One of the favorite and most successful of the Liberal Lies is that Republicans favor the rich over the poor. Actually, this is part of the liberal?s favorite games, divide and conquer. Like race bating, class warfare is a good way Democrats and liberals have made up for the fact they have embraced failed policies for decades. With all the deep thinking of a first grade religion class, liberals rarely think through their beliefs and do not notice that too often liberal policies hurt the ones they claim to love.
Do Republican policies favor rich? Well, in a way. Republican policies favor businesses, and many business are owned by rich people, However, Republican policies that favor business owners also favor people who most often happen to be your employer, so to not do so would obviously hurt business and raise unemployment, and thus in the end, would also hurt the poor. Liberals rarely tell you that one, since they would have little to run on the next election. But since we keep buying it, they keep selling it.
Republicans do not hate the poor, but just have a different approach. Give a man a fish, he eats one day, teach him to fish, and he eats the rest of his life sums up in a simple way the difference between Democratic and Republican philosophies. By slowing growth and encouraging dependency, liberal policies actually hurt the poor, in the end, because it hurts the entire country. If the media ever cared to write about it, one might notice higher unemployment and lower GNP?s in countries with high tax rates and more socialized economy. But if they did then the Democrats would not have anything to talk about, and the liberal media can?t have that. This is an old gag, ?but boy they get a lot of mileage out of that one.
The Democrats, frustrated by the fact that the Reagan administration?s policies had restored American economic dominance by slashing inflation and unemployment rates, resorted to income inequality as the basis of their criticism. The data in our article ?The Truth About Income Inequality? need to be updated, but the concepts are all there, and what we wrote ten years ago is equally applicable today.
Once again, the Democrats are unable to criticize the economy on the usual grounds, and therefore must fall back on inequality, as Paul Krugman did in the column that appeared in the New York TImes on Friday. As usual, Krugman is hysterical. He writes, ?The middle-class society I grew up in no longer exists,? ?Working families have seen little if any progress over the past 30 years,? and ?economic security is a thing of the past.? Republicans are the chief demons: ?Since 1980 in particular, U.S. government policies have consistently favored the wealthy at the expense of working families – and under the current administration, that favoritism has become extreme and relentless.? And, as always, those who disagree with Krugman come in for insults, not factual rebuttal: ?right-wing partisans try?to discredit anyone who tries to explain to the public what?s going on??that would be Krugman, I suppose; conservatives rely on ?shaping, slicing and selectively presenting data in an attempt to mislead,? and further engage in ?scare tactics? and ?name calling.? As to scare tactics, I can?t recall any conservatives claiming that middle class society no longer exists, or that economic security is extinct. And Krugman?s reference to slicing and dicing data is an implicit rebuke to the Times? own Public Editor Daniel Okrent, who criticized Krugman for ?the unfair use of statistics, the misleading representation of opposing positions, and the conscious withholding of contrary data.?
Underlying the invective, of course, one would usually expect to find some facts. Normally if one were to proclaim the extinction of the middle class?a surprise to the 80% or more of Americans who inhabit it?one would look for some solid data to back up the claim. But Krugman has no such data. His column is almost fact free. Here is the sole statistical basis for his proclamation of the end of economic security:Adjusted for inflation, the income of the median family doubled between 1947 and 1973. But it rose only 22 percent from 1973 to 2003, and much of that gain was the result of wives? entering the paid labor force or working longer hours, not rising wages.
Troglodyte that he is, Krugman doesn?t link to his sources, so it?s up to us to track down the data he refers to. In this case, it wasn?t hard: he?s relying on the historical Census Bureau data on family incomes. His 22% calculation is correct for ?all families.? Of course, that?s partly an artifact of the dates Krugman arbitrarily chooses. 1973 represented a business cycle peak, while in 2003 the economy was coming off a recession. Competent economists do not do peak-to-trough comparisons. If, to take an example skewed in the opposite direction, we compare median family income in 1982 with the 2000 figure, the growth is 27%, not 22%.
