Tax Cuts Don't Cause Deficits, Spending Does - (Proof Provided!)

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Radical Leftists claim that the Bush tax cuts all but created the current debt crisis. Sane rational people maintain that tax cuts alone don't cause deficits - it's the combination of tax cuts and continued (or increased) spending that causes deficits. Actually, it's always spending that causes a deficit - correction - it's always over-spending incoming revenue that causes a deficit. It's impossible to have a deficit without spending.That's the definition of a deficit - over spending incoming revenue.

But, surely, you say, tax cuts must some how contribute to deficit spending, no? Well, actually, no. They only contribute to deficit spending when you don't account for the lower revenue they produce and continue to spend at the same rate you spent before you cut taxes. To prove this, let's take a quick trip to Fantasy-Land - a land where everything is milk and honey and the streets are paved with gold.

In Fantasy-Land, the following holds true:

1) the government collects taxes but does not spend them - that is, annual outlays are zero. All government functions are carried out by non-unionized citizen-volunteers.

2) All citizens pay a flat 50% income tax

3) The tax base is $1billion thus the government collects $500 million per year in (unused) taxes.

All is well, until the citizens of Fantasy-Land elect far right conservative Jorge Push. President Push decides that the tax rate should be lowered to 25%. The far left radicals decry such a position as a threat to the nation's economic well being. Surely the sky will fall and the deficit (of zero) will rise immeasurably, if taxes are lowered! Push gets his 50% tax cut. The government revenue stream drops to $250 million per year (see, say the leftist radicals, income does drop when you cut taxes!!) and YET the deficit remains at ZERO!

So, therefore, lowering taxes in of themselves does NOT produce a deficit. Why is the radical Left so opposed to cutting taxes? Only they can tell you that - I haven't got a clue on that one. But one thing is sure - simply cutting taxes does not produce a deficit. Overspending incoming revenue produces a deficit - and over spending incoming revenue happens with high tax rates or low tax rates. So stop the pandering to your base and "man up". Leave taxes alone and CUT SPENDING!

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Obama’s and Bush’s effects on the deficit in one graph

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Please study the graphic below carefully before reading the analysis that follows:



Before I begin my analysis of this graphic, I'd like to mention that it came from a New York Times editorial. Enough said.

OK, where do I begin? I must say two things about this graphic off the bat:

1) it's absolutely brilliant! It takes a confusing subject (deficit, debt, budgeting) and confuses it even further. It places Vaseline over the lens of the budget debate to "soften the image" and thus make Obama look better.

2) it does show how fiscally irresponsible President Bush was. Liberal Loons run around calling Bush conservative - this graphic should show them he was anything but. Perhaps he was a social conservative, but he didn't seem to be a fiscal conservative.

Now onto some of the gritty details.

At first glance, you can easily fall into the Liberal trap that has been set - namely, that Bush's policies all but created the current increase in the deficit and Obama's policies have only been a drop in the bucket. But that would be wrong. Why do I say that? Well, look at how the graphic is structured. It covers only policy changes spending, not actual or projected spending.

That is why there's no Iraq, Afghanistan wars section on Obama's side of the ledger. He's merely continuing a policy from the previous administration. Never mind that Obama ran on a peace platform AND won a Nobel Peace prize! We're still at war, YET not one cent of the continuing drain on the Treasury (which adds to the deficit) is reflected in the graphic for Obama. Surprisingly, there's a net SAVINGS on defense - where this comes from is any body's guess. I'm assuming it's the President's projected savings from winding down the war efforts some time in 2012. Not sure, as no details are provided for what each segment means, outside the given label itself.

Next we get the Liberal bugaboo on tax cuts. $1.8 trillion of the deficit is attributed to Bush's tax cuts. Had Bush and the Congress (both parties had control during parts of Bush's presidency) CUT $1.8 trillion in spending, there would be no net effect on the deficit from the tax cuts. Liberals don't want to see this. They continually rail against tax cuts as adding to the deficit. They don't if you cut the same amount of spending. Again, let's make it clear that Bush didn't cut spending enough to offset any loss in revenue from his tax cuts, so it's legitimate to include the "Bush" tax cuts here. BUT, here's the rub - even though Obama continued the tax cuts, they don't seem to show up on his side of the ledger. And if they do, they're not called "Obama's tax cuts" or even "Bush's tax cuts continued". I have a suspicion that the Bush Tax Cuts section is both the original tax cut and the extended tax cut that Obama signed into law last fall. But who knows? Also, what's behind the stimulus tax cuts on Obama's side? Is that the payroll tax cut and Social Security tax cut and/or the extended Bush tax cuts? I dunno.

