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Say, Looks Like That Supply-Side Stuff Works After All6 Jul 2023
Say, Looks Like That Supply-Side Stuff Works After All
Every lawmaker who supports Bidenomics should be fired, with prejudice, the next time their seat comes up for election.issuesinsights.com
Bidenomonics has been, and will continue to be, a disaster. This is what happens when lawmakers manipulate economies. No one should ever expect a different outcome when politicians enact ideas that they believe are so brilliant that they will overcome the laws of economics. The way out of this mess is to make a policy U-turn to both unleash the economy and expand precious liberty.
President Joe Biden last week bragged that his economic policies ā straight from the Democrats blueprint that says āborrow, tax, spend, regulate, then do it all againā ā are working. But as weāve noted, Bidenomics has been a wreck, a flop that is taking us into a recession.
Not only did Biden openly boast as our sclerosis grows worse, he also, as Democrats always do, took a jab at ātrickle-down economics,ā claiming it has āfailed the middle class ā¦ failed America ā¦ blew up the deficitā and āincreased inequity.ā
He probably would have blamed the Canadian wildfires on ātrickle-down economicsā had he thought about it. But thereās not much thinking going on in his head ā and in fact there never has been, with his ungovernable mouth leading the way throughout his career as an elected grifter.
~Snip~
We donāt see Biden or any other Democrat ever coming around to supply-side economic policies, the correct terminology for what they sneeringly call ātrickle-down economics,ā which asserts that lower taxes and less regulatory meddling fuel economic growth. Yet they are exactly what our economy ā any economy ā needs, now and forever.
In our post-lockdown world, the states that have the strongest economic recoveries are the red ones on the map. And what do they have in common? Low taxes and light regulation.
We can see this vividly in the rankings of states that have had the greatest increases in hiring over the last year. Of the top 10, only two are blue, or Democratic, states.
~Snip~
Democrats are stubborn animals who will continue to take two-by-fours upside their heads and swear that the blows donāt hurt and thereās no damage done. So we canāt under any circumstances foresee them ever abandoning their policy preferences, from busted Obamanomics to neo-Marxist Sandynomics to baffled-by-his-own-BS Bidenomics, that cause so much harm. Which is why we need a real red wave in 2024 rather than another ebbing tide like the one we had last year.
Commentary:
Before one declares that Bidenomics is ``Not Working``, one needs to discern the goals of Bidenomics. One might find that Bidenomics is, indeed, Working as designed to destroy te economy and America.
The big takeaway from this article is that lower taxes and light regulation actually increases tax revenues. This is because:
1) productive economic effort is rewarded, and2) there is less incentive to avoid taxes (e.g., people fleeing CA, NY, and IL).At the Federal level, look what the Reagan Tax Cuts did for the disastrous Carter and Obama economy; one of the longest sustained growth periods of US economic growth ever.
Did the Democrats learn the lesson? No! because to them higher taxes is the means to attaining more power.
While it is a current trend to use the term āBidenomicsā when referring to the abject failure of so many infrastructure sub-systems and supply chain shortages including baby formula, we should probably be calling it āObamanomicsā.
Remember āWe are going to change your world as you know it.ā No one thought to ask what his objective actually was..
The post-WW2 period also referred to as the "Golden Age of Capitalism," was indeed marked by high top marginal tax rates for the rich, strong labor unions, and a relatively low wage gap between CEOs and average workers.
- High top marginal tax rates: According to data from the Tax Foundation, the top marginal tax rate in the United States was indeed over 90% for much of the 1950s and remained above 70% until the 1980s (Tax Foundation, 2019).
- Strong labor unions: The Bureau of Labor Statistics reports that about a third of all workers were members of unions in the 1950s. This number has since declined to around 10% today (Bureau of Labor Statistics, 2021). Unions play a critical role in protecting workers' rights and promoting wage growth, which is a significant factor in income inequality.
- CEO to worker wage ratio: The Economic Policy Institute reports that in 1965, CEOs in the United States earned 20 times more than a typical worker. By 1989, this ratio had grown to 58 to 1, and in recent years, it has soared to approximately 320 to 1 (Economic Policy Institute, 2020).
FDR's New Deal ushered in a range of policy changes aimed at combating the Great Depression, including increasing taxes for the wealthy and establishing a social safety net.
