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Supply-Side Economics
by James D. Gwartney,
professor of economics and director of the Gus A. Stavros Center for the Advancement of Free Enterprise and Economic Education at Florida State University. He was previously chief economist of the Joint Economic Committee of the U.S. Congress.
The term âsupply-side economicsâ is used in two different but related ways. Some use the term to refer to the fact that production (supply) underlies consumption and living standards. In the long run, our income levels reflect our ability to produce goods and services that people value. Higher income levels and living standards cannot be achieved without expansion in output. Virtually all economists accept this proposition and therefore are âsupply siders.â
âSupply-side economicsâ is also used to describe how changes in marginal tax rates influence economic activity. Supply-side economists believe that high marginal tax rates strongly discourage income, output, and the efficiency of resource use. In recent years, this latter use of the term has become the more common of the two and is thus the focus of this article.
The marginal tax rate is crucial because it affects the incentive to earn. The marginal tax rate reveals how much of oneâs additional income must be turned over to the tax collector as well as how much is retained by the individual. For example, when the marginal rate is 40 percent, forty of every one hundred dollars of additional earnings must be paid in taxes, and the individual is permitted to keep only sixty dollars of his or her additional income. As marginal tax rates increase, people get to keep less of what they earn.
An increase in marginal tax rates adversely affects the output of an economy in two ways. First, the higher marginal rates reduce the payoff people derive from work and from other taxable productive activities. When people are prohibited from reaping much of what they sow, they will sow more sparingly. Thus, when marginal tax rates rise, some peopleâthose with working spouses, for exampleâwill opt out of the labor force. Others will decide to take more vacation time, retire earlier, or forgo overtime opportunities. Still others will decide to forgo promising but risky business opportunities. In some cases, high tax rates will even drive highly productive citizens to other countries where taxes are lower. These adjustments and others like them will shrink the effective supply of resources, and therefore will shrink output.
Second, high marginal tax rates encourage tax-shelter investments and other forms of tax avoidance. This is inefficient. If, for example, a one-dollar item is tax deductible and the individual has a marginal tax of 40 percent, he will buy the item if it is worth more than sixty cents to him because the true cost to him is only sixty cents. Yet the one-dollar price reflects the value of resources given up to produce the item. High marginal tax rates, therefore, cause an item with a cost of one dollar to be used by someone who values it less than one dollar. Taxpayers facing high marginal tax rates will spend on pleasurable, tax-deductible items such as plush offices, professional conferences held in favorite vacation spots, and various fringe benefits (e.g., a company luxury automobile, business entertainment, and a company retirement plan). Real output is less than its potential because resources are wasted producing goods that are valued less than their cost of production.
Critics of supply-side economics point out that most estimates of the elasticity of labor supply indicate that a 10 percent change in after-tax wages increases the quantity of labor supplied by only 1 or 2 percent. This suggests that changes in tax rates would exert only a small effect on labor inputs. However, these estimates are of short-run adjustments. One way to check the long-run elasticity of labor supply is to compare countries, such as France, that have had high marginal tax rates on even middle-income people for a long time with countries, such as the United States, where the marginal rates have been persistently lower. Recent work by edward prescott, corecipient of the 2004 Nobel Prize in economics, used differences in marginal tax rates between France and the United States to make such a comparison. Prescott found that the elasticity of the long-run labor supply was substantially greater than in the short-run supply and that differences in tax rates between France and the United States explained nearly all of the 30 percent shortfall of labor inputs in France compared with the United States. He concluded:
I find it remarkable that virtually all of the large difference in labor supply between France and the United States is due to differences in tax systems. I expected institutional constraints on the operation of labor markets and the nature of the unemployment benefit system to be more important. I was surprised that the welfare gain from reducing the intratemporal tax wedge is so large. (Prescott 2002, p. 9)
The supply-side economic policy of cutting high marginal tax rates, therefore, should be viewed as a long-run strategy to enhance growth rather than a short-run tool to end recession. Changing market incentives to increase the amount of labor supplied or to move resources out of tax-motivated investments and into higher-yield activities takes time. The full positive effects of lower marginal tax rates are not observed until labor and capital markets have time to adjust fully to the new incentive structure.
Because marginal tax rates affect real output, they also affect government revenue. An increase in marginal tax rates shrinks the tax base, both by discouraging work effort and by encouraging tax avoidance and even tax evasion. This shrinkage necessarily means that an increase in tax rates leads to a less than proportional increase in tax revenues. Indeed, economist Arthur Laffer (of âLaffer curveâ fame) popularized the notion that higher tax rates may actually cause the tax base to shrink so much that tax revenues will decline, and that a cut in tax rates may increase the tax base so much that tax revenues increase.
How likely is this inverse relationship between tax rates and tax revenues? It is more likely in the long run when people have had a long time to adjust. It is also more likely when marginal tax rates are high, but less likely when rates are low. Imagine a taxpayer in a 75 percent tax bracket who earns $300,000 a year. Assume for simplicity that the 75 percent tax rate applies to all his income. Then the government collects $225,000 in tax revenue from this person. Now the government cuts tax rates by one-third, from 75 percent to 50 percent. After the tax cut, this taxpayer gets to keep $50, rather than $25, of every $100, a 100 percent increase in the incentive to earn. If this doubling of the incentive to earn causes him to earn 50 percent more, or $450,000, then the government will get the same revenue as before. If it causes him to earn more than $450,000, the government gets more revenue.
