"I am not worried about the deficit. It is big enough to take care of itself."
Ronald Reagan, President of the United States.
The debate over debt really turns on how much is "too much".
Between 1935 and 1981 the only significant increases in the deficit occurred during world war II and the Vietnam War.
Between 1981 and 1989 the Reagan Administration consistently ran annual deficits of $167 Billion and more than doubled the nations outstanding gross debt.
The Clinton Administration posted four straight years of surpluses and wiped out the annual deficit in 1998; But, the total national debt never decreased because the interest on the debt was highter than the surpluses.
Bush's tax cut in 2002 turned a $126 Billion annual surplus into a $158 Billion deficit and pushed the total federal debt over $6 Trillion.
These are facts, what follows is opinion.
The only way to resolve our current problem is to reduce spending, raise revenue and stop the hysterical emotion based bickering. The Congress needs to look at all ways to increase revenue and all programs to reduce spending. Spending must have a positive cost benefit., based on reason and not emotion.
Cut spending. Absolutely.
But how do you intend to raise government revenues.
I have a time proven way.
Cut taxes.
Three times in the past tax cuts have increased government revenue
The Historical Lessons of Lower Tax Rates
The tax cuts of the 1920s
Tax rates were slashed dramatically during the 1920s, dropping from over 70 percent to less than 25 percent. What happened? Personal income tax revenues increased substantially during the 1920s, despite the reduction in rates. Revenues rose from $719 million in 1921 to $1164 million in 1928, an increase of more than 61 percent.
According to then-Treasury Secretary Andrew Mellon:
The history of taxation shows that taxes which are inherently excessive are not paid. The high rates inevitably put pressure upon the taxpayer to withdraw his capital from productive business and invest it in tax-exempt securities or to find other lawful methods of avoiding the realization of taxable income. The result is that the sources of taxation are drying up; wealth is failing to carry its share of the tax burden; and capital is being diverted into channels which yield neither revenue to the Government nor profit to the people.
The Kennedy tax cuts
President Hoover dramatically increased tax rates in the 1930s and President Roosevelt compounded the damage by pushing marginal tax rates to more than 90 percent. Recognizing that high tax rates were hindering the economy, President Kennedy proposed across-the-board tax rate reductions that reduced the top tax rate from more than 90 percent down to 70 percent. What happened? Tax revenues climbed from $94 billion in 1961 to $153 billion in 1968, an increase of 62 percent (33 percent after adjusting for inflation).
According to President John F. Kennedy:
Our true choice is not between tax reduction, on the one hand, and the avoidance of large Federal deficits on the other. It is increasingly clear that no matter what party is in power, so long as our national security needs keep rising, an economy hampered by restrictive tax rates will never produce enough revenues to balance our budget just as it will never produce enough jobs or enough profits In short, it is a paradoxical truth that tax rates are too high today and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now.
The Reagan tax cuts
Thanks to bracket creep, the inflation of the 1970s pushed millions of taxpayers into higher tax brackets even though their inflation-adjusted incomes were not rising. To help offset this tax increase and also to improve incentives to work, save, and invest, President Reagan proposed sweeping tax rate reductions during the 1980s. What happened? Total tax revenues climbed by 99.4 percent during the 1980s, and the results are even more impressive when looking at what happened to personal income tax revenues. Once the economy received an unambiguous tax cut in January 1983, income tax revenues climbed dramatically, increasing by more than 54 percent by 1989 (28 percent after adjusting for inflation).
According to then-U.S. Representative Jack Kemp (R-NY), one of the chief architects of the Reagan tax cuts:
At some point, additional taxes so discourage the activity being taxed, such as working or investing, that they yield less revenue rather than more. There are, after all, two rates that yield the same amount of revenue: high tax rates on low production, or low rates on high production.
Hmmm would you approve of such a proven strategy?
I would.
Anyone would think the clowns in DC could catch a clue. What worked in the past will work now. Duuuuuuhhhhhhh.
Raising taxes has never worked. Jeeze. These guys are usless.