The other obfuscation in this graphic is a really remarkable one. I have to be misinterpreting this graphic somehow because not to be misinterpreting the graphic means that the creator of the graphic really really wanted to make this a truly biased graphic. Look at the date ranges, for each President, covered by this graphic. In Bush's case, the date range is in the past and "fixed"  - you can't put any more fiscal damage on him than you already have. But look at Obama's date range. His covers the future.

Are you trying to tell me or anyone else looking at this graphic that President Obama intends NOT to have any policy changes in the next 6 years that will increase deficit spending?? Are you kidding me? He's not going to propose an infrastructure bank (as he did in his State of the Union)? Or perhaps "green job initiatives"? Nothing that will add to the deficit? He's going to create new spending programs out of whole cloth using ONLY the revenues that are currently coming into the Treasury? Again, I don't think so.

And there you have it - the one element that exposes the complete bias of this graphic. Of course, since Obama hasn't proposed any new policy change spending BEFORE this graphic was created, it doesn't get included in this graphic. And if he proposes something massive tomorrow? Don't bet on the graphic being updated any time soon.

The graphic may be "accurate", but it's so biased to show what it wants to show that it's a useless but highly misleading analysis tool.

Thanks Liberals for trying to spin a better picture for Obama - it's working on your side of the aisle, not ours.

Please leave your thoughts on this graphic. Correct or enahnce my analysis. Leave a comment below.

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I guess the Rich DO pay their taxes (and ours!)

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I stole this graphic from a Wall Street Journal online article:

Gee, I guess the rich do pay their taxes and basically ours. Go down to the middle class and approximately 97.1% of taxes paid are paid by these two groups. It's high time we re-balance this tax paying act and spread the tax base.

And before you all post comments suggesting that I'm "rich" ... please don't bother. I'm in the yellow box all the way through.

Your thoughts? Raise taxes on the rich? How high should it go - till they contribute 75% of revenues?

Share your thoughts below! And click a rating button to let us know how you rate this post!

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Netflix Sux!! (or does it?)

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As you may have heard by now, Netflix, the DVD rental-by-mail company, has decided to restructure its pricing plans to separate the DVD rentals from the streaming option. Previously, for as low as $9.99/month, you were able to have unlimited DVD rental (though only one home at a time) and unlimited streaming.

Now, starting in September, 2011 for current members (immediately for new members), the unlimited 1 DVD plan is $7.99/month and the unlimited streaming is $7.99/month. Together, it will be $15.98. This is a rather large jump to say the least. The increase caused thousands of subscribers to flood the Netflix blog with feedback - much of it against the pricing changes along with threats to cancel memberships.

I'll take a different viewpoint though (don't I always?) - I think it makes a lot of business sense to do this. By separating the income streams for DVDs and unlimited streaming, Netflix will have the cash flow needed to better meet the demands of each group. This should allow them to invest in a deeper DVD library (though it's fairly deep as it is), but, more importantly, to snag more deals for streaming content. This extra $7.99/month should give them a nice cash wad to use for long term streaming deals and to remain competitive with sites such as Hulu.com as they ramp up their streaming offerings. Netflix is bringing Mad Men to streaming next week and has added all the Star Trek series to stream, too.If they can keep consistently adding quality content then it should work out very nicely for their bottom line.

No, I don't like to pay more for any item, especially one that was so cheap as the Netflix DVD/streaming combo plan, but I must see the positive in this and go along with the increase.

What are your thoughts? Feel free to share them with us. Vent a little - it helps!

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Are you "Happily Divorced"?

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Have you caught Fran Drescher's new show Happily Divorced, playing on TV Land (Weds, 10:30p ET)? I started watching it a few weeks back - it has its moments. It's not quite as funny (yet) as The Nanny, but I'll give it time. The first season of The Nanny was a tad uneven, too. It takes a bit for the writers to "find" the characters and their story lines. Once they do, I feel the series will be almost as funny as The Nanny was. The reason I say "almost as funny" is that there isn't the bevy of characters that The Nanny had. All of them were funny and could hold their own scenes.