Now consider a taxpayer paying a tax rate of 15 percent on all his income. The same 33 percent rate reduction cuts his rate from 15 percent to 10 percent. Here, take-home pay per $100 of additional earnings will rise from $85 to $90, only a 5.9 percent increase in the incentive to earn. Because cutting the 15 percent rate to 10 percent exerts only a small effect on the incentive to earn, the rate reduction has little impact on the amount earned. Therefore, in contrast with the revenue effects in high tax brackets, tax revenue will decline by almost the same percentage as tax rates in the lowest tax brackets. The bottom line is that cutting all rates by a third will lead to small revenue losses (or even revenue gains) in high tax brackets and large revenue losses in the lowest brackets. As a result, the share of the income tax paid by high-income taxpayers will rise.
---
(continued below)
by James D. Gwartney,
professor of economics and director of the Gus A. Stavros Center for the Advancement of Free Enterprise and Economic Education at Florida State University. He was previously chief economist of the Joint Economic Committee of the U.S. Congress.
The term âsupply-side economicsâ is used in two different but related ways. Some use the term to refer to the fact that production (supply) underlies consumption and living standards. In the long run, our income levels reflect our ability to produce goods and services that people value. Higher income levels and living standards cannot be achieved without expansion in output. Virtually all economists accept this proposition and therefore are âsupply siders.â
âSupply-side economicsâ is also used to describe how changes in marginal tax rates influence economic activity. Supply-side economists believe that high marginal tax rates strongly discourage income, output, and the efficiency of resource use. In recent years, this latter use of the term has become the more common of the two and is thus the focus of this article.
The marginal tax rate is crucial because it affects the incentive to earn. The marginal tax rate reveals how much of oneâs additional income must be turned over to the tax collector as well as how much is retained by the individual. For example, when the marginal rate is 40 percent, forty of every one hundred dollars of additional earnings must be paid in taxes, and the individual is permitted to keep only sixty dollars of his or her additional income. As marginal tax rates increase, people get to keep less of what they earn.
An increase in marginal tax rates adversely affects the output of an economy in two ways. First, the higher marginal rates reduce the payoff people derive from work and from other taxable productive activities. When people are prohibited from reaping much of what they sow, they will sow more sparingly. Thus, when marginal tax rates rise, some peopleâthose with working spouses, for exampleâwill opt out of the labor force. Others will decide to take more vacation time, retire earlier, or forgo overtime opportunities. Still others will decide to forgo promising but risky business opportunities. In some cases, high tax rates will even drive highly productive citizens to other countries where taxes are lower. These adjustments and others like them will shrink the effective supply of resources, and therefore will shrink output.
Second, high marginal tax rates encourage tax-shelter investments and other forms of tax avoidance. This is inefficient. If, for example, a one-dollar item is tax deductible and the individual has a marginal tax of 40 percent, he will buy the item if it is worth more than sixty cents to him because the true cost to him is only sixty cents. Yet the one-dollar price reflects the value of resources given up to produce the item. High marginal tax rates, therefore, cause an item with a cost of one dollar to be used by someone who values it less than one dollar. Taxpayers facing high marginal tax rates will spend on pleasurable, tax-deductible items such as plush offices, professional conferences held in favorite vacation spots, and various fringe benefits (e.g., a company luxury automobile, business entertainment, and a company retirement plan). Real output is less than its potential because resources are wasted producing goods that are valued less than their cost of production.
Critics of supply-side economics point out that most estimates of the elasticity of labor supply indicate that a 10 percent change in after-tax wages increases the quantity of labor supplied by only 1 or 2 percent. This suggests that changes in tax rates would exert only a small effect on labor inputs. However, these estimates are of short-run adjustments. One way to check the long-run elasticity of labor supply is to compare countries, such as France, that have had high marginal tax rates on even middle-income people for a long time with countries, such as the United States, where the marginal rates have been persistently lower. Recent work by edward prescott, corecipient of the 2004 Nobel Prize in economics, used differences in marginal tax rates between France and the United States to make such a comparison. Prescott found that the elasticity of the long-run labor supply was substantially greater than in the short-run supply and that differences in tax rates between France and the United States explained nearly all of the 30 percent shortfall of labor inputs in France compared with the United States. He concluded:
I find it remarkable that virtually all of the large difference in labor supply between France and the United States is due to differences in tax systems. I expected institutional constraints on the operation of labor markets and the nature of the unemployment benefit system to be more important. I was surprised that the welfare gain from reducing the intratemporal tax wedge is so large. (Prescott 2002, p. 9)
The supply-side economic policy of cutting high marginal tax rates, therefore, should be viewed as a long-run strategy to enhance growth rather than a short-run tool to end recession. Changing market incentives to increase the amount of labor supplied or to move resources out of tax-motivated investments and into higher-yield activities takes time. The full positive effects of lower marginal tax rates are not observed until labor and capital markets have time to adjust fully to the new incentive structure.
Because marginal tax rates affect real output, they also affect government revenue. An increase in marginal tax rates shrinks the tax base, both by discouraging work effort and by encouraging tax avoidance and even tax evasion. This shrinkage necessarily means that an increase in tax rates leads to a less than proportional increase in tax revenues. Indeed, economist Arthur Laffer (of âLaffer curveâ fame) popularized the notion that higher tax rates may actually cause the tax base to shrink so much that tax revenues will decline, and that a cut in tax rates may increase the tax base so much that tax revenues increase.
