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Same Old Tune


By Barbara Gordon - Posted on 25 October 2008

Let's face it. McCain's entire campaign has centered around fearmongering. His strength is foreign policy, and so he had hoped to skate through the entire race by playing on Americans' fears of terrorism and security lapses. So, early on he suggested that Obama would "embolden" our enemies. That he was "pals" with the terrorists. That Obama is wholly unqualified when it comes to foreign policy, and that there's no time for "on the job training." That Obama would end America's status as the last remaining superpower.

Well, Senator McCain made a strategic mistake (one among many, actually). He's like the song and dance man who only knows one tune, but then he starts his performance only to find the audience clamoring for something else.  He has no choice but to either insist on playing the song he had planned, or to flounder around trying to satisfy his listeners with a nervous and off-key rendition of an unfamiliar tune. 

Earlier this year, when Senator McCain found the voters requesting a few lines about the economy, he chose to keep singing his own foreign policy praise. In fact, he did so as long as he could possibly hold out. But now, trailing far behind Obama and realizing that the economy is the sole interest of the American voters, McCain has belatedly and begrudgingly agreed to change his tune. He's finally switched from a foreign-policy-oriented mantra to one focussed on the economy. And yet still there's a common refrain: he's merely switched from security-based fearmongering to economic fearmongering.

Just look at what he said today. He said that we have to elect him because

1. It would be too dangerous to give Democrats both the presidency and control of Congress

and

2. Democrats will raise taxes and increased taxes will cause unemployment to skyrocket.

Well, obviously any Republican would be concerned about the Democrats becoming too powerful. But on the other hand, there's something to be said for efficiency. Remember what happened when a Democratic President was paired with a Republican Congress? The entire government shut down. Literally. Because of an inability to agree on a budget, non-essential functions of the federal government were shut down for five weeks in late 1995 and early 1996. The shutdown was estimated to cost the government about $800 million dollars. So it's hard to argue that a heterogeneous executive-legislative pairing necessarily makes for a more balanced, effective government.

And as far as taxes and unemployment are concerned, we Republicans often like to accuse Clinton of instating the "single largest tax hike in history." Regardless of what you think of the revenue increase, it was followed by seven years of steady decrease in unemployment to its lowest levels ever. Now, obviously, there's no single cause of unemployment. But it's awfully difficult to make a strong argument that increased taxation alone is going to cause a sudden hike in job losses.

So yet again McCain is resorting to baseless fearmongering in hopes of garnering support among undecided voters. Yet for the nine months the voters have seen all these attemps as exactly what they are: shameless ploys founded on nothing more than falsehoods and half-truths. I'd imagine the voters will see through this one, too.

 

No fear.

I realized that months ago, probably even before I jumped onto the Obama bandwagon.

And I'm not afraid of this economic crisis either. In fact, I'm angry at all of the politicians who keep playing up the fear angle.

The whole problem with the world is that fools and fanatics are always so certain of themselves, & wiser people so full of doubts.
-- Bertrand Russel

McCain engages in fear-mongering just as Bush does!  Bush orders DOJ to purge Ohio voter rolls!!  http://www.talkingpointsmemo.com/talk/blogs/esk/2008/10/bush-orders-doj-to-probe-ohio.php 

Let's see Boehner (who is on his way out, and good riddance) and Bush try that in all of: Florida, Georgia, Virginia, Michigan, Iowa, New Mexico, Colorado, Nevada, New Hampshire, and West Virginia.

Even if they pull out all of the stops, there is no way he can keep an investigation of that magnitude under the press' radar. They have all but lost the Presidential race, now Boehner is trying to salvage the Congressional races.

----

Sticker/sign tally in Orange County, CA:

  • Obama - 5
  • McCain - 2
  • (As of 2008/10/24)

So why dear Barbara did Clinton then have to cave to the Republicans and reduce the capital gains tax?  Or why did he leave us in a recession?

"The power to tax is the power to destroy" - John Marshall

I fail to see the relevance of your questions. Did you read the post or not?

