Thursday, October 23, 2008

An Obamanomics Preview

When Obama talks about raising taxes to spread the wealth around, he risks prolonging the current financial gloom and doom. Here's an analysis of what Obama wants to do, tax-wise, and the probable results of enacting his tax policies. The money graf:
The nearby chart shows the arc of tax policy and economic growth across the Bush years. After the dot-com bust, President Bush compromised with Senate Democrats and delayed his marginal-rate income tax cuts in return for immediate tax rebates. The rebates goosed spending for a while but provided no increase in incentives to invest. Only after 2003, when the marginal-rate cuts took effect immediately, combined with cuts in dividend and capital gains rates, did robust growth return. The expansion was healthy until it was overtaken by the housing bust and even resisted recession into this year. Mr. Bush and Congress returned to the rebate formula in February, but a blip in second-quarter growth has now ended as the economy heads into recession. The Dow plunged again yesterday with a 514-point drop.

Er, the chart referred to is in the original and I'm too much of a doofus to figure out how to post it here. But follow the link and the graph will make the point abundantly clear: lower taxes = higher GDP. Higher GDP = better for everybody.

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