How likely is this inverse relationship between tax rates and tax revenues? It is more likely in the long run when people have had a long time to adjust. It is also more likely when marginal tax rates are high, but less likely when rates are low. Imagine a taxpayer in a 75 percent tax bracket who earns $300,000 a year. Assume for simplicity that the 75 percent tax rate applies to all his income. Then the government collects $225,000 in tax revenue from this person. Now the government cuts tax rates by one-third, from 75 percent to 50 percent. After the tax cut, this taxpayer gets to keep $50, rather than $25, of every $100, a 100 percent increase in the incentive to earn. If this doubling of the incentive to earn causes him to earn 50 percent more, or $450,000, then the government will get the same revenue as before. If it causes him to earn more than $450,000, the government gets more revenue.
Now consider a taxpayer paying a tax rate of 15 percent on all his income. The same 33 percent rate reduction cuts his rate from 15 percent to 10 percent. Here, take-home pay per $100 of additional earnings will rise from $85 to $90, only a 5.9 percent increase in the incentive to earn. Because cutting the 15 percent rate to 10 percent exerts only a small effect on the incentive to earn, the rate reduction has little impact on the amount earned. Therefore, in contrast with the revenue effects in high tax brackets, tax revenue will decline by almost the same percentage as tax rates in the lowest tax brackets. The bottom line is that cutting all rates by a third will lead to small revenue losses (or even revenue gains) in high tax brackets and large revenue losses in the lowest brackets. As a result, the share of the income tax paid by high-income taxpayers will rise.
---
(continued below)
Supply Side Economics (cont'd)
...
As the Keynesian perspective triumphed following World War II, most economists believed tax reductions affect output through their impact on total demand. The potential supply-side effects of taxes were ignored. However, in the 1970s, as inflation pushed more and more Americans into high tax brackets, a handful of economists challenged the dominant Keynesian view. Led by Paul Craig Roberts, Norman Ture, and Arthur Laffer, they argued that high taxes were a major drag on the economy and that the top rates could be reduced without a significant loss in revenue. They became known as supply-side economists. During the presidential campaign of 1980, Ronald Reagan argued that high marginal tax rates were hurting economic output, but contrary to what many people think, neither Reagan nor his economic advisers believed that cuts in marginal tax rates would increase tax revenue.
The 1975â1985 period was an era of great debate about the impact of supply-side policies. The supply siders highlighted the positive evidence from two earlier major tax cutsâthe Coolidge-Mellon cuts of the 1920s and the Kennedy tax cut of the 1960s. Between 1921 and 1926, three major tax cuts reduced the top marginal rate from 73 percent to 25 percent. The Kennedy tax cut reduced rates across the board, and the top marginal rate was sliced from 91 percent to 70 percent. Both of these tax cuts were followed by strong growth and increasing prosperity. In contrast, the huge Hoover tax increase of 1932âthe top rate was increased from 25 percent to 63 percent in one yearâhelped keep the economy depressed. As the economy grew slowly in the 1970s and the unemployment rate rose, supply-side economists argued that these conditions were the result of high tax rates due to high inflation.
Keynesian economists were not impressed with the supply-side argument. They continued to focus on the demand-side effects, charging that it was irresponsible to cut taxes at a time when inflation was already high. They expected the rate cuts to lead to larger budget deficits, which they did, but also that these deficits would increase demand and push the inflation rate to still higher levels. As Walter Heller, chairman of the Council of Economic Advisers under President John F. Kennedy put it, âThe [Reagan] tax cut would simply overwhelm our existing productive capacity with a tidal wave of demand.â But this did not happen. Contrary to the Keynesian view, the inflation rate declined substantially from 9 percent during the five years prior to the tax cut to 3.3 percent during the five years after the cut.
Economists continue to debate the precise effects of the 1980s tax cuts. After extensive analysis of the 1986 rate reductions, both Lawrence Lindsey and Martin Feldstein concluded that for taxpayers previously facing marginal tax rates of 40 percent or more, the drop in tax rates caused such a large increase in taxable income that the government was collecting even more revenue from taxpayers in these top brackets. This would mean that tax rates of 40 percent had had a highly destructive impact on economic activity. Joel Slemrod argued that Lindseyâs and Feldsteinâs estimates of the extra income due to tax rate cuts are too high because they inadequately reflect peopleâs shifting of personal income from high-tax-rate years to low-tax-rate years and of business income from regular corporations to partnerships and Sub-S corporations in response to the lower personal tax rates. According to Slemrod, only a small portion of the increase in the tax base resulted from improvements in efficiency and expansion in the supply of labor and other resources.
Even though economists still disagree about the size and nature of taxpayer response to rate changes, most economists now believe that changes in marginal tax rates exert supply-side effects on the economy. It is also widely believed that high marginal tax ratesâsay, rates of 40 percent or moreâare a drag on an economy. The heated debates are now primarily about the distributional effects. Supply-side critics argue that the tax policy of the 1980s was a bonanza for the rich. It is certainly true that taxable income in the upper tax brackets increased sharply during the 1980s. But the taxes collected in these brackets also rose sharply. Measured in 1982â1984 dollars, the income tax revenue collected from the top 10 percent of earners rose from $150.6 billion in 1981 to $199.8 billion in 1988, an increase of 32.7 percent. The percentage increases in the real tax revenue collected from the top 1 and top 5 percent of taxpayers were even larger. In contrast, the real tax liability of other taxpayers (the bottom 90 percent) declined from $161.8 billion to $149.1 billion, a reduction of 7.8 percent.