And as far as taxes and unemployment are concerned, we Republicans often like to accuse Clinton of instating the "single largest tax hike in history." Regardless of what you think of the revenue increase, it was followed by seven years of steady decrease in unemployment to its lowest levels ever. Now, obviously, there's no single cause of unemployment. But it's awfully difficult to make a strong argument that increased taxation alone is going to cause a sudden hike in job losses. 

You discuss gridlock and increased taxes and a supposed weak link to job loss.

I rebutted that with how the Republican congress managed to pass the capital gains tax rate decrease to help stimulate an economy that was ransacked by taxes and then given the freedom to move manufacturing overseas.  Is it any wonder that companies free to move to a lower cost base of operations exercised that right?

"The power to tax is the power to destroy" - John Marshall

What I said was that Clinton's tax increase was followed by seven consecutive years of decreasing unemployment.

You suggest that the Republican Congress had to decrease the capital gains tax in order to stimulate job growth. But if you look at the charts, the unemployment rate was in sharp decline until the point at which the capital gains rate was cut. After that, unemployment continued to decline, but not as fast. So I hardly see how you can argue that the economy had been "ransacked by taxes," nor that the rate cut was responsible for stimulating job growth.

Then how do you explain the resulting job creation and revenue increase due to Bush's tax cuts in 2001 and 2003?

"The power to tax is the power to destroy" - John Marshall

Jill, I'm not interested in going back and forth with you if you can't even identify my argument.

I did not say that tax cuts do not increase jobs. I said that your rebuttal failed to indicate that they do. My original piece had nothing to do with tax cuts to begin with. My argument was that tax increases alone don't decrease jobs.

You are frustrating me with your inability to construct a relevant, cogent response to the blog, so I'll just disengage and let my previous statements speak for themselves.

A rise in income taxes alone may not result in a job decrease in a stable market as the case of under Clinton's administration (at least until the tech bust of 2000).  However we are not in a stable economic evironment - thus you are comparing apples and oranges to suit your blog's premise (half truths and ploys?).

A rise in income tax along with an increase in the cap gains and dividend rates will result in a job decrease as investment will most likely depart to areas that are more tax friendly.

I will refrain from making statements about the intellectual content of your blog and posts.

Quite frankly all of this is moot if the next President doesn't address our monetary policy.

"The power to tax is the power to destroy" - John Marshall

I am not comparing anything, Jill.

One thing is clear. You have no schooling whatsoever in the art of debate. You cannot address your opponent's actual point, so you make up a new argument on his/her behalf so that you can, in McCain fashion, continue singing your same old tune. Good luck with that.

 How can I discuss your 'point' when I find the basis on which you have predicated this argument to be lacking.  That is what I am addressing and I managed to do it without denigrating you.

I didn't realize we were debating.  I am simply addressing your argument about taxes and job loss  to note how raising taxes in one timeframe didn't result in immediate job loss so why would Obama's.

However, WSJ has done a better job of articulating how Obama's stances on taxes and healthcare are not the solution to our problem than McCain has which is the point I think you were trying to express. 

 "The power to tax is the power to destroy" - John Marshall

Let me spell it out for you. Here was my argument:

Higher taxes alone do not always lead to increased unemployment.

I have posited my evidence, which clearly indicates that the highest tax hike in history did not result in increased unemployment, but rather the opposite. I rest my case.

You're welcome to construct your counterargument. (Note: the only accurate counterargument here is, "higher taxes always result in increased unemployment." Good luck with that.)

 

 

Again that point can not be argued b/c we are not in the same economic conditions nor industry make up.  Our current condition is closer to the situation under Hoover than your argument of Clinton.

"The power to tax is the power to destroy" - John Marshall

A rise in income tax along with an increase in the cap gains and dividend rates will result in a job decrease as investment will most likely depart to areas that are more tax friendly.

No. If companies wish to lower their exposure to taxes, if indeed they are going to face them, they are more inclined to invest in their own business, as this becomes deductible from income.

A corporation will not cease operations to find a different venture if they are faced with higher taxes.

You think that if Microsoft was to face higher taxes, they would exit the software business, and perhaps move into solar and wind energy because of tax credits? Your reasoning is ridiculous.

 

No - I didn't state specifically but I was referring to individual investment.

However, it is well within corporations abilities to shift work to OUS sites in order to take advantage of lower tax rates if business conditions allow. 