But that?s a relatively minor point. Here is a more fundamental problem with Krugman?s calculation. When we compare ?family income? figures over time, the figures are distorted by the fact that over the past three decades, families have fragmented. There are far more single-parent families now than in the early 1970s. Single-parent families generally have lower incomes than two-parent families, so this trend has depressed family income. If we factor out this demographic change, we find strong and steady income growth. Thus, the Census Bureau data show that for the category ?Married-Couple Families,? median income went from $46,723 in 1973 to $62,281 in 2003. (All numbers are in constant 2003 dollars.) That?s a hefty 33% increase in real income. Meanwhile, incomes of families headed by either a man or a woman increased by 23.4%. But since there was a considerably greater proportion of such families in 2003 than in 1973, the aggregate increase on a ?per family? basis was dragged down to 22%. (If you don?t think that?s possible, do the math.)
This is a solid record of income growth. But Krugman tries to minimize it by comparing the misleading 22% figure to alleged data for the average incomes of the top 1% and top .1% of Americans. There is a basic problem with this approach: the Census Bureau does not keep data on the top 1% or top .1% of families. So Krugman is getting these numbers somewhere else, meaning that he is comparing an apple and an orange. Worse, every calculation I have seen of incomes of the top 1% of wage earners has been a bogus partisan calculation, based on slicing and dicing IRS data. Since Krugman doesn?t link to (or otherwise identify) his source for these numbers, there is no way to come up with a fair comparison to the Census Bureau data on median incomes.
I can?t resist this parting shot: Krugman writes darkly that ?Since 1980 in particular, U.S. government policies have consistently favored the wealthy at the expense of working families?? Let?s test Krugman?s thesis by referring to his apparent gold standard, the Census Bureau?s median family income data. Let?s refer to the data for ?Married Couple-Families? to avoid the demographic distortion described above. Here are the numbers: during the decade from 1970 to 1980, median income rose 13.4% in constant 2003 dollars. During the twenty years beginning in 1980, median income rose an average of 13.5% per decade. Which shows, I guess, how government policies devastated the middle class beginning in the last year of the Carter administration.
And the economics at work here equally applies in Europe. So lets take a look at the countries that the Democrats idolize, and see if the tax-the-rich socialist policies in Europe really work. Again, from Powerline.
It?s often noted that the European Union has a combined gross domestic product that is approximately the same as that of the United States. But the EU has 170 million more people. Its per capita GDP is 25 percent lower than that of the U.S. and, most important, that gap has been widening for 15 years. If present trends continue, the chief economist at the OECD argues, in 20 years the average U.S. citizen will be twice as rich as the average Frenchman or German. (Britain is an exception on most of these measures, lying somewhere between Continental Europe and the U.S.)
People have argued that Europeans simply value leisure more and, as a result, are poorer but have a better quality of life. That?s fine if you?re taking a 10 percent pay cut and choosing to have longer lunches and vacations. But if you?re only half as well off as the U.S., that will translate into poorer health care and education, diminished access to all kinds of goods and services, and a lower quality of life. Two Swedish researchers, Frederik Bergstrom and Robert Gidehag, note in a monograph published last year that ?40 percent of Swedish households would rank as low-income households in the U.S.? In many European countries, the percentage would be even greater.
Yup, America sucks.
And lets go deeper then that. Not only does Europe have a weaker economy, their unemployment rate is far much worse then our 4 to 5 %.
The Decline of Europe
By Nima SanandajiIn a June 23 speech before the E.U. Parliament, British Prime Minister Tony Blair delivered a stinging rebuke to European critics who charged him with wanting to ?abandon Europe?s social model.?
What type of social model is it, Blair pointedly asked, ?that has 20 [million] unemployed in Europe, productivity rates falling behind those of the USA; that is allowing more science graduates to be produced by India than by Europe; and that, on any relative index of a modern economy – skills, R&D, patents, IT, is going down not up? Of the top 20 universities in the world today, only two are now in Europe.?
Blair had it quite right. The Western European welfare states are very much in need of political reforms. Our economies are stagnating, our citizens have stopped working, and our big governments are as bureaucratic and inefficient as ever. Indeed, if the prime minister can be properly accused of anything, it is indulging in understatement: Unemployment in the European welfare states is actually higher than Blair indicates in his speech.
Rather than tackling unemployment, however, European governments have learned to hide it. For instance, in Sweden, state officials claim that the unemployment rate stands at 5.5 percent. But a recent report by an economist working for Sweden?s largest labor union gives this rosy prognosis, showing that the real unemployment rate is between 20 and 25 percent. Things are little in better in the big powers of Western Europe?Germany and France?where official statistics have for many years showed double digit unemployment rates.