Since 1986, the top marginal personal income tax rate has been less than 40 percent, compared with 70 percent prior to 1981. Nonetheless, those with high incomes are now paying more. For example, more than 25 percent of the personal income tax has been collected from the top 0.5 percent of earners in recent years, up from less than 15 percent in the late 1970s. These findings confirm what the supply siders predicted: the lower rates, by increasing the tax base substantially in the upper tax brackets, would increase the share of taxes collected from these taxpayers.
Supply-side economics has exerted a major impact on tax policy throughout the world. During the last two decades of the twentieth century, there was a dramatic move away from high marginal tax rates. In 1980, the top marginal rate on personal income was 60 percent or more in forty-nine countries. By 1990, only twenty countries had such a high top tax rate, and by 2000, only three countriesâCameroon, Belgium, and the Democratic Republic of Congoâhad a top rate of 60 percent or more. In 1980, only six countries levied a personal income tax with a top marginal rate of less than 40 percent. By 2000, fifty-six countries had a top marginal income tax rate of less than 40 percent.1
The former socialist economies have been at the forefront of those moving toward supply-side tax policies. Following the collapse of communism, most of these countries had a combination of personal income and payroll taxes that generated high marginal tax rates. As a result, the incentive to work was weak and tax evasion was massive. Russia was a typical case. In 2000, Russiaâs top personal income tax rate was 30 percent and a 40.5 percent payroll tax was applied at all earnings levels. If Russians with even modest earnings complied with the law, the tax collector took well over half of their incremental income. Beginning in January 2001, the newly elected Putin administration shifted to a 13 percent flat-rate income tax and also sharply reduced the payroll tax rate. The results were striking. Tax compliance increased and the inflation-adjusted revenues from the personal income tax rose more than 20 percent annually during the three years following the adoption of the flat-rate tax. Further, the real growth rate of the Russian economy averaged 7 percent during 2001â2003, up from less than 2 percent during the three years prior to the tax cut.
Ukraine soon followed Russiaâs lead and capped its top personal income tax rate at 13 percent. Beginning in 2004, the Slovak Republic imposed a flat-rate personal income tax of 19 percent. Latvia and Estonia also have flat-rate personal income taxes.
Supply-side economics provided the political and theoretical foundations for what became a remarkable change in the tax structure of the United States and other countries throughout the world. The view that changes in tax rates exert an impact on total output and that marginal rates in excess of 40 percent exert a destructive influence on the incentive of people to work and use resources wisely is now widely accepted by both economists and policymakers. This change in thinking is the major legacy of supply-side economics.
...
As the Keynesian perspective triumphed following World War II, most economists believed tax reductions affect output through their impact on total demand. The potential supply-side effects of taxes were ignored. However, in the 1970s, as inflation pushed more and more Americans into high tax brackets, a handful of economists challenged the dominant Keynesian view. Led by Paul Craig Roberts, Norman Ture, and Arthur Laffer, they argued that high taxes were a major drag on the economy and that the top rates could be reduced without a significant loss in revenue. They became known as supply-side economists. During the presidential campaign of 1980, Ronald Reagan argued that high marginal tax rates were hurting economic output, but contrary to what many people think, neither Reagan nor his economic advisers believed that cuts in marginal tax rates would increase tax revenue.
The 1975â1985 period was an era of great debate about the impact of supply-side policies. The supply siders highlighted the positive evidence from two earlier major tax cutsâthe Coolidge-Mellon cuts of the 1920s and the Kennedy tax cut of the 1960s. Between 1921 and 1926, three major tax cuts reduced the top marginal rate from 73 percent to 25 percent. The Kennedy tax cut reduced rates across the board, and the top marginal rate was sliced from 91 percent to 70 percent. Both of these tax cuts were followed by strong growth and increasing prosperity. In contrast, the huge Hoover tax increase of 1932âthe top rate was increased from 25 percent to 63 percent in one yearâhelped keep the economy depressed. As the economy grew slowly in the 1970s and the unemployment rate rose, supply-side economists argued that these conditions were the result of high tax rates due to high inflation.
Keynesian economists were not impressed with the supply-side argument. They continued to focus on the demand-side effects, charging that it was irresponsible to cut taxes at a time when inflation was already high. They expected the rate cuts to lead to larger budget deficits, which they did, but also that these deficits would increase demand and push the inflation rate to still higher levels. As Walter Heller, chairman of the Council of Economic Advisers under President John F. Kennedy put it, âThe [Reagan] tax cut would simply overwhelm our existing productive capacity with a tidal wave of demand.â But this did not happen. Contrary to the Keynesian view, the inflation rate declined substantially from 9 percent during the five years prior to the tax cut to 3.3 percent during the five years after the cut.
Economists continue to debate the precise effects of the 1980s tax cuts. After extensive analysis of the 1986 rate reductions, both Lawrence Lindsey and Martin Feldstein concluded that for taxpayers previously facing marginal tax rates of 40 percent or more, the drop in tax rates caused such a large increase in taxable income that the government was collecting even more revenue from taxpayers in these top brackets. This would mean that tax rates of 40 percent had had a highly destructive impact on economic activity. Joel Slemrod argued that Lindseyâs and Feldsteinâs estimates of the extra income due to tax rate cuts are too high because they inadequately reflect peopleâs shifting of personal income from high-tax-rate years to low-tax-rate years and of business income from regular corporations to partnerships and Sub-S corporations in response to the lower personal tax rates. According to Slemrod, only a small portion of the increase in the tax base resulted from improvements in efficiency and expansion in the supply of labor and other resources.