While I like the casting of Fran's parents (though nothing can be beat her mother and grandmother from her previous series), I'm a bit turned off by her husband. He just doesn't quite gel for me. I know it would have been thought of as "The Nanny II" if they brought back all the old characters, but at least we would know them and be able to get right back into the swing of things (sort of like Lucille Ball did with all her series post I Love Lucy). I hope they, at least, bring back The Nanny cast for guest roles throughout the series - that would be fun to see how they all look today.

Well, just thought I'd change things up a bit and review a sitcom. Have you seen Happily Divorced? What are your thoughts? Let us know by leaving a comment!

BTW, don't forget to rate this post by using the buttons below. It helps guide me on what to post about.

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Ron Paul - First Advertisement of 2012 Election Cycle

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Just saw this posted on Facebook, so I thought I'd get it out there fast. It's the first Ron Paul advertisement of the 2012 election cycle. It's a great ad...check it out and leave a comment!




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Obama at Press Conference: "We're Smarter Than You."

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President Obama held a news conference this morning in which he spouted more hot air that sounded good, but, when examined closely, is the same ole, same ole. Basically, the (evil) Republicans are holding him back from making a grand cut in the deficit (upwards of $4 trillion over the next so many years). He's willing to cut the budget and reform entitlements "if only" the (evil) Republicans would allow him to raise taxes, mostly by letting the Bush tax cuts expire in the "outlying years". By making all these reforms, the President, with absolutely no evil plans to expand goverment, would be able to continue making investments in America such as job re-training, "infrastructure bank" and student loans, among many other Progressive initiatives. Of course, all of these intiatives are outlined in the Constitution, thus justifying the President's spending of taxpayers money on them.

The President was pummeled by reporters from CBS News, HuffingtonPost.com, Congress Daily, McClatchy Newspapers and American Urban Radio (has anyone heard of these besides the first two??) about why the Republicans are holding him back. Surprisingly (not), no reporter from Fox News was allowed to ask a question. Told by one reporter that a CBS News poll showed only 24% of the American people believe the debt crisis is important, the President responded that the American people aren't properly paying attention to the nuances of the debt and debt reduction. That professional politicians such as himself were hired to deal with these issues. Basically, the American people are stupid and those smart politicians in DCwill solve the debt problem, your help not needed, thank you very much. Next Question?

The President was willing to personally take a "small" tax hike as others in his and higher tax brackets should. (Though there was no mention that the President's salary is actually tax money and as such it doesn't make a difference how much is nicked by taxes - he never earned it in the first place). He did admit that, without reforms, entitlements would be in danger as no amount of tax increases would be able to save them. Odd though that he continues to push for a "small" tax high on the oil executives, jet owners and other "rich" taxpayers to pay down the debt.

Seriously, I could go on and on - I wanted to throw rocks at my TV...he talks the game, but then goes around and doesn't play the game. We'll see how things pan out.

Your thoughts?

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Why I Dislike Balanced Budget Amendments

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While you would think that a right-leaning blog such as Tony Island Blog would whole-heartedly support a "balanced budget amendment", in this case, you would be wrong.

I am currently reading a book (review forthcoming) that, among many issues, outlines and supports a balanced budget amendment ("BBA"). There are eleven sections (when the book was published) to this proposed amendment, some of which contain definitions of various terms used in the amendment. While the idea of a balanced budget amendment gives my heart the "warm fuzzies", my logical head tells me it's not the way to go.

So, without further ado:

Here are my 5 reasons against any constitutional balanced budget amendment:

1) The Constitution should not be filled with economic amendments - Our Constitution elegantly outlines our (limited) form of government. It doesn't contain economic theories or definitions and neither should any proposed amendment. Just like the Prohibition amendment was an embarassment  to the Constitution (morality should NOT be part of the Constitution), so would a balanced budget amendment.

2) Constitutional Amendments should not contain "escape" clauses - The proposed BBA, like similar efforts, has an escape clause to allow deficit spending in case of declared war (other BBAs allow deficit spending during recessions). What does this tell us about the amendment itself and our political leaders if we need an "escape" clause? Imagine if our Founding Fathers put an escape clause in the First Amendment? Or how about in the succession of the President? Or any other part of the Constitution? So why would we pass any amendment that contains an escape clause?

