George H. W. Bush, aka Bush 41, promised, "No New Taxes" in his bid for reelection. What we got was a tax hike and the unscrupulous Bill Clinton. Fortunately a Republican congress applied "The Contract With America" and innovation in the high tech boom made for a great economy. It also made the politicians and Clinton administration look smart.
As Johnny Carson said years ago, "Who Do You Trust?" or "Whom Do You Trust?" Today's congressional Republicans have turned soft to conservative principles, they lack the intestinal fortitude to stop the flood of earmarks, and mimic their so called rivals on the left.
As sure as the sun will rise in the East, if the liberals gain power in the House or Senate, a tax increase proposal will appear on the horizon. Only a President with a sense for free market economies will veto such a proposal. Unfortunately the earmarking will continue and probably grow, increasing big federal government.
Politicians are only creative when the decision making is easy. They don't have to know economics, they only have to satisfy the lobbyists who pave the way for their election and then, reelection. It's easy, buy your way in, move into a nice home near D.C. and plan to be a career politician, riding on taxpayers money.
Tim Kaine, the new Democratic Governor from Virginia, vowed during his campaign not to raise taxes. So much for that, he recently called for a tax increase even with a hugh surplus of $1.5 billion. The $1 billion tax increase proposal was defeated although many Republicans voted for it.
Former Democratic Virginia Governor, Mark Warner, has 2008 presidential ambitions. Warner also campaigned against higher taxes but won approval of his own tax hike. The Wall Street Journal reported on a study of economic growth and taxes. The following is what they found:
A new study from the American Shareholders Association examined the 10-year forecast for economic growth and federal revenue collections for the period 1997-2006. And over these years, it found, the CBO underestimated tax revenue collections by a cumulative $800 billion.
The forecasting faux pas is actually larger because those estimates excluded the impact of at least three major tax cuts (in 1997, 2001 and 2003) that subsequently passed Congress. These tax cuts were estimated by the wizards at Joint Tax to deplete federal tax collections by an additional $1.24 trillion through 2006, according to the Shareholders Association study.
So if you add those together, CBO and JTC have managed to underestimate revenues by $2.04 trillion over the past decade. Here's one way to appreciate how large this error is: It would be as if CBO forgot to count all the federal income tax payments made by every resident of Florida for an entire decade. Tied to their outdated forecasting models, these agencies refuse to acknowledge that there is any Laffer Curve effect from changes in tax rates that help the economy grow and revenues increase. Thus CBO also managed to project a decade ago that the U.S. economy would be $1.3 trillion smaller today than it actually is.
Misinformation and more good money chasing the bad. This is just one more example of waste and a nice excuse for politicians to promise not to raise taxes before they do.