Even though economists still disagree about the size and nature of taxpayer response to rate changes, most economists now believe that changes in marginal tax rates exert supply-side effects on the economy. It is also widely believed that high marginal tax ratesâsay, rates of 40 percent or moreâare a drag on an economy. The heated debates are now primarily about the distributional effects. Supply-side critics argue that the tax policy of the 1980s was a bonanza for the rich. It is certainly true that taxable income in the upper tax brackets increased sharply during the 1980s. But the taxes collected in these brackets also rose sharply. Measured in 1982â1984 dollars, the income tax revenue collected from the top 10 percent of earners rose from $150.6 billion in 1981 to $199.8 billion in 1988, an increase of 32.7 percent. The percentage increases in the real tax revenue collected from the top 1 and top 5 percent of taxpayers were even larger. In contrast, the real tax liability of other taxpayers (the bottom 90 percent) declined from $161.8 billion to $149.1 billion, a reduction of 7.8 percent.
Since 1986, the top marginal personal income tax rate has been less than 40 percent, compared with 70 percent prior to 1981. Nonetheless, those with high incomes are now paying more. For example, more than 25 percent of the personal income tax has been collected from the top 0.5 percent of earners in recent years, up from less than 15 percent in the late 1970s. These findings confirm what the supply siders predicted: the lower rates, by increasing the tax base substantially in the upper tax brackets, would increase the share of taxes collected from these taxpayers.
Supply-side economics has exerted a major impact on tax policy throughout the world. During the last two decades of the twentieth century, there was a dramatic move away from high marginal tax rates. In 1980, the top marginal rate on personal income was 60 percent or more in forty-nine countries. By 1990, only twenty countries had such a high top tax rate, and by 2000, only three countriesâCameroon, Belgium, and the Democratic Republic of Congoâhad a top rate of 60 percent or more. In 1980, only six countries levied a personal income tax with a top marginal rate of less than 40 percent. By 2000, fifty-six countries had a top marginal income tax rate of less than 40 percent.1
The former socialist economies have been at the forefront of those moving toward supply-side tax policies. Following the collapse of communism, most of these countries had a combination of personal income and payroll taxes that generated high marginal tax rates. As a result, the incentive to work was weak and tax evasion was massive. Russia was a typical case. In 2000, Russiaâs top personal income tax rate was 30 percent and a 40.5 percent payroll tax was applied at all earnings levels. If Russians with even modest earnings complied with the law, the tax collector took well over half of their incremental income. Beginning in January 2001, the newly elected Putin administration shifted to a 13 percent flat-rate income tax and also sharply reduced the payroll tax rate. The results were striking. Tax compliance increased and the inflation-adjusted revenues from the personal income tax rose more than 20 percent annually during the three years following the adoption of the flat-rate tax. Further, the real growth rate of the Russian economy averaged 7 percent during 2001â2003, up from less than 2 percent during the three years prior to the tax cut.
Ukraine soon followed Russiaâs lead and capped its top personal income tax rate at 13 percent. Beginning in 2004, the Slovak Republic imposed a flat-rate personal income tax of 19 percent. Latvia and Estonia also have flat-rate personal income taxes.
Supply-side economics provided the political and theoretical foundations for what became a remarkable change in the tax structure of the United States and other countries throughout the world. The view that changes in tax rates exert an impact on total output and that marginal rates in excess of 40 percent exert a destructive influence on the incentive of people to work and use resources wisely is now widely accepted by both economists and policymakers. This change in thinking is the major legacy of supply-side economics.
Now that we have some definition of the term "ABSS" let me clarify that I am not really a supply-sider, although I do understand what those folks are talking about and it sure sounds more convincing than Keynes' ideas.
I'm a practical man. What I see is this: while the Kennedy boys were busy chasing skirts, skirmishing with the Soviets, invading Cuba, starting a long and truly disastrous war in Vietnam and, yes, working with the Repubs to lay the foundations for civil rights legislation, Johnson had better and bigger plans for the dem party: the war on poverty.
What he eventually managed to push through Congress is the concept that some of us (in reality a certain percentage but they defined it in different terms) are poor and, therefore, the government has the moral obligation to help them. So, here are a few $billions/year to go do that, the government I mean.
Although, predictably, those $billions/year eventually grew into $trillions/year (remember, the basic/hidden definition of who's poor in this country is a % of the population... our poor are really rich compared to, for example, Poland's poor or Mexico's poor or Haiti's poor) his second tool was even more ambitious: this country needs more and more poor folks for the government (in his vision, the dem party) to take care of in exchange for power to run bigger and bigger parts of the economy, ie, more or less everything.
And here was the ingenious third leg of the stool: make the rules of welfare etc, all poverty-fighting government projects, so obscure and stupid, that, once in, you'll never want or even be able to leave. Like drug addiction or the Mafia, etc. Here's the real "story of Julia's sister": she wanted out of the house at the age of 15, got pregnant, started receiving welfare payments, kept having babies with whoever every 2-3 years, more money from the government, etc, never got married because that would stop the flow of cash (the trap) and lived her life happy and poor for many years. Of course, she always voted for the dems because they were, are, and will always be her sugar-daddies.
