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Tuesday, July 20, 2004

Battle Tax Cuts - Iron Blogger Republican - First Rebuttal

I can’t say that I was surprised to see my opponent prophesying doom. After all, that’s what a political party does when it’s not in power and wants to be.
 
I WAS shocked, however, when I realized about one-quarter of the way into the challenger’s lengthy opening statement that he wasn’t debating the same topic I was.
 
You see, in what I thought was a potentially winning debate strategy, I decided to argue in favor of Bush’s tax cuts in Battle: Tax Cuts. My opponent thought it would be better to argue whether Bush should be re-elected in November.
 
And so we see arguments like these from his opening statements: the dollar doesn’t stack up to the Euro, so tax cuts are bad; trade numbers are off, so tax cuts are bad; oil prices are high, so tax cuts are bad; we didn’t find WMD in Iraq, so tax cuts are bad. Telling blows in Battle: Iraq, I have no doubt.
 
Still and all, it really is as easy as Will Rogers made it sound, so liberals, to win the White House, have to spin, spin, spin.
 
What do I mean? Well, since you can’t just come out and SAY that letting people have more of their own money is bad, in order to attack you have to re-define terms. A tax cut is no longer a cut in taxes, but is now “a reduction in planned government revenue.” More of your income in your own pocket is now “reduced federal income.” Battle: Tax Cuts is now Battle: Investment Supply. Reagan’s booming economy based on tax cuts is now based on “pressuring oil prices down.” Good, presumably, is now evil.
 
In any other debate format, I wouldn’t even respond to this misdirection.
 
My talented challenger does rise above most Bush-bashing types with his sheer knowledge and ability to communicate. His economic principles are sound and sharp, even if they don’t really come to address whether tax cuts are good or bad. A very clear, very literate analysis of rising oil prices educates exquisitely, but fails to convince me that this has anything to do with the efficacy of tax cuts at all.
 
Of course, oil (which the challenger somehow bases his entire anti-tax cuts argument on) is not the indicator it was for Reagan. Oil is at more of a premium and crisis looms no matter how strong our economy. Rising oil prices are accurately used to show that the economy is suffering, but that’s a fact that I freely acknowledge. I live in Youngstown. I don’t need any other indicators that the economy is currently suffering.  Besides, even if more, cheaper oil was able to fix the problem, liberals don’t want us looking for it
 
Liberals HAVE TO concentrate on the short-term and this is the root of our disagreement. The election is, after all, just 4 months away. So what we get from a tax cut battle on the liberal side is “Bush put in his tax cuts yesterday and today roses aren’t falling from the sky. Anyone but Bush!” 
 
The real issue with any change in economic policy is that it takes time to reveal its long-term effects, either positive or negative. Since they need votes now, liberals are willing to trade long-term gain for short-term loss. As I said in my opening, these things are best judged in years, not days. 
 
Nevertheless, let us look at the two most critical points at which my opponent narrows his sight to mere months and shine the light on them.
 
The first such claim my opponent makes is that “Creating 1.5 million jobs in 6 months is a pathetic performance for an economy in economic rebound.” This is misleading on a few levels. For instance, the fact that we are gaining jobs at all (let alone a whopping 1.5 million) in our horrid economy (yes, we’ll talk about the causes of the current deficit in a moment) is a sign that SOMETHING Bush did must be working. It takes a long time to dig out of a hole like the one we’re in, and the fact that momentum has turned positive is, or should be, an encouraging sign. Unless, of course, you have a President to unseat in four short months.

The other misleading bit about this is the short-term deficit projection. Yay! Time to talk about deficits!
 
The idea that you should let folks keep more of their own money is an obviously good one. In a campaign year, however, even obviously good ideas need to be defended against spin, so here we go.
 
First of all, my opponent seems troubled, in his words, “that federal revenues as a share of GDP have been slashed” thanks to the tax cuts.
 
I see now that I’m going to have to talk more clearly to ensure comprehension. Ready?
 
Tax cuts take money away from the government and return it to the people, who can find better ways to spend it than the government can. By definition, a tax cut reduces federal revenues across the board.
 
This dip in government income is to be expected and returns us to the battle of short-term loss versus long-term gain.
 
(The challenger also makes an interesting and wordy claim that these weren’t “real tax cuts.” This is a claim I would, again, prefer to ignore on the face of it, but can refute easily enough by showing the cancelled check I got back from the government for six hundred very real dollars. No amount of pessimism or spin can refute that I got a real tax cut and, yes, it helped me survive, a fact that earned me the label “outright liar” in Stirling’s rebuttal.)
 
I believe that deficits DO matter, despite the argument the challenger put in my mouth to the contrary. This is why deficits have to be done with careful planning and at least some spending cuts – say, the end of a costly war. (Although not everyone even agrees that spending cuts are necessary - “Tax cuts don’t need to be paid for [with offsets] — they pay for themselves.” -House Budget Committee Chairman Jim Nussle quoted in BNA Daily Tax Report, March 17, 2004)

My opponent accurately points out that the 2003 tax cuts didn’t come with spending cuts attached.  
 