"The power to tax is the power to destroy" - John Marshall

Easy Jill. Huge levels of deficit spending. Alan Greenspan helped by suppressing interest rates, embraced de-regulation, and higher levels of leveraged lending. These policies from Bush and Greenspan inflated the economy with massive amounts of money. Americans were all too happy to jump on board with so much easy credit available. Consuming and then consuming some more like the hungry hungry hippos, they have become.

I read a study that argued the capital gains reduction from 28% to 20% stimulated only a net 1.3% growth in the first two months after they went into effect and then growth return to previous levels ever since. The reduction from 20% to 15% had an even smaller effect under Bush. The deficit spending by the Bush Administration did more to increase revenue than any cut in capital gains has.

I am also firm believer that the reduction in taxes has minimal if any effect on job creation. Demand creates jobs.

I also contend that GDP growth adjusted for inflation is stagnant and has been for many years. Historically America had some of the highest percentage growth year over year when income taxes were as high as 70% and capital gains tax at 60%. That is easy to follow because America had a trade surplus. The economy was experiencing real growth back then and not the imaginary smoke and mirrors growth the government and Federal Reserve has been manufacturing. Further reductions in capital gains will have a smaller and smaller impact.

The fundamentals of the U.S. economy are so bad the government is left with no other choice but to pump money into the economy creating artificial growth, then repeat as needed.

The government is also hiding the true cost of the War from the America people. I doubt that many Americans realize that Iraq and Afghanistan wars are 100% financed. 40% from foreign nations. Nations I will remind them are not assured of having our best interest in mind. The DOD politely omits the interest and future obligations to our returning soldiers, replacement of spent ordinance and equipment in their reports. The war to date with no further expenditures is racking up a 3+ trillion dollar bill. 

I might as well mention the trade deficit, peak oil, resource depletion, population growth, climate change, and federal liabilities while I am at it.

Jill you are very smart. We all see this. I love reading your posts. Please, I implore you, come to the light. It is so nice here. Use the force Jill. You can do it. : )

I agree.  I believe McCain thought this would be about the war and foreign policy.  He stated he didn't know much about the economy like it was OK.  He didn't know it would be about the economy.  It is clear he has no plans to help fix the economy.  He doesn't have any real ideas so all he can do it attack Obama.
If Barak was suggesting using the bail-out money to directly purchase & refinance those mortgages, the rabbid right would be yelling Communist instead of Socialist.
Loved your blog, Barbara!  I "dugg" it too! 

McCain will create more jobs, but they will be in India, China, Columbia, etc.  There is no way on earth that we can create a lot of good paying new jobs in the United States if we still allow tax breaks for companies to move offshore and still operate in our country and to ship jobs overseas.

Obama's infrastructure and energy plans will create millions of jobs and as he said in one of the debates, that will be his first priority.  McCain's main focus seems to be on newclear (sorry, couldn't resist) energy which is the most expensive to develop and the lest cost effective.  I can see doing this when we are back on our feet again and not using credit cards to pay for our wars, but to create all those plants would, for years be subsidizing socialized energy which would not return any profits for 20 or 30 years.  And knowing the free market policy that McCain supports, he'll probably outsource building the nuclear reactors in Pakistan or India and then have them shipped over here. . .

Back in the 50s, 60s, and 70s we had much higher tax rates then even under Clinton and we were the largest exporter of manufactured goods in the world as well as the worlds biggest lender.  Now we have low tax rates, import a lot more than we export, though we are still the world's biggest exporter of tobacco, and are the biggest borrowers in the world.  After 28 years of low taxes and free market economics, McCain really is just more of the same.  I don't know if Obama (or anyone) can dig us out of the mess we are in, but I'm sure McCain can't short of starting World War Three!

 

Absolutely. He doesn't talk about it much now, but Obama is a huge supporter of Switchgrass-based ethanol (instead of corn), and I feel he would be much quicker to adapt investment in algae biofuel. If he can get these investments on the fast track to realization, we can start to experience some energy independence fairly soon.

 As far as nuclear, I have heard that each plant costs approx. $8 billion, and you can imagine the time involved to actually build. 

