Conservative> Dick Morris> Obama S Taxes Could Wreck Economy

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Obama's Taxes Could Wreck Economy

Whatever is left of the economy after the current round of crisis interventions by the Fed could go down the drain if Obama is elected and carries out his plans for sharp increases in taxation. Even if Obama does not understand the linkage, most Americans do and will turn sharply against Obama's tax plans if McCain hammers away at the risk they pose for us all.

During the Great Depression, Congress raised taxes sharply in the Revenue Act of 1932. The top rate went from 25 percent to 63 percent. As a result, the real GDP dropped by 13.3 percent and unemployment rose from 15.9 percent to 23.6 percent.

In 1990, Bush-41 famously broke his "read my lips, no new taxes" pledge of the 1988 campaign and raised the federal gasoline tax and federal excise taxes, and imposed a 10-percent surtax on the top income bracket, raising its taxes to 31 percent. The recession that followed in 1991-1992 cost him re-election.

It is obvious that increasing capital gains taxes by a minimum of one-third and possibly doubling them, both of which Obama has proposed during his campaign, would send a clear signal to investors to keep their money under the mattress. Who would buy stock now knowing that the tax on any profits he or she will make is going to go up sharply if Obama becomes president?

Look at what happened just last year in Michigan. Democratic Gov. Jennifer Granholm raised taxes on almost everything.

Income taxes shot up 11.5 percent, and the state's 6 percent sales tax was expanded to dozens of new services, like investment advice, janitorial services, landscaping, ski lifts, carpet cleaning and tanning.

The $1.75 billion tax package shook the economy to its foundations. Michigan became the only one of the 50 states with a shrinking gross domestic product (GDP). The value of all goods and services produced in the state fell by 0.5 percent, while the national GDP rose by 3.4 percent. The state fell from 23rd in GDP to 35th. Taxes caused a disaster.

In a strong economy, Obama's tax hikes would raise questions. In a weak economy, they portend a catastrophe. It would be like bleeding a sick patient, the medicine of 200 years ago, depriving him of blood even as he needs more, not less, circulating through his arteries.

McCain's populist rhetoric, including his pledge to fire SEC Chairman former Rep. Christopher Cox, is important for a Republican candidate. But his focus should shift to the tax issue. With firms suffering, withering and dying for a lack of capital, tax increases on those who invest would be a horrible mistake.

Americans will realize this obvious fact, and McCain should use it to gain the advantage in discussing the economy. There is no reason for the economy to work to Obama's advantage when he is committed to a doctrinaire program of tax increases and spending hikes. McCain can use the issue to run rings around him.

To find out more about Dick Morris and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate web page at www.creators.com.

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Sir; it would only be a guess; but luxury has killed more economies in history than taxes. It is the bankruptcy of nations that invites revolution, and it is luxury that seeds bankruptcy. It isn't just these financial institutions, global capitalism, and our government that are bankrupt, but as usual in such instances, they have sucked every bit of wealth out of the people that the people can bear. We don't have anything left to peddle, we have borrowed on everything we own to get by, and financed high profits to the point of glut. You can only bleed people so much and then they say fine: Let me live and I'll live in my car.... Taxing the only people who have money makes good sense. It may be put back into circulation. You have to know how prone the government is to just hand tax money to the rich to get the joke. The thing is, that my heart goes out to those people who worry about hurting the economy; but if the economy were not free to hurt people continually it would not exist. Capitalism exists on injustice, and so long as the sun shines and the rain falls people can endure some injustice. When injustice grows so extreme that people begin to fall out, lose their faith, and become demoralized, you have a long way to go to bring them back. Hang on to your money. Don't let the government have any. Consider that we have excess population, more people than jobs, but that in laying off people, and making those who remain work harder and run scared you are really draining the last drops of blood and money out of your economy. Why don't they all drop dead? And again, that is part of the problem: The idea of wealth and capital cannot be allowed to suffer, but the people can be tortured. I want all you rich folks to get what you want, and I want you to keep all the loot you have piled up too. As soon as you get it all you will find you have made your world very tippy. Your ease and luxury has got to leave some life for the people. Otherwise, what good are you and who are you but the enemy?

Comment: #1
Posted by: James A, Sweeney
Mon Sep 22, 2008 10:54 AM

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What you don't get, Morris, is that the economy already has gone down the drain. And idiots like you who can't stop repeating the same old incantations like taxes are bad, government is bad, regulation is bad, etc. etc. are the ones who have helped to flush it all away. .......................................................................................................................................................................................................................................................................................................................................................................................................................................................
It's been eight long years since the country has had a competent team in the White House, Morris. You Republicans have had it all your way and it really shows. There has never been a period in our history when the country has fallen so far, so fast, in just about every measure you care to consider. Rome is burning, Morris. It's time for the fiddling to stop. .......................................................................................................................................................................................................................................................................................................................................................................................................................................................
What you should be praying for now is a president with intelligence and competence. You really don't want a guy running the White House who is so out of it he is still learning the basics of the internet. You don't want a gal second in command who thinks we should be polluting our failing classrooms with garbage like "intelligent design." You just don't want that third rate crap any more for your great country, Morris. Think about it.

Comment: #2
Posted by: Masako
Mon Sep 22, 2008 6:45 PM

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