Monday, July 25, 2011

Is History Repeating itself

Is history repeating itself? There are some really close similarities, good and not so good, with this President and past Presidents

Lets look at the economy. He is facing a lot of the same problems that President Carter faced. Higher inflation, Higher fuel prices, Higher unemployment, lower revenues, slow growth and lower consumer confidence. President Carter tied to spend money, freeze wages and prices to combat the economy. None of it worked. The economy did not change till President Reagan. During Jimmy Carter's last year in office (1980), inflation averaged 12.5%, compared to 4.4% during Reagan's last year in office (1988). Over those eight years, the unemployment rate declined from 7.1% to 5.5%. Reagan implemented policies based on supply-side economics and advocated a classical liberal and laissez-faire philosophy, seeking to stimulate the economy with large, across-the-board tax cuts. The economy recovered.

Henry Morgenthau, Jr. was the U.S. Secretary of the Treasury during the administration of Franklin D. Roosevelt

"We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong … somebody else can have my job. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. … I say after eight years of this Administration we have just as much unemployment as when we started. … And an enormous debt to boot."

To reduce the deficit he argued for increased taxes, particularly on the wealthy.

"We have never begun to tax the people in this country the way they should be..... I don't pay what I should. People in my class don't. People who have it should pay."
Does this sound extremely familiar to you? It does to me. This was the fiscal policy of FDR trying to get America out of the depression. It failed then and Obama could learn from history for it is not working now either.

After President Roosevelt Died in office VP Truman took over. He inherited and bad economy. After many years of Democratic majorities in Congress and two Democratic presidents, voter fatigue with the Democrats delivered a new Republican majority in the 1946 midterm elections, with the Republicans picking up 55 seats in the House of Representatives and several seats in the Senate. Although Truman cooperated closely with the Republican leaders on foreign policy, he fought them bitterly on domestic issues. He failed to prevent tax cuts or the removal of price controls. The power of the labor unions was significantly curtailed by the Taft–Hartley Act, which was enacted by overriding Truman's veto. After the tax cuts and the passage of Taft –Harley the economy began to improve.

Clinton in his first address to the nation on February 15, 1993, announced his plan to raise taxes to cap the budget deficit.

On February 17, 1993, in a nationally televised address to a joint session of Congress, Clinton unveiled his economic plan. The plan focused on reducing the deficit rather than on cutting taxes for the middle class, which had been high on his campaign agenda. (Clinton's advisers, including Robert Rubin formerly of Goldman Sachs, pressured him to raise taxes on the theory that a smaller federal budget deficit would reduce bond interest rates. That policy failed as the economy continued to spin downward. As a result, the 1984 Midterm elections, the republicans offered the Contract with America. The Contract with America was introduced six weeks before the 1994 Congressional election, the first mid-term election of President Bill Clinton's Administration, and was signed by all but two of the Republican members of the House and all of the Party's non-incumbent Republican Congressional candidates.

Proponents say the Contract was revolutionary in its commitment to offering specific legislation for a vote, describing in detail the precise plan of the Congressional Representatives, and marked the first time since 1918 that a Congressional election had been run broadly on a national level. Furthermore, its provisions represented the view of many conservative Republicans on the issues of shrinking the size of government, promoting lower taxes and greater entrepreneurial activity, and both tort reform and welfare reform. President Clinton worked with the Republicans to enact The Contract. After some of the legislation was passed. Clinton oversaw the biggest expansion in US history.

Similarly When President Bush took office the economy was going down. He passed The Economic Growth and Tax Relief Reconciliation Act of 2001. It began to take hold but it all changed on 9-11-2001. After the attack on the WTC, the economy tanked. I response to the downturn in the economy, President Bush passed The Jobs and Growth Tax Relief Reconciliation Act of 2003. Shortly the economy began to recover. There were several other incidents during the Presidents tenure but the economy recovered each time till the last year of hi Presidency. The economy took a serious down turn that went into the Obama administration.

So that brings us to today. President Obama had to make some choices to get the economy to turn around. When he took office, the National debt was increasing about 1 billion dollars a day. Unemployment was on the rise. The housing crises would soon rear its ugly head. He is facing many of the same issues other Presidents have faced. He could raise taxes to increase revenue and spend, or he could be fiscally responsible as well as tax cuts. He chose to spend and raise taxes. Obama signed economic stimulus legislation in the form of the American Recovery and Reinvestment Act in February 2009 and the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act in December 2010.