Why unemployment rates are so high in Western Europe poses no mystery. Our governments pay citizens when they don?t work and tax them heavily when they do. Government regulations hinder companies from increasing employment and prevent entrepreneurs from starting businesses. Regulations and labor unions keep the cost of labor higher than the market price, which inevitably creates unemployment. These problems persist as the labor unions and socialist forces oppose almost all reforms that seek to open up the labor market and make it more lucrative to work. Even when reforms are being implemented, government involvement in the economy is seen as the solution to all problems. For example, the French government recently initiated a program to stimulate the creation of low-wage jobs in the domestic service market. On its face, this may sound like a good idea. Except that, rather than relying on market mechanisms, the French have created a state agency to oversee the domestic service market.
Political systems that reward dependence on government and punish hard work inevitably destroy the foundation for entrepreneurship and depress employee morale. This fact is starkly demonstrated in the 2004 Global Entrepreneurship Report, which shows that entrepreneurial activity in the US is about twice that of France and Germany and more than three times that of Sweden. Summing up the report?s findings this April, the Economist magazine noted that the ?report argues that the German economy is not stuck in a particularly vicious cyclical slowdown. Rather, its structural problems, particularly the highly regulated labor market, have reduced trend growth (the average growth rate of the economy) to a meager 1.1%, in contrast to roughly 2% for the rest of the euro area, and about 3% for the United States. Unless these trends reverse, Europe?s largest economy could eventually wind up as its economic backwater.?
It is perhaps unsurprising that Western Europe has fallen far behind the USA. The Swedish think tank Timbro concludes that if the EU were a state in the USA, it would belong to the poorest group of states. Germany, France, Italy and Great Britain all have lower per capita GDP than all but four of the states in the US. In fact, the only E.U. country to have a higher per capita GDP than the USA is Luxemburg. The escalating discrepancy between America?s dynamic economy and Europe?s languishing welfare states is further illustrated by the fact that the average American consumes 77 percent more than the average citizen of the original 15 EU countries. (Notwithstanding the demonstrable success of the U.S. economic model, the American left still aspires to reform it in the mold of Western Europe?s failed experiment in socialism.)
And the gap is growing. Looking at almost all economic indicators, the American economy is more vital and stable than those of Western European countries. Labor productivity growth in the US has gone up from one percent between 1987 and 1995 to almost three percent between 2000 and 2004. During the same periods, labor productivity in the 15 original EU countries has declined from two to one percent. One is thus led to wonder: What would happen to Western Europe if the flow of technology, ideas and investments from the USA were to stop? Would Europe?s economies grow without the USA as the locomotive that drives the world economy?
For the time being, Western Europeans persist in cherishing their ignorance of such questions. A survey that recently was conducted among French schoolchildren showed that 70 percent of them aspired to become bureaucrats rather than captains of industry. In a sense, this is to be expected: Western Europe has chosen to reward government bureaucrats rather than entrepreneurs; it has chosen to reward dependence on welfare programs and punish hard work. The new generation of Europeans has adapted to this reality and, consequently, their working morale is at an all-time low. And if that remains the case, the question must be asked: Who will save Europe from itself?
The oddest thing about the strong economic growth that has taken place over the last several years is how stubbornly many people refuse to recognize it. Polls continue to suggest that most Americans are unaware of the economy?s excellent performance. Can that really be true? No doubt inadequate news coverage is a factor, but I can?t believe that a majority of Americans really have no idea how the economy is performing. I suspect that when asked about the economy in opinion surveys, many people focus on what they perceive to be negative at the time?budget deficits, the price of gasoline?either because that?s what?s in the news, or because they hope to influence the government by voicing dissatisfaction.
Did those evil pro-rich Bush tax rates have anything to do with this? Lets do another comparison of growth and tax rates again with some information about the state of the economy after Bush?s tax cuts were first enacted:
Building on the robust 8.2 percent economic growth in the third quarter that some claim resulted from President George W. Bush?s tax cuts, a business forecasting group predicts that the U.S. economy will exhibit the largest rate of growth since Ronald Reagan was president two decades ago.
The actual growth in the gross domestic product to be 5.7 percent in 2004, the highest rate of annual growth in the American economy since the tax cuts signed into law by Reagan in 1984. The 2003 economic growth rate is expected to come in at 3.1 percent.