The reason we were so good at manufacturing was because of the protective tariffs we imposed that kept jobs and factories in America. 

Macho - curious on your thoughts about where our auto industry is now headed.  Millions of dollars invested switching mfg lines to accommodate hybrid and smaller vehicle designs.  With the commodity bubble popping, oil around $60/barrel, and public's lack of attention span, do you think we have killed our auto business?

Will the demand still be there when gas goes below $2.50 and the immediate cost threat not in the public's face?

"The power to tax is the power to destroy" - John Marshall

The concern raised by Republicans about a monolithic and one-sided monopoly of Democrats in the executive and legislative branches is one that normally I would endorse.  The history of the past 14 years, however, tilts me in a different direction for a number of reasons:

1)  Ever since Gingrich's "contract with America" in 1994 and until 2006, the GOP has had a stranglehold on Congress and - for most of that time - on the executive branch in the form of Cheney and Bush (in that order).  In that time they have let loose the dogs of deregulation that have led to the current crisis.

2)  There are those that say the worst problems have arisen in the last two years and have attempted to lay blame at the feet of the Democrats.  While I make no excuses for the Dem's waffling on a number of issues, it is disingenuous to suppose that they have had the time or ability to effect any real change, especially in the face of constant GOP filibustering.  The current crisis is the result not of two years of Democratic rule but of 28 years (since Reagan) of philosophical dominance of the GOP freewheeling approach to our markets.  Money that goes to the captains of industry tends to stay there unless outside forces intervene.  Simply put, trickle-down does not work and has failed us miserably.

3)  It is true that the ratings given by the public to Congress are even lower than the abysmally low ratings "enjoyed" by Bush.  It is easy to understand these ratings when you recognize that Congress has been in gridlock for far too long.  The simplest way to improve this situation is to ease the gridlock.

4)  As a fiscal conservative, I am appalled at how things have devolved in regard to the "rescue" or "bailout" (depending on one's perspective), but I recognize that  a consistent and consensus-based approach to solving the problem relies on a no-gridlock Congress.  Neither Obama nor McCain has a clear-cut approach to meaningful solutions, but at least Obama has studied the problem and returned with useful suggestions, while - until recently - McCain freely admitted his weakness on economics.  His subsequent waffling on solutions has alienated me (and apparently many other fiscal conservatives) from his candidacy.

5)  Obama may be "liberal", but the claim that he is the "the most liberal" member of the Senate is unfounded and untrue.  A review of the average ratings by the liberal groups places him solidly in the middle: 42nd of 100 senators.  The conservative average ratings put him at 34th, not 1st.  That said, it is not unduly optimistic to assume that he will tack to the center on fiscal matters, especially given that any other approach is doomed to filibuster and probably failure.  Assuming he enters office with the mandate of a significant majority, he will have the gravitas to pull the more liberal lawmakers in a centrist direction.

6)  A heavily Democratic weight in Washington has its dangers, but certainly no more so than we've seen with Republican dominance.  As long as Dem's remain sensible and aim at the center, they will offer much more hope and solutions than the divisiveness that has exemplefied the GOP rule. 

Should Democrats treat a mandate as a shift to unfettered liberalism, they will fail, and I will be first to condemn them.  Should they follow the direction of Obama, however, and seek to find the bipartisan middle road, they will have justified our support of them this year.

-Douglas McGaw

Emporia, KS

dbmcgaw@sbcglobal.net

Thanks for the thoughtful post, I absolutely agree with you.

Another consideration that hasn't been mentioned is the strong rightward pull of recent years, so much so that today's "liberal" is more closely aligned with yesterday's "moderate."

To those who have friends and family members that still believe Obama is "the most liberal" in the Senate, I suggest using the same method I've used on my own - visit National Journal to review the "analysis that used 99 key Senate votes, selected by NJ" and ask their views on those votes - turns out my "conservative" sister is more liberal than the "most liberal senator."

Well stated, Doug.   Your closing statements were the exact thoughts in my mind when I voted Obama/Biden two days ago.  I never thought I'd feel so satisfied after voting for a Democrat.  After 20 years of largely unapologetic straight-party GOP voting, this year carries a strange new sensation of freedom.

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