Tax Cuts Work

Obama has proposed $310 billion in tax cuts. Depending on what other taxes and fees he raises, and if he allows the Bush tax cuts to lapse or actually passes legislation to curtail them even sooner, the cuts have a chance to stimulate the economy. The amount is relatively modest considering the recent surge of Federal bailout spending, but it sure beats a 300 billion dollar tax increase. Then again, massively growing government with 600,000 new Federal hires, raising taxes on the high net worth individuals who own businesses and do most of the job creation in the private sector, and saddling industry with burdensome regulation may negate any benefit the tax cut could create.

Straw Man Topples

World markets have plummeted; even oil, which was supposed to be past peak production with supplies on the way to drying up, has dropped under $50 per barrel. Demand has evaporated, not just for oil but for almost every consumer good. A cycle of deflation may prevail which the Obama tax plan would only worsen. When a luxury tax was passed on yachts and cars over $35,000, their sales contracted and the American boat industry collapsed. To stimulate demand and robust spending, taxes must be lowered. Unfortunately, Obama who does not recognize the dynamic nature of the economy does not have "tax cut" for the people who do the real spending in his vocabulary.