President Obama often boils down the issues around his plan to raise income taxes by saying it’s all about the “math,” a subject he doesn’t seem to know much about.
No doubt the White House would argue the last point, but the uncomfortable fact remains that after Mr. Obama’s first four years in office, the unemployment rate remains painfully high and economic growth is slowing. The president’s math clearly isn’t working well, and neither are 23 million Americans who want full-time jobs.
Even a cursory analysis of the mathematical issues at the center of the battle over the “fiscal cliff” raises some fundamental numbers that Mr. Obama doesn’t acknowledge.
One has to do with the political makeup of the House of Representatives, the other with the dreary, subpar growth rate of the recession-leaning Obama economy.
The immovable mathematical reality in the House is that Republicans control it by a decisive margin: 241-191, with two vacancies to be decided.
In the early jockeying over a compromise to break the impasse, the numbers suggest that Mr. Obama’s proposal doesn’t stand a snowball’s chance in what the Founding Fathers called the people’s chamber.
House Speaker John A. Boehner of Ohio has told the president repeatedly that his plan to raise the 28 percent income tax rate to 36 percent and the 35 percent top rate to 39.6 percent “cannot pass the House.”
Mr. Obama has convinced a majority of the voters that Republicans irrationally refuse to raise taxes on people who earn $200,000 or more in order to protect wealthy Americans.
But for Republicans, this isn’t about class or protecting the rich (the top 25 percent of income earners already pay 87.3 percent of all income taxes), and it isn’t about politics. It is all about growth economics — something Mr. Obama and the national news media in general do not understand.
Lower tax rates in general result in stronger economic growth, increased investment, more business formation and more job opportunities. That results in tax revenue growth and deficit reduction.
That was what happened after the Kennedy tax cuts in the 1960s, the Reagan tax cuts in the 1980s, and even in Bill Clinton’s second term when the economy took off after he cut the capital-gains tax rate, fueling the high-tech job boom.
The bitter political polarization that is self-evident in this battle is one we have fought many times. Mr. Obama’s retro-economic ideology comes right out of the New Deal of the 1930s and the Great Depression: higher taxes and government spending for public-works jobs.
It didn’t work then, and it’s not working now.
In 1937, with the economy flat on its back and one-fourth of the nation still out of work, Franklin D. Roosevelt sharply raised tax rates in an effort to bring down budget deficits, the worst medicine for a job-starved economy. We didn’t really begin climbing out of the Depression until World War II and a massive industrialization for the war effort.
The second math equation Mr. Obama doesn’t understand — or even want to acknowledge — is the economy’s weakened condition under his failed public-works spending programs.View Entire Story
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