Raising Taxes Has Become The Third Rail Of Politics

Raising taxes is considered somewhat of a faux paux for Republicans in the White House. Democrats often rail on Reaganomics and the Trickle-down theory. But what do the Democrats intend do to about it? Instead of confronting the tax problem, Democrats opt to go along with it. Both parties have become free lunchers.

President Obama wants to dance right along with Conservatives on the orchestrated debate about raising taxes. One of Obama’s campaign promises was to let the Bush tax cuts reach a conclusion, and not to extend them. Now Obama has shifted on this position.

The Economic Recovery Tax Act of 1981 brought about across the board decrease in the marginal income tax rates in the U.S. by 23% over three years, with the top rate falling from 70% to 50% and the bottom rate dropping from 14% to 11%. This was also known as the ERTA or “Kemp-Roth Tax Cut.”

Then came part two of the Reagan tax cuts – the Tax Reform Act of 1986, which was sponsored by the Democrats as well by the way. The top tax rate was lowered from 50% to 28% while the bottom rate was raised from 11% to 15%. This would be the only time in the history of the U.S. income tax that the top rate was reduced and the bottom rate increased at the same time.

The idea was that tax breaks for the rich would boost business after more money would reach into the economy. At the time, this seemed like a good idea (especially for the wealthy). But, during Reagan’s presidency, the national debt more than tripled from 900 billion dollars to 2.8 trillion dollars. And for the last 30 years the trend has continued in Washington.

David Stockman, former Director of the Office of Management and Budget under U.S. President Ronald Reagan, has had a change of heart since 1981. He was one of the architects behind Reaganomics, what would be labeled as “Voodoo Economics”.

David Stockman said in an interview with NPR that Republicans had “abandoned their old-time fiscal religion in favor of two theories, which I think are now proving to be both wrong and highly counterproductive and damaging”.

Stockman finds it “unconscionable that the Republican leadership, faced with a 1.5 trillion deficit, could possibly believe that good public policy is to maintain tax cuts for the top 2 percent of the population who, after all, have benefited enormously from this phony boom we’ve had over the last 10 years as a result of the casino on Wall Street”.

Lesley Stahl of 60 Minutes also interviewed David Stockman. Stockman said that “his own Republican Party has gone too far with its anti-tax religion”. “We have now got both parties essentially telling a big lie,” he told Stahl. “With a capital ‘B’ and a capital ‘L’ to the public: and that is that we can have all this government, 24 percent of GDP, this huge entitlement program, all of the bailouts. And yet, we don’t have to tax ourselves and pay our bills. That is delusional.”

Stockman claims that the national debt is growing by $100 billion a month. He says that avoiding the issue of raising taxes would be a huge mistake. Stockman says that even giving tax breaks for the middle class is off course.

Extending the Bush tax cuts will prove to be very detrimental to the country. The country will continue further into escalating debt as both the Republicans and the Democrats buy into the “Big Lie”.