Talon News reported that the 8.2 percent revised third quarter growth rate was the best three month period in the economy since the first quarter of 1984. Most economists forecast a 4 percent rate of growth in the fourth quarter to end the year.
Now lets look at foreign economic growth of say, Germany, the powerhouse of Europe.
German growth was ?0.1% in 2003, and remains fragile, so our main scenario envisages only a gradual recovery to 1.5% growth in 2004 and 2% in 2005.
Now lets look at those tax rates:
General rate Top rate
(percent of GDP) (percent of income)
Germany 39.2 56.0
United States 29.8 34.0
And again US economic growth was 8.2 percent.
Hmmmm.
I?ll give the last word to my buddies at Flopping Aces.
Giving Back to the Rich?and Benefiting the Poor
Posted by WordsmithFrom the NY Times:
The Senate voted 54 to 44 on Thursday to pass almost $70 billion in tax cuts, mostly for the nation?s wealthiest taxpayers. The action ensures that virtually all of President Bush?s tax cuts will be locked in place until after the next presidential election.
Charles Schumer had this to say:
?The Bush administration and the Republican leadership are far more interested in helping their wealthiest friends than hardworking, middle-class Americans. The GOP made its choice, and they chose millionaire investors and oil companies over middle class families.?
And how does creating policy to ?punish? the rich, benefit the poor? The ?wealthy? already shoulder the majority of the tax burden of this nation. The tax cuts benefit everyone. If the wealthy see a larger tax return, that?s because they pay more taxes than the bottom bracket income earners. The poor might not get a huge tax return, but that?s because those on the bottom end don?t even pay income tax. As President Kennedy said: ?A rising tide lifts all boats.? Everyone benefits or suffers together. Not just one class. In the 80?s, tax revenue rose by 99.4%, outpacing inflation. This is what is happening now.
Stephen Moore, member of the editorial board of the Wall Street Journal explains it very well in this Marketplace interview, from April 26th:
The Bush tax cuts have been routinely assailed as multimillion dollar giveaways to the Rolls Royce owners of America at the expense of the middle class.
But new IRS statistics on the taxes Americans pay show that George Bush?s tax policies actually soak the rich.
It turns out that the income tax burden has substantially shifted onto the wealthy. The percentage of federal income taxes paid by those who make more than $200,000 a year has actually risen from 41% to 47% in recent years.In other words, the richest 3 out of 100 Americans are now paying close to the same amount in income taxes as the other 97% of workers combined.
It?s also a common myth that the rich are hording all the wealth, while the middle class stays stuck in economic quicksand.
The IRS data show that the share of all income earned by the wealthiest 10% of Americans has actually fallen since 2001. The rich are earning less of the total income but paying more of the total taxes.
During this economic expansion, the middle class is growing and becoming more prosperous. About 4 out of 10 Americans now make more than $50,000 a year ? that?s up from 3 out of 10 in 1990.
There?s more good news. Tax revenues over the past two years are up more than half a trillion dollars ? the largest two-year increase in tax collections in history.
Bush cut the capital gains and dividend taxes, but guess what? Now those tax receipts are through the roof in the last two years.
It?s called the Laffer Curve: a lower tax rate has increased economic growth and investment and thus the government gets more tax revenues.
The Bush tax cuts have pumped steroids into the US economy and created 5 million new jobs, a surge in new business investment and record worker productivity.
Those are the reasons to make the tax cuts permanent. But for those who really want to sock it to the rich, the Bush tax cuts have done that too.
President Bush?s tax cuts work: Everyone benefits. The kind of economic policies- of raising taxes- that Democrats favor, punishes all classes. We should be creating more wealth for everyone to enjoy by allowing more people to keep more of their own earnings; not stifling growth.
And here is yet another example to show just how poorly liberals and their Democratic allies think. Their policies hurt the family, hurt the military, and hurt the country. When you raise taxes on middle class or rich business owners, who really pays the tax? You do, in the form of a more expensive product, so in a way you just raised your own taxes, dummy. Even worse, in the end, you might cost yourself a job. How do you think taking money away from anyone, whether it is a business owner or employee, rich or poor, helps the economy?
The Democrats economic policy can be summed up by the 3 D’s. Keep em? Destitute and Dependant and they will stay Democrat.
and we keep buying it.
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