This great nation provides for its citizens in abundance. From petroleum to food supply, we enjoy things others can only dream of having. It is what makes this country great and the envy of all other nations. Americans are spoiled and we unapologetically accept this axiom. This is why we are burdened with the insatiable desire for instant gratification. We prefer the quick fix, rather than the slow and steady approach, as evidenced by the high volume of Bernard Madoff, Google and Mortgage-backed securities investors. It is also why American voters are precariously eager to oust Barack Obama from office to blindly elect a new American President in hopes of spurring a faster economic recovery.
I have argued that lower taxes for corporations do not directly translate to higher federal revenues. Economists like Greg Mankiw and noted columnists agree on this point. Bruce Bartlett, of The Fiscal Times, has stated that “Economists have known for many years that many tax cuts are nothing more than spending by another name.” But recent history has fueled the controversy in favor of pundits and supporters for Republican principles to maintain the belief that tax cuts will fuel more trade and investment; such as Ryan Dwyer has written for the Washington Times. They affirm that from 2003 to 2007, after the second installment of the Bush tax cuts took effect, federal revenues began to soar, thus validating Republican theories. What the theory fails to account for is that investment in the housing and energy markets fueled the economic recession, substantiating what liberals have argued; that Wall Street will adversely affect the economic landscape where Government does little to regulate it. It also fails to prove whether the increase in investments was due to lower tax rates or whether Wall Street merely discovered another investment vehicle to drive their profits through the roof.
The Jobs and Growth Tax Relief Reconciliation Act of 2003 was signed into law in May 2003 reducing the rate of dividends and capital gains taxes. Federal tax receipts did begin to increase, but not due to the lowered rates cited by Republican leaders. What has long been forgotten are the accounting scandals of companies such as Enron, WorldCom and Tyco International that led the Fed to lower interest rates to the historic low of 1.00%. This drop in rates led to a surge in home sales and mortgage equity withdrawals that were fueled by the deceptive mortgage-backed securities market where loans were easily attainable and loosely substantiated by the banking industry. Thus, when the subprime mortgage crisis hit the market, the economy took a hit once again and led to a slow economic recovery, of which we are still experiencing and the Obama Administration has had the privilege of inheriting.
Further exacerbating the recovery has been the Federal bailouts of the banking industry, AIG and the Big 3 automakers. The failure of the Federal government to save these companies/industries would have corresponded with deeper unemployment numbers than we have already experienced and a double-dip economic recession. It seems that we have also forgotten the $85 Billion handed to American International Group, Inc. or the $700 Billion authorized by the Emergency Economic Stabilization Act of 2008. The GOP continues to coerce the American people into believing that the correct action for the Obama Administration should be to further lower taxes in order to repeat the economic trend of 2003 to 2007. It is the GOP who wants us to believe that the failure of Wall Street to improve unemployment statistics is based entirely on the policies of the Obama Administration; even after having extended the Bush tax cuts. It is the GOP who wants us to believe that a permanent tax cut will improve the economy while a temporary cut will lead corporations to terminate jobs in anticipation of tax increases rather than depending on their KPIs to determine the feasibility of maintaining their workforce.
Americans are accustomed to getting what they want, when they want it. We live by the proverb that the United States of America is too big to fail. This fuels our appetite for luxury and extravagance and it drives thousands to our shores in pursuit of the American Dream. We have little regard for each other’s welfare with exception to acts of God. This out of sight out of mind attitude drives our Forty-niner ideology that has led us into economic depressions and will continue to do so through the existence of the U.S. Constitution as we know it today. This is why it is negligent, on the part of Government, to expect corporations to act in good faith and drive healthy employment numbers while maintaining stable investment practices. It is also negligent of lawmakers to expect federal tax revenues to increase when their primary source of income is slashed.