3) Constitutional Amendments should not contain man-made measurements - The proposed BBA contains a provision to cap total government spending to 18% of GDP. The problem with this is who determines GDP? Perhaps one of the sections defines GDP, but it's all too easy to expand (or contract) GDP to suit the political needs of either the Congress or President in power. Constitutional amendments should have wording that is enduring, not based on some sort of man-made measurement.

4) Constitutional Amendments should not contain binding or easily overridden provisions - One of the provisions of the proposed BBA is a three-fifths vote requirement to raise the debt ceiling. While this sounds like a "tough" hurdle to overcome (and it may well be, which is its intent), it could also be a tightly binding provision that could bite us in the ass during a "real" emergency. What if the US Congress were attacked while it was in session and 50% of the Congress were injured or dead. How then do you increase the debt limit? Do the living (but injured) Congressmen now constitute "Congress"? Do the dead Congressmen negate the ability to have a three-fifths vote to raise the debt? What's to prevent Congress, minutes before the final vote which would make the BBA law, from passing a one-time $560 trillion(or any other outrageously high number) debt limit thus effectively eliminating the need to vote to increase the limit under the new Amendment's debt increase provision? What if the Congress were to eliminate the "debt ceiling" all together?

5) Constitutional Amendments should not be unenforceable - My biggest problem with a BBA is the inability to enforce it. How do you jail 535 Congressmen if they don't follow the letter of the law? There are absolutely no provisions in this or any BBA to have enforcing legislation. I don't know what kind of self-enforcing could be built-in (perhaps the President could dismiss the Congress and call for new elections? That would open a can of unimaginable worms), but without it, the BBA becomes a toothless tiger. We already have trampled the Constitution. Why then would we add a BBA that was laughably unenforceable? That would only further erode our system of government and society. We're doing enough damage without the need for a BBA to hasten such damage.

Well, there you have it - my 5 reasons against any BBA. Do you agree? Disagree? I love a good debate - open my mind by posting a comment below.

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Rep. Maxine Waters - Completely Nuts or Completely Honest? You Decide.

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This clip is a few years old, but I only found it the other day.

Boy is Rep Maxine Waters a real nut - or, maybe, she's just honest? What an asinine thing to say. Yet she keeps getting re-elected. Her constituency is really out of step with the rest of country.

Play the clip below, then share your thoughts by leaving a comment.

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Black-and-right.com - Conservatism with a different color

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I just wanted to share a new blog I found the other day - http://www.black-and-right.com/

As you might surmise from the URL, it's a right of center web site hosted by...wait for it...a black man! And...grab onto your socks...he hails from Massachusetts! Wow - has the world ended yet?

He's got some great stuff. I always find it fascinating to find off-beat conservatives out there- that is, ones other than "white racists" that the media loves to portray all conservatives as being. Of course, I'm sure Bob Parks, the owner of http://www.black-and-right.com/ , gets his fair share of hate mail from liberal black Democrats.

Check out his site for a refreshing take on conservatism.

Have you checked out Bob Parks' blog or a similar "non-traditional conservative" blog lately? If so, share the link with us by posting a comment! Worthy "non-traditional" Web sites/blogs will get a shout out.

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Presidential Hot Air Same on Virtual World as Real World

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The President is holding a Twitter Town Hall as I post this blog - of course, I expected hard hitting questions and honest answers and as sure as the sun sets in the West, I got neither.

On a question about why Obama isn't pushing more tech jobs instead of manufacturing jobs, Obama drones on about manufacturing jobs having higher pay, etc. Sure, for lower educated Americans, manufacturing is a great way to lift yourself out of poverty, but there aren't enough of them to employ everyone who needs a job. Of course, the real reason Obama pushes manufacturing jobs is the Unions. Not too many union members in Silicon Valley. We still haven't learned that Unions destroyed GM and Chrysler.

He continues to defend the role of government in creating jobs which we know can't happen - government can't create jobs, only destroy them. But he won't acknowledge that.

He's a smooth talker. Too bad he's smoothly talking us to Third World status (or worse - European-style Socialism).

Are you following the Twitter Town Hall? Please share your thoughts by leaving a comment!

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Happy Independence Day!

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Just a short post to wish all my readers A Happy Independence Day!

How are you celebrating July 4th? Family, food and fireworks? Whatever you do - think about the reason this day exists and what would have happened had our Founding Fathers lost the war.

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