And, of course, as the $$ obligations grew larger, the government needed more money to meet them, and raised taxes again and again, and when that was exhausted, sort of, started taking over big chunks of the economy, like healthcare, so that more goodies can be given to Julia and her sisters/cousins to keep them poor, dependent and always, always, voting democratic. Need more dependents? There are zillions of those poor folks south of the border... Go get them in, give them something to eat, keep them poor and scared and get those votes for our party as well, the more the merrier.
Very sad.
I'm a practical man. What I see is this: while the Kennedy boys were busy chasing skirts, skirmishing with the Soviets, invading Cuba, starting a long and truly disastrous war in Vietnam and, yes, working with the Repubs to lay the foundations for civil rights legislation, Johnson had better and bigger plans for the dem party: the war on poverty.
What he eventually managed to push through Congress is the concept that some of us (in reality a certain percentage but they defined it in different terms) are poor and, therefore, the government has the moral obligation to help them. So, here are a few $billions/year to go do that, the government I mean.
Although, predictably, those $billions/year eventually grew into $trillions/year (remember, the basic/hidden definition of who's poor in this country is a % of the population... our poor are really rich compared to, for example, Poland's poor or Mexico's poor or Haiti's poor) his second tool was even more ambitious: this country needs more and more poor folks for the government (in his vision, the dem party) to take care of in exchange for power to run bigger and bigger parts of the economy, ie, more or less everything.
And here was the ingenious third leg of the stool: make the rules of welfare etc, all poverty-fighting government projects, so obscure and stupid, that, once in, you'll never want or even be able to leave. Like drug addiction or the Mafia, etc. Here's the real "story of Julia's sister": she wanted out of the house at the age of 15, got pregnant, started receiving welfare payments, kept having babies with whoever every 2-3 years, more money from the government, etc, never got married because that would stop the flow of cash (the trap) and lived her life happy and poor for many years. Of course, she always voted for the dems because they were, are, and will always be her sugar-daddies.
And, of course, as the $$ obligations grew larger, the government needed more money to meet them, and raised taxes again and again, and when that was exhausted, sort of, started taking over big chunks of the economy, like healthcare, so that more goodies can be given to Julia and her sisters/cousins to keep them poor, dependent and always, always, voting democratic. Need more dependents? There are zillions of those poor folks south of the border... Go get them in, give them something to eat, keep them poor and scared and get those votes for our party as well, the more the merrier.
Very sad.
Obama Decree Guts Bipartisan Consensus
By Gov. Bob McDonnell
In 1996, President Bill Clinton worked with Republicans in Congress to reform our nation's costly and ineffective welfare programs. Upon signing the bipartisan bill into law, Clinton noted that the measure would "[restore] America's basic bargain of providing opportunity and demanding, in return, responsibility." And he was right. Most would agree that the measure has been a great success - except, apparently, President Barack Obama, whose administration last month took steps to remove one of its central requirements.
The Obama administration's recent decision was both unexpected and unexplainable, defying what we have learned from history and what we know about good government. Our nation was built on a commitment to the dignity and necessity of work. That commitment and its rewards have been passed down from generation to generation. And, in the 1990s, welfare reform ensured that value remained part of the laws governing our nation.
Building on successful state programs, like our groundbreaking legislation here in Virginia that I was honored to carry in the legislature as a delegate, Congress strengthened the welfare safety net by adding a requirement that individuals receiving financial support must also look for and find work. It's known as "welfare-to-work" for short. And while some were concerned that the measures in this reform were too tough, their doubts were soon erased.
Welfare caseloads that had remained unchanged for 40 years were quickly cut in half. The poverty rate among welfare recipients, especially children, plummeted. The percentage of single mothers with a job grew from 58 to 75 in less than a decade. Millions of Americans were moving off the welfare roll and moving up life's ladder.
Over the course of 16 years, welfare reform has proven to be a historic achievement. But, ignoring this record, the Department of Health and Human Services last month announced that it would allow states to propose programs that did not comply with federal work requirements. With a stroke of a pen, decades of bipartisan efforts to tie welfare to work were undone, and the heart of welfare reform was gutted.
As a candidate, the president claimed that he supported welfare-to-work policies. He once professed that work should be "a centerpiece of any social policy." He has now apparently changed his mind.
Worse still is the way this recent decision unfolded. President Obama did not work with Congress to secure legislative approval. He did not tell the American people about his decision - or ask them for their support. He simply decided that he did not like the existing law, and then chose to work around it.
By unwinding our nation's welfare-to-work requirements, the Obama administration is making a tragic mistake. Millions have benefited from this bipartisan reform. And while the Obama administration has given no indication that it will reverse this decision, this November voters will have a chance to elect someone who will.
When he was governor of Massachusetts, Mitt Romney was a strong proponent of welfare reform and fought hard to ensure it was implemented in accordance with federal guidelines. He understands that linking welfare to work reflected our country's most important principles and that the dream of overcoming hardship - and moving from government dependence to economic independence - is one that America must never turn away from.
This is yet another example of the very clear choice that Americans have before them in the coming election: a choice between President Obama's old-school liberal policies and government handouts, and Governor Romney's vision of increased economic freedom and opportunity.
What President Obama does not understand is that we don't want handouts - nor do we want to go back to the failed policies of the past. Instead, we want a president who can deliver an economic recovery, and the employment opportunities that so many of our fellow Americans still need. We want a president who will make sure our dreams of economic success can be realized. Those dreams are what made America great, and Mitt Romney will make sure they remain within reach for future generations.