- Increasing taxes for the wealthy: The Revenue Act of 1935, sometimes called the "Wealth Tax," significantly raised taxes on higher-income individuals and corporations.
- Establishing a social safety net: The Social Security Act of 1935 was a major part of the New Deal's social safety net. It created a system of transfer payments in which younger, working people support older, retired people. It also established an unemployment insurance system, supported by both federal and state governments, and offered assistance to the needy, aged, blind, and families with dependent children (Social Security Administration, 2020).
References:
- "US Federal Individual Income Tax Rates History, 1913-2019." Historical U.S. Federal Individual Income Tax Rates History, 1913ā2019
- "Union Members Summary." Bureau of Labor Statistics, 2021, www.bls.gov.
- Mishel, L., & Wolfe, J. "CEO compensation surged 14% in 2019 to $21.3 million: CEOs now earn 320 times as much as a typical worker." Economic Policy Institute, 2020, www.epi.org.
- "The Wealth Tax Act: Historical Documents." National Archives, 2016, www.archives.gov.
- "Social Security Act." Social Security Administration, 2020, www.ssa.gov.
The assertion that supply-side economics are universally beneficial:
While the tax cuts under Reagan did stimulate some economic growth, the data doesn't show that they were the primary driver. According to data from the Bureau of Economic Analysis and the Tax Policy Center, while the economy grew by 3.5% per year on average under Reagan, it grew by 3.7% under Bill Clinton, who raised taxes on the wealthy (Gale, W.G., & Samwick, A.A. (2014). Effects of income tax changes on economic growth. Economic Studies at Brookings).
- The argument that lower taxes always increase tax revenues: This is a classic supply-side argument, often known as the Laffer curve, but it doesn't hold up under scrutiny. There is a point at which lower taxes can stimulate enough economic activity to increase total revenue, but many economists argue we are generally on the wrong side of that curve. Notably, even the Reagan tax cuts initially led to significant drops in revenue and spiked the federal deficit (Auerbach, A.J., & Slemrod, J. (1997). The economic effects of the Tax Reform Act of 1986. Journal of Economic Literature, 35(2), 589-632).
- The claim that regulation hampers economic growth: The idea that red states have fared better due to less regulation doesn't necessarily hold water. Itās important to consider other factors such as urban density, population age, and the local industry structure. For example, older, densely populated states with a high reliance on hospitality and tourism (often blue states) were harder hit by the COVID-19 pandemic.
- The claim that Keynesian policies like those of Biden are inherently destructive: Keynesian economics suggests that in times of economic downturn, government should step in to stimulate demand, often through increased spending and deficit financing. This policy was successful in helping the U.S. escape the Great Depression and the Great Recession of 2008 (Romer, C.D. (2011). What do we know about the effects of fiscal policy? Separating evidence from ideology. Speech delivered at Hamilton College, Clinton, NY).
Supply-side economics theory: Mankiw, N. G. (2014). Principles of Economics. South-Western College Publishing.- The impact of the Reagan tax cuts: Romer, C. D., & Romer, D. H. (2010). The macroeconomic effects of tax changes: Estimates based on a new measure of fiscal shocks. American Economic Review, 100(3), 763-801. Link
- Union membership and wage growth: Farber, H. S., Herbst, D., Kuziemko, I., & Naidu, S. (2018). Unions and inequality over the twentieth century: New evidence from survey data. NBER Working Paper No. 24587. Link
- Globalization and the decline in manufacturing jobs: Autor, D., Dorn, D., & Hanson, G. (2016). The China Shock: Learning from Labor-Market Adjustment to Large Changes in Trade. Annual Review of Economics, 8, 205-240. Link
- The decline in union membership and the growth of inequality: Western, B., & Rosenfeld, J. (2011). Unions, Norms, and the Rise in U.S. Wage Inequality. American Sociological Review, 76(4), 513ā537. Link
- The impact of fiscal policies on economic performance: Auerbach, A. J., & Gorodnichenko, Y. (2012). Measuring the Output Responses to Fiscal Policy. American Economic Journal: Economic Policy, 4(2), 1ā27. Link
- The relationship between high marginal tax rates and economic growth in the post-war era: Piketty, T., Saez, E., & Stantcheva, S. (2014). Optimal Taxation of Top Labor Incomes: A Tale of Three Elasticities. American Economic Journal: Economic Policy, 6(1), 230-271. Link
