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Yes, budget cuts can help the economy

The left tells us that there is no way to keep the economy going if federal spending is reduced – they are wrong.

On a simplistic and illogical level sure, taking any money out of the economy might shrink it, but that is the same short-term thinking that has led to a non-recovery from the prior recession, lackluster employment and seeing manufacturing output in the tank.

In more realistic terms, there are only two things that will allow us to cut the overall taxation of American workers and corporations: 1) broadening the tax base and 2) Cutting federal spending.

As it stands, many Americans have far too little exposure to income tax rates to feel the pain of allowing their government to spend more than it makes. This makes the class warfare rhetoric from the Obama campaign seem attractive. Also, there are not enough wealthy people, by Obama’s definition, in the U.S. to tax at even 100% to cove0r entitlement spending. Spending is the issue, taxes are the symptom – fix the issue, and taxes will follow.

You see, we only need to raise taxes so that Congress can spend more. If we decided that they cannot spend more, they will have no need to increase taxes.

The United States currently has the highest corporate tax rate in the world. Companies like GM are making a large number of their products overseas because it’s financially advantageous to do so. The tax advantage for not manufacturing in the United States is far too great at this time.

Obama would enact penalties for not producing in the U.S. – which could also lead to the trade wars of past Democrat administrations. Romney would lower the overall corporate rate so that company accountants could inform their CFOs that it makes sense to manufacture in the United States again. That’s an actual conversation – unlike Obama’s dream-world scenario.

If federal spending is cut, the government can responsibly cut tax rates. Ergo – if we don’t spend so much, businesses can invest and grow the economy with the money that they used to send to the federal government.

If the base is broadened so that we all share in the cost of the things the government provides, tax rates can be cut. If tax rates are cut, American businesses can again compete in the global economy and we can all get the jobs we need and want. Trickle-down economics isn’t about money flowing from the wealthy to the poor as the left would have American voters believe – it’s about money flowing from employers to employees, businesses to other businesses. That is how an economy is re-ignited.

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  1. janbrown says:

    Rich, while your approach to this crisis is well explained & agreeable to thinking Americans, I fear it was influnced by facts that apply only if we actually have a budget!! We have a WH occupant that can’t even produce one that his good old boys will go along with. Then there’s all the boys & girls we sent to Congress that are more consumed with re-election & ‘lookin’ good’ to their constituients & want everything tied with little bows (ear marks) as opposed to our nation’s economic wellness as their focus. As the old timer said, “If the well is dry, doesn’t matter how many times you lower the bucket, it ain’ta gonna fill with water”