut that I promised during the campaign and will include in our next budget.” If this tax cut lines up with similar statements that he and his team made regarding taxes during the campaign, that means that many of those getting tax cuts didn’t actually pay any income taxes at all. In effect, a payout from the government.

And what about the 5% that aren’t getting a tax cut? Why don’t they deserve a tax cut? They already bear a disproportionate burden of our tax base, and also tend to be the ones that are the linchpin of our economy: those that own or heavily invest in business enterprises.  While I understand that our tax system is progressive (read that leftist), that doesn’t mean that we can’t give the higher brackets a tax cut. They would still be in the higher brackets, therby maintaining our “progressive” system.

A word on class warfare: the Democrats, for years, have couched their economic views in terms of the middle/working class versus the rich.  The unfortunate part about this is that, at a time when the best course of action would be to cut corporate income tax rates (as well as personal income tax rates), there is no way in h-e-double hockey sticks that Obama (or anyone else that pays dues to the DNC) could mention that without a veritable fire storm of criticism. Can you imagine the moveon.org types? Why, the New York Times might even have a critical word or two to say about Obama. Here is a word of advice for my Democrat bretheren – go to your bookshelves, take out your copies of Marx, and throw that crap away! Marx’s theories have been proven for what they are, and have done little in the West but help to engender an adversarial relationship between labor and capital, which has done little but hurt those on the labor side of the equation.

Okay, this post now has the potential to be long, which is saying something on this blog. So I will continue this conversation on another post…

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4 Comments

Filed under Economy, Politics

4 responses to “Economics, Part I

  1. andeeroo

    We need a third party that is not owned by business and special interests

    Will Congress bailout plastic surgeons next?

    Examine the wrinkles in the shrinking cosmetic surgery biz!

    Read – ECONOMY SAGS, BUSTLINES DROOP at:
    andeeroo.wordpress.com/

    • Travis

      Your comment brings up a good point about supposed bailouts. One of the major problems is that once one group or industry has gotten on, what’s to say that another industry isn’t as deserving? I came across a story last week about the porn industry looking for some financial help. This is the problem when you don’t let the free market, as painful as it is sometimes, operate on its own.

      I used to think that what we needed was a viable third party. The problem with that line of reasoning is that the American system was set up to support a two-party system. Unlike the parliamentary system, that awards seats (and power) based on each party’s proportionality to the others, our system is more of an all or none system. The solution to this is not a third-party (in my opinion) but for the parties to be driven more by ordinary people. He only way this will happen is for those people to become involved in the workings of the party, and by extension, become more involved in the political process.

  2. Terry Grimm

    Sadly, the DNC has already bought and sold the working class of this country. I see it back in my father’s hometown north of Pittsburgh. The vast majority of those people are sucking on the economic crack pipe of welfare, unemployment, and union dependency. I am ashamed to admit it, but it appears much of the American industrial force has already lost it’s spine and succumbed to that dreaded disease known as “entitlement.” They all seem to want more and more without working for it or paying for it. Job banks, exorbitant amounts of vacation, the list goes on and on. I am truly at a lost as to how we can reverse that process. I think it will only get worse over the next few years.

    • Travis

      The recent issues revolving around the “Big Three” bring the issue into sharp relief. The UAW basically told the management at the three companies to take a hike when they came looking for concessions on wages and other labor costs. It seems that I remember reading somewhere that GM’s average labor cost is $70 an hour…$70!!! Even if you take into account high benefit costs, that still says to me that the cash compensation portion of that $70 is significant. The argument by the labor leaders is that wages have to be high because the cost of living in the area is high. I suspect the inverse is true…cost of living is driven significantly by the income level of the area.

      Why the automakers have chosen to stay in and around Detroit is beyond me. The whole reason the Rust Belt is the Rust Belt is because of two primary reasons (beyond the move of the economy from an industrial to post-industrial phase): costs were cheaper elsewhere, and the unions were unwilling (or unable) to see that their ever-increasing demands for wages and benefits would eventually drive the manufacturing corporations to make the drastic decision to relocate. Hence, the issues you describe. The sad fact is that the people of these areas are the ones that helped make this country great. The just listened to the wrong people, who, as you put it, turned “working for a living” into “I am entitled”. I agree with you too in that I think the entitlement disease is only going to get worse in this country with the Democrats running the federal government for the next few years, at least.

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