That wasn’t the purpose of the bill. The bill was a hurried effort to get the tax cuts across because people are hurting from the tax burden TODAY. The proposed spending cuts that accompany are separate, but just as real
  
Somehow trying to spin the actual wording of the bill itself, Stirling goes on to say “The amounts that the Iron Blogger throws around of what families are ‘getting back’ are equally worthless” (quotes his). Funny, I was just quoting the legislation that passed. Stirling acts like that is somehow a matter for interpretation.
 
I wouldn’t have expected confusion on the issue, but since it seems to be there, I feel the need to clear the air about the way tax cuts work. Again, this is really simple stuff.
 
It is hard to find links for this bit of rhetoric, since it isn’t even to the level of Economics 101, but rather, common sense. Here it is, then, nevertheless:  
 
Tax cuts allow people to hold on to more of their money, admittedly reducing the amount the government has in the short-term. People use that additional money in the marketplace, creating a need for new consumable products and services. The need for new consumable products and services creates jobs (everyone keeping up so far? I know we just lost a few liberals who cannot let go of the mistaken idea that job creation is the government’s responsibility and can’t be left to the citizens). These new jobs put more people to work, so income tax revenues are higher, more people have more money and we are at the top of the paragraph again. Easy, yes?
 
You’d think.
 
Focused as they are on the short-term, the money “lost” to the government really and truly scares liberals, who are convinced the government can find better uses for your money than you can. Interestingly, I haven’t read any news stories about liberals who sent their refund checks back in to the government, but I’m sure it’ll happen soon.
 
Nevertheless, Stirling still calls it a “loan” that we are “borrowing” despite the fact that cutting taxes doesn’t increase government spending, but only reduces the amount of tax revenue that comes in. Still, his rebuttal resonates with borrowing, borrowing, borrowing, hoping beyond hope that we will believe it based solely on repetition.
 
So the Left cries “deficit!” and we are expected to join the hysteria. Honestly, the mere mention of the word makes the Left sweat like Paris Hilton on Jeopardy.
 
Let me make this clear right now. Bush’s tax cuts, just put in place recently, did not cause the current malaise in our economy. The current deficit is there because of 9/11, the accompanying stock market decline (which was declining as Bush entered office, by the way – before 9/11) and to a lesser extent, cases of corporate malfeasance. Also, of course, the astoundingly high costs of war, which I, unlike John Kerry, never supported. 
 
“Other things being equal, a tax cut, by stimulating consumption and investment, can help the economy.” 
 
In this case, the other things are NOT equal, they are in fact horrible, and yet some job growth STILL exists thanks to the tax cuts. Remind me how this is bad news? I think it’s remarkable.
 
Stirling presents his beloved Congressional deficit projections, based on our current economy. In the short term, given our current financial situation, yes, tax cuts will give the government another blow, adding to the deficit.
 
What liberals prefer us NOT to think about, however, is that those projections are based on our current economy, not the expanded and growing economy that will exist in the slightly-longer run thanks to the tax cuts. 
 
If negativity to unseat Bush is all you’re after, you can certainly find it in today’s deficit projections.
 
It is the long term I’m thinking about, though. In the long term, as we saw above, more money means more jobs and then yet more money, reducing the self-imposed deficit, ultimately eliminating it and growing the economy.
 
The list of benefits from the $350 billion Jobs & Growth Tax Relief Reconciliation Act of 2003 are real, solid helps to the poor AND the rich right now, at this moment. Projected ancillary benefits, like the salvation of the ailing Social Security system, are just gravy. 
  
We have real financial help, measured in real dollars, for hurting taxpayers today, and projected gain for tomorrow on the supply side. This versus the short-term deficit increase my opponent is losing sleep over in his haste to win an election. 

“When you tax something, you get less of it. Indeed, this is why governments tax tobacco and alcohol—to discourage smoking and drinking. But it is foolish to impose high tax rates on productive behavior. We don't want to penalize people for inventing new products, building new factories, and employing more people. We don't want to punish people for working harder. This is why the President's tax-rate reductions on income, dividends (profits distributed to shareholders), and capital gains (profits from the sale of assets like stocks and real estate) have helped boost growth.”



Again, I give you two sides of a debate: Short-term loss versus long-term gain. “Time to shutter the failure factory” before the tax cuts are even out of infancy or opening the window to future prosperity at the expense of election year rhetoric. Fear as a tool to win elections or optimism as a tool to fix the economy. More of your own money staying in your own pocket and working for you directly or more of your money going to Uncle Sam.

Take your pick.



With Respect,

Dan Champion, Iron Blogger Republican

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