We have a chance this November to elect a president who understands that while tough times don't last, tough people do. And Americans are tough. We may be experiencing hard times, but we will bounce back. This is at the heart of what makes our country great - and what made welfare reform successful.
President Obama's welfare policy accepts that tough times are here to stay, and jobs will remain in short supply. But what our country is experiencing doesn't have to be permanent. If we elect Mitt Romney as our next President, we can usher in a new era of opportunity and prosperity.
By Gov. Bob McDonnell
In 1996, President Bill Clinton worked with Republicans in Congress to reform our nation's costly and ineffective welfare programs. Upon signing the bipartisan bill into law, Clinton noted that the measure would "[restore] America's basic bargain of providing opportunity and demanding, in return, responsibility." And he was right. Most would agree that the measure has been a great success - except, apparently, President Barack Obama, whose administration last month took steps to remove one of its central requirements.
The Obama administration's recent decision was both unexpected and unexplainable, defying what we have learned from history and what we know about good government. Our nation was built on a commitment to the dignity and necessity of work. That commitment and its rewards have been passed down from generation to generation. And, in the 1990s, welfare reform ensured that value remained part of the laws governing our nation.
Building on successful state programs, like our groundbreaking legislation here in Virginia that I was honored to carry in the legislature as a delegate, Congress strengthened the welfare safety net by adding a requirement that individuals receiving financial support must also look for and find work. It's known as "welfare-to-work" for short. And while some were concerned that the measures in this reform were too tough, their doubts were soon erased.
Welfare caseloads that had remained unchanged for 40 years were quickly cut in half. The poverty rate among welfare recipients, especially children, plummeted. The percentage of single mothers with a job grew from 58 to 75 in less than a decade. Millions of Americans were moving off the welfare roll and moving up life's ladder.
Over the course of 16 years, welfare reform has proven to be a historic achievement. But, ignoring this record, the Department of Health and Human Services last month announced that it would allow states to propose programs that did not comply with federal work requirements. With a stroke of a pen, decades of bipartisan efforts to tie welfare to work were undone, and the heart of welfare reform was gutted.
As a candidate, the president claimed that he supported welfare-to-work policies. He once professed that work should be "a centerpiece of any social policy." He has now apparently changed his mind.
Worse still is the way this recent decision unfolded. President Obama did not work with Congress to secure legislative approval. He did not tell the American people about his decision - or ask them for their support. He simply decided that he did not like the existing law, and then chose to work around it.
By unwinding our nation's welfare-to-work requirements, the Obama administration is making a tragic mistake. Millions have benefited from this bipartisan reform. And while the Obama administration has given no indication that it will reverse this decision, this November voters will have a chance to elect someone who will.
When he was governor of Massachusetts, Mitt Romney was a strong proponent of welfare reform and fought hard to ensure it was implemented in accordance with federal guidelines. He understands that linking welfare to work reflected our country's most important principles and that the dream of overcoming hardship - and moving from government dependence to economic independence - is one that America must never turn away from.
This is yet another example of the very clear choice that Americans have before them in the coming election: a choice between President Obama's old-school liberal policies and government handouts, and Governor Romney's vision of increased economic freedom and opportunity.
What President Obama does not understand is that we don't want handouts - nor do we want to go back to the failed policies of the past. Instead, we want a president who can deliver an economic recovery, and the employment opportunities that so many of our fellow Americans still need. We want a president who will make sure our dreams of economic success can be realized. Those dreams are what made America great, and Mitt Romney will make sure they remain within reach for future generations.
We have a chance this November to elect a president who understands that while tough times don't last, tough people do. And Americans are tough. We may be experiencing hard times, but we will bounce back. This is at the heart of what makes our country great - and what made welfare reform successful.
President Obama's welfare policy accepts that tough times are here to stay, and jobs will remain in short supply. But what our country is experiencing doesn't have to be permanent. If we elect Mitt Romney as our next President, we can usher in a new era of opportunity and prosperity.
When Morris passes on, you will be speechless.Quote from Yannis:
The Real Poll Data
http://www.dickmorris.com/the-real-...s&utm_medium=dmreports&utm_campaign=dmreports
Clint Eastwood Makes Romney's Day With Endorsement
NewsMax
The "Dirty Harry" star and Oscar-winning director of "Unforgiven" and "Million Dollar Baby" endorsed the Republican presidential candidate Friday night during a fundraiser in Sun Valley, Idaho.
"I think the country needs a boost," Eastwood told The Associated Press as he joined other Romney supporters for the private campaign event.
In February, Eastwood told Fox News that he wasn't supporting any politician at that time. Some saw the "halftime in America" ad he made for the Super Bowl as a nod toward President Barack Obama. Eastwood responded then by saying he was not "politically affiliated" with the president.
"Now more than ever do we need Gov. Romney. I'm going to be voting for him," Eastwood told Romney supporters Friday night.
"He just made my day," Romney said. "What a guy."
Standing at Romney's side, Eastwood said he was filming "Mystic River" in Massachusetts almost a decade ago when he first saw political advertisements featuring Romney, who was running for governor at the time.
"I said, God, this guy, he's too handsome to be governor, but he does look like he could be president," Eastwood joked. "As the years have gone by I began to think even more so about that."
Eastwood, 82, said he hoped Romney would restore "a decent tax system that we need badly ... so that there's a fairness and people are not pitted against one another as who's paying taxes and who isn't."
