The American Spectator

Special Report

Still Fighting Reaganomics

By Peter Ferrara on 6.4.08 @ 12:08AM

(Page 2 of 3)

--Taxpayers with children will lose 50% of their child tax credits;

--The Federal death tax will soar back to its original level after phasing out in 2010;

--Married taxpayers will suffer the return of the marriage penalty.

--Federal taxes overall will increase by more than $2 trillion over the following 10 years, the largest tax increase in U.S. history.

The economic policy savants at the Concord Coalition think this will help the economy rather than trash it.

THE ORGANIZATION DERIDES McCain for recognizing the economic devastation such a disastrous tax policy would cause, and supporting the permanent adoption of the Bush tax cuts. It also sharply criticizes the additional tax cuts McCain has proposed for his own economic program, saying, "The centerpiece of Mr. McCain's economic plan is a series of tax cuts that would largely benefit corporations and the wealthy. He is calling for cutting corporate taxes by $100 billion per year."

McCain has proposed cutting the Federal corporate income tax rate from 35% to 25%. The problem McCain recognizes is that America's competitors overseas have been slashing corporate tax rates in recent years. The average corporate tax rate in the European Union has been cut from 38% in 1996 to 24% in 2007. Counting state income taxes, the average American corporate rate is actually 40%.

How is America to compete not only with these countries, but with the emerging giants of India and China, with this crippling tax disability? McCain says, "High tax rates are driving many businesses and jobs overseas -- and, of course, our foreign competitors wouldn't mind if we kept it that way. We're going to get rid of that drag on growth and job creation." But the Concord Coalition vilifies McCain for this sophisticated view, saying, "Mr. McCain's plan would appear to result in the biggest jump in the deficit" as compared to the economic programs of Barack Obama and Hillary Clinton. The Concord Coalition would favor raising taxes on America's corporations even more, to reduce the dreaded demon deficit, tax increases endorsed by Obama and Hillary as well.

Little Ireland has a corporate tax rate of 12.5%. Since adopting that rate 20 years ago, Ireland has soared from the second lowest per capita income in the EU to the second highest. But to the Concord Coalition, this does not compute.

But what may have surprised some is what the Concord Coalition said about McCain's budget plan to cut $160 billion in spending out of a Federal budget now approaching $3 trillion a year. The Wall Street Journal reported,

"The chances of cuts of this magnitude are 'nonexistent,'" said Robert Bixby, executive director of the Concord Coalition, a nonpartisan group that promotes fiscal discipline. "There's not a consensus to cut back on the functions of government that much," he said. "Those are very, very deep cuts."

That is some statement for a supposed deficit hawk organization.

BUT IT IS nothing new. For example, when President Bush's 2009 budget proposed a freeze on domestic discretionary spending for 5 years, the Concord Coalition did not support it. Quite to the contrary, when the Senate budget resolution supported by the majority Democrats proposed to increase domestic discretionary spending by $210 billion above the President's proposal over 5 years, and the House budget resolution supported by the majority Democrats proposed to increase such spending by $276 billion above the President's proposal, the Concord Coalition actually defended these spending increases, saying,

Under the President's budget, non-defense discretionary spending would sink to an historic low of 2.8% of GDP by 2013. That compares with 3.7% of GDP in 2007. The President's budget is thus not a realistic standard for comparison.

The Concord Coalition is thus a fraud as a fiscal watchdog or deficit hawk group. What it wants is higher taxes to finance Big Government.

You won't find any statements or studies or reports on the Concord Coalition website listing desirable spending cuts. All you will see is whining about the deficits and tax cuts. The organization does not object to government spending per se of any magnitude.

The Concord Coalition gave no support or credit to the Bush Administration when it proposed a much more modest increase for the State Children's Health Insurance Program (SCHIP) than either the Democrat controlled House or Senate. As long as the Democrats "paid for" their proposed doubling or tripling of spending on the program in some way, the Concord Coalition was completely OK with that. Indeed, the Coalition actually complained about the President's inadequate 25% increase in SCHIP funding, saying "it is not sufficient to maintain coverage for current enrollees" and "800,000 people would lose health insurance without increased funding." In the end, the President's supposedly inadequate proposal was what was adopted for the following year.

Similarly, there was no objection from the Concord Coalition to the $600 billion farm bill boondoggle, again because it was supposedly "paid for." Indeed, there is nothing in anything the Concord Coalition has written that indicates it would have any objection to a communist system with government taking and spending 100% of GDP, as long as the budget is balanced.

TWO WEEKS AGO, Rep. Paul Ryan (R-WI), the ranking Republican on the House Budget Committee, produced a comprehensive reform proposal for the nation's entitlement programs that balanced both Federal taxes and Federal spending at 18.5% of GDP, the modern historical average for the Federal tax burden. The proposal was fully scored as producing this result by the Congressional Budget Office, the Joint Tax Committee, the Social Security Administration, and the Health Care Financing Administration. What an exciting accomplishment.

Letter to the Editor

topics:
Taxes, Health Care, Barack Obama, Hillary Clinton, Business, Federal Budget, Social Security, Law, European Union