His stimulus has been a failure and did nothing he claimed it would do. There were no new jobs, in fact unemployment went over 10%. The tax relief was a wolf in sheeps clothing. He gave a small break in the income tax on weekly paychecks designed to raise the take home pay. However it was offset by the raise in Medicare tax, with more coming in 2013, and the result was no difference in the take home pay.

He raised the Limit on SS taxes. Obama said in an interview with NBC’s Tim Russert in November of 2007, “I think that the best way to approach this is to adjust the cap on the payroll tax so that people like myself are paying a little bit more. The CBO disagrees. The CBO has said the link between earnings and retirement benefits “has been an important aspect of Social Security since its inception.” Raising Social Security taxes on higher earners would weaken that link between wages and benefits, the CBO said, because their benefits wouldn’t increase as much as their tax burden would.

Raising taxes on higher earners would make Social Security more of an income transfer program: taking money from those who earn more, and giving it to those who earned less while they were working.

To some degree, Social Security already does this redistribution in the way its benefit formula is designed, but Obama’s proposal would nudge the system further in that direction. And it did.
He signed into law the Car Allowance Rebate System, known colloquially as "Cash for Clunkers", that had mixed results. In fact, it cost taxpayers and added to the deficit. Cash for Clunkers – or CARS, the Car Allowance Rebate System – was, on its face, a good idea. It was meant to revitalize the auto industry, get people into newer, safer, and more fuel efficient vehicles, and get many of those exhaust belching clunkers off the road. Naturally, the program was hailed as a success by DC despite being a failure and an administrative and financial fiasco.
The program was expensive, costing three billion dollars. In the midst of an economic downturn, the government didn’t just have that kind of money on hand. They had to borrow it, increasing the nation’s debt. Individuals taking part in the program were likely giving up a paid-for car and getting a car that will take years to pay off. So, not only did CARS increase the national debt, but also the individual debt of many participants

Obama called for Congress to pass legislation reforming health care in the United States, a key campaign promise and a top legislative goal. He proposed an expansion of health insurance coverage to cover the uninsured, to cap premium increases, and to allow people to retain their coverage when they leave or change jobs. His proposal was to spend $900 billion over 10 years and include a government insurance plan, also known as the public option, to compete with the corporate insurance sector as a main component to lowering costs and improving quality of health care. It would also make it illegal for insurers to drop sick people or deny them coverage for pre-existing conditions, and require that every American carry health coverage. The plan also includes medical spending cuts and taxes on insurance companies that offer expensive plans. Obamacare is riddled with tax increases, has anyone added those up? The Heritage Foundation did. All told Obamacare contains 18 separate tax increases that will cost taxpayers $503 billion between 2010 and 2019. COST TAXPAYERS!! That’s in addition to the $900 billion in start up costs.

On November 7, 2009, a health care bill featuring the public option was passed in the House. On December 24, 2009, the Senate passed its own bill—without a public option—on a party-line vote of 60–39. On March 21, 2010, the health care bill passed by the Senate in December was passed in the House by a vote of 219 to 212. Obama signed the bill into law on March 23, 2010. More taxes, more government spending.

Chairman, Ben Bernanke, stated that the economic outlook was "unusually uncertain." Who can blame him for saying that. History has shown two different actions responding to a faltering economy. One has shown that it works and the other that it does not. Talking points from both sides make it hard to figure which is the right move. Repubs always push for lower taxes, smaller Government. Dems push for spending and bigger Government. Charlie Rangel (D-NY) was interviewed by John Stossel. They debated the size of government and entitlements. Rangel Quote” It’s a great government, why not be big”. Stossel responded by saying “I want a smaller more efficient government like this is”. Stossel held up a book on constitution. Rangel said” throw out that book”. Really Charlie? Get rid of our constitution? What can one expect; Rangel is the king of gimme gimme gimme.

History shows under Reagan, Clinton, and Bush that tax and budget cuts make a big difference and spurs economic growth. But the Dems always use scare tactics to hide the fact those principals work. History also shows under FDR, Carter, Early Clinton years, and under Obama that tax increases and growing Government does not work. So why are the Dems and Obama always against tax cuts and smaller Government? Why be against cut, cap and Balance? Americans follow that in their private lives, why not Washington?

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