The actor and director instantly became Romney highest-profile celebrity supporter. Romney has also earned the endorsement of Oscar-winning actor Jon Voight and rock star Kid Rock.
A campaign spokesman could not immediately say whether Eastwood would play an active role in the campaign.
About 325 people paid as much as $25,000 apiece to attend the event. Eastwood is a part-time resident of Sun Valley.
NewsMax
The "Dirty Harry" star and Oscar-winning director of "Unforgiven" and "Million Dollar Baby" endorsed the Republican presidential candidate Friday night during a fundraiser in Sun Valley, Idaho.
"I think the country needs a boost," Eastwood told The Associated Press as he joined other Romney supporters for the private campaign event.
In February, Eastwood told Fox News that he wasn't supporting any politician at that time. Some saw the "halftime in America" ad he made for the Super Bowl as a nod toward President Barack Obama. Eastwood responded then by saying he was not "politically affiliated" with the president.
"Now more than ever do we need Gov. Romney. I'm going to be voting for him," Eastwood told Romney supporters Friday night.
"He just made my day," Romney said. "What a guy."
Standing at Romney's side, Eastwood said he was filming "Mystic River" in Massachusetts almost a decade ago when he first saw political advertisements featuring Romney, who was running for governor at the time.
"I said, God, this guy, he's too handsome to be governor, but he does look like he could be president," Eastwood joked. "As the years have gone by I began to think even more so about that."
Eastwood, 82, said he hoped Romney would restore "a decent tax system that we need badly ... so that there's a fairness and people are not pitted against one another as who's paying taxes and who isn't."
The actor and director instantly became Romney highest-profile celebrity supporter. Romney has also earned the endorsement of Oscar-winning actor Jon Voight and rock star Kid Rock.
A campaign spokesman could not immediately say whether Eastwood would play an active role in the campaign.
About 325 people paid as much as $25,000 apiece to attend the event. Eastwood is a part-time resident of Sun Valley.
Why Private Job Creation Is Even Slower Than It Looks
By Jeff Cox
NEW YORK (CNBC) -- Private-sector job growth relied on to fuel the employment recovery is even weaker than it looks, according to one economic expert who says government subsidies distort the true picture.
The Bureau of Labor Statistics on Friday put non-government nonfarm job creation in July at a much better-than-expected 172,000, which helped lift investor sentiment even though the total headline unemployment rate rose to 8.3%. (The total nonfarm payrolls gain was 163,000 as government lost 9,000 jobs.)
But Alan Tonelson, research fellow at the U.S. Business and Advisory Council, said the number isn't as good as it looks because the heavily subsidized health services industry generated 38,000 jobs, or more than 22% of the total.
"It's certainly weaker than it appears if we believe that the recovery and the entire U.S. economy should be propelled overwhelmingly by the private sector, by private capital, by private markets, by market forces," Tonelson said in an interview.
"That's not to say that we don't need government spending or that government doesn't provide many useful services," he added. "But I don't think most Americans and I'm certain most economists would not argue that the strength of the U.S. economy and its future prospects are determined significantly by the strength of the public sector."
Though the number of industries that receive government subsidies is expansive, Tonelson boils his research down to the most identifiable in government employment data: Health care services, private educational services and social assistance agencies.
Since the recession, as defined by the National Bureau of Economic Research, ended in June 2009, such jobs have accounted for 1.144 million of the total 3.384 million private sector jobs created.
That means that the non-subsidized private sector generated 2.24 million jobs -- considerably less than the more than four million positions President Obama trumpets on the campaign trail.
Still, Tonelson maintains that he has no political axe to grind.
Rather, he believes policy makers and the public need to make sure they're getting the clearest picture possible about the real strength of the private sector.
By Jeff Cox
NEW YORK (CNBC) -- Private-sector job growth relied on to fuel the employment recovery is even weaker than it looks, according to one economic expert who says government subsidies distort the true picture.
The Bureau of Labor Statistics on Friday put non-government nonfarm job creation in July at a much better-than-expected 172,000, which helped lift investor sentiment even though the total headline unemployment rate rose to 8.3%. (The total nonfarm payrolls gain was 163,000 as government lost 9,000 jobs.)
But Alan Tonelson, research fellow at the U.S. Business and Advisory Council, said the number isn't as good as it looks because the heavily subsidized health services industry generated 38,000 jobs, or more than 22% of the total.
"It's certainly weaker than it appears if we believe that the recovery and the entire U.S. economy should be propelled overwhelmingly by the private sector, by private capital, by private markets, by market forces," Tonelson said in an interview.
"That's not to say that we don't need government spending or that government doesn't provide many useful services," he added. "But I don't think most Americans and I'm certain most economists would not argue that the strength of the U.S. economy and its future prospects are determined significantly by the strength of the public sector."
Though the number of industries that receive government subsidies is expansive, Tonelson boils his research down to the most identifiable in government employment data: Health care services, private educational services and social assistance agencies.
Since the recession, as defined by the National Bureau of Economic Research, ended in June 2009, such jobs have accounted for 1.144 million of the total 3.384 million private sector jobs created.
That means that the non-subsidized private sector generated 2.24 million jobs -- considerably less than the more than four million positions President Obama trumpets on the campaign trail.
Still, Tonelson maintains that he has no political axe to grind.
Rather, he believes policy makers and the public need to make sure they're getting the clearest picture possible about